Mind the leadership gap

Feb 23 2009 by Nic Paton Print This Article

Given that it isn't exactly creeping up unannounced, you'd have thought the departure of the Baby Boomer generation of leaders over the next few years would be something relatively easily planned for. Yet many U.S firms still predict that a leadership vacuum within their top echelons will be almost inevitable.

According to a study by training and organisational development firm CPP, there is a marked lack of urgency among many U.S firms about how to respond to the looming departure of this highly skilled and experienced generation of managers.

In fact, among many firms there seems to be a sense of shoulder shrugging inevitability that the main outcome will be a retiree-induced leadership skills gap, so there is little point in doing much about it.

The global poll of HR leaders found more than seven out of 10 in the U.S and 60 per cent elsewhere were bracing for the impact of ill-equipped employees assuming higher-level positions because of a lack of available talent. Consequently, they also anticipated a higher level of employee burnout.

"Companies should be concerned because poor leadership can have serious top-to-bottom ripple effects, from employee burnout to underperformance of the entire company," said Mike Morris, senior research scientist at CPP.

"The survey data tells us that hiring and developing leaders will be more difficult in the future, and companies that prepare their leaders should have a big advantage," he added.

Key challenges facing this future generation of managers included a rapidly changing competitive environment, knowledge retention, pressure to innovate, generational differences and, most notably, pressure to cut costs, it found.

"While these problems will continue to plague business, organisations are not unavoidably at the mercy of such forces," stressed CPP chief executive Jeff Hayes.

Developing a "leadership pipeline" long before the gap emerged, ensuring knowledge was transferred between generations and implementing a solid, long-term leadership development programme could all help an organisation to identify, retain and prepare their future leaders for the tasks ahead, CPP recommended

Yet this sitting on hands when it comes to executive succession planning was nothing to do with ignorance most firms were well aware that this was an issue they should be dealing with, the research discovered.

There was broad awareness that firms faced a looming leadership gap during the next decade as baby boomers began to retire in droves, pointed out Hayes.

"If businesses continue to ignore the oncoming leadership gap, they may see devastating consequences," Hayes warned.

"As it becomes increasingly difficult to obtain and retain top performers with strong leadership experience, organisations may find their greatest asset their workforce in jeopardy," he added.

While nearly six out of 10 of those polled said they expected their organisations to grow during the next 10 years, the majority from all regions, except Brazil, also expected hiring, retaining, and developing leaders to become more difficult.

Yet at the same time the research identified a mark lack of preparedness within many firms, with no more than four out of 10 reporting having a formalised succession or executive coaching programme, and just over half having a process in place to identify potential leaders.

"With the slowing economy and changing workforce, organizations face significant leadership challenges in the coming years," said Josh Bersin, president of consultancy Bersin & Associates.

"Consequently, leadership development, executive coaching and career development should be among the priority investment areas for most companies today," he added.

This short-sightedness on succession planning is not exactly a new phenomenon among U.S businesses.

Last summer a survey of more than 2,500 senior HR executives by consultancy Novations Group found that more than a fifth felt what succession plan they had were useless and a quarter said work on this area was only done in "fits and starts".

And in August last year, a study by the Institute for Corporate Productivity found that more than two-thirds of organisations would not be able to immediately fill a leadership position if it was necessary, while just a third have identified an internal interim successor should their CEO suddenly depart.

What's more, fewer than half said they have a formal succession plan in place, or conducted regular talent reviews to gauge the readiness of employees who could step up into a leadership roles in short order.