Leadership is most pressing human capital challenge: Survey

Bench strength, depth, development opportunities among concerns
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 05/15/2015

When it comes to the most pressing human capital challenges facing Canadian businesses, leadership once again tops the list, according to a recent Deloitte report.


Ninety per cent of human resources and business leaders consider leadership an important or very important business concern, found the survey of 118 people — with 54 per cent saying it’s the most pressing priority. 


That ranks above culture and engagement (86 per cent) and workforce capability (80 per cent).


And while just 33 per cent feel their organization is ready or very ready to address the challenge of leadership, that’s up from 20 per cent in 2014, said Deloitte.


“Organizations and senior leaders are understanding the need for their business to focus on culture to dramatically improve employee engagement and then, ultimately, the impact that all of that has on the customer and their ability to execute the business plan,” said Heather Stockton, a partner and human capital leader at Deloitte in Toronto.


“There’s a recognition that you can have the best controls in the world but if you don’t have the right culture and the right leaders with the right values and behaviours, they’ll find a way around the controls.”


Leadership has changed dramatically in the last generation. It used to be you showed up and told people what to do and people knew their roles, said David Town, president of Your Leadership Matters in Aurora, Ont.


“Leadership now requires, particularly when you profile gen X and Y… a process of involving people in coming onboard and coming onside to go in the direction that you want to go in. And this is a newer skill set and not necessarily one that’s been modelled well in many workplaces,” he said. 


“More people need to understand ‘What do I really need to do to be effective in a leadership role? I can’t just tell people what to do anymore.’”


It’s more demanding in the sense that a leader has to understand the people she’s leading, which is wrapped up in engagement, said Town.


“It really is about understanding what motivates that person — people have their own individual reasons for wanting to get onside with you and I think there’s a term called… the psychological contract that has changed in the last generation because so many companies engaged in re-engineering, rightsizing, downsizing, all of which had the consequence of people getting laid off or changing their employment,” he said.


“So people observed that, and especially the generations now in the workplace watch that and go, ‘So I’m not going to be loyal to the company just because; I’m going to be loyal because they’ve engaged me in the process, I believe in their vision, it’s challenging work.’


“So the leadership yoke, as it were, the demand of leaders is that they need to figure out ways rather than showing up and saying, ‘I’m at the top of the house in this department or in the whole company.’ Those that inspire people make a dramatic difference.”


Development challenges

Given the increasingly complex business environment, organizations see the effective development of leaders as an ongoing challenge, found Deloitte. But there’s an opportunity to propel business strategy and agility by deepening bench strength. 


Employers and HR are worried about the depth of leadership, the quality of the bench strength they have, said Stockton, and there’s a shifting emphasis on leadership at all levels.


“The emphasis has largely been on senior executive succession but as businesses sort of shift and think about the future, one of the biggest challenges they have is the depth of leadership. So they need to actually start to build leaders at all levels so that they have a strong pipeline in order to execute against their business plan.”


As a result, Deloitte also suggests employers:


• accelerate the development of high-potential talent


• play to leaders’ strengths by targeting individual growth opportunities and capabilities that are critical to the organization’s business strategy


• provide developing leaders with opportunities to “audition” for future roles, such as a secondment into another business and other stretch roles.


It’s about being programmatic, said Stockton. That means using traditional classroom training but also providing people with experiences and challenges and asking them to understand factors such as their sector and the competition.


“It becomes really an anchor of what you do in a business around building leaders, so it’s going further down in an organization, it’s being very, very systematic about it, treating it like a program, and it’s also (about) different types of development and broader types of development,” she said.


“In the past, many leaders have really come up in one discipline as an expert and there’s recognition that in this new world we live in — with hyper-competition, disruption through technology and innovation — leaders actually need to truly understand the business in a broader perspective than simply a single discipline or technical expertise.”


Testing and investing

Organizations are also “testing and investing” in order to accelerate leaders’ performance, said Stockton.


“So they’re pushing them earlier and into different challenges; they’re taking an expanded view around succession to develop leaders at all levels; they’re very focused on global mindsets to grow talent in business simply because of how open the world is today through social media, through technology, through disruption and through competition,” she said.


“And then leaders are driving learning agendas to shape culture, and then they’re taking a very intentional approach to in-role and experiential development.”


Many organizations do a good job of identifying the skills that are going to make people successful as leaders, and trying to put them in positions to hone those skills, said Town. But other employers  just hope the right people will show up or grow organically.


“The lack of intentionality, I think, is a big risk particularly as the workforce changes with the advent of the baby boomer curve. It’s going to work its way through in the next 10 years and I think there’s going to be a whole different set of people’s experiences available to organizations in terms of leadership. 


“Those that have been developing their leaders and have a good process for identifying them will be in a much better position than those that are not.”


Most skill learning is going to come on the job — it’s not going to come from classroom training or online training, he said. 

It’s about giving people exposure to skills in a very formalized way, such as coaching.


“Then the organization needs to be committed to testing those skills in the crucible of work, so putting people into secondments, one-year positions, covering off different leaves that can occur in the organization, giving people an opportunity to really show their stripes, said Town.


“So it’s almost like you’re operating a co-op program internally in your own organization to really see ‘Before I give somebody the full reigns of leadership, I’ve explored whether they can do this or not.’”


In some leadership programs, action learning is used, where people in groups are given an executive-sponsored project to work on, said Russel Horwitz, principal at Kwela Leadership & Talent Management in Vancouver. 


They’re usually research-orientated projects involving something critical to the business, so they’re not easy tasks, he said, and they end with recommendations.


Giving people more advanced work is huge, particularly with respect to testing critical thinking skills, conceptual skills, presentation skills, those sorts of things, he said. 


“Not necessarily people skills — you don’t need to give them a special project to see that.  But those high-level leadership skills, definitely. “


For leaders, there are a variety of skills needed, such as strategic planning, having a vision, change management, influencing skills, team development skills, being organized, conflict resolution, communication, teamwork skills, creative problem-solving and innovation, said Horwitz.


Most people are promoted because they’re technically good at what they do, he said — and then it’s discovered they lack the necessary leadership competencies to succeed, which leads to problems.


“I don’t think people know enough what to look for, particularly people skills, critical thinking skills, influencing skills, things that have nothing to do with actual jobs,” he said. 


“If you can spot those things and you promote someone, they’ll probably do well. But if they’re not present, they do very poorly, and a lot of people make that mistake.”

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