Ready-Now
Leaders:

25 Findings to Meet Tomorrow’s
Business Challenges
Global Leadership Forecast 2014|2015

We asked leaders what would help increase their effectiveness.
They answered: My Organization Needs to START...
Continuously developing leadership skills for all levels of management | Sponsoring recognized management courses so I can keep up todate on changing dynamics | Building programs where mid-level leaders can intern in another area to gain exposure and advance skills |Offering an external mentorship program; an external coach may be more helpful for insights
into a person’s development | Enhancing mentoring of new leaders by current colleagues and next-level leaders | Identifying
individual strengths and weaknesses to help create a focused plan | Mentoring and guiding new leaders rather than removing them fromleadership positions | Mentoring leaders for the first six months after they get promoted | Pushing leaders out of their department to see how
other departments function; interns get to do this but managers do not | Valuing leaders for spending time and effort ingrowing their people | Promoting a culture of active mentorship outside of one’s supervisor | Allowing time for development by reducing
secondary responsibilities | Giving safe chances to sharpen leadership skills | Providing more venues for learning, such as special projects
and rotational placements | Providing forums for managers to share ideas and discuss effective ways to handle issues | Organizing informal
meetings to facilitate team bonding, identify talent, and increase job satisfaction | Allowing leaders to participate in outside organizations to
network and better understand industry issues | Making sure all leaders have the opportunity to hear the stories of our VPs and AVPs just as thehigh-potential group does | Showing support from upper management for leaders in the same mannerthat leaders are taught to support the line staff | Giving more opportunity to learn how senior managers handle different

situations/issues | Involving C-level executives in developing future leaders | Making senior leaders more accessible | Showing an interest infolks who are exhibiting our excellent leadership values | Walking the walk senior leaders talk; there is a serious disconnect between their visionand the implementation of that vision | Acting consistently with stated values; don’t just say that people are our most important asset when action
shows otherwise | Motivating people, and not in terms of money; recognize people; give effective

feedback; be honest; be clear | Returning senior leadership to listening to first- and mid-level managers’ viewpoints | Opening

the lines of communication so that senior leaders know what’s really going on and we know that senior leadership knows what’s going on |Making sure managers understand their employees’ aspirations and work closely to achieve them | Putting all leaders on the same page, withthe same plan, using the same leadership tools, so we all do things the same way | Providing a detailed career path, and being honest about
it; if there is no path, then say that; if there is a path, make sure it is understood and that I am getting the right education and information |Outlining a five-year career plan with best- and worst-case scenarios | Providing better tech tools to makemanagers more effective and give them more time to focus on learning and leading rather than day-to-day tasks | Ensuring that new and existing
leaders are given the tools they need using a more structured on-boarding process | Recognizing the positive! Create a more fun, energetic,
and vibrant company culture | Holding people accountable | Allowing employees to make mistakes in attempting new or innovative methods |Creating more transparency, more attention to promoting women in leadership roles,
and an atmosphere in which everyone has a chance to be a leader | Allowing leaders to attend companysponsored out-of-the-country assignments, training, and conferences | Communicating to the last mile | Increasing accountability andempowerment in the region; otherwise, it slows the company down in reacting to customer requests |Involving younger leaders in decision
making; don’t take them for granted; they are much more up-to-date, hence don’t leave them in the name of seniority | Increasing staff levels
so that we can work on being a leader rather than managing; workloads are too high to engage interaction and relational aspects of leadershipand self-development | Involving leaders in the process of “what’s next” | Providing regular feedback/ideas on how
someone is doing good or bad in a leader role | Training all leaders, not just new leaders; the leaders who have been here so long have to get
up to speed with the changing culture and times; ensuring that leaders can choose between a number of leadership development courses| Building sustainability processes to support development | Creating development plans formally and making

them transparent to staff so they are clear what they need to deliver | Doing something might be a start| Arming me with context/information around the business challenge areas I am not prepared for so I can cascade down |Bigger Is Better

The Global Leadership Forecast 2014|2015
This Global Leadership Forecast 2014|2015 is the seventh report since Development Dimensions International (DDI) began
this research in 1999. The current report—a joint effort of DDI and The Conference Board—includes survey responses from
13,124 leaders; 1,528 global human resource executives; and 2,031 participating organizations. To ensure that no individualorganization dominated the overall results, a random sample was taken from any organization whose leaders comprised morethan 1 percent of the global sample. Leader demographics are shown below.
The record-breaking size of the participant pool gave us sufficient sample sizes so that we could look at our findings frommany points of view. We were able to dissect findings based on diverse perspectives spanning leaders and HR professionals,
four leader levels, gender, 48 countries across all regions, 32 major industry categories, and multinationals versus local
corporations.

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Global Leadership Forecast 2014|2015

Questions That
Produce Insight
We approached the Global Leadership Forecast 2014|2015 with a unique three-question
framework leading to actionable insights.

# What Now describes a current situation. As an example, we now know that almost

three-quarters of all high-potential programs are ineffective. This is where most survey
research starts and stops.

? So What addresses the consequences of the current situation continuing. In our

example above, forecast data show that participating organizations with the best financial
performance are over three times more likely to have high-potential programs in place.
(Financial performance was determined by analyzing the link between survey responses
and a composite of external financial metrics for publically-traded companies for which
this information was available.)! Now What Here we turn insight into action. Given that high-potential programs have apositive financial impact, what specific actions or practices drive program effectiveness?
Look for Now What sections throughout the report for actions you can take.

#

What
Now
4
Global Leadership Forecast 2014|2015

?

So
What

!

Now
What

Table of Contents
What’s Keeping CEOs Up at Night?

CEOs’ Top Challenges Leaders Aren’t Ready.................................................................................. 8
Working Within the VUCA Vortex...................................................................................................10
Are Leaders Ready to Deliver?

Leadership Outlook Going Nowhere Fast.....................................................................................12
Millennials From Generational Differences to Generating Growth..........................................................14
Leadership Readiness Which Countries Make the Grade?...............................................................16
Leadership Readiness Which Industries Are Rising, Which Are Falling?...............................................18
Critical Leadership Skills What’s Important Is Being Ignored...........................................................20
The Leadership Agility Tightrope Mastering the Art of Change......................................................22
The New Role of HR

Evolving HR From Partner to Anticipator.........................................................................................24
How They See You (and Why) The Senior Leader View of the Business Value of HR.............................26
Leadership Analytics How HR Can Use Big Data to Provide Big Value..................................................28
Global Program Implementation Balancing Corporate vs. Local Control..........................................30
What Do Leaders Need in Order to Improve?

70:20:10 The Right Ratio…or So We All Thought................................................................................32
Critical Periods for Leadership Growth Match the Timing to the Target.........................................34
Drivers of Crucial Leader Outcomes What Experiences Matter Most?...........................................36
Managing the High-Potential Dilemma Who, How Many, and What Then?.....................................38
Leadership Development Methods One Size Does Not Fit All......................................................40
What’s Holding Them Back?

Interacting vs. Managing Organizations Place More Value on Managing—and That’s the Problem.............42
Top Barriers to Learning Make the Course More Like the Job and the Job More Like the Course...............44
Gender Diversity Pays Off.........................................................................................................46
Engaging Leaders in the Information Age............................................................................48
What Happens When Organizations Get It Right?

Pipeline or Pipe Dream? Avoiding the Nightmare Scenario.............................................................50
To Grow or to Grab? Risks and Rewards of Internal Versus External Leader Staffing Strategies..................52
Behind “The Best” Talent Practices of Top-Ranked Organizations.......................................................54
Developing Across the Entire Pipeline A Key to Financial Success...............................................56

Conclusion..................................................................................................................58
Appendix.................................................................................................................................60

5
Global Leadership Forecast 2014|2015

The Leadership Development Road Map:

Key Questions on the Path to Organizational Success

6
Global Leadership Forecast 2014|2015

7
Global Leadership Forecast 2014|2015

What’s Keeping CEOs Up at Night?

CEOs’ Top
Challenges
Leaders Aren’t Ready

The Conference Board CEO Challenges—Percent of Leaders Considering Themselves Very Prepared

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Global Leadership Forecast 2014|2015

What’s Keeping CEOs Up at Night?

Human Capital Is Important;
Leadership Is Critical
In The Conference Board CEO Challenge , more than 1,000 respondents
indicated that human capital remains their top challenge, with customer
relationships rising in importance in the past two years. Also, operational
excellence and innovation remain vitally important for driving businessgrowth and ensuring a sustainable future. These challenges, albeit invarying order, were the top challenges in all four regions included in thesurvey: the United States, Latin America, Europe, and Asia.*®

When asked about the strategies to address the human capital challenge,
4 of the top 10 strategies CEOs selected (the full top 10 are presented
in the chart at right) are focused on leadership: improve leadershipdevelopment programs, enhance the effectiveness of senior management
teams, improve the effectiveness of frontline supervisors and managers,
and improve succession planning. CEOs know their organizations
cannot retain highly engaged, high-performing employees without
effective leaders who can manage, coach, develop, and inspire theirmultigenerational, globally dispersed, and tech-savvy teams.
CEOs also were asked to identify the leadership attributes and behaviors
most critical to success as a leader. The top five prominent in every
region globally were:• Retaining and developing talent.
• Managing complexity.
• Leading change.
• Leading with integrity.

