OVERVIEW. Summary State of Leadership Development Study: Top Findings

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1 OVERVIEW More than one-third (35.7%) of organizations surveyed in Brandon Hall Group s research say their leadership development practices are still below average or poor State of Leadership Summary Leadership 2015 State development of Leadership stands tall as a clear and continuing human capital concern. Building Development better alignment Study: between Top Findings leadership development solutions and business needs, developing high-quality leaders faster at all levels, and utilizing true leadership analytics to drive predictive decisions about future-oriented leadership capability and acuity are clear business needs. High-performance organizations have figured out the configuration of those needs to best meet their business goals but they definitely are among the minority. While most have been pressing the leadership accelerator for several years, just a few have made significant progress. More than one-third (35.7%) of organizations surveyed in Brandon Hall Group s research, concluded in April 2015, say their leadership development practices are still below average or poor. Another third (33.7%) say they are only average. 30.7% report their practices as exceptional or above average, which is actually a fairly impressive increase (21%) over last year s scores where just 25.3% were exceptional, or what we call high-performance Level 4 organizations. This data serves as a strong reminder that leadership development is a strategic and long-term business imperative, not short-term training. For those of us who treat it as such, we can expect it to yield better business results and serve as a real business differentiator. Page 1

2 High-Performance Leadership Development Impact Model 1 Leadership Development Business Impact Levels This data serves as a strong reminder that leadership development is a strategic and long-term business imperative, not short-term training. Efficient LD Impact/ROI Curve è Effective è 1 Adhoc Leader Training Business- Aligned è Predictive 4 Optimized Organizational Capability % % 3 Sustainable Leadership Performance % % 2 Collaborative Leader Development % % % % LD Focus Optimized Leadership Capability Collective Leadership Performance and Brand Leader Segment Capability Leader-by-Leader Skill Improvement Business Focus Transformational & Sustained Business Success Competitive parity and business growth Business Process Effectiveness Operational Efficiency 2015 Brandon Hall Group Page Brandon Hall Group

3 About 41% of organizations recognize the critical importance of defining leadership requirements, yet a mere 8% have taken the time to define their unique leadership requirements. Top 5 Findings 1. Requirements for Good Leadership are Vital,Yet Infrequently Defined Effective leadership development requires alignment with business goals and alignment requires careful definition of the capability, skill and experience requirements essential for an organization s leaders. About 41% of organizations recognize the critical importance of defining leadership requirements, yet a mere 8% have taken the time to define their unique leadership requirements. Organizations cited alignment as the third greatest barrier (behind limited budget and limited time to participate in development) to effective leadership development. 77% of organizations indicated that their leadership strategy was only somewhat, or not at all, aligned with their business strategy. 2 Disparity Between Importance, Implementation of Defined Leadership Requirements Very important to implement 41% Fully implemented 8% 0% 20% 40% 50% Source: 2015 Brandon Hall Group State of Leadership Development Study (n=218) Page 3

4 71% of survey respondents said their leaders are not ready to lead their organizations into the future. 2. Deficit of Leaders With High-Quality Skills is a Global Concern While leadership development earns a top spot, year after year, on organizations talent priority lists, 36% of organizations globally still don t have. More than half (51%) of organizations said their leadership is not at all ready, or only somewhat ready, to lead their organizations today. 71% said their leaders are not ready to lead their organizations into the future. 3 Leadership Skills Need Improvement Very Ready Not/Somewhat Ready 80% 70% 60% 50% 40% 20% 0% 11% 51% 5% 71% Ready to Lead Organiza:on Today Ready to Lead Organiza:on Into the Future Source: 2015 Brandon Hall Group State of Leadership Development Study (n=218) Page 4

5 4 Most Essential Leader Skills With the Greatest Mastery Gap Coaching in- the- Moment Social Intelligence Strength Agility Visioning Change Agent Manages Global Business Networker Technologically Savvy Awareness Inclusive Team Building Skills Manages Complexity Acumen Data Analysis Thinker Resilient Problem Solver Integrity Current Gap 8% 9% 12% 11% 13% 11% 14% 15% 19% 16% 17% 22% 17% 18% 18% 25% 26% 24% 19% 17% 23% 29% 27% 24% 24% 22% 25% 23% 26% 31% 31% 29% 22% 27% 32% 32% 24% 36% 39% 43% 0% 20% 40% 50% Source: 2015 Brandon Hall Group State of Leadership Development Study (n=171) 50% When asked why, proactively managing leaders skill gaps was the number one reason and cited as the most critical priority for improving leadership development by 57% of organizations. When asked which skills were most critical to focus on, coaching was identified as the skill with the greatest gap in all leaders, and communication, resiliency, critical thinking, collaboration, and data analysis were also identified as the five skills most essential for all leaders and with a significant gap in mastery. Another troubling finding is that the majority of organizations (84%) reported a current, or anticipated (within the next five years) shortage of leaders. With this prediction looming, it is no surprise that managing gaps in critical leader segments was cited by 46% of organizations as the second most critical priority for improving the leadership development process. Leadership shortfalls are, and will continue to prove to be, the single greatest differentiator between high-performance and all other organizations. 3. Deficit of Leaders With High-Quality Skills is a Global Concern A leader skilled as an effective development coach is a recurring and critical leadership development need. In Brandon Hall Group s 2015 State of Performance Management Study, 64% of organizations advised that developing leaders to be effective coaches was the single greatest opportunity for improving and sustaining employees performance excellence. The theme repeats itself in in our the leadership development study, in which 81% of organizations indicated that their leaders are not at all, or only somewhat, effective at developing their employees. More than half (57%) of all organizations advised that their top priority for improving leadership capability is developing leaders to be effective development coaches. Page 5

