Wanted: Leaders of the future
09 August 2012
New research published this week by the Institute of Leadership and Management (ILM) highlights a dramatic lack of leadership and management skills in UK firms.
In the survey, 93% of managers expressed concern that low levels of management skills are having a negative impact on their business – and they were right. Our own study of high-growth firms (those achieving 20% employment growth per year) finds that effective leadership is the foundation of sustained organisational performance: 41% of firms identified as high-growth were twice as likely to indicate lack of management skills as an impediment to sustained growth when compared with the rest of the cohort. Similarly, the Hay Group estimated that 70% of the organisational culture and team climate was determined by the quality of leadership.
The ILM research also indicates the disinterest of modern organisations in nurturing their own talent. Leadership is largely viewed as a feature of senior roles, and is rarely recognised as a skill that needs nurturing across the organisational hierarchy. In the ILM study 43% of businesses have no talent plan in place at all, with only 55% of managerial vacancies filled internally. At the senior level, only half of the companies recruited from their internal talent pool.
On the other hand, those who do progress to management roles within organisations, may not have the skills required for the job, finds ILM. Functional competence, as opposed to ‘people skills’, is still the largely trusted way up the corporate ladder. With evidence for the effectiveness of people-oriented leadership in mind, the research revealed a shortage of emotional intelligence among managers as a particular challenge facing UK employers.
Amidst an abundance of leadership training courses and the flamboyance of the careers sections of large corporates, the lack of confidence in their leadership skills among the UK managers is surprising. To me, it suggests that either the majority of organisations do not appreciate the need to train leaders, or that we still don’t know what the ‘perfect formula’ for a leader would be. Over the past decade, The Work Foundation has gathered evidence both on the value of leadership for the bottom line and the behaviours of outstanding leaders.
While the risk of not growing your own leaders does not seem imminent – and easily resolved via clever headhunting techniques – employers should remember that scarcity of internal development opportunities has an immediate impact on employee morale and productivity. CIPD recently found that 58% of employees display signs of a ‘not bothered’ attitude to their job. As a leader’s primary job is to engage staff through organisational values, this figure is an early warning sign of the UK’s leadership crisis.
The dearth of leadership skills represent a significant risk to the growth of SMEs which are the likeliest source of innovation and growth in the UK. If they fail to flourish, this hampers their ability to boost jobs growth, reduce economic inactivity and lower dependency rates. It is likely that due to resource constraints and lack of appropriate policy support, development of leadership and management skills will remain a low priority for SMEs.This will in turn hinder the firm’s – and, as a consequence, the UK’s growth. The Work Foundation has explored the best ways to support leadership skills in the UK through its research programme.