Now What.01 Better leadership can have a positive!

impact on CEOs’ top challenges; thisstudy shows how better development canpositively affect leadership. All leaders canlearn to bring the customer voice into theirorganization, become talent scouts andadvocates, and create an environment
where innovation flourishes.

performance management.02 Improve

processes and accountability (the third
human capital strategy below) is often
the most neglected talent management
system. To address this gap, ask thesequestions about your performance
management system:•	Is it used as a business system tohelp execute top-down strategy?
•	Do employees understand their goals,
and are they held accountable forachieving them?
•	Do employees get feedback
about strengths and development
opportunities so they can grow?

CEOs’ Human Capital Strategies• Having an entrepreneurial mind-set.
The CEO Challenge looked at what must be
done. For the first time, the Global Leadership
Forecast asked leaders to assess their own
readiness to execute these tasks. Their selfassessments are sobering. For instance, neverwere more than 50 percent “very prepared” toaddress any of the challenges (see illustration
at left). In fact, in the human capital challenge,
only 27 percent of leaders reported they were“very prepared” to be the kind of leader thatcreates an optimal workplace where employeesdeliver their very best. HR leaders’ appraisal
was even more harsh: Only 9 percent indicatedtheir leaders were “very ready” to address thehuman capital challenge.
* Mitchell, C., Ray, R.L., & van Ark, B. (January 2014), The Conference Board CEO Challenge®
2014: People and Performance, New York, The Conference Board, www.conference-board.org.

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Global Leadership Forecast 2014|2015

What’s Keeping CEOs Up at Night?

Working Within the

VUCA Vortex

Leaders Need More Preparation to Face VUCA Challenges

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Global Leadership Forecast 2014|2015

What’s Keeping CEOs Up at Night?

Leading in a VUCA World
A VUCA world is one that is volatile, uncertain, complex, and ambiguous.
First used by the United States military to discuss preparedness, the term
was later popularized in the publications of Bob Johansen of the Institutefor the Future.*
This study measured leader readiness in four key areas from which
we created an overall VUCA index:• Anticipating and reacting to the nature and speed of change.
• Acting decisively without always having clear direction and certainty.
• Navigating through complexity, chaos, and confusion.
• M aintaining effectiveness despite constant surprises and a lackof predictability.
Less than two-thirds of leaders said they were either “highly confident”
or “very confident” in their ability to meet the four VUCA challenges.
As illustrated at left, this less-than-encouraging view is echoed by HR
professionals, about a third or more of whom viewed their organization’s
leaders as not capable of meeting the challenges of volatility (40 percent),
uncertainty (32 percent), complexity (36 percent), and ambiguity(31 percent). At best, only about 18 percent identified their leaders as“very capable.”This does not bode well for businesses and industries worldwide. Indeed,in The Conference Board CEO Challenge®, CEOs indicated that among
their top pressing issues were these elements of the VUCA world inwhich they must navigate: economic depression in Europe, currency
volatility, financial instability in China, labor relations, cybersecurity,
volatility in energy markets, activist shareholders, and government
regulations to address bribery and corruption.**Our research found that organizations whose leaders have high VUCA
capability are 3.5 times more likely than organizations with low VUCA
capability to have a strong leadership bench—that is, leaders readyto step in to meet future challenges. Also, VUCA capability links tofinancial results. The top 20 percent of organizations performing wellfinancially are three times more likely to have VUCA-capable leadersthan the bottom 20 percent.

* Johansen, B. (2009), Leaders Make the Future: Ten New Leadership Skills for an
Uncertain World, San Francisco, Berrett-Koehler Publishers.
** Mitchell, C., Ray, R.L., & van Ark, B. (January 2014), The Conference Board CEO
Challenge® 2014: People and Performance, New York, The Conference Board, www.
conference-board.org.

Now What!

A world that requires effective leaders is
one with greater implications for sounddecision making, high confidence, and readyadaptability. The illustration at left summarizes
the talent management practices that—due
to a prevalence in organizations ranked highcompared to those ranked low in leaders’ VUCA
readiness—consistently helped the leadersand organizations included in our research
successfully navigate a VUCA world.
The impact of solid talent management choices
will be further amplified by a focus on the rightskill targets. Our research identified the top four
skills that, when practiced effectively, had thegreatest impact on leader preparedness andconfidence in addressing the challenges of VUCA:.01 Managing and introducing change.

Unsurprisingly, this was the strongest
predictor of a leader’s confidence in theface of VUCA.

.02 Building consensus and commitment.

This skill is critical for eliminating discordand misunderstanding.

.03 Inspiring others toward a challenging
future vision. To induce others toact, leaders first must be inspired
themselves.

.04 Leading across generations. Thisskill is key to forging a shared purpose
despite diverse employee viewpoints andmotivations.

25% of organizations report theirleaders are not VUCA-capable.

3X Organizations whose leaders

are VUCA-capable are three times more
likely to have financial performancecommensurate with the top 20 percent.

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

Leadership
Outlook
Going Nowhere Fast

Quality of Leadership over Three Global Benchmarking Studies

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

Development Efforts
Have Stalled
When compared to our last two forecasts, the number of leaders who
expressed confidence in the overall quality of leadership in theirorganization increased just slightly: 40 percent of leaders rated current
quality as high (see illustration at left). According to HR professionals,
however, the needle hasn’t moved at all. Only one in four organizations
evaluated their overall leader quality as high, the same percentage as our2011 forecast.*
Why is leader quality going nowhere fast? Apparently, because
leadership development efforts have stalled, despite the fact that it isestimated that some $50 billion a year is being spent on developing
leaders worldwide.** As in the last two forecasts, only 37 percentof leaders in the current study rated their organization’s leadershipdevelopment program as effective, indicating no improvement over the
past seven years. The overwhelming majority of leaders are still saying
they are not satisfied with their organization’s development offerings.
It’s no wonder that, with leaders reporting a lack of improvement in theirdevelopment, we aren’t seeing a vast difference in overall leader quality.
If organizations aren’t doing enough to push the needle, thenthe outlook for the future is even gloomier. Only 15 percent oforganizations rated their future bench strength as strong, a slightdecrease from our last forecast (see illustration at right). Most
organizations are not confident that they have the leadership to address
current and future needs. So, what can they do to improve? The
message from leaders is loud and clear: Organizations need to refocus
on improving their development efforts.

37%

Now What.01 A focus on developing future talent!

begins at the front line, with sustainable
learning experiences that extend leaders’growth and development on the job
beyond formal learning.

.02 Development efforts won’t have alasting impact unless they are followedby opportunities for leaders to practiceand use their newly acquired skills.
Organizations that report their leaders
practice and then receive feedback on
key skills with their managers are fivetimes more likely to have high leader
quality and bench strength compared tothose that don’t.

.03 Leadership development, though closely
tied to leader quality, is not its sole
driver. Strong leadership selection andsuccession management systems also
play major roles in driving leader quality.

Ready Now Leaders for the Futureof leaders rated the qualityof their organization’s
development programs
as high or very high.

* Boatman, J., & Wellins, R.S. (2011), Global Leadership Forecast 2011: Time for a
Leadership Revolution, Pittsburgh, PA, Development Dimensions International.
** K ellerman, B. (2012), The End of Leadership, New York, HarperCollins.

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

Millennials

From Generational Differences
to Generating GrowthHigher Growth, Higher Percentage of Millennials

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

Moving Up Faster
Aggressive-growth organizations, such as those in the high-techindustry, have a significantly higher proportion of Millennials*(30 percent) in leadership positions than organizations with cautious
growth (25 percent) or no to low growth (21 percent). (See theillustration at left.) However, organizations that rely on a greater supplyof younger leaders face unique challenges. Millennials report being lessengaged in their roles within their organization. Also, they are more
likely to intend to leave in the next 12 months than leaders in othergenerational groups.
Compared to those labeled Generation X, Millennials are lessconcerned with opportunities to provide feedback to their seniorleaders about the organization’s strategy and culture, the organization’scommunications about specific behaviors needed to succeed as a leader,
and work-life balance.
Their preferences mirror those of other generations when using othermethods for leadership development, such as formal workshops,
training courses, online learning, and developmental assignments (e.g.,
special projects). Millennials also have a stronger preference for usingsocial learning (e.g., social networks, wikis, and blogs) and mobile
development (e.g., smartphones or tablets) for improving leadershipskills than other generations, and they tend to learn from others more
frequently. Given their preferences, Millennials may seek out more
frequent opportunities to learn from others via social and virtual
platforms, something organizations need to keep in mind as they work
to design development efforts aimed at this generation.

Now What.01 The engagement level of this group!

can be raised by providing them with agreater understanding of their career
path as a leader and improving their
manager’s effectiveness.

.02 HR professionals can reevaluate theiremployee value proposition, especiallyas it relates to multiple generations. A
flexible arrangement and offerings ofvalue would support different employee
needs and motivations. A career pathframework would help younger employees
understand available development
opportunities to keep them engaged andremain with the organization.