6 The majority of organizations (83%) said that targeted development for all leader levels is important or very important, yet a mere 5% have implemented solutions for all levels. 5 Most Critical Priorities for Improving Leadership Capability in Next 1-2 Years 60% 50% 40% 20% 0% 57% Developing leaders to be effec;ve development coaches 46% Improving leaders' ability to act innova;vely 42% Developing leaders' ability to manage high performance teams 17% Improving leaders' ability to manage risk 16% Improving leaders' global acumen Developing leaders as teachers Source: 2015 Brandon Hall Group State of Leadership Development Study (n=157) 4. Developing Leaders at All Levels is Still an Opportunity for Most The majority of organizations (83%) said that targeted development for all leader levels is important or very important, yet a mere 5% have implemented solutions for all levels. Even for those with well-functioning solutions, they identified their mid-level leader solution and individual contributor leader solution as least effective among all levels. Considering the broad span of control of most mid-level leaders and the volume of individual contributors with high potential to move into supervisory potentials, it would serve organizations well to focus dedicated time and resources to growing the effectiveness of the solutions for these two leader levels. Page 6

7 Leadership Development is expected to have the largest budget allocation increase over the next 12 to 24 months. 6 Core Development Programs by Leader Level/Segments We have a well- func.oning, effec.ve solu.on We have no solu.on 45% 40% 40% 35% 35% 25% 26% 26% 20% 17% 18% 19% 15% 12% 5% 0% Execu.ves and Other Senior Leaders First Time Leaders/ Supervisors Mid- level Emerging Leaders Individual Contributors 2015 Brandon Hall Group State of Leadership Development Study (n=202) 5. Leadership Development Spend Rising Again While leadership development was ranked third in investment among talent processes (behind only learning and development and talent acquisition) it was cited by more than half (52%) of organizations as the single talent process that will receive the greatest increase in talent budget allocation over the next 12 to 24 months. During qualitative interviews with executives, other senior business leaders and HR and talent leaders, they described their plan for increased investment as requisite to building high-performance leadership development in two different areas: increasing budget to support core solution offerings for all leader levels and acquiring predictive data capability to enable future-oriented leadership requirements and decisions. Regarding predictive capability, 34% of organizations plan to increase their budget on HR analytics. Page 7

8 67% of organizations indicated that the integration of leadership data with other talent data was very important or important. 7 Organizations Expecting Budget Increase for Talent Processes Over 1-2 Years 0% 20% 40% 50% 60% Leadership Development 52% Workforce Planning AutomaBon/Technology HR AnalyBcs Competency Management Succession Management L&D 36% 35% 34% 31% Performance Management Talent AcquisiBon Total Rewards 15% We expect to increase our budget in this area over the next 1-2 years Source: 2015 Brandon Hall Group State of Leadership Development Study (n=153) Specifically, leadership analytics will enable the knitting together of leadership data with other talent process data and allow forecasting of answers to what-if leadership scenario planning. For example, this data could address how proficient a critical leader segment is today and how proficient do we forecast its proficiency level in 5 years if we add 100 leaders to staff in the next 6 months. Or, how many leaders are effective development coaches today and how many will we need to be proficient if we proceed with the acquisition of Company ABC, etc. 67% of organizations indicated that the integration of leadership data with other talent data was very important or important and 82% advised that the data was integrated to a very small degree or not at all. Page 8

9 About Brandon Hall Group Brandon Hall Group is a HCM research and advisory services firm that provides insights around key performance areas, including Learning and Development, Talent Management, Leadership Development, Talent Acquisition and HR/Workforce Management. With more than 10,000 clients globally and 20 years of delivering world-class research and advisory services, Brandon Hall Group is focused on developing research that drives performance in emerging and large organizations, and provides strategic insights for executives and practitioners responsible for growth and business results. At the core of our offerings is a Membership Program that combines research, benchmarking and unlimited access to data and analysts. The Membership Program offers insights and best practices to enable executives and practitioners to make the right decisions about people, processes, and systems, coalesced with analyst advisory services which aim to put the research into action in a way that is practical and efficient. To learn more about Brandon Hall Group, please call us at (561) or us at success@ brandonhall.com. Page 9