Why has the development of leadership skills become such an important issue? To answer this question, we have to ask why leadership has become such an important issue. Leadership, in the sense referred to here, is more than management and administration. It entails the ability to motivate others and to inspire collective effectiveness. It also involves an ability to understand and respond to an ever-more complex environment—whether it is the corporate environment in which a team operates, or the global market in which a corporation competes.
The environment in which organizations do business has changed, and continues to change with increasing rapidity. This means that leaders themselves must possess a different and much wider set of skills than in the past—with a far greater emphasis on adaptivity, and the ability to embrace, understand, and respond to complexity. And leaders have to be prepared to expend as much effort understanding the external environment in which they compete, as they do taking charge of the internal structures of governance and operations. The changing environment has made leadership of this new sort an increasingly essential resource for any organization that hopes to stay ahead of the curve or even to simply keep up with it.
Within this context of rapid change and organizational response, three broad trends are emerging, which are shaping leadership and leadership development. The first is that as the demand for effective leadership grows, leadership is becoming an increasingly scarce resource, and organizations face an ongoing strategic shortage of this resource.
The second trend is that more employees are seeking leadership development, yet in some organizations, there is a reduced level of commitment in developing their leadership resources. This is due in part to a response to the reality of high employee turnover and its result that leadership development can no longer be an investment in lifetime employees.
The third trend is a crisis of growing employee disengagement in which more employees feel fundamentally detached from the concerns of the organizations in which they work. There are many reasons for this, but it might be the widely-recognized phenomenon that the relationship between employer and employee no longer functions on the basis of loyalty or any assumption of long-term employment. Employees must therefore be motivated in other ways: for example, by the self-interest that access to leadership development can satisfy or by the sort of personal relationships, team solidarity, and engagement with the work at hand that only effective leadership at every level of an organization makes possible.
One conclusion that could be drawn from this is that it is increasingly important for organizations to develop what the authors of Deloitte’s 2015 Global Human Capital Trends report describe as a leadership pipeline—an ongoing program of leadership development at all levels. For this reason, leadership development has emerged as a key organizational strategy. The trends explored in what follows can broadly be understood as ways of responding to this need; they are less techniques for making the best senior leaders and more about developing talent wherever it lies within an organization’s ranks. They represent different aspects of the ongoing evolution of leadership development. Some are responses being embraced by organizations and others are systemic and environmental shifts that are changing the demands being put on organizations—patterns to which leadership development strategies are responding.
Development of leaders at every level of the organization
Leadership development has traditionally been investment in the highest echelons of an organization’s hierarchy. But as economies, technologies, and organizations themselves become more and more complicated, it is becoming increasingly clear that leadership is an invaluable resource at every level of an organization, and that investment in leadership development at every level is a worthwhile investment, even a necessary one. Bersin & Associates’ Corporate Learning Factbooks, have shown a steady increase in investment in leadership development at all levels over the last few years, but above all in first line leaders. This larger cohort are the leaders that transition to the ranks of senior management. Recognizing and developing potential in more employees not only transforms an organization by introducing the benefits of effective leadership; it also supplies leadership for the pipeline that feeds into upper levels of corporate governance and helps ensure that an organization has the leadership resources that it needs.
An increasing emphasis on outward-looking leadership
This represents another change in attitudes. Until recently, the leader was in large part defined by the boundaries of their organization. But it is becoming increasingly clear that the most important aspect of effective leadership is not this attention to the organization itself, but a clear perspective outwards. This requires leadership development that imbues awareness of the economic and social environment in which an organization completes or the role that a department plays within the larger organization. It means understanding the trends shaping markets and technologies and foreseeing developments instead of reacting to them.
There is another dimension to this emphasis on outward-looking leadership. In an increasingly globalized economy, a capacity for understanding and appreciating the diverse business cultures of different industries and different parts of the world can be an essential component of effective leadership. The market might impose competition as the discipline to which all management decisions must ultimately defer, but the day-to-day reality of leadership involves co-operation, reciprocity, and embracing of mutually-beneficial ends with other organizations. The more a leader can achieve these, in every circumstance, the more effectively he or she can navigate the integration of their organization’s broader strategy.
The emergence of collective leadership strategies
Collective Leadership is being embraced by more organizations. It refers to an approach which, instead of emphasizing the search for and development of leaders, focuses on the creation of conditions in which leadership potential can emerge and flourish. At the senior management level, this approach to leadership and leadership development emphasizes the value of moving away from a reliance on iconic leadership figures. A single leader could symbolize an organization’s distinctness, but the collective leadership model assumes that a leadership team, men and women who all exemplify the qualities that make a modern leader, will be in a better position to engage with the demands of a “volatile, uncertain, complex, and ambiguous” world. If effective leadership is the practice of understanding and responding to the complicated, then a team, in this view, is the logical default model. Collective leadership emphasizes the importance of the active elements of leadership—exploring, analyzing, imagination, and acting decisively. It transforms the leadership culture “…from reliance on command-and-control hierarchies to adaptation within agile, interdependent networks.” These collective leadership development strategies reflect the changing expectations and demands of employees. Bureaucratic hierarchies are anathema to many younger employees, and this is often truest of the most talented and valuable employees.
The emergence of the Millennial leader
One generation of leaders replacing another certainly is not a new phenomenon, but the entry of the Millennial generation into positions of leadership represents a change more profound than any that has gone before. Many of the other trends discussed here, from the emergence of collective leadership models to the decline in hierarchical management, represent the increasing presence of the Millennial (the first generation to grow up immersed in the fast-changing reality of new information technologies) in the leadership pipelines of organizations.