.03 To implement leadership development

initiatives that match Millennials’
preferences, integrate social and mobile
learning into development programs. For
example, build virtual learning platforms
and provide opportunities to connect withothers, both virtually and in person.

Millennials also seem to receive a significantly higher percentage ofpromotions than do any other generation. This could be attributed to two
factors: 1) They are starting at lower management positions with more
opportunity for advancement or 2) organizations could be reacting toMillennials’ reputation for readily changing jobs. Either way, the goodnews is that they are stepping up.

* The generally accepted definitions of “Millennials” and “Generation X” are as follows:“Millennials” were born between 1982 and 2000; “Generation Xers,” between 1965
and 1981.

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

Leadership
Readiness

Which Countries Make the Grade?

Leader Quality and Bench Strength Ratings by Country

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

Some Are Improving FasterLeadership readiness is a blend of quality and depth within an
organization’s leadership ranks. We examined such readiness bycountry as it stands in 2014. We also looked at how leadership
readiness has changed since the publication of our Global Leadership
Forecast 2011. For each country listed, a minimum of 30 HR
professionals evaluated their organization’s leaders.
Our findings are summarized in the figure to the left. Overall, we see
wide variation around the globe in the quality of today’s leaders and inbench strength (i.e., the supply of leaders ready to step in to fill vitalleadership roles). Along with this variability, country-by-country trends
are troubling: Far too many countries have not seen an improvementin leadership quality, and for those where leader quality has improved,
their leaders are still failing to keep up with their peers.
For organizations in countries with a deficit in current leader quality,
negative consequences await them as they struggle to succeed in
the face of business demands with leaders who lack practiced andpolished leadership skills. This situation is even more dire in countries
whose bench strength also is low: Their insufficient talent pool ofcapable leaders means that tomorrow’s leaders may be no more readyto address business challenges than today’s. On the other hand, forcountries where bench strength exceeds current leader quality, a newgroup of eager leaders is waiting impatiently to fill higher-level roles
as they become available.

Now What!

.01 Countries with a weak future supply of

leaders should implement programs andpolicies that promote and encourageorganizations to dedicate resources todeveloping more leaders with the skills
they need to successfully address futurebusiness challenges.

.02 Organizations that have an ample supplyof leaders yet have a gap in leadership
quality need to offer their leadersdevelopment programs and experiencebased learning opportunities so they
can progress in their jobs and effectively
address real business issues.

.03 Organizations with global operations

must prioritize development offerings
carefully by country, weighing the benefitsof a fully consistent approach against therisks of programs that do not take into
account differences in local talent pools.

Countries that are low in bench strength, regardless of current leader
quality, will not have the supply of future leaders they will need to fuelgrowth, innovation, and execution of business objectives. Countries withmoderate or high bench strength probably have taken the steps needed tosustain forward momentum by selecting or developing leaders who are
ready to take on more influential roles when needed.
On the whole, this view of the current state of global leadership
illustrates the many challenges faced by multinational companies
pursuing a common leadership standard in all of their operations. In
many cases, leader quality and bench strength will vary substantially bycountry. This suggests the importance of having a differing initial focus
for development programs as a precursor to deploying a more integrated
and comprehensive talent development strategy.

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

Leadership
Readiness

Which Industries Are Rising,
Which Are Falling?

Leader Quality and Bench Strength Trends by Industry

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

Some Are Facing Greater
Leadership Shortages
Which industries have the best supply of leaders prepared to tackle theirbusiness challenges? We examined how various industries have changedin the past few years and what leadership readiness trends have emergedsince 2011 to address this issue head on, as shown in the figure at left.
“Stay the Course” industries, such as business services, are in improving
positions, probably because they are investing heavily in developing
their leaders.
Industries that are “Headed in the Wrong Direction” are struggling due
to changing business environments and demographics. The health careindustry, for instance, faces intense talent shortages, an aging customer
base that requires greater care, and evolving government regulations.
Manufacturing also is dealing with an aging workforce in addition to
slowing growth. These issues will continue to affect the ability of theseindustries to meet business goals. “Many Challenges, Few Leaders”
industries lack a sufficient supply of leaders prepared to lead in fastchanging, technical environments. For example, STEM (science,technology, engineering, mathematics) and leadership skills can be awinning combination, but they also can be difficult to find in the current
talent pool. In response, organizations need to provide acceleration
programs for leaders in their leadership pipeline or attract new leadersfrom nontraditional external sources.

Now What.01 “Many Challenges, Few Leaders”!

and “Headed in the Wrong Direction”
industries can consider expanding thepool of candidates to attract leadersfrom other industries and provide intense
on-boarding experiences (e.g., coaching,mentorship, networking opportunities)
to encourage their integration into theorganization.

.02 	Leaders in “Eager and Waiting

Impatiently” industries will demand more
opportunities to develop. For that reason,organizations will need to explore new,unique ways to develop the required
skills while promoting innovation andcreativity among their leaders.

Leaders in “Eager and Waiting Impatiently” industries can offer
improving leadership quality, though they need to continue to focus on
enhancing their capabilities, especially in competitive industries likeretail. A sufficient supply of leaders gives organizations a stable labormarket, although recruiting top talent will likely remain competitive.

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

CriticalLeadership
SkillsWhat’s Important Is Being Ignored

Some of the Most Critical Skills Are Still Out of Focus

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Global Leadership Forecast 2014|2015

Are Leaders Ready to Deliver?

!

Time to Change Focus

Now What

We asked HR professionals to rank two leader skills according to how
critical they are for leaders’ success in the next three years and how
much their organization’s current development programs focus onthem (see illustration at left). For many of these skills, the current focus
corresponds with how critical they will be for the future (either as lesscritical with less focus or more critical with more focus). But there aresome notable exceptions.

.01 Design development programs aroundHR currently is focusing heavily on two skills that they are not
rating as critical for the future: Building consensus and commitment
and Communicating and interacting with others. HR is either
overemphasizing these with their current focus or undervaluing their
future skill criticality, failing to recognize them as foundational skills.
On the opposite side of the illustration, two skills that were noted
as most critical (Fostering employee creativity and innovation andLeading across countries and cultures) are not being focused on.
These two skills were identified among the most critical in
our last forecast, but HR still doesn’t focus on them in theirleadership development programs. As a result, leaders havenot improved.

the skills your leaders need to succeed.
The most critical skills are those that help
them accomplish strategic objectives.

.02 	Multinational companies, in particular,

should emphasize development in global
leadership skills to prepare their leaders
to meet intercultural challenges and drive
global growth.

.03 	Innovation, a top Conference Board CEO

challenge, can be influenced directly byleader behavior. Look for leaders who
possess the skills to encourage risk taking,networking, and generating new ideas.

Percent of Leaders Considering Themselves
Highly Effective

Only one in three organizations currently is focused on developing
their leaders’ ability to foster innovation; only one in five isemphasizing development in global leadership. Though both skills
are critical, HR hasn’t implemented development initiatives that
focus on them. Only one-third of leaders reported being effectivein leading across countries and cultures, the lowest single skill
effectiveness rating in our survey (see illustration at right).
Multinational organizations that rely on their leaders to drive
global growth should not overlook this skill gap. Similarly, with
only 56 percent of leaders currently effective, fostering innovation
is a skill area that deserves attention. Innovation has emerged as
one of the top challenges for businesses; having leaders able toencourage innovation and creativity is vital if they are to lead incompetitive markets.
Do organizations benefit from investing in building leaders’ skillsin these critical areas? The answer is a resounding yes. We foundthat organizations that have been focusing on developing theseskills, and whose leaders are now more effective, are three times
more likely to rank in the top 20 percent for financial performance.

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Are Leaders Ready to Deliver?

The Leadership
Agility Tightrope
Mastering the Art of Change

Spotlighting the Ingredients of Leader Agility

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Are Leaders Ready to Deliver?

Balance Leader Agility with
Organizational Agility
Agile organizations possess the ability to anticipate trends, respond toproblems, and adapt to change—important competitive advantages in acomplex world. No surprise, agile businesses thrive when their leaders
are agile, and vice versa. But what are the ingredients of leadershipagility? To explore this, we created an agility index by combining leader
capability in the four components of VUCA (volatility, uncertainty,
complexity, ambiguity) with leader effectiveness in core behavioral
skills strongly linked to these VUCA outcomes. (The figure on theprevious page shows the capabilities and skills making up this index.)
Across all leaders in our research, only 18 percent rated highly on thisagility index—a clear wakeup call for those companies in which agility
is a mandate for survival and growth.
Our forecast shows that the impact of an agile leadership pool—for
those few companies able to achieve it—is enormous. We looked at
a composite of metrics—profitability, earnings per share, five-year
rate of return to investors, and stockholder equity—gathered fromfinancial databases on 150 publically traded companies. We found thatcompanies with a larger pool of agile leaders (30 percent or higher) areable to reduce the time it takes a new leader to be fully capable by anaverage of three months. Organizations in the top 20 percent of financial
performance are 5.8 times more likely to have a high proportion of
agile-ready leaders than those in the bottom 20 percent.
We also explored the relationship between rapid company growth andleadership agility. Fast-growth companies have 35 percent more agile
leaders than their no/slow-growth counterparts; however, in no/slow-growth companies, agile leaders are 32 percent less engaged
compared to those in high-growth companies. They also are 47
percent more likely to be looking for another job. Simply put, agile
leaders are likely to clash more often with—and to depart more
quickly from—a company that is performing poorly or that has ahighly conservative culture. This finding points to a potential trap
when it comes to agile leaders: Companies that can’t follow throughculturally and strategically promote agile leaders at their own peril,as they run a likelihood of losing them to more agile organizations.

