Only 15% of business executives worldwide have confidence in their own top leadership successfully to manage disruption – including unexpected events like pandemics, technological advances, shifting demographics, and climate change.
This is according to a global analysis by the international executive search firm Odgers Berndtson.
The lack of confidence is striking since 95% of executives also believe that managing disruption well is now critical for companies to succeed in turbulent times. Odgers Berndtson concludes that successful companies will “reinvent leadership” for the modern world.
“As the quality of leadership in the modern business environment comes into question, the topics of succession planning and leadership diversity should be top of mind for businesses,” says Lauren van Halderen, joint-MD at Odgers Berndtson South Africa. “Having strong succession plans in place, especially at a board level, is critical to empowering emerging leaders and achieving the diversity necessary for business success.
“While many South African businesses do have succession planning strategies in place, there needs to be a larger focus on diversity at an executive level.
“In 2017 it was reported that only 19,1% of JSE-listed companies have female directorship on their boards, and in 2018 concerns arose around only five of the JSE top 40 CEOs being black,” she adds. “It is imperative that as a country we work to improve these numbers, as diversified boards could lead to better confidence in leadership in the future.”
Using a methodology developed with Harvard Business Review Analytic Services, the firm has launched the first The Odgers Berndtson Leadership Confidence Index. Using data from almost 2 000 senior executives, managers and board members of companies with sales from $50-million to over $5-billion around the world, this gives a first measure of confidence in the ability of top leaders to drive success in changing times.
The Index also identifies what qualities and attributes in top people companies need most to thrive in changing times. In its report, Odgers Berndtson notes that 88% of senior managers and executives expect disruption to increase over the next five years, and almost as many (85%) say it has already had an impact on their organisations.
The stakes are high. According to Harvard Business Review Analytic Services (HBR-AS), 95% of senior executives around the world now believe managing disruption well is not only vital to the success of their company, but also brings “discernible competitive edge”. The longevity of top companies is getting ever shorter, with some in the US for example, predicting half of the current Fortune 500 companies will disappear over the next decade.
Only 16% of senior managers believe their company’s top leadership has managed disruption well to date, and only 15% are confident they will do well in future. The majority (61%) are tentative but a quarter (24%) actively worried – with similar results across all global regions.
This crisis of confidence appears most stark when it comes to individual roles and leaders, notably chief executives. While 85% of respondents believe the CEO has the most critical role to play, 40% express doubts that the person in the top role will manage disruption well over the next five years.
“As the world of work evolves, we have to consider the way an executive search firm will address its own evolution – something we see clearly when assessing talent for C-suite positions,” explains Chania Stempowski, joint-MD at Odgers Berndtson South Africa. “Past success is less indicative of future success when identifying candidates and managing assignments, and factors such as motivation, dexterity and flexibility are coming to the foreground as the lifespan of skills continues to diminish.
“Leading a company in the face of the coronavirus and crashing stock markets are just some of the recent examples of the kinds of disruption leaders are facing today.
“It is in this mix of uncertainty and disruption that businesses should be considering three factors when hiring leadership talent: assessing the candidate’s ability to lead an organisation, assessing the candidates ability to lead others and assessing their leadership agility.
“If leaders are flexible, capable of personal growth, have the capacity to inspire and develop talent, and are able to develop a clear vision for the future, they are more likely to be equipped to deal with inevitable disruption and inspire confidence from their team.”
However, the Index shows confidence is also lacking in all C-suite roles – including key top jobs such as finance, human resources and technology – and that there are clear differences between the top 15% of leaders, who inspire the most confidence, and the rest. “The more progressive leaders see only opportunity,” Odgers Berndtson notes. “What is required is a healthy attitude towards change.”
The Index also compares companies that score highly on confidence in their top leaders with those that don’t. Confident companies are the most positive about their leadership’s courage, vision, and curiosity, plus their ability to drive a sense of purpose.
“Successful leadership requires a more collaborative approach, especially in terms of building trust and inspiring confidence from one’s team,” adds Stempowski. “A common finding from the MBA students who took part in our local 2019 CEOx1 Day programme was how pleasantly surprised they were by the CEOs, whom they shadowed, in terms of the expertise and guidance they took from their teams.
“Leadership in the modern world is not about being an expert on every aspect of the business, but rather about being able to lead a team and collaborate successfully, especially in the face of disruption.”
Odgers Berndtson believes an evolution in leadership is required for companies to thrive in a world of complexity and uncertainty, combining the drive, adaptability and curiosity required for constant change, with the vision and courage to lead change and resilience to stay the course. Leaders need a mindset to cope with change, and the humility to move on from old command and control structures. This is also likely to impact the process of executive search.