With the budgeting process for the next fiscal year in full swing for many organizations, we’re starting to field queries from clients and prospects about the how to invest strategically in leadership development. But which competencies are most important? What will yield the best return on your investment? How do you avoid shooting in the dark?
This article outlines some of the key considerations when evaluating where to make a strategic investment in leadership development for your organization and shares a method for nailing your leadership gap in precise and quantitative terms.
Current and Future Needs
Businesses, foundations, nonprofits, and educational organizations need leaders who can effectively navigate complex, changing situations and get the job done. The questions that need to be asked at the organizational level are:
- “Who do we have?”
- “What do they need to do?”
- “Are they equipped to do it?”
As leadership expert Marshall Goldsmith famously writes, “What got you here, won’t get you there.” It turns out that most organizations are lacking not just in what they need from leaders in the present, but even more so in the future.
Research on Leadership Competencies
The Center for Creative Leadership | CCL conducted research that surveyed 2,239 leaders from 29 organizations. It showed that leaders across industries are lacking crucial leadership skills for meeting current and future needs.
The four most important future skills—inspiring commitment, leading employees, strategic planning and change management—are among the weakest competencies for today’s leaders.
The leadership gap appears notably in high-priority, high-stakes areas. Other areas where there is a significant gap between the needed and existing skill levels are employee development and self-awareness.
Download The Leadership Gap White Paper to learn more about the CCL research.
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Organizations In Flux
Most organizations are facing increasing levels of turbulence due to market conditions and external trends.
When an organization is in the midst a big transition—whether it’s a turnaround effort or restructuring or a merger/acquisition or the launch of a new cross-functional project or catching up with rapid growth—leaders will be asked to step into unfamiliar territory that requires a strength in inspiring commitment, leading employees, change management, strategic planning, employee development and self-awareness.
Self-aware leaders admit personal mistakes, learn from mistakes, seek ongoing feedback and know themselves well (strengths and weaknesses).
During a period of transition, leaders will be under a tremendous amount of stress. It’s like riding a surf board, every moment makes a difference and leaders need to know themselves well enough to maintain their balance and stay standing. This is not only for their own well being, but also because subordinates are very sensitive to the emotions of their managers. Leaders who are emotionally volatile create distrust and distraction rather than motivation and focus in their teams.
In moments of change, morale plummets as people worry about the future of the organization and their roles in it. The survival of the enterprise demands that people are fully committed and stretch themselves. Leaders need to be able to frame a picture of the future that their subordinates can embrace.
Inspiring commitment also requires that managers recognize and reward employees’ achievements. Such managers publicly praise others for their performance and understand what motivates other people to perform at their best.
Leading employees is not just about providing clear direction. During a time of transition, leaders also need to connect authentically with the fears, frustrations and other difficult feelings that change brings up in people and create a sense of safety and motivation.
But it goes beyond that: Just at a time when the stress is high, effective leaders need to focus on developing their people—this is critical for retaining talent at a time when many jump ship and also for strengthening their bench so they can rely on others to take over key responsibilities. They must take the time to actively coach and develop the people on their teams even when they are already in a pressure cooker.
When an organization is going through a big change, leaders need to be able to adapt. They also need to build strong, collaborative relationships quickly both with direct reports, peers and key stakeholders.
Such managers must view change positively, adapt plans as necessary, manage others’ resistance to change, adapt to the changing external pressures facing the organization and involve others in the design and implementation of change.
Strategic planning is critical and extremely challenging at times of transition because of the need for leaders to be able to keep sight of the longer term in the fire of the day to day. They need to be able to step in and out of the weeds to ensure that the team is headed in the right direction.
What Got Them There, Won’t Necessarily Get You There
While you will no doubt recognize these are crucial for your organization’s future, no two organizations are the same.
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A tech company maturing after rapid growth demands different things from its leaders than an established non-profit that is restructuring or a law firm with a slate of managing partners preparing to retire. The leadership requirements vary.
Each organization is also made of a unique mix of individuals with different values and skills who together create a unique culture. Just as the leadership requirements vary, so do the leadership competencies and gaps of the leaders within the organization.
Credible Diagnosis of Leadership Gaps
Often the leaders we speak with know how crucial it is to overcome their leadership gap in order to succeed. But they can be reluctant to invest because the need appears to be so murky. They may have invested in the past with little visible result.
What organizations need first and foremost is to make a credible diagnosis of what leadership competencies are most important to the organization right now and in the future as well as what gaps need to be addressed.
For our clients, we use a team and organizational assessment tool developed by the Center for Creative Leadership based on the above research called the Leadership Gap Indicator | LGI. Designed to identify the shortfall between current and future needs in leadership capacity, this online assessment covers 20 leadership competencies and five derailment factors.
When used for an organization, the top leaders of the organization fill it out—identifying the competency gaps for themselves and their peer group as well as those further down. The resulting report provides a very clear and quantifiable view of the gaps and the direction forward.
The results in aggregate also serve as a powerful tool for building consensus and buy-in among the leadership on the most pressing needs and where to invest. Finally, it offers a baseline for benchmarking the impact of the investment.
Exclusive Partnership with the Center for Creative Leadership
Next Step Partners is an inaugural member of CCL’s partnership network. This gives us exclusive access the organization’s cutting edge research, tools and experts. We tap into this vast resource when working with clients to develop strategic leadership development programs.
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For more than four decades CCL has leveraged the power of leadership to transform individuals, teams, entire organizations and societies to achieve what matters most to them.
Its innovative solutions are steeped in extensive research and experience gained from working with tens of thousands of organizations and more than a million leaders at all levels—across six continents and more than 130 countries. It has been named by Bloomberg Business Week and the Financial Times’ as one of the top ten providers of executive education.
Ready to find the talent gaps in your organization?
If you’d like help determining where to make a strategic investment in leadership development for your organization, we can help. And if you want to learn more about the Leadership Gap Indicator, we should talk.
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