By Stuart R. Levine
Published In, The Credit Union Times

The issue of leadership represents the most pressing challenge for global organizations.  According to Deloitte’s Human Capital Survey, the vast majority of human resources and business leaders (86%) identified leadership as a significant problem and 50% saw this leadership deficit as immediately pressing.

Recently, I moderated a National Association of Corporate Directors web seminar for 224 participants. In response to a polling question, “Are you confident that your company has the right talent in place to execute strategy?” only 24% responded “very confident,” leaving 76% as “somewhat confident,” “unsure” or “not confident.” Further highlighting the issue, a new Gallup study of over 7,000 U.S. workers indicates that half of those polled reported leaving a job due to their boss. Shockingly, only 35% of managers felt engaged in their work and 14% actually “tune out.” If managers are feeling this way, you can imagine the impact on their direct reports.

What is leading to such dismal statistics? This paucity of leadership has myriad causes and some clear remedies. Problems include: The failure to integrate leadership development into the culture of the organization; insufficient and inconsistent investment in people; only allowing select employees to benefit from education and development programs; inadequate succession planning, especially for leaders in the middle to lower levels of the organization; programs focused on theory rather than practical examples; inadequate accountability and insufficient measurement of results.

Leadership development requires a commitment from the top, starting with the CEO. It is the oxygen of a healthy culture and must permeate every level of the organization. Good leadership drives organizational health, which drives profitability. In a healthy culture, all leaders of the company focus on continually identifying, recruiting and developing future leaders throughout the organization. It becomes ingrained in the fabric of the organization and leaders are held accountable and rewarded for their talent pipeline.

Well-developed leadership programs integrated into the organizational culture are essential. Often, however, they are short-term, sporadically funded and viewed as non-critical expenditures, especially in bad years. Although U.S. companies spend plenty on these programs (about $14 billion annually), frequently they are one-off “solutions,” not continuous, deliberate efforts to assure that the culture incorporates ongoing development. These programs also need to be part of the overall organizational strategy and must have full leadership support.

Effective leadership often requires behavioral change based on introspection. In order to change, leaders must examine their own mindsets and adjust their underlying beliefs.  Oftentimes leaders have both conscious and unconscious assumptions that can sabotage themselves and their organizations. For example, a manager might be reluctant to give someone an assignment based on an underlying belief that only the “boss” should be responsible for key decisions or critical projects, or they are simply unable to relinquish control. In a healthy culture, the leaders are teachers, delegating and supporting active learning, becoming coaches and mentors in order to increase the leadership capacity of the team.

Data shows that building the leadership pipeline, a key responsibility of management and boards, is in short supply in most organizations.  Deloitte’s survey reports that only 32% of organizations have succession planning for top-level employees, despite the fact that significant numbers of senior leaders will be retiring near term,  while a mere 18% hold leaders accountable for recognizing and developing successors.

Many organizations limit leadership development to select employees at the top. The key to success of any organization is a focus on developing the leadership competencies of middle managers.  The lack of attention to these middle managers sends negative ripples throughout the organization.  Since this level is doing the bulk of the work and these are the people that engage most quickly and truly appreciate development opportunities, organizations should focus their efforts here and create a talent pool to improve current results and accelerate the succession planning process.

Measuring the effectiveness of leadership development programs is analogous to accounting for any business investment.  The organization must appreciate the value of its “people investment”.  Data-driven tools can help assess efficacy by measuring leadership competencies and effectiveness before and after program participation.  Organizations can then discern what works best and what changes are needed for continuous improvement.  Since every organizational culture is different, there is no “one size fits all” for leadership development and programs must be continuously monitored and tweaked.

In a healthy culture, leaders at all levels become stewards of human as well as financial capital.  High-performing companies that invest in leadership, reap the benefit.  Organizations that cut education and learning at the first sign of a downturn are destined to continue the downward spiral.