A new UK Chartered Management Institute (CMI) report confirms that organisations are potentially losing millions of pounds in lost profit because they have poor leaders. Over 2,000 UK managers were asked which aspects of management they thought they were best at and another 6,000 managers completed a diagnostic tool to identify their real strengths and weaknesses. Did self-perception match reality?: 21 % said they were good at getting results, 41% actually were; 19 % believed they were strongest at managing themselves, only 8% were; 44 % said they excelled at managing people, only 37% were; and 14 % felt they were born to lead. The exercise also revealed that 63% had no management or leadership training before taking up senior posts and thus potentially were not fully effective in those posts.
Leaders’ perception of their own ability is often higher than the reality, be it how well they are doing compared with their teams’ views, or CEOs’ views of how well they lead their organisations compared with the feedback from staff. The report’s underestimate of ability to deliver results suggests over-ambitious organisational or personal objective-setting.
These results raise serious issues, at individual, organisational and national level. But we should have learned these lessons already. In 1999 I was on an expert panel examining leadership in business for the UK government. We found that standards of leadership needed to dramatically improve to make UK plc competitive. It was decided it was best for organisations to take responsibility for this themselves, with government support. My own research then showed that only 25% of line managers had the critical leadership and management skills needed to get good performance from themselves and their people. Yet 10 years later the CMI report shows only a marginal improvement – to 37% with these vital skills, and a staggering 63% lacking them. Further, with only 8% effective at self-management – that is, 92% not knowing which aspects of their work they should prioritise to deliver key organisational objectives – no wonder people and organisations could perform better. Nor is it surprising a high percentage of CEOs in UK are non-UK nationals.
Good leadership is the key to success or failure, fact. Line managers are responsible for eight of the top 10 most important factors in achieving employee engagement, (source: Corporate Leadership Council), and high engagement can deliver up to 30% more effort from up to 50% of staff. How much could that improve the bottom line? A good line manager can also reduce the risk of losing talent by 87%. So it’s simple: if managers have good leadership skills, the organisation reaps the rewards. You could ignore this and rely on the 14% from the survey who said they were ‘born to lead’. Bur should you let people be leaders who assume that due to divine right they should be leaders?
Some will assume that if their organisation is doing well financially they must have good leadership capability within it. No so; unless you are benchmarked as number one in your sector and have high employee engagement then your organisation could do better. At one time I was in a global organisation, based in Switzerland, declared the Best Company for Leaders Europe, yet we were still able to find opportunities to improve leadership. If you operate outside the UK don’t assume this is just a UK problem. Low leadership capability is a challenge faced by organisations globally.
We urgently need to improve the level of leadership and self-management capability in our organisations, including the ability to be able to assess our own performance more accurately with feedback from others.
And who is key to starting the ball rolling? HR. But HR professionals must also take some of the blame for the problem. To date HR practitioners generally have not persuaded senior management to accept the business case for leadership development and subsequent implementaion. A few development programmes don’t meet the standard required; a holistic system to drive business performance is needed. Demonstrating measurable business success through such a system is key to building the credibility of HR.
To design a leadership development system is relatively easy. To position it to gain buy-in and implement it to deliver organisational performance improvements year on year is not. Developing self-assessment ability is easy in theory but needs careful implementation to work in practice through both process and culture. And it’s not only about senior leaders; leadership needs to be developed from first line level up, to ensure top-quality leadership at all levels. This will engage staff and create a pipeline of senior leaders for the future.
Leadership is the key to good profits and competitive advantage. To neglect it is to condemn your organisation to a long, lingering decline in performance. I hope that in 10 years’ time we aren’t still having to deal with this problem that cases so much damage to organisations and people. But that’s up to the HR function.