Leadership pipelines set to run dry: Study

by 04 Oct 2012

Australian businesses are headed toward a leadership time bomb as the pipeline of future leaders dwindles, according to a global leadership study.

The SHL Global Leadership study has found that while Australia ranks fourth in the world for its ability to supply the leaders of today, it drops out of the top 25 countries for supplying tomorrow’s leaders.

“Australia currently has a strong leadership potential, but employers urgently need to focus on identifying and developing the leaders of the future, said Stephanie Christopher, managing director for SHL Australia and New Zealand.

Most organisations already have comprehensive training and development programs designed to guide selected employees into more senior positions.

However, according to Christopher, employers should be wary of performance-based selection processes as not all high performers have what it takes to be a leader and employees with key leadership abilities could be overlooked.

“Employers need to correctly identify their cohort of potential leaders to ensure the training and development programs are delivering a high level of results by effectively supporting the right employees to fulfill their potential,” said Christopher.

The Global Leadership study was compiled from 1.5 million SHL psychometric assessments completed by graduate, managers, executives and professionals from 37 countries over five years to 2011. Individuals were measured against eight different skill areas to determine leadership ability.*

The top five countries providing today’s leaders include Hong Kong, Germany, UK, Australia and the US.

Mexico, Turkey, Egypt, Switzerland and Brazil top the list for where leaders of the future will be developed.

“It’s worrying that Australia is falling behind in identifying up-and-coming leaders. Australian employers need to ask themselves where their top leadership talent will come from over the next decade, and ask how they can be more innovative in identifying potential,” Christopher said.

“It’s important to look at all employees to spot those with the leadership characteristics to help the business meet its objectives, not just the senior ranks or high performers,” she added.

Effective leaders have the ability to build relationships, solve problems, communicate effectively, respond positively to change, influence and motivate others.

The changing global landscape of leadership potential outlined in the SHL study means that organisations have the opportunity to find their next leaders overseas or from different industry sectors, according to Christopher.

What can organisations do better? SHL has recommended a five-pronged approach to cultivating leadership:
 

  1. Identify the behaviours and skills which make a successful leader in your organisation
     
  2. Have a full picture of the leadership potential across your organisation. Don’t restrict that view to only those you think have high potential or rely on ‘gut feel’
     
  3. Use scientific data to benchmark employee skills against competitor talent and identify leadership shortages to avoid succession risk
     
  4. Focus on HR strategies that effectively spend training and development budgets and apply this across the business
     
  5. Take a global view of where your leadership talent is located and be prepared to use creative strategies to source talent across borders to fill leadership gaps

 

Top 25 countries with leadership potential today and tomorrow

 

Supply of leadership potential as a % of population: Top 25 countries

Ranking 1-25

Effective leaders today (by country)

%

Potential leaders of tomorrow (by country)

%

1

Hong Kong

14% 

Mexico

54%

2

Germany

13%

Turkey

50%

3

United Kingdom

10%

Egypt

44%

4

Australia^

10%

Switzerland

43%

5

United States

10%

Brazil

42%

6

Switzerland

10%

India

41%

7

Canada

10%

Italy

41%

8

Japan^

9%

United States

41%

9

Singapore^

9%

Germany

40%

10

New Zealand^

8%

Netherlands

40%

11

Sweden

7%

China (Taiwan)

39%

12

China (Taiwain)^

7%

United Arab Emirates

39%

13

France^

7%

Denmark

39%

14

Thailand^

7%

Sweden

37%

15

Finland^

6%

Portugal

37%

16

Belgium^

6%

Russia

37%

17

Spain

6%

Spain

37%

18

Turkey

6%

Ireland

37%

19

Italy

6%

Indonesia

37%

20

South Africa^

6%

China (Hong Kong)

37%

21

United Arab Emirates

6%

United Kingdom

37%

22

Mexico

6%

Norway

36%

23

Denmark

5%

Poland

35%

24

Brazil

5%

Canada

35%

25

Norway

5%

China (Mainland)

34%

^Indicates those counties ranked in the top 25 leaders today but not listed in the top 25 for leadership potential tomorrow

Additional findings from the study:
 

  • Globally, only one in 15 (6.7%) managers and professionals qualify as leaders today. One in three managers and professionals have the next tier of leadership potential but for this level of people the journey to realise that potential is longer and needs targeted investment. The value of investing in these people is substantial because there are six times as many managers and professionals with this level of potential than leaders for today.
     
  • In China (Taiwan), Germany, Sweden, Switzerland and US, the supply of leadership for today and tomorrow is stronger than the average global supply. While competing for leadership talent remains a challenge in these geographies, the odds of finding effective leaders for today are significantly higher at one in 10 vs. the global average of one in 15.

 

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