The performance of Canadian companies is threatened by a dearth of good leadership, according to a new study.
In fact, as the pace of change accelerates and competition increases, the quality of leadership appears to be falling further behind, said many of the CEOs surveyed in the study for the Conference Board on Canada.
Two years ago, the Conference Board first identified the potential dangers of a leadership gap in Canada. In this followup, CEOs said leaders are actually less able to respond to change and no better at fostering a culture of innovation.
“Our new report card on leadership tells us that in the race to keep up with change, change may be winning,” write the authors of the report
Leadership for tomorrow: Playing catch up with change.
And on the important task of creating a culture of openness to innovation, CEOs also said leaders have not improved at all since 1999. Respondents said it was in the so-called soft skills of leadership where they suffered the most. For key competencies like building teams, gaining employee commitment and making employees feel valued, more than 70 per cent rated their organizations’ leadership as only fair or weak.
In the survey, just two per cent of top executives said their leaders’ ability to implement change was excellent. That is down from five per cent just two years ago. Nearly 20 per cent said their ability to implement change was poor.
“There is a huge gap between what is required for sustained success versus what they seem to have in capability. It is important to bridge that gap,” said Prem Benimadhu, vice-president of the centre for management effectiveness at the Conference Board and one of the authors of the report.
But the study also revealed reason for optimism. Respondents said the development of leaders is improving and the orientation to change has also strengthened.
The problem identified by the Conference Board and participating CEOs has less to do with the top tiers of corporate leadership, and more to do with the culture of leadership: people at all levels of an organization with the power to make decisions, be innovative and have the responsibility to act quickly to changes affecting their part of the operation.
In the report, Micheline Bouchard, former CEO of Motorola Canada, explained, “Leadership has been viewed as a critical success factor but only in terms of those at the top.” If the CEO and senior executives were good, that would be enough but that is no longer the case, she went on. “The issue is that we have not built leadership deep in the organization. I don’t mean that everyone would want to go to the top. But everyone needs to be in a position to make a difference.”
Overwhelmingly, CEOs feel good leadership, at all levels of an organization, is the most critical driver of corporate success since it enables firms to respond quickly and constructively to changing markets, explained Benimadhu. Leadership capacity refers to a role not a position, he said.
Not everyone will be developing strategy or defining the vision for the company, if that were the case, there would be chaos.
“When we talk about leadership at all levels, we are not saying that everyone is going to exercise leadership in all spheres.”
Benimadhu said he was surprised to find out that the state of leadership has actually regressed since the last study, and he cited a number of possible factors. For example, there could be a lag between the improvement of development practices and demonstrated behaviours in the workplace.
In 1999, just 10 per cent of respondents to the survey described training programs for developing leadership capability as highly effective. Most people said programs were outdated, ineffective and too focused on management rather than leadership.
But by 2001, 25 per cent said training programs were highly effective. However, executive development programs are viewed negatively, with 85 per cent saying those programs were only somewhat effective at best.
“It does take time to develop leaders at all levels,” said Benimadhu. “It does not happen dramatically, developing the soft side in people takes a long time. Two years is not enough time but the question is will we have the time.”
He also said that developing good leadership capacity can be impeded by structural problems.
“In my view there is tremendously unused leadership capability in our employees,” said Benimadhu, blaming organizational structures that prevent employees from acting independently.
“If you have an organizational context that is perceived to be based on constraint, control and compliance, they (employees) will not exercise leadership. To get leadership you have to demand leadership of employees.”
“The best leaders that anyone has ever worked for, have demanded leadership from others.”
Retention also becomes an essential component in creating good leadership capacity. To hold onto the leaders they have, companies must ensure employees feel a sense of purpose and meaning in their work. “Each individual wants to make a contribution,” he said.
Organizations need to start talking about why they exist and what grand cause they are supporting. Good leaders won’t stick around for good pay or benefits, he said.
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.