Bad managers—we’ve all had them. It’s baffling how some have kept their jobs. Do you ever wonder whether senior and executive leaders are even aware of middle management’s shortcomings? Are leadership development programs keeping pace with business needs? Are companies truly ready for the next generation of leaders?
Let’s dive into these questions and explore what’s really happening in organizational leadership development. We’ll discuss the risks, costs and actionable ways organizations can prepare their business before it’s too late.
The readiness crisis
Chief executive officers claim to prioritize talent development, and many employees are eager to grow. Yet, the reality on the ground tells a different story. The Center for Creative Leadership reports that nearly 60 percent of promoted professionals never receive any training when they transition into their first leadership role, and 50 percent of managers in organizations are rated as ineffective.
Organizations are failing to provide first-time leaders with the necessary support and development to effectively transition into quality people leaders, who probably haven’t been receiving any type of leadership development throughout their careers. At this alarming rate, we’ll be sure to set up our next generations of leaders for failure.
To make matters worse, organizations aren’t ready for the next wave of talent. According to the 2022 McKinsey report, only 12 percent of organizations claim to have a strong bench to fill critical leadership roles, yet only 36 percent of individual contributors actually want to become a people manager but at a different organization. If talent development and retention truly are key priorities, we should be seeing stronger numbers, an increase in promoted professionals being developed for their roles in leadership and individual contributors receiving the development they’re looking for.
Risks to the organization
In the post-COVID-19 era, businesses face a tug-of-war between employee expectations and organizational goals. Leaders are caught in the middle, tasked with executing company strategies while representing their teams’ interests. This modern conundrum demands modern leadership skills. With only 30 percent of employees engaged in the workplace, relying on ill-equipped leaders to manage and execute organizational goals will cost organizations high-performing talent, employee engagement and profitability.
Skills evolution
Organizations are missing golden opportunities to nurture in-house talent. Imagine if leaders could leverage their own experiences of being managed, while also adapting to the needs of a multi-generational workforce. The skills leaders need have changed. The approach of relying on one’s own experiences no longer makes a leader “effective.” The proof is in the data. Skills such as resiliency, empathy, active listening, leadership and social influence are critical for organizations to invest in and prioritize as the labor market changes over the next five years.
Moreover, employees with leaders who demonstrate strong emotional intelligence are four times less likely to leave their jobs. This expands what it means to experience “bottlenecking” in a business. Not only will organizations experience delays in progress, but also disengaged workers underperform.
Engagement equals success
With only one in three leaders effective at building talent, organizations are losing out.
Research published by Development Dimensions International links employee development and engagement directly to the manager’s engagement and influence, stating that leaders who receive training to enhance their leadership skills are more engaged in their roles, and employees who provide their leaders with high ratings are seventy percent more likely to be engaged themselves. Happy bosses make for happy workers and vice versa. And, happy workers make organizations more profitable.
What it costs
Research indicates that happy employees are 13 percent more productive than employees (Social Science Research Network) who are not. Need something more specific and tied to revenue? Happy salespeople produce 37 percent greater sales (Lorman). From a macro perspective, high employee engagement can be linked to lower turnover (Select Software Reviews) as highly engaged employees are less likely to look for new jobs, thus saving an organization costs in attrition and hiring.
Taking action
Simply put, organizations need to develop leaders sooner, better and faster. The benefits of having highly engaged, highly skilled leaders will enable organizations to face the changing tides of the workplace, ensuring both people and profitability may be valued and protected. Where does an organization get started?
- Identify the gaps. Ask yourself: How are you measuring your leaders’ effectiveness, and do you understand how their performance impacts culture? If you have data already available, you may have saved yourself some dollars in this next step.
- Conduct a needs assessment to collect relevant and timely data, gaining insights into the current landscape of leadership performance and its impact on employees. Leverage the analysis output, understand the strengths of the leadership team and attack the blind spots head-on. A well-executed analysis will provide insight into what level of leader requires development, what programming may look like and for how long. If this cannot be done internally, you can find good vendors to conduct a good analysis anywhere between $25,000 and $180,000. You get what you pay for, so be clear on what you need and what you don’t need. And don’t buy into a program without understanding your unique data first. Find a tailored solution that meets your needs.
Moving forward
It’s time for organizations to prioritize leadership development. By investing in comprehensive programs that address both hard and soft skills, companies can build a strong leadership bench. Partner with the right experts to get the data you need and solve for your unique challenges. This isn’t just an investment in individual leaders—it’s an investment in the organization’s future success and resilience.
