Top leadership traits identified

by 23 Jan 2007

JOB SHADOWING for senior managers, outdoor activity-based programs and paper-based self-study leadership modules are the least beneficial activities for developing leaders, recent research has found.

In addition to these, executive MBAs and web-based self-study modules are worst practice leadership development when implemented too late in an executive’s career.

The US research, in which Hay Group surveyed 564 companies with at least US$8 billion ($10.2 billion) in revenue from around the world, instead found that companies with best practice leadership used a number of other practices.

Such companies provide rotational job assignments for high potentials and assist leaders at all levels to focus on creating a work climate that motivates employees to perform at their best. They also provide training and coaching to help leadership teams, as well as the individual leaders, work together more effectively.

The study also found the top companies for identifying and fostering leadership talent perform better on the stock market. Their average five-year total shareholder return beat the S&P 500 over the same period by 3.53 per cent. This period covers both the bleak years following the downturn and September 11, as well as a recent surge in the S&P.

The research highlighted an impending talent and leadership shortage for many businesses around the world. This would inevitably cause ripple effects elsewhere in business, according to Hay Group, particularly in placing further upward pressure on salaries and work-life balance issues.

It would also force organisations to pay a premium to hire talent from the outside, which is financially costly, takes time and sometimes fails.

As such, focusing on identifying and managing the talents of high potential candidates will rise to the top of the agenda, according to Mary Fontaine, vice-president and general manager of Hay Group’s McClellandCenter for Research and Innovation.

“Organisations that are able to identify, develop, and promote their leaders from within will find themselves better positioned than their peers to win the war for leaders – and to safeguard their organisational futures,” she said.

“The top companies are already focused on this. Those companies which are not prepared will be forced to rely on external recruitment – which is usually much more expensive and less dependable than internal promotion.”

It takes about three years to identify a high potential, according to Fontaine, and another 10 to prepare them for the executive suite.

“The costs and risks of recruiting from the outside can be even higher. Yet how many major companies have a 13-year horizon in place for their talent development programs?”

Addressing the leadership crisis

Hay Group research identified steps businesses can take to address a leadership crisis in the face of the ageing workforce.

1. Train leaders to inspire: leaders at all levels must create a climate that motivates employees to perform to their best.

2. Make leadership top priority: ensure that the importance of leadership to the future of the business is recognised and understood throughout the organisation.

3. Foster a team spirit: provide training and coaching to help leadership teams, as well as the individual leaders, to work together more effectively.

4. Alternate projects for high potentials: ensure that potential leaders gain a wide range of leadership experience by rotating assignments.

5. Develop mid-level managers: external leadership development programs, web-based self-study leadership modules and executive MBA programs are all effective training tools for middle managers.

The remaining best practices highlight the need to start early on mid-level managers and high potentials:

1. Rotational job assignments for high potentials.

2. External leadership development programs for mid-level managers.

3. Web-based self-study leadership modules for mid-level managers.

4. Executive MBA programs for mid-level managers.


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