Now What.01 If agility is key to the future of your!

company, hire and promote leaders highin agility. Several validated assessment
tools are available to help you do this.
The term “learning agility” has come into
vogue. A strong learning orientation is
crucial to leadership agility, but it is more
complex than a single factor.

.02 	Avoid the agility mismatch; claiming to beagile but failing to back it up with decisive
action and rapid decisions will push yourmost agility-capable leaders elsewhere.

.03 	HR often plays a role in organizational

design and process efficiency. While
the term “reengineering” seems to have
died, the tenet behind it is relevant.
Simplify complex processes by reducing
non-value-added steps and layers ofapproval. This capability, often found inpeople with organization development(OD) skills, can have a big impact on
your company’s agility.

.04 	Some agility skills can be learned. One islearning how to introduce and manage
constant change. Make sure your leaders
are “change masters.”

Impact of Agility on the Organization

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Global Leadership Forecast 2014|2015

The New Role of HR

Evolving HR

From Partner to Anticipator

How Do HR Professionals Contribute to Business?

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Global Leadership Forecast 2014|2015

The New Role of HR!

Get Strategic, Sooner

Now What

Which is more critical to business success: strategy or the talent to executeit? Assuming they are equally important suggests that hiring and nurturing
talent and conducting strategic planning should be done simultaneously, as
one process. Yet, only one in four HR respondents reported participating
early in strategic planning. The other three either were not involved orwere asked to develop talent plans after the strategic planning process.

.01 Recognize the benefits and limits of an HR

HR’s role needs to continue to evolve. For at least two decades, thechallenge for HR was to move from being administrators or reactors tobeing business partners. HR units worldwide have made that shift. As
shown in the illustration at left, 60 percent of our HR sample classified
themselves as “partners.”.02 HR needs to build a case for earlier

It’s now time to raise the bar for HR, to take on a new role we call“anticipator.” Anticipators are always looking for what might comenext. They work with the business to predict future talent gaps, and thenstrive to close the gap. They are able to proactively advise leaders on theprobability of their strategies succeeding based on available talent andits quality. However, as the illustration at left shows, fewer than 2 in 10
HR professionals place themselves in the anticipator category.
We also examined when HR gets involved in the strategic planning
process—early, late, or not at all. As the illustration at right shows,
anticipators are far more likely than their partner or reactor counterparts
to be part of their organization’s strategic planning process. That
involvement pays off big for their organizations, which are three times
more likely to have stronger leadership bench strength and over six
times more likely to have exhibited strong financial performance thanorganizations in which HR’s involvement in the planning process occurs
late or is nonexistent.
While anticipators and partners generally are likely to use similar
leadership practices, anticipators do six things differently than partners
or reactors. Anticipators:

partnership orientation. Anticipators takea distinct approach to talent management(as described at left), which extends theirinfluence and unlocks new forms of value
for the organization.

involvement in strategic planning. Several
organizations have done this with a setof practices called “strategic workforce
planning,” which focuses on building future
talent capacity tied to business goals.

.03 HR needs to become more knowledgeable
and self-aware in using talent analytics,
including building specialized roles within
their team. Analytics provide the data tomore accurately predict talent needs aswell as determine what works to close any
talent gaps.

.04 The skills and knowledge that got HR

to where they are today probably won’t
be relevant in the future. HR needs to
be in a constant learning mode to avoid
obsolescence. The role of human capitalmanagement will change more in thenext 5 years than it has in the past 30.

Who’s Most Connected to Strategic
Planning?

•	Put a stronger focus on programs that foster employee
creativity and innovation.
•	Are more likely to position leadership development as anintegrated journey rather than an independent series of events.
•	Are more likely to institute negative consequences for managers
who fail to develop their leaders.
•	Help ensure that a higher percentage of leaders are promoted from within.
•	Help leaders be more ready to meet the CEO challenge of human capital.
•	Are much more likely to use advanced workforce analytics,
particularly those that involve forecasting future talent needs.

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Global Leadership Forecast 2014|2015

The New Role of HR

How They See
You (and Why)
The Senior Leader View of theBusiness Value of HR

How Senior Leaders Describe the Data They Get from HR Reactors, Partners, and Anticipators

Larger font indicates more frequently used terms

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Global Leadership Forecast 2014|2015

The New Role of HR

To be an “Ideal” Business
Partner, Think Future FirstWe asked HR professionals to evaluate their contributions to businessby placing themselves into one of three roles:• R eactor—Ensuring compliance with policies/practices; providing
tools/systems when asked.
• P artner—Openly exchanging information about current issues;collaboratively working toward mutual goals.
• A nticipator—Using data to predict talent gaps; providing insights
linking talent to business goals.
Our findings from these self-evaluations, described in the previous
section of the Global Leadership Forecast, showed which tactics andpractices drove HR’s strategic influence.
The results, however, raised a key follow-up question: How do seniorleaders view their HR counterparts? We conducted a targeted follow-up
survey with 113 senior leaders in which we asked them to place HR into
one of the three roles. Results are below, showing a stark contrast in
views. Senior leaders considered nearly half the self-styled HR Partners
as Reactors. However, HR and senior leaders largely agreed on the
Anticipator role; that is, HR respondents vastly overestimated their ability
to become Partners, yet were quite accurate about being Anticipators.
We then looked at the terms that senior leaders chose to describe thedata they receive from HR counterparts they categorize into each role.
Their responses, shown in the graphic on the previous page, showed
how HR tactics differ between Reactors, Partners, and Anticipators.
Most notably, “Future-oriented” surged from Partner to Anticipator,
whereas “Relevant” and “Frequent” were used more often to describe
Partners than Anticipators.
Senior leaders told us whether the data
they received from their HR partners was“ideal”—this description was applied much
more often to Anticipators. Future-focused
was again a key differentiator, having threetimes the influence on ideal as “Frequent,”
and five times the influence as “Relevant.”

Now What!

.01 Focus on sharing talent data that lookforward strategically, rather than backward
and operationally, such as projected
talent needs, business outcomes of talent
programs, and “what if” scenarios for
optimizing talent program impact.

.02 Think beyond whether data are relevant

now. To be an Anticipator leading the way,the value of your data may take time tobecome evident. Often, the most valuable
data face initial temporary resistancebecause their relevance isn’t clear.

.03 Consider downshifting the frequency ofdata you provide to business partners
if, by doing so, you can place a heavier
focus on the quality of the data and its
implications for business planning. Datafrequency alone isn’t a differentiator for
how senior leaders perceive value.

.04 See partnership as a waypoint

rather than a destination. Many HR
professionals who see themselves as
Partners are viewed by senior businessleaders as mere Reactors, showing that
HR Partners often are poorly calibrated
on how they are viewed by the business.

.05 Initiate an open dialog with current or

targeted business partners on their viewsof the talent data you’re providing them.

How HR and Senior Leaders Describe HR’s Role

As a final sign of the limitations of being a
Partner, only 29 percent of senior leaders
relied on HR Partners’ data to a great extent
when making strategic talent decisions,compared to 55 percent for Anticipators’ data.

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Global Leadership Forecast 2014|2015

The New Role of HR

Leadership
Analytics

How HR Can Use Big Data
to Provide Big Value

The Misguided Flow of Leadership Analytics

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Global Leadership Forecast 2014|2015

The New Role of HR

Move Forward
by Looking Ahead
Research conducted in 2014 by The Conference Board found thatBig Data Analytics was the number one “hot button” issue for CEOs.
However, Analytics was only number 19 (out of 22) in importance as a
strategy to address the top CEO challenge, Human Capital.* This meansthat Big Data is hot and getting hotter because executives are putting
increased pressure on finding ways to monetize data. However, thesesame executives do not recognize the potential of analytics.
To better understand the gap between HR analytics practices andrecognized value to the business (and how it can be closed), we
focused on several forms of leadership analytics, ranging from basic toadvanced. We wanted to find out how often each was being done, howwell it was being done, and most importantly, which forms of analytics
link to financial outcomes. With these links we could see how well HR
is responding to—or failing to respond to—organizations’ need forvalue-added analytical insight.
The struggles of HR analytics are rampant, varied, and illustrative whenviewed as detailed above. We found that 47 percent of organizations
don’t do any form of leadership analytics well. Only 1 in 20 does all
forms well. Also, for almost every form, more companies have failed
than succeeded. But we found an even bigger issue: What organizations
do rarely produces value for the business. The figure at left showsthese distinctions. On the left of the figure are forms of analytics more
often pursued; on the right, forms that are less common. Unfortunately,
those on the right correlate significantly with financial performance (acomposite of external financial metrics). Those on the left do not.