Is the transformation brought by the Millennial generation really so different? Arguably, yes—for the organizations that hire them. The Baby Boomers seem to have mostly left their alternative values behind when they went to work. The Millennial generation are less inclined to do so. While the 60s counter-culture was a phenomenon that took place for the most part outside the corporate world, the cultural shift embodied by the Millennial employee, rooted in profound transformations in the relationship between humanity and its technologies, is entering the corporate world and its ranks. This is perhaps the most significant aspect of the change they represent. They are bringing their values and attitudes into the corporate world, instead of demonstrating against corporate values from outside.
The Millennial employees are aggressive about their career development, ready to commit to work that they find fulfilling, and also serious about values, about employers that share their values, and about everything from organizational hierarchies to human rights. However, they are not a movement, they are a generation, and any organization that wants to develop its leadership resources has to do so in ways consonant with the expectations of the Millennial employee. And one expectation they bring with them is for effective leadership development.
Increasing investment in leadership development by smaller companies
No company is protected from change. Smaller companies face the same economic environment and the same increasingly complicated social and technological changes that larger companies do. And smaller companies are, increasingly, becoming transnational in their own right—as clients and suppliers. It is not surprising that Bersin by Deloitte’s 2014 Leadership Development Factbook reported that small businesses had showed the greatest increase in leadership development investment. The shift also represents many of the broader trends in Leadership Development that have made investment in it easier and cheaper for smaller companies, and improved the effective return on money invested. These trends include the growing diversity of tools and information available. As they continue, a small business specific knowledge base will continue to emerge, making the decision to invest in formal leadership development progressively easier for smaller businesses.
An expanding definition of what a leader is, and who can be one
This is a trend with two dimensions. The first is the growing recognition that leadership can not be understood, or effectively understood, in terms of an employees’ formal position in an organization; leadership is a reflection of their successful embrace of the roles, responsibilities and attitudes that define a leader, whatever position they hold in an organization.
At the same time, the selection of participants for leadership programs is becoming more objective and impartial. When global competition is relentless, and leadership is in permanent short supply, companies cannot afford to indulge outdated ideas of what a leader should look like. Leadership potential has to be sought out wherever it lives in an organization.
The development of assessment criteria that are more transparent, are much in evidence—along with the progressive decline of institutional habits and attitudes that can lead to less-than-objective selection procedures or outcomes. This will not simply be a shift in attitudes or politics; it will be a result of the compelling need to maximize leadership resources. And the shift will be made easier by the fact that more and more employees want, and are asking for, a place in leadership development programs. The result is that ongoing internal recruitment will almost certainly become more and more important as a source of leadership resources at all levels of an organization, with talent found and developed in-house, and fed into the pipeline.
Innovation in leadership development methods
Organizations are abandoning a focus on any particular set of formalized tools for developing leadership potential. Instead, they are embracing a more wide-ranging approach, in which an individual participates in the design of their own development process, using tools and methods of their own choosing.
The range of approaches are displaying an emphasis on innovation. This is driven by the need for effective leadership—but also by the very different expectations of Millennial employees, with their anti-hierarchical values, and skills in technology. Technology has played a central role in the innovations, with more content increasingly being delivered on mobile technology, so that it is available to participants everywhere.
Another example of technological innovation is the introduction of games and simulations in the learning process, in order to increase employee engagement and generate powerful co-operatively generated results. And it has proven just as useful in improving participation in leadership development programs. A couple of years ago, Deloitte introduced elements of gamification to one of their senior executive leadership programs and significantly shortened the completion time.
And even as the intensification of engagement through gamification has proven both popular and successful, old approaches are falling out of favor. They are experienced as too information-intensive by participants already stressed out by work and battling the effects of information overload. The demand for autonomy and for a diversity of approaches is a result of generational change and a product of the market-driven demand for effective results.
Transfer of development ownership from organization to employee
People develop more rapidly when they take responsibility for their own progress, especially when this progress leads them towards their own improvement. Leadership is a capacity, a quality of interaction with others and the world, so there is reason to embrace approaches to leadership development that leave responsibility in the hands of the learners themselves. Everyone learns in their own way—and learning to be a leader is no different. Taking control of the process does not just make development easier; it also makes embracing the commitment to development an integral part of the process of development itself. The effectiveness of the one-room schoolhouse was that students were expected to take responsibility and progress on their own; the teacher’s role was to confirm the results.
There is a clear pattern of circumstances and responses to the emergence of leadership as an important organizational concern and of leadership development as an organizational strategy. Demographics, globalization, intensified competition, and the growing complexity of the economic and technological environment have imposed these on business. The changing environment has made successful corporate governance far more complicated and imposed a shift in strategies; stable hierarchies are giving way to more dynamic, egalitarian, and collective strategies; leadership is increasingly less focused on organizing subordinates and increasingly more focused on understanding and responding to challenges by means of consensual, collective strategies.
Leadership is a resource which it is impossible to have too much of in the current economic climate, and organizations have progressively sought to develop leadership potential at every level. The shape of this transformation has been greatly influenced by the entry of a new generation of employees into the workplace—a generation whose social attitudes and whose exposure to both information technology and network-based endeavors together represent perhaps the greatest inter-generational shift ever in workplace demographics and culture.
As organizations respond to the more demanding environment, and as effective leadership itself becomes an increasing element in market competition, the only possible conclusion is that workplaces will undergo even more profound transformation, and that leadership development will become an increasingly important element of corporate strategy.
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