Hannah Mullaney, Managing Consultant, Saville Assessment and Stephanie Rudbeck, Senior Consultant, Talent Management and Organisational Alignment, Willis Towers Watson
Where are we now?
Our most recent Global Workforce Study found that only 55% of all financial services employees have trust and confidence in the job being done by the senior leadership of their organisation. Why is this?
Well, when we dig a little deeper into these results, we also found that:
WANT TO BUILD A FINANCIAL EMPIRE?
Subscribe to the Global Banking & Finance Review Newsletter for FREE Get Access to Exclusive Reports to Save Time & Money
By using this form you agree with the storage and handling of your data by this website. We Will Not Spam, Rent, or Sell Your Information.
- 38% of financial services employees don’t think their senior leaders are doing a good job of growing the business
- 43% of financial services employees don’t think their senior leaders are doing a good job of managing costs
- Only 44% of financial services employees think their leaders are doing a good or very good job of developing future leaders
- Only 56% of financial services employees believe the information they receive from senior leadership
- Only 49% of financial services employees believe their organisation has a sincere interest in employee well-being
Leadership appointments have a critical impact on organisations, however, so many of these appointments fail. A 2013 report by the Institute for Policy Studies cites that nearly 40% of the CEOs on the highest-paid lists from the 20 years’ prior were eventually “either bailed out, booted or busted”. Willis Towers Watson’s proprietary benchmark database estimates the cost of senior management and leadership turnover to be 75% of compensation. Our data also highlights that at any one time, approximately 30% of leaders are a flight risk – so, organisations can lose leaders easily; and it costs!
Where are we going?
Leaders already have a tough job – and it’s one that is only set to get tougher. The world is changing, work is changing and we are at the beginning of a fourth industrial revolution. Technological advances such as AI and robotics are already disrupting almost every industry and to master this new digital world, leaders must be “agile amid disruption”. Indeed, those occupations and specialties most in demand today did not exist 10 years ago. In fact, 65% of children entering primary school today will end up working in jobs that don’t yet exist. We are living in a VUCA world. Leaders are leading in a VUCA world. For those of you unfamiliar with the acronym, VUCA stands for volatile, uncertain, complex and ambiguous. Starting to sound familiar?
Additionally, the demographics of organisations are changing and younger generations are starting to emerge as the dominant force in most organisations, bringing with it another set of challenges. Our clients recently discussed this topic at a roundtable event and described how “a large chunk of the workforce feels they have a more relevant understanding of their markets and clients than their leaders” and are “full of fresh ideas” that reflect this. They are, consequentially, often “dissatisfied with decisions that current leaders are taking”. This can be particularly pertinent amongst cultures where an approach of “this is how we’ve always done it” is ingrained. The outcome is often a disengaged workforce that eventually leaves and that is not good for business.
Looking forward, what do we need to do differently to identify and develop leaders who will not simply survive in this new world, but thrive? We believe that assessment models focussing on impact will help drive innovation in future talent management practice.
What do we need to do?
Solving the problem of potential with impact
How to best identify high potential individuals has long been the subject of debate amongst HR and leadership teams. These debates often rightly start with the question “What is potential?” In an effort to support organisations with this problem, a number of generic models of potential have been put forward over recent years. Whilst such models can be incredibly useful, a major drawback of them is their inability to cope with diversity in future leadership or change within the organisational environment.
Generic measures of potential may help organisations identify future leaders but they fail to provide an understanding of the sort of leadership roles those identified would be best suited to. This is problematic for the individual and the organisation as both parties start to map out the future.
The impact model of leadership provides a solution to this problem. Rather than seeking to establish what potential looks like in a generic sense, by asking “Where must our future leaders have impact?” organisations are able to define what their future leadership should look like in a way that links directly and tangibly to organisational outcomes. Assessing individuals against this framework not only identifies potential future leaders, but enables the development of specific career pathways for individual leaders and development plans tailored to these.
Using impact in succession planning
Succession planning is an exercise that brings its own challenges. It is fundamentally a question of what talent is needed and what talent is available? The practice, however, can encounter any number of problems. Firstly, much activity in this space is positioned in a way that associates it with a current leader’s organisational mortality and so, therefore, becomes inherently sensitive. It can, therefore, be much more difficult to engage with and appropriately advise leadership teams in the exercise. Secondly, there is the issue of defining critical roles and scoping out what these might look like in the future. Whilst we might have a good go at predicting the future, it is still an uncertain place and where many succession plans fall down is in their lack of flexibility. Successful succession plans are as dynamic as the world around us. Finally, there’s the problem of successor identification itself. Leaders often fall victim to mistaking success at one level for success at higher levels (the classic example is promoting a successful sales person out of the role in which they excel and into management). And of course, we must not forget the bias that creeps in; leaders often demand to be able to see themselves in their successors.
By using impact to frame conversations about succession and what talent is needed in the future, it is possible to create plans that are fluid, adaptable, less sensitive and more objective. And this will only have positive effect.
Leadership development for the future
Some organisations still do invest heavily in an emerging or senior leadership development programme in partnership with a leading business school, however these are increasingly rare as their ROI is seen to be difficult, if not impossible, to measure. This is typically a sizeable investment for a relatively small group of individuals with no guarantee that they will stay for the organisation to realise that value.This speaks somewhat to the issue of a general preference on the organisation’s part for ‘home grown’ leaders over external hires, which probably comes from there being less risk associated with the former than the latter. This preference, however, does appear to be at odds with what employees want; the fact that younger generations actively avoid staying in one organisation for more than a few years means ‘home grown’ leaders are difficult to cultivate. If you are particularly progressive, you may not be bothered by this, instead taking the view that you are developing future leaders not just for you, but for the world – although how on earth do you measure ROI there?
Development demands from employees are also changing. Early talent in particular expects rapid growth within a less formal structure, compared to older generations. At a recent networking events, one delegate spoke of how after only a month, their graduates expected to have had a one-on-one meet and greet with the CEO and another talked of graduate employees who expected either an upwards or lateral move within the first two years in role. It is regularly reported that graduates look for training and development over financial incentives during their job hunt. The rise of the gig economy and contingent workforces poses an interesting question around who is responsible for development – workers will still want it and organisations should be thinking about how it can feed into attraction in a world where the war for talent will only become more aggressive.
It is becoming increasingly clear to us that future development needs to focus on flexible, bite-size learning that an individual can dip in and out of, depending on their preference, need and time available. It also needs to take advantage of advanced technology. Elements should include access to online modules, psychometrics, apps and podcasts with opportunities for a cohort to meet virtually for a discussion on the topic. Practical development activities where a group of individuals from different parts of the business work together on a real-life business problem are also both popular and effective.
We also think that rotation programmes and job shadowing will become increasingly more popular, along with the relatively new concept of reverse-mentoring, where younger employees are paired up with more experienced leaders to provide fresh perspectives and an insight into the reality of the millennial generation. Where already in place, it is seen to have had a positive impact in bringing different employee generations closer together, facilitating better working relationships, closing the knowledge gap for both parties and empowering both emerging and established leaders.
The future is packaging leadership development together differently and making use of more flexible,technology-driven, self-selected and self-directed approaches. The learning ‘event’ is no longer.