Five Steps to Addressing the Leadership Talent Shortage

Five Steps to Addressing the Leadership Talent Shortage

10:22 AM Wednesday June 2, 2010
by Sue Ashford and Scott DeRue

(Editor's note: This post is part of a six-week blog series on how leadership might look in the future. The conversations generated by these posts will help shape the agenda of a symposium on the topic in June 2010, hosted by HBS's Nitin Nohria, Rakesh Khurana, and Scott Snook. This week's focus: leadership development.)


Nearly 60% of companies are facing leadership talent shortages that are impeding their performance. Another 31% expect a lack of leadership talent to impede their performance in the next several years. Yet, in 2009, U.S. companies spent an estimated $12 billion (24% of their overall training budgets) on leadership development programs and services. By any reasonable standard, what we are currently doing to grow and develop future leaders is not working. Here are five critical attributes that we believe are necessary for developing the leaders of today and tomorrow:
The best learners make the best leaders. We must teach people how to learn leadership from life experiences. In our paper, "Power to the People," we argue that learning leadership is a function of how people approach, go through, and reflect on developmental experiences — a process we call "mindful engagement," We need to stop teaching leadership theory in a vacuum, and start teaching people how to learn leadership from real-world experiences.
Leadership as a set of principles. Business education is largely oriented toward teaching an important but narrow set of technical knowledge and skills. We need to expand our teaching to encompass a set of leadership principles that can be globally applied across situations. Doing so will build an adaptive capacity that enables people to more effectively lead in today's complex and dynamic business environment.
Reward leadership development (FINALLY!). All companies pay lip service to the importance of developing people, but how many companies actually reward (with any significance) the development of people? Answer: very few. Also, how many companies penalize managers for hoarding key talent? Answer: almost none. Yet, managers often do everything they can to avoid losing key talent to other opportunities because, as one executive put it to us the other day: "I can't afford to lose my best people."
Leadership development at all levels. In an earlier blog entry, we argued that leadership is not about position. If that is true, then why do most leadership development programs focus on senior executives? We need to expand our focus to figure out ways to efficiently and economically develop leaders throughout the organization.
Keep it simple. Leadership is complex, but leadership development cannot be. We must provide key talent with clear metrics and development priorities that provide a straightforward roadmap for realizing their leadership potential. Unfortunately, that is not the case in most companies. One Fortune 500 company that we are working with developed a leadership competency model that specifies 54 distinct competencies across 15 different leadership skills. The result? Employees are confused, and assessment data are poor. Instead, identify the three or four competencies that really differentiate top performers across different levels of the organization, and then reward and promote based on those competencies.

These are our five ideas for improving the return on investment in leadership development and addressing the looming leadership talent shortage. Do you agree? Disagree? Have other suggestions?


Sue Ashford is Associate Dean for Leadership Programming and Executive MBA Program and the Michael & Susan Jandernoa Professor of Management and Organizations at the at the University of Michigan Stephen M. Ross School of Business. Scott DeRue is an Assistant Professor of Management and Organizations at the University of Michigan Stephen M. Ross School of Business.


(Editor's note: This post is part of a six-week blog series on how leadership might look in the future. The conversations generated by these posts will help shape the agenda of a symposium on the topic in June 2010, hosted by HBS's Nitin Nohria, Rakesh Khurana, and Scott Snook. This week's focus: leadership development.)
Sue Ashford and Scott DeRue


Sue Ashford is Associate Dean for Leadership Programming and Executive MBA Program and the Michael & Susan Jandernoa Professor of Management and Organizations at the at the University of Michigan Stephen M. Ross School of Business. Scott DeRue is an Assistant Professor of Management and Organizations at the University of Michigan Stephen M. Ross School of Business.


http://blogs.hbr.org/imagining-the-future-of-leadership/2010/06/5-steps-to-addressing-the-lead.html

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Maximo Aton 1 year ago

The five ideas in improving leadership in the organization will be very useful. However, there is a need to highlight that leadership principles should conform with universal moral values. History has shown that there were skilful leaders like Hitler who was able to lead people into self destruction. Transactional leadership will bring change in the organization without due regard to what is really good or right. Transformational leadership and ethical leadership can lead an organization into higher ideals. When an organization is morally bankrupt, sooner or later the organization will be financially bankrupt. This has happened to once powerful Roman Empire and other big companies like Enron. Leaders with moral values are of paramount importance for continuous business success.

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Jeff Walker 1 year ago

these are great points for the for-profit and non-profit world...another world to look at, how do we develop and bring leaders into the government world (city, state, federal?). Right now most great leaders are too afraid to enter the political scene. How can we make the federal government interested/and more able to bring in leadership talent into govt service.

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Steve Swavely, Ph.D. 1 year ago

Those are 5 great principles, but I would add a critical 6th - Leadership development is relationship development. This is still an area that most companies are reluctant to address head on - which in my opinion is why 60% of companies are in the middle of a leadership shortage and another 31% have a leadership shortage on their horizon. Part of the problem is that great relationship development depends on developing high levels of self awareness, which all too often is still viewed as a "soft skill" that either can't be "trained" or is not worthy of training dollars. Thankfully, neuroscience is beginning to change that view as well as provide effective ways of increasing self awarenss beyond the traditional 360 and personality assessment.

