The baby-boomer leadership vacuum

2007

As the baby-boomer generation of experienced leaders head off into retirement, Western businesses are not doing enough to fill the vacuum at the top of their organisations or counter the growing threat from emerging economies.

A survey of more than 400 HR executives from 40 countries by IBM found more than three quarters were concerned about their organisation's ability to develop future leaders.

This is an increasingly serious failure, given the backdrop of explosive growth in emerging markets and the retirement of experienced personnel, IBM warned.

By failing to groom a new generation of leaders adequately, companies were placing their growth strategies at risk, it added.

But leadership was not just an issue for Western businesses, it said.

Leadership issues were surfacing worldwide, with organisations in every corner of the globe being affected.

Companies in the Asia Pacific region were most concerned with their ability to develop future leaders (88 per cent), followed by Latin America (74 per cent), Europe, Middle East and Africa, (74 per cent), Japan (73 per cent) and North America (69 per cent), it said.

"In today's business environment, organisations worldwide need to have a pipeline of future leaders who can deliver on today's commitments, drive workforce and enterprise transformation and lay the groundwork for future growth," said Tim Ringo, global leader, human capital management, IBM Global Business Services.

"Effective leadership not only guides individuals through turbulent business conditions, but creates a climate that attracts and retains high performers, who will be in increasingly short supply in the future," he added.

Companies needed to put more of an emphasis on rotating employees across divisions and geographies to hone their future leadership talent, he said.

Another key challenge identified in the research was that of passing on knowledge from older to younger employees.

Half of the HR executives polled said their firms were finding it hard rapidly to develop skills to address current and/or future business needs.

Worryingly, more than a third said their employee skills did not match their current organisational priorities.

"The ability of an organisation to look ahead and identify the skills it will need in the future, and then rapidly develop a critical mass of individuals with those skills in a cost-effective manner, will be a core competency for those companies looking to compete in the globally integrated world," added Randy MacDonald, senior vice president of HR at IBM.

Nearly half of the organisations polled had seen employee turnover increase over the past two years, against just 16 per cent that had seen it decrease.

Yet HR executives and managers appeared to be more concerned with developing existing employee skills than attracting new talent.

Many believed their corporate reputations alone would be enough to attract and retain the people they need. Under a fifth said retention was a high priority workforce issue.

And just 14 per cent said their workforce was very capable of adapting to change, despite the fast-moving nature of the modern workplace.

Adaptable workforces needed to be able to predict future skills and successfully anticipate future business scenarios, said IBM.

Yet just 13 per cent those polled said they believed they had a very clear understanding of the skills they would require in the next three to five years.

A similarly low percentage said they were capable of identifying individuals with specific expertise within their organisation, another key issue when it comes to adaptability.

And just eight per cent said they were very effective at fostering collaboration among their managers.