Numerous surveys indicate that leadership capacity has significantly declined over the past decade. There is a growing gap between a leader’s capacity to lead and the organization’s leadership needs. This gap continues to be a big concern for CEOs and human resource professionals.
Factors contributing to this growing leadership gap include The Great Resignation, minimal investment in leadership development, poor organizational practices, global workplace changes, and competing business priorities.
Let’s explore how we can counter this drop in leadership capacity in today’s business environment.
The Shortfalls of Leadership Capacity – What to do About it?
There is a discrepancy between a leader’s capacity to lead and the organization’s current and future leadership needs. A leadership capacity shortfall is simply a lack of critical leadership skills and competencies. Organizations are not effectively addressing this gap, which is having negative impacts across the globe.
The principal competencies lacking in today’s business leaders are change management, strategic thinking, engaging, inspiring, and building relationships among broad stakeholder groups, including employees. Developing employees and inspiring action are other essential leadership shortfalls.
Companies continue to face obstacles in mitigating the leadership gap. These obstacles include failure to focus on leadership competencies needed for today’s environment, underinvestment in leadership development, investing in employees who are not interested in development, and leaders that are resistant to development. Failure to overcome these obstacles will make it difficult for businesses to compete and win.
There are three key steps organizations can take to close the leadership gap.
These include: (1) Conducting leadership and organizational needs assessments, (2) Creating an organization-wide leadership development plan, and (3) Measuring performance against the leadership plan.
A leadership and organizational needs assessment first identifies the specific leadership competencies required for current and future organizational success. Top executives must take ownership in this process to ensure selected competencies are specific to their organization. For example, if a technology company is navigating unprecedented change, change management may be a top leadership competency targeted for development.
The next step is performing leadership assessments on key leaders within the organization. There are many tools HR professionals or executive coaches can use to identify leadership strengths, weaknesses, and blind spots. Assessments help identify the core competencies required for both leadership and organizational success. You can now perform a gap analysis between the organization’s leadership needs and the leadership capacity of those leading the organization.
An organization-wide leadership development plan tailored to each leader can now be created based on previously identified leadership gaps. For high-potential leaders, new stretch assignments and executive coaching are powerful tools that will strengthen skills and facilitate behavioral changes.
Finally, the company must measure performance against the leadership plan. The plan should have metrics to evaluate the leaders’ progress toward reaching their goals. Leadership analytics, follow-up assessments, 360 reviews, and assessing progress on stretch assignments can be valuable tools. The overall developmental process should be relatively simple, have top executive sponsorship, and have buy-in from the leaders going through the developmental process. Other high-priority initiatives will suffocate the leadership development process without these three.
Leadership Challenges Organizations Need to Overcome
Organizations face many leadership challenges, such as employee engagement, stakeholder trust, providing inspiration, developing employees, leading change, and talent retention.
Employee engagement continues to decline. As a leader, you must take responsibility for engaging and inspiring your team around a shared vision or purpose. Building engagement and trust go hand-in-hand and are proven to improve productivity, performance, talent retention, and employee well-being. Lack of employee engagement and empowerment can be a sleeping giant. It may go unnoticed for a period, but eventually, it can be the demise of any once flourishing business.
When developing talent, it’s essential to recognize that people are at different points in their journey, each requiring unique and tailored developmental approaches. Some employees have no desire to develop for a new role which may be okay. Leaders must know their employees and recognize these differences to grow their team successfully.
Company leaders must also lead by example in all areas. To develop trust, they must demonstrate company values, walk the talk, and ensure their actions model behaviors the company deems important. Most leaders underestimate how closely their subordinates observe them. Tiny discrepancies in behaviors can have significant impacts on their credibility.
Finally, in a world where companies compete fiercely for talent, it can be tempting to relax disciplinary actions or personnel accountability. However, failure to maintain high accountability will create retention risk with your most talented employees.
Final Verdict
Company executives must invest in leadership development to overcome the leadership gap and positione their company for future success. The leadership gap continues to widen due to a lack of consistent focus on this competitive multiplier.
Regardless of the plan, leadership development must be sponsored at the CEO level so that other “burning” business objectives don’t out-prioritize your project. Mastering leadership competencies and closing the gap is not easy, but it is undoubtedly achievable through leadership development and executive coaching.
Business environments are constantly changing, markets are in flux, and disruption seems to be around every corner. Organizations with strong and competent leaders will navigate change and lead their companies beyond their competition.
Vance Crocker