Now What.01 Recognize and inoculate against Big!

Data skepticism within the business
community (both your own and ingeneral). Although it is arriving long after
other functions, HR has an opportunity
to apply previously under-recognizedstructure, data qualification, and logic
to analytics. Big Data doesn’t needmore hype; rather, it needs more rigor
and realism, and HR is ideally suited toprovide these critical voices.

.02 Reevaluate your analytics focus. Is yourperception of analytics the same as thatof your business partners and senior
executives? This doesn’t mean, forexample, you shouldn’t gather reactions
and efficiency metrics or benchmark
internally. Simply don’t expect those to betrue analytics in the eyes of the business.
Prioritize accordingly.

.03 Direct your organization’s efforts toward

future-focused and business-centric
analytics that generate foresight about
talent gaps and drive talent alignment
with strategic goals. Without question,these are more complex and resourceintensive, but they also will help HR
connect with Big Data and Analytics asa cross-enterprise business imperative,
converting talent data to financial impact.

* Mitchell, C., Ray, R.L., & van Ark, B. (January 2014), The Conference Board CEO
Challenge® 2014: People and Performance, New York, The Conference Board, www.
conference-board.org.

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Global Leadership Forecast 2014|2015

The New Role of HR

Global Program
Implementation

Balancing Corporate vs. Local Control

Finding the Right Balance of Corporate vs. Local Control of Talent Management Programs

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Global Leadership Forecast 2014|2015

The New Role of HR

Finding the Optimal Balance

Now What

Deliberate international expansion—reaching customers beyond aheadquarters’ country and accessing foreign markets’ growth potential—isa prevailing business imperative. In our research 69 percent of organizations
indicated that they plan to add offices or facilities outside their homecountry. To grow talent along with operations globally, talent management
functions face a core challenge: when and how to incorporate both global
and local perspectives into program design and implementation.

.01 	Have the balance conversation

More than 1,500 HR professionals evaluated the effectiveness of leaderfocused talent management programs. We also asked them to indicate
the degree of corporate versus local influence. By comparing these, we
diagnosed which forms of influence produce optimum effectiveness.
Findings are summarized in the figure at left.
In the upper left portion are three programs that worked best when
corporate influence was heavier. For these programs, deviating too far
from a uniform set of talent practices is linked to negative consequences.
It’s important to note that even in these situations, local influence serves
a vital role by reducing the risk of an outdated perspective on the regional
context. However, effectiveness suffers when erratic standards are used
to define expectations for performance, selection, and promotion, andwhen development of the organization’s senior-most leaders fails toadhere closely to a more centralized organizational vision. The costs
of inconsistency are more severe for these programs than for others.

!

today. Proactively plan flex points inprogram implementation, agree on andcommunicate the scope of autonomy
for local decision making, and conduct
regular audits to confirm alignment.*.02 	Be cautious when scaling back central

influence on programs involving
selection, promotion, and performance
management decisions. These programs
lose effectiveness without a common
and globally agreed-upon leader
success profile.

.03 	For leadership programs extending

across the leader pipeline, local influenceis particularly critical. We found thatfailing to account for cultural differencesin program implementation was moredamaging than failing to account fordifferences in program design.

.04 	Finally, several recent interviews with

global HR heads revealed that, while thequality of the talent initiatives was critical,
consideration of a host of implementation
factors—scalability, technology, cultural
adaptation, and development plans—wasequally important. Consider these factors
carefully as you plan for your global rollout.

In the upper right portion are three programs optimized by a near-equal
blend of corporate and local influence. For these programs, neither heavy
corporate control nor heavy local control is right. For mid-level andfront-line leaders, failing to consider local perspectives means ignoring
or undervaluing cultural differences in learning styles and logisticalparameters that field operations face (and which should
affect program design). The positive impact of blended
Preferred Approach to Global Program Implementationinfluence is similar for succession management,
which, for most organizations, extends throughout theleadership pipeline rather than just in the executive
ranks. For these programs, carefully managed“inconsistency” is beneficial and essential.
None of the leadership-focused programs we looked atwere most effective when controlled locally. This does
not mean that local influence is irrelevant, but it showsthat negative consequences are almost certain whenaccommodating local perspectives becomes abdicationof responsibility and an absence of corporate support.
* Mitchell, S., Bolling, B., Phang, N., & Schott, T. (2013), Talent Beyond Borders: An Organizational Guide to
Delivering the Promise of Global Talent Management, Pittsburgh, PA, Development Dimensions International.

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Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

70:20:10
The Right Ratio…
or So We All Thought

Leaders Thirst for More Structured Development and Learning from Others

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Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

Get Rid of the Old
Bumper Sticker
The most common piece of wisdom on how leaders learn is the 70:20:10
ratio—70 represents learning that occurs on the job; 20, learning fromothers; and 10, learning from formal development. This ratio originatedin decades-old research that asked leaders to look backward at theretrospective value of learning types. It has evolved to something very
different, however: a near-universal planning edict, looking forward
to how leaders should seek and receive development. Even the ratio’s
originators have stated publicly that they never intended it to be used as
the prescriptive tool it has become.*
These disconnects—along with not a single piece of supportive recent
research—prompted us to find out if this ratio is fact or myth when put
to the test with over 13,000 of today’s leaders. As the illustration at left
shows, the time leaders spend on learning has a very different ratio, onethat significantly emphasizes formal learning and learning from others
while de-emphasizing on-the-job learning. Surprisingly, this 55:25:20
ratio of actual learning time spent varies very little by leader level.
Next, we wanted to know what ratio is used by organizations thatprovide the highest-quality leader development. To do so, we isolatedorganizations that exceed their peers in leadership development quality
as viewed by the leaders themselves. The resulting data showed that
52:27:21 is strongly associated with high quality—a ratio that closely
matches how leaders actually spend their time. We also asked leaders
how much time they spend on leadership development as well as how
much time they’d like to spend. Their answers: 5.4 hours/month now,
8.1 hours/month desired. When asked where they would most preferspending those additional learning hours, the chart at right shows theirpointed response: more formal learning and learning from others.
From all these data, we concluded that overreliance on 70:20:10
misrepresents leaders’ reality and doesn’t match the practices oforganizations with the highest-quality development or what leaders
themselves prefer. Even more problematic, the 70:20:10 ratio—in fact,
any ratio—emphasizes the separation of learning methods rather thantheir integration. Allowing learning methods to compete rather thanintegrating them so they can build on one another undermines theirimpact and their value.

Now What!

.01 Though 70:20:10 does not match reality,

leaders generally will spend a greater
proportion of their time in on-the-job
learning. As such, carefully choose andsequence components of formal learningwith learning from others.

.02 Do not place too much weight onpercentages. Effective learning requires
someone (a “master blender”) who can
put together the right combination oflearning activities to meet the needs ofboth learners and the business.

.03 While experiential learning and learningfrom others are key to an effective blend,
consider allocating more time on formal
learning to build foundational leader
competencies that can have wide-ranging
benefits while matching up well withleaders’ learning preferences.

.04 Organizations benefit when formal

learning is a vital component of thelearning mix, establishing a frameworkand foundation for on-the-job learning.
This foundation enables job experiences
to be easily converted into sustained,
well-supported behavior change.

Percent More Time Leaders Want
for Each Type of Learning* McCall, M.W., Yost, P.R., McHenry, J.J., O’Connor, P., & Plunkett, M. (2014, May),
Beyond 70-20-10 Leadership Development.

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Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

Critical Periodsfor Leadership
GrowthMatch the Timing to the Target
Rates of Leadership Skill Growth by Management Level

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Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

Leadership Skills Develop
at Different Rates
Targeting development to stages of leadership doesn’t have to be aguessing game. Certain skills tend to grow more quickly at certain
times, such as when the topic matches the learner’s experience andopportunity. Other skills grow slowly but steadily. Knowing whatgrows and when is critical to optimizing your leadership development
investment; failing to take advantage of critical growth periods
squanders time and effort. We looked at which skills grew most andwhen by comparing the average self-reported skill levels between highand low-tenure leaders at each level. This review produced data-driven
guidance for how to plan leadership development at each of these fourlevels of leadership:• F rontline: Supervisor, team leader, location or department
manager, foreman, etc.
• M id-level: Leader of first-level leaders (group manager,
district manager, etc.)• H
 igher-level: Leader/Manager of mid-level leaders (director,
department head, vice president, etc.)• Senior-level: Executives and those in policy-making positions(CEO, COO, CFO, executive VP, senior VP, etc.)
The illustration at left shows how 12 skills grew (slowly, moderately,or rapidly) within the four leadership levels. This information can beused in two ways to design a development sequence. First, look acrossa row to identify the leadership level where a skill grew quickest.
Targeting that skill at that leadership level (or levels) most likely will
have the biggest payoff. Second, look down a column to identify (whenblended with your organization’s competency model and business
context) high-priority growth targets for each leadership level. Whendevelopment time is short and investment is limited, missing theopportunity to grow a leader when skill enhancement is most likely tostick (such as, Coaching and developing others at the frontline level)
can be a costly omission.