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Marc Mikulski 1 year ago

Great post. In the public sector, especially in a unionized environment the leadership void is also being felt. Often many desire to be leaders just because it means a bump in pay, not because they really aspire to have a leadership role. What we end up with many times are people that can score well on a promotional examination and are savvy in some technical aspect of their present assignment. They are promoted to their level of their incompetence, “leadership”, with no desire to engage in any professional development and destine to remain in the status quo environment or worse to anyone’s detriment. Your five critical attributes are very relevant on what we should be doing to prepare employees for leadership roles. My issue though over the years has been how do you identify those quality potential leaders other than a written assessment in a unionized governmental setting? We identified six attributes that begins to develop a basic profile on who we should concentrate our efforts on. By no means is this informal metrics an all inclusive roadmap, but you can see what we’re striving for.

“Appreciates the Thrill of a Challenge”, identifying a willing to do things outside the scope of their position and that they’re not afraid of learning new tasks. It shows a willingness to take on more or new responsibility and not being afraid to fail.

“Possesses a Constructive Spirit of Discontent”, my personal favorite. I like to call it the “Bionic Person Attribute” a positive attitude that looks at problems as challenges and offers solutions to them, believing that they can make it better, faster or stronger!

“Demonstrated Leadership in the Past”, leverages past behavior as a forecaster of future behavior. Are they an informal leader or knowledgebase within the organization already? Do they have leadership roles outside the organization?

“Possess a Completion Factor”, this demonstrates an ability to focus on solving issues and problems and that they can follow through.

“Possess Mental Toughness” reveals if that they are prepared to be criticized and whether or not they have an iron will to stay the course and are willing to pay the price to get to the vision.

“Peer Respect” An employer can get a fairly accurate read on a person by the company they keep. By looking to see if they have peer respect an employer can get an idea of what their character and personality is like.

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Paul Krizman 1 year ago

Every company has two central assets - customers and employees. Focusing on employee leadership development is key to a buisness owner developing a entity that works for him. The idea of keeping it simple is an excellent concept - make it easy to learn and the incentive for your people to advance will be greater.

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GK 1 year ago

I agree of extending leadership development to all levels within the organization and not limiting it to the senior leadership team. Unfortunately, many organizations fail to understand this.

However, in my opinion, the corporate world needs to go beyond this. It is time we have more colleges with focus on developing leaders of consequence for taking up challenges of tomorrow.
Leadership can not be constrained just to the organization. It extends to having a positive influence on the employees, the customers, the society, and the planet.

Today, there is a need for a leader who practices the principles of mindfulness, ethics, compassion, sustainability and diversity.

In addition to developing technical skills, our education system should focus on enhancing leadership skills as well. Aspen Institute and School of Inspired Leadership are two such institutes, which in my opinion are focusing on developing young leaders.

It is essential to understand the context which demands developing leaders for tomorrow.

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Nara Venditti, Ph.D. 1 year ago

Great article! One point I would add is dipping deeper into the pool of high potential employees with diverse backgrounds.

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Jeff P Michaels 1 year ago in reply to Nara Venditti, Ph.D.

Nara you hit the nail on the head. I am facing issues where my experience is being overlooked due to it's broad scope and variety, when in reality I believe it is my greatest strength.

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Whael Matti 1 year ago

I really believe in Leadership being gained from real-life experiences and projects. Leadership training is important to understand the structure of being a leader, but work gives the insight of how this structure becomes a dynamic entity that reward all team members with different leadership skills.

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Istuti 1 year ago

Great thought to ponder on. I'd like to add that organisations(esp large ones) need to focus a lot more on holistic development of an employee rather than a siloed approach. For Example, an employee who is a finance major keeps to finance function in the organisation for most part of his career leading to limited understanding of the big picture which often comes in the way of gaining a leadership position.

All employess should be multi-skilled and adept to handle and look at a problem/issue from different angles such as HR/Financial/Operational/Customer/Administrative/Legal/Shareholder impact to be able to lead in an effective way.

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Greg Strosaker 1 year ago

I think the overall point is to assume that leadership can, in fact, be developed and is not solely an inherent trait in an individual. Yes, there are some with more natural leadership tendencies, but the necessary skills can be improved in a wider range of employees than most executives probably currently believe, if the investment is there. Your five ideas seem about right; there needs to be less air of "exclusivity" around leadership development opportunities.

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Jennifer Doyle 1 year ago

I love your point regarding teaching leadership skills to all levels - not just the top. Today's individual contributor is the situational leader of tomorrow. Everyone in a company has an opportunity to make an impact - positive or negative - and teaching all employees a few fundamentals of leadership will reap fantastic rewards for all.

That being said, I would also note that those in the organization, who do not support leadership development opportunities - whether for themselves or for those they manage, should be dealt with swiftly. Leadership development should not be an optional activity for those who enjoy it but a requirement of all employees as it directly impacts the success of the company - which is an obligation the company owes to its shareholders and Customers.

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notmd 1 year ago

you make a critical statement.. "how many companies actually reward (with any significance) the development of people? Answer: very few. "..I think we need to understand why has it been this way before we say what they should change..Many of those in current leadership roles would say they were not developed and had to fight their way to the top..The survival of the fittest..and thank goodness they persisted (in most cases)..Their empathy for someone being "hand held" into a leadership role is against their beliefs and experience..The problem is the math..The result has been fewer leaders which raises the risk that our organizations may fail..That less is more doesn't work for this equation..the more leaders the organization can select from creates the law of large numbers and increases the probability of success that more leaders exist in the organization..If your CEO starts telling you how tough it was for him/her to get to their position ,you may have an organization that follows the rules of survival..