In the Workforce 2020 study conducted by Oxford Economics and SAP, 40% of executives say their companies’ growth plans are slowed by lack of access to the right leadership. According to another study by Bersin, less than 15% of business and HR leaders say their leadership pipeline is prepared for what’s coming. These are just two examples, with many other studies supporting the following finding: our leadership is not ready for the future. What could be the reasons for this gap, also known as the ‘leadership cliff’?
In many companies, a few well-established assumptions about leadership still drive a lot of the decisions that are made behind the curtains. Let’s look more closely at four of the most dangerous traps, and how they can hold you back from preparing your leaders for the future.
1. Assume your best leaders are born, not made.
You either have it, or you don’t. If a key leader leaves, drop a capable successor into the job and do not worry about a lifeline or support system. If they swim, they are bound to have a great future, if they sink - well, they probably never had it in them. Following this approach, you will quickly sort out those who are not born to be great leaders and be left with the great personalities that you need.
2. Only focus on the business outcomes, not on how they are achieved.
Leadership is all about the results you deliver. When it comes to performance, promotions and appraisals, set your sight firmly on the business KPI to determine a candidate’s leadership qualities. As long as they continue to perform, you don’t need to know how your leaders achieve their targets.
3. Make sure to quickly replace those who fail.
Failing is not an option. If a product, marketing campaign or go-to-market strategy fall short of expectations or goals, look to replace the person in charge. At the same time, reward those who focus on maintaining a clean slate and are always well perceived and positioned. This will make sure you create an environment of low risk and projects that cannot fail.
4. Identify the best practice and make sure everyone learns it by heart.
Once a solution is found, focus on repeating what worked. Don’t get distracted by those who voice concerns that old solutions might not be those of the future. If you have successful leadership trainings in place, make sure you stay consistent with the practices and the approaches you have identified as the best. What has worked to produce the great leaders you have today will also work at preparing the new generation of leaders.
Ask yourself, honestly, if reading the above sounds at least a little bit familiar. If it does, your company might be missing out on many opportunities to get your leadership ready for the future. Why? Because falling into these traps actually undermines a culture of learning and development among your leaders. So what can you do differently? Here are four recommendations that can help you re-define your leadership development and culture.
1. A growth mindset as the foundation.
Assuming leaders are born is one example of a fixed mindset logic. From this vantage point, you are likely to spend all your energy on trying to find the right person, or testing people to see if they are. What if in such an environment, a leader shows vulnerability, asks for help or even admits to failure? They risk being exposed and getting kicked out of the club of the chosen few. The downsides of such an environment are abundant. For example, it can drive leaders to avoid challenges, focus on how they are perceived or inhibit cooperation. A growth mindset on the other hand views challenges and failures as learning opportunities, other talented leaders as inspirational rather than threatening, and actively seeks out feedback. Do leaders in your organization feel safe to live by such a mindset? Companies that are able to answer ‘yes’ are much more likely to consistently build great leadership.
2. Pay attention to how your leaders ‘make the quarter’.
In addition to closely looking at the business performance your leaders achieve, you also need to hold them accountable for how they lead. When considering for promotions or additional responsibility, make sure you know if their employees trust them, and if they are able to drive high employee engagement. Once you understand who is successful and sustainable at the same time, you will be much more likely to place your bets on those leaders will be able to lead you in the future.
For example, at SAP, every leader is also measured by how much their team members say they trust them, and by the engagement they are able to generate in the organization. These are just two examples of many ways to create transparency on ‘how’ your leaders work, but they are powerful in their simplicity and bring of lot of things together (link).
3. Take time to groom leaders, with strong support during rotations and assignments.
As indicated in the Workforce 2020 study, nearly two-thirds of executives “do not plan for succession and continuity in key roles” (link).
Given this number, it is no surprise many companies are worried about their leadership pipeline. Great leaders develop first and foremost through the experiences they make, and the challenges they have faced and overcome (link, link). It is therefore essential to find the right challenges and at the same time, to pair them with effective leadership development. For example, international or functional assignments of leaders need to be carefully identified and not born out of urgency. How would it fit into their overall development, and how do you support them before, during and afterwards? This is just one example of how the sink-or-swim fallacy can be avoided, since it assumes that a scaffolding of support can make the difference between somebody leaving or having an impactful learning experience.
4. Understand how your leadership needs to evolve in the context of your strategy.
What you do with your leaders needs to be connected to what is happening in your company. If you are changing your business model or facing strong competitors, connect your leadership development to how your strategy is shifting. For example, the best practices and leadership models that were effective in your business 10 years ago will probably not hold up to the new realities of today’s markets, and even less of tomorrow’s. In our dynamic world, best practice can also be past practice.
When looking into how strategy and leadership depend on each other, you also need to understand if the leaders you have are equipped for the new direction. Are they able to adapt how they do things? It is essential to understand where your leaders might have blind-spots or patterns which were successful in the past but may not be in the future.
For example, as SAP is moving from an on premise business model to the cloud, product release cycles and customer stickiness are reduced significantly. We’ve looked closely at how new ways of delivering product releases, different customer relationships and new support models impact what we need from our leaders, and that influences how we are developing them.
Leadership as the differentiator
The four traps outlined above are still deeply engrained in many decision-making processes on leadership development. Avoiding them requires a big shift towards a learning culture that embraces challenges and supports leaders in facing them. The rewards are worth the effort though. As also indicated in the Workforce 2020 study: companies that are able to provide tailored, holistic and relevant leadership development can differentiate themselves from their competition to achieve more sustainable success.
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