Now What!

.01 When building a leadership development
sequence, consider the timing alongwith the content to capitalize on natural
growth trajectories for leaders.

.02 Avoid missing out on high-growth

opportunities for frontline and mid-level
leaders. For many skills, growth rates arelower for higher- and senior-level leaders.
If foundations aren’t established early,
future skill development will be limited.

.03 Don’t neglect skills with slow but steady
growth. Even basic skills such ascommunicating and networking remain
relevant as development targets forsenior leaders.

.04 Consider staggering development,

focusing first on skills with growth rates
that are more foundational or unique tothat level of leader, and placing skills thatare less so later in a leader’s career.

.05 For global leadership skills, prioritize

Intercultural business communication
first at the front line, then Integrating
oneself into intercultural environments,and finally Leading across countries andcultures as leaders use these skills more.

In addition to the skills showing selective growth at points along theleadership ladder, three skills are worth noting because they grow atsimilar rates across almost all levels of leadership: Building consensus
and commitment, Communicating and interacting with others, andDeveloping networks and partnerships. These skills will be valuabletargets for foundational development regardless of leader level.

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Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

Drivers of Crucial
Leader Outcomes
What Experiences Matter Most?

Strongest Influences on Employee Development Focus, Retention, and Engagement

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Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

!

Focus on the Overlap

Now WhatA leader’s immersion in the job and thoughts on staying long-term
are influenced by his or her experience with a development-mindedmanager and the organization’s approach to leadership development.
We found strong links between several such experiences and threeoutcomes: Engagement (the leader’s active involvement in thejob); Employee Development Focus (the leader’s active pursuit ofopportunities to develop their employees), and Retention (the leader’sintent to remain at the organization long-term). When everything cannot
be a focus, organizations need to know which experiences most shapewhich outcomes to prioritize targeted leadership development practices.

.01 Work inward-out when prioritizing efforts

We analyzed the links between the experiences of more than 13,000
leaders and these three outcomes to define more precisely what
experiences matter most. The figure at left summarizes our findings,
with each outcome represented by an overlapping circle. Experiences ineach circle are top drivers of that outcome; experiences in areas where
the circles overlap are drivers of multiple outcomes. Two factors stoodout as heavy influences across all three outcomes: understanding one’s
career path and having opportunities to provide feedback to seniorleaders about the organization’s strategy and culture.
We also looked for signs of differences by leader level. Across alllevels we found a nearly identical ordering of which experiences drive
which outcomes, with one important exception. For Engagement,
frontline leaders were heavily influenced by “Advancing Upward.”
This makes perfect sense because front-line leaders are early in theircareers and anxious to climb the ladder. On the other hand, “Manager
Is Effective at Developing Me” had a stronger impact for higher-level
leaders. This suggests that, although fewer advancement opportunities
are available at higher levels, the development focus and their
manager’s actions continue to shape engagement for mid- throughsenior-level leaders.

to improve leader experiences. Start
with the experiences at the center ofthe figure; these influence all threeoutcomes. To further target certain
outcomes, take action to address thoseon the outer portions of the graphic.

.02 Revisit the availability and awarenessof processes for leaders to understandand plan their career development. Also,
consider opportunities for them to openly
share feedback with senior leaders about
the strategy and culture. Despite thestrong influence of these experiences,
they often are under-communicated orlack credibility for leaders because ofpoor follow-through in the past.

.03 	When informing leaders about what theyneed to be successful, consider thatdetailed information (for example, specificskills, behaviors, and actions) has more
impact on these outcomes than general
information about higher-level domains
or ill-defined competencies. Evaluate thespecificity of your competency models andthe outputs of associated assessment
and development programs to make surethey provide the level of precision leaders
are seeking.

Most of the experiences listed have substantial room for improvement
based on the views of the leaders in our research. Only 36 percentof leaders reported having an up-to-date development plan linked to
Engagement and Employee Development Focus. All other experienceswere agreed to by barely half, ranging from 52 to 57 percent, with an
exception for having a “Clear Career Path” (66 percent agreement).

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Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

Managing theHigh-Potential
DilemmaWho, How Many, and What Then?
Targeting the Right Size Pool to Maximize High-Potential Engagement and Retention

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Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

If Everyone’s Special,
No One Is
While many leaders seek to be thought of as a “high potential”—
someone who someday will do great things—the truth is that somepeople are above average and some are not. Identifying truly highpotential leaders is a daunting task. Even more challenging is creating
an environment that allows developing leaders to achieve their potential
while still retaining them within the organization.
The illustration at left encapsulates the dilemma that organizations facewhen they have too many or too few high potentials. Organizations
with a larger pool of high potentials (35+ percent) risk lower levels of
engagement and retention (33 percent) than those with a smaller pool
(15–30 percent), likely because the additional resources focused on theformer leaders are spread too thin. Meanwhile, organizations with too
few high-potential leaders (5–10 percent) have an even greater risk ofgenerating lower retention and engagement rates (45 percent).
Of the organizations we studied, 66 percent
reported that they have programs for
identifying and developing high-potential
leaders with, on average, 25 percent of theirleaders identified as “high potentials.”
As depicted in the figure at right, an
overwhelming majority of those withhigh-potential programs indicated thatthey hold senior management accountablefor identifying and developing highpotential leaders (85 percent). They reporta widespread use (75 percent) of objective
assessment data regarding high-potential
capabilities, potential, and readiness.
Also, more often than not, they reportthat high potentials’ performance during
developmental assignments is carefully
evaluated (66 percent), yet only a little morethan half noted that a priority is placedon measuring the effectiveness of theirdevelopment programs.

Now What!

.01 Revisit your process of identifying high-potential leaders to ensure you have theright people—and the right quantity ofpeople—in your pool.

.02 Only 59 percent of HR leaders indicatedthat their organization has a mentoring/coaching program specifically designed
to address high potentials’ unique needs.
Yet, when asked what development
practices most affected leadershipdevelopment quality, high-potential
leaders selected mentoring by asignificant margin. HR groups need toaddress this disconnect between two very
important organizational constituencies.

Impact of High-Potential Program Design Factors

Quality high-potential programs that are strongly supported can mean the difference between retaining or losing a high-potential
leader. Roughly half the leaders who responded were considered high potentials. When asked about their level of engagement,
those with weakly supported programs were twice as likely to indicate an intention to leave within 12 months (16 percent). Only
8 percent of those with strongly supported programs (half as many) indicated an intention to do the same.

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Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

Leadership
Development
Methods
One Size Does Not Fit All

Most Effective Leadership Development Methods at EachManagement Level

40
Global Leadership Forecast 2014|2015

What Do Leaders Need in Order to Improve?

Maximize Effectivenessby Level
A company that has invested energy and expense in finding and hiring
the best talent will, of course, want to use the most effective methods
to develop leaders and continue to grow their skills. How can anorganization maximize the effectiveness of development choices?
To explore this question and to identify the most effective development
methods across four leadership levels, we asked leaders to identify
which methods are most effective for developing their skills. We also
asked HR to tell us what methods their organizations are focusing on(see the graphic on the previous page).
We found that leaders across-the-board said in-role assignments aremost effective for developing their leadership skills, followed by formal
training. Formal training appears to be more valuable early in a leader’scareer to build the foundational skills they’ll draw upon later and isincreasingly replaced by the benefits they receive from developmental
assignments as they rise to the top.

Now What!

.01 Build options and flexibility for leader

development that take into account themethods leaders find most valuable,
which vary notably across leader levels.

.02 Look outside the organization forcoaching guidance as leaders’ roles
grow more complex. Leaders earlier intheir careers benefit most from formal
development and internal coaching,but even at mid-level, leaders indicate
greater value of having external coaches.

.03 Use technology as a way to reach leaders

who otherwise would have limited
opportunity for development. Technologyenabled development methods will be
more successful in reaching leaders who
are globally dispersed.

Coaching from one’s manager was the third most effective method.
It’s also worth noting that even though external coaching is not heavily
utilized or emphasized (only a third of organizations are using externalcoaching regularly), it was incrementally more effective across thepipeline and more effective than internal coaching/mentoring for all but
the first level. Why? The more complex challenges facing leaders at
higher levels often require a greater level of sensitivity and impartialitythat makes external coaches more suitable advisors.
Ranking last in effectiveness were technology-enabled training methods,
such as instructor-led online training or mobile-accessible and social
learning applications. These methods may be less favorable whenleaders have access to in-person development, but it is also worth
considering that far fewer programs currently incorporate technologyenabled methods (only one in eight organizations), and as a result, few
leaders may have exposure to or familiarity with them. Currently, thesemethods are more likely to be seen as supplements to formal learningor developmental assignments than as stand-alone learning methods.
This is likely to change, however, as more programs incorporate thesemethods and as organizations integrate technology more deeply within
their learning strategies.

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Global Leadership Forecast 2014|2015

What’s Holding Them Back?

Interacting vs.
Managing

Organizations Place More Value onManaging—and That’s the Problem

Leaders’ Balance of Time—Actual, Preferred, and Company Valued

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What’s Holding Them Back?

Where Should Leaders Be
Spending Their Time?
Many leaders ask themselves: What’s the difference between managing
and leading, and which is more important? We chose to reframe the issue
by taking a closer look at managing and interacting. “Managing” is timespent planning, doing administrative tasks, scheduling, etc. “Interacting”
is time spent in conversation with others, such as peers, team members,
supervisors, and customers. We hypothesize that interacting is far
more critical to successful leadership than is managing. In a McKinsey
Quarterly article, the authors wrote that the quality of interactions has
the potential to create durable, competitive advantage, and aptly label theability of leaders to leverage conversations as relationship capital.*
We found that leaders currently spend, on average, 41 percent of
their time managing (see the figure to the left). In part, this is due toa perception among leaders that their organization’s senior leaders
place more value on managing competencies than on interpersonal
relationships. Given a preference, leaders would nearly double the timethey spend interacting and cut in half their time spent managing.
There is a high cost to organizations that neglect striving for a betterbalance in how leaders spend their time. A heavier focus on managing
leads to less job satisfaction, higher turnover, and lower engagement
among leaders. If organizations signaled that time spent interacting was
as valuable as time spent managing, they likely would have a stronger
leadership bench strength, which in turn would be closely linked tosuperior financial performance.

Now What.01 Organizations need to hold all levels!

of managers accountable, in equal
proportions, to their interpersonal
skills and the results they accomplish.
Measurement of employee engagement
has come a long way in providing leaderswith feedback (which can be used as
benchmarks) on how others perceivethem.

.02 Ensure that your selection and promotion
systems include a valid measure ofinteraction skills. A bias remains to
select or promote leaders based on
their technical skills rather than theirleadership skills.

.03 Building positive interaction skills is noteasy. In our experience with training
thousands of leaders, with years ofpractice coupled with a heavy dose of selfinsight, but leaders can be trained anddeveloped to interact better with others.

Organizations That Value Interacting
Benefit More

DDI has evaluated thousands of leaders using a highly valid assessment
center process. In simulated leadership environments, we assess a wide
range of competencies, but also focus on key interaction skills:• Maintains or enhances self-esteem.
• Listens and responds with empathy.
• Asks for help and encourages involvement. (to enhance collaboration)• Shares thoughts, feelings, and rationale. (to build trust)• Provides support without removing responsibility. (to build ownership)• Facilitates discussions.
Leader performance on these interaction skills is sorely lacking, withless than one in three displaying high proficiency.** Not surprisingly,
senior managers perform as poorly as new frontline leaders.
* Matson, E., & Prusak, L. (2010, September), Boosting the Productivity of Knowledge
Workers, McKinsey Quarterly.
** Busine, M., Watt, B., Wellins, R.S., & Boatman, J. (2013), Driving Workplace
Performance Through High-Quality Conversations: What Leaders Must Do Every Day
to Be Effective, Pittsburgh, PA, Development Dimensions International.

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Global Leadership Forecast 2014|2015

What’s Holding Them Back?

Top Barriers
to Learning

Make the Course More Like the Job
and the Job More Like the Course

What Is Getting in the Way of Learning? Leaders Said...

44
Global Leadership Forecast 2014|2015

What’s Holding Them Back?

Crafting a Better
Learning Experience
What makes learning work? What holds it back? All types of leadershiplearning have the same goal—sustained improvement of leader
behaviors. But the route to achieving this goal takes a more circuitous
path for some types of learning. When we compared leaders’ reportsof the most common barriers to formal learning (training courses,
diagnostic assessments, books/articles, etc.) with those to on-the-job
learning (shadowing others, networking, developmental assignments,
special projects, etc.), we found a surprising pattern: The barriers aren’t
uniform. In fact, they are nearly exactly opposite. The factor most
likely to hold leaders back from stronger development resulting fromon-the-job learning—that is, poor post-learning feedback from one’s
manager—is rarely a barrier in formal learning. The top two barriers toformal learning—low relevance to the job and to business challenges—
typically are strengths for on-the-job learning.

Now What!

.01 Managers of learners, by connecting

learning to job and business needs andby reinforcing it after it occurs, are key toconverting learning to behavior change.
Hold them accountable for doing so.

.02 For formal learning, stay vigilant for

how changes in organizational strategy
should dictate changes in the learning’s
focus and how it’s positioned to leaders.
Don’t assume leaders will spot relevance
automatically. Clarify these links withboth the learner and his or her manager
and quickly rectify any lack of perceived
relevance.

.03 Stop viewing—and allowing leaders toview—on-the-job and formal learning as
The figure at left illustrates this contradictory pattern clearly, listing six
distinct events. See them as counterpartscommon barriers rated by leaders. Notice that what works for one formin an integrated learning journey, usingof learning rarely works for the other. However, there is a promisingformal learning to build structure,
way to view this pattern too: Organizations know how to provide
planning, and reinforcement aroundon-the-job learning to better convert
learning with recognized relevance, and that is rarely a barrier for oninformal learning experiences into
the-job learning. They also know how to reinforce learning experiences
sustained changes in leader behavior.
with manager feedback, which is rarely a barrier for formal learning.
In other words, organizations are demonstrating the use of the tools,
processes, and information needed
to ensure both relevance and postLeader responses to the question, “What word would you use tolearning manager support.
describe your organization’s approach to leadership development?”
What’s missing, however, is theapplication of this knowledge acrossthe range of learning methods. As aresult, learning experiences are too
often squandered and considered onlyin isolation rather than as a planned
sequence integrating on-the-job andformal learning opportunities. By
viewing on-the-job learning more likeformal learning and formal learning
more like on-the-job, organizations
will be better able to leverage thedistinct strengths of both forms, thus
generating stronger development
outcomes for leaders and value forthe business.

(Text size reflects frequency of response.)

45
Global Leadership Forecast 2014|2015

What’s Holding Them Back?

GenderDiversity
Pays Off

Organizations with Better Financial Performance Have More Women in Leadership Roles

46
Global Leadership Forecast 2014|2015

What’s Holding Them Back?

!

Some Differences Count

Now What

There was no significant difference between the men and women in
our study regarding leadership skills or ability to handle management
and business challenges. Yet, women remain underrepresented inhigher levels of leadership. What explains this imbalance?

.01 Bolster current development programs

One of the few significant differences between the sexes was levelof confidence. Men considered themselves more effective as leaders(highlighted in the illustration below). This self-confidence is reflectedin how highly they rated their leadership skills and ability to tackle
management and business challenges. Women, on the other hand, wereless likely to rate themselves as highly effective leaders compared totheir peers, to have completed international assignments, to lead acrossgeographies or countries, and most significantly, to lead geographicallydispersed teams (a big opportunity gap). Missing out in these key
developmental opportunities makes a difference: Leaders who hadaccess to these global and more visible leadership experiences were
far more likely to be promoted and to advance more quickly in theirorganizations.

or implement new practices that allow
leaders, especially women, to build
knowledge and skills. Development
opportunities build confidence.

.02 Ensure that formal practices are in place

for selecting and transitioning leaders forinternational and stretch assignments.
Multinational organizations and thosewith a focus on global growth should
pay particular attention to diversity andencourage women to take on global
leadership roles.

.03 Strongly supported mentoring programs

can play a key role in helping develop andprepare new leaders, women in particular.
Women who have achieved seniorleadership roles overwhelmingly report
how critical mentorship was in helping
them advance and grow in their careers.*

These gaps are worth noting and addressing. Encouraging gender
diversity in your leadership pool means greater diversity of thought,
which, in turn, leads to improved problem solving and greater businessbenefits. Gender diversity has paid
off for organizations where 30 to
Where Are the Gender Differences?
40 percent of leadership roles areheld by women. The difference
between top and bottom financial
performers is clearly illustrated atleft. Organizations in the top
20 percent of financial performancecounted 37 percent of their leaders as
women; among organizations in thebottom 20 percent, only 19 percent ofleaders were women. The same trend
emerges in the percentage of leaders
who were high-potential women:Among organizations in the top
20 percent for financial performance,a statistically significantly higher
percent of leaders were highpotential women (28 percent).
* Neal, S., Boatman, J., and Miller, L. (2013),
Women as Mentors: Does She or Doesn’t
She? A Global Study of Businesswomen and
Mentoring, Pittsburgh, PA, Development
Dimensions International.

47
Global Leadership Forecast 2014|2015

What’s Holding Them Back?

Engaging
Leaders in the
Information Age
Leaders That Get the Information They Need to Succeed Are More Engaged

48
Global Leadership Forecast 2014|2015

What’s Holding Them Back?

!

Clarify Targets for Success

Now What

Almost all companies have some sort of leadership competency modeland spend millions developing and maintaining it. Is there a payoff?
We explored the effect on engagement and organizational outcomesof having clear information about the competencies/skill areas and thespecific behaviors needed to succeed as a leader. Our analysis reveals
that the answer is “plenty”—but only if the necessary level of behavioral
detail is built into the model.

.01 To gain the full benefits of a competency

Only 56 percent of leaders get information about both the competencies
and specific behaviors needed to succeed from their organizations, but
those that do are 2.8 times more likely to be highly engaged. That’s
significant considering that highly engaged leaders are 4.5 times more
likely to stay with their organizations.

approach to talent management, verify
that your competency model outlines
details at the behavioral level.

.02 Provide leaders with their targets

for success, and then back them up
with information about how their own
performance matches up.

.03 Don’t stop at one discussion, but

continue the dialog. Behavioral targets
should be revisited and redefined as
leaders move into new roles.

Providing a clear picture of success better enables these organizations tohang on to their talent. In addition, organizations whose leaders say they
are getting clear information are:• 7 .8 times more likely to have high leadership strength.
• 9 times more likely to have high leadership agility.
• 2 .3 times more likely to have an effective performance management
system in place (due to the key role competencies play in defining
expectations for success).
• M uch more likely to demonstrate better financial performance(60 percent of organizations who provide this information are in
the top 20 percent of financial performance compared to 0 percent
of organizations who don’t).
While these results make a strong case for competency models, not allcompetency models are created equal. Those that provide the greatest
level of detail—and which, in turn, can be tapped to build specificsuccess profiles to guide assessment and inform selection, development,
and promotion decisions—are the most likely to deliver the strongest
returns.

49
Global Leadership Forecast 2014|2015

What Happens When Organizations Get It Right?

Pipeline orPipe Dream?

Avoiding the Nightmare Scenario

Talent Management Practices That Affect the Percent of Ready-Now Leaders

50
Global Leadership Forecast 2014|2015

What Happens When Organizations Get It Right?

How Talent Management
Practices Reduce
Succession Risk
Growing your own leaders pays off richly. Organizations that fill alarger percentage of their positions internally have significantly higher
leadership strength and financial performance (more than three times
higher) than organizations that don’t. Yet, the ability to actually do thisvaries widely; in other words, it’s much easier said than done. For the
average company, it’s not even a coin flip despite the higher stakes.
Across our entire sample, less than half (46 percent) of critical positions
could be filled immediately by internal candidates, on average.
If a full, capable bench is your organization’s goal, what are thebest ways to increase your odds? We found that two types oftalent management practices were closely linked—but in different
ways—to the key metric of percent of critical positions that can be
immediately filled by internal candidates. These practices are shownin the illustration on the previous page. On the left side of the tree
are the practices that affected this metric through omission; that is,organizations that took these steps were still only average in theirability to fill critical positions, but those that failed to do them fell far
behind their peers. The percentages in the leaves show how much themetric changes when these practices are not done. Notice that there area few common characteristics among them. They deal with defining
and providing feedback on competency skill targets for leaders,broadly using these competencies, and aligning leadership performance
expectations with organizational strategy.

Now What!

.01 First, focus on reducing the threats ofomission on the readiness of your bench.
Institute, reinforce, and systematize thetalent management practices on the left
side of the tree.

.02 Next, once these are firmly in place andfunctioning effectively, differentiate yourorganization by aggressively pursuing
the actions on the right side of the tree.
These future-oriented practices have aclear association with a stronger bench.

.03 Revisit these practices often to make surethey are being adhered to consistently. In
particular, focus on these three practices
that are not often done well but whichhave a large payoff: putting programs inplace to ensure smooth transitions fromone leadership level to the next (only
37 percent of organizations do this well),building high-quality development plans
for leaders (38 percent), and ensuring
regular reviews of these development
plans (49 percent).

The practices on the right side of the tree affected organizations’ability to fill critical positions through action. Companies that failed totake these steps were only average, but those that took them boosted
their bench strength noticeably compared to others (indicated by thepercentages in the leaves). These practices deal with forward-facing
systems and processes and a future orientation for both individuals andorganizations: determining leader skills linked to success, ensuring thatleader development plans are high-quality and regularly reviewed, andfacilitating smooth transitions among leadership roles.

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Global Leadership Forecast 2014|2015

What Happens When Organizations Get It Right?

To Grow
or to Grab?

Risks and Rewards of Internal Versus
External Leader Staffing Strategies
Talent Practices and Leader Success Rates by Leader Staffing Strategy

52
Global Leadership Forecast 2014|2015

What Happens When Organizations Get It Right?

Whether and How “GrowingYour Own” Works BestFor many organizations a “grow your own” strategy to fill leaderroles with capable internal candidates is an aspiration and hallmark
of corporate culture. Internal promotions are not always desirable orfeasible, however, and some organizations seek to “grab” leaders from
elsewhere rather than grow their own talent pools. In our research
spanning 1,500 organizations, we asked three questions to gauge theimpact of various staffing approaches:
1.	Do internal (80+ percent of leaders hired internally), mixed(50–75 percent), or external (<50 percent) approaches generate
the best success rates?
2.	What practices are the strongest drivers of leader success rates,
and how do these vary by staffing approach?
3.	Is there a tipping point after which growing your own becomesineffective?
Overall, we found a consistent payoff when promotions drew heavily
on internal candidates for leader success rates (shown on the previouspage) and for key talent outcomes (shown below). The previous pagealso shows which five talent practices best differentiate higher successfor each staffing approach, comparing the success rate when thatpractice is in place (right end of the white bar) and when it is not (leftend of the white bar).
Two talent practices, linking leader performance expectations to strategy
and leaders practicing key skills with managers, were uniformly linked tohigher leader success rates. When leaders regularly reviewed development
plans with their managers, this was a strong driver of success when half ormore leader roles were staffed internally, highlighting the long view taken
by companies stocking and drawing on their internal talent pool.
Rigorous competency management was a unique driver of success rates
for internally and externally focused companies. These organizations
have chosen their focus—either internal or external; whether they
achieve success is then determined by their ability to deploy broadcompetency models. Contrast this with mixed-focus organizations where
talent practices had a weaker impact in each case—as shown by shorterbars for those using versus not using.
Although, overall, success rates increased as more leaders were
promoted from within, we did find a point of diminishing returns: Past
80 percent, the advantages of additional internal hiring were minimal. In
ambiguous and complex environments requiring periodic infusions of
new perspectives and ideas, the risks of an exclusively internal-focusedleader staffing strategy (as compared to one that is only largely so) may
outweigh the benefits.

Now What!

.01 Install frequent talent audits, strategic

talent planning, and high-quality
development systems that allow you to
confidently promote leaders heavily fromwithin. This approach will produce higher
rates of leader success.

.02 Regardless of your staffing approach,confirm that organization strategy fully
cascades down to leader performance
expectations and that leaders have ample
opportunities to practice key skills withmanagers and receive their feedback.

.03 If your staffing model is heavily weighted(80+ percent) toward internal promotions,ensure a firm and broad-based foundationof competencies to define and underlie
leader success.

.04 For mixed-focus hiring, consider amore definitive shift toward either aninternally or externally focused approach;organizations in the middle ground findindividual talent practices have a lower
impact on leader success rates.

.05 For externally focused companies(45 percent or less internal), ensure
strategic performance alignment, feedback
for skill development, and competency
management, and confirm senior leader
accountability for leadership development.

Improved Leadership Outcomes for
Organizations with a Higher Rate ofInternal Promotion

53
Global Leadership Forecast 2014|2015

What Happens When Organizations Get It Right?

Behind“The Best”

Talent Practices of Top-Ranked
Organizations

Talent Practices Similar Across All Rankings and Unique to Specific Rankings

54
Global Leadership Forecast 2014|2015

What Happens When Organizations Get It Right?

Prestigious Companies
Manage Talent Differently

Now What.01 Top-ranked companies emphasize bothformal learning and developmental
assignments, integrating them intodevelopment programs linking classroom
and on-the-job experiences.

An organization known in the market as a “best company” gains
valuable external recognition. Beyond mere publicity, being top ranked
is an important guidepost for investors, customers, and prospective
candidates. Although top-ranked companies earn prestige, almost no
research exists on whether these organizations actually manage theirtalent differently—and if they do, how so?

.02 Emulate the Most Admired by installing

We asked HR leaders whether their company was included on any
rankings or lists reflecting strengths in their workforce. We consolidated
their responses into three reputational categories: Most Admired, Best
Places to Work, and Most Innovative. We also designated companies
included on the Global 500 list as a distinct metric based on revenue.
Comparing companies ranked on each of the lists with those that were
not ranked revealed two sets of talent practices. First, some practices
spanned rankings, showing similarity among top-ranked companies.
These practices, shown on the left side of the graphic on the previous
page, were more likely to be in place for companies top-ranked on all
the rankings than for unranked companies. Second, some practices wereunique to just one ranking. These practices, shown on the right side of
the graphic, were more likely to be in place for top companies in justone ranking, but varied little based on the other rankings.
Talent practices common across all rankings highlight the key roleof leader development, selection, and high-potential management inbuilding an employee culture that not only generates high revenue, butalso is the envy of others. Top companies also have achieved strong
leader readiness to meet key business challenges and place a premiumon developmental assignments and formal leadership training.
Several talent practices were unique to only one ranking; that is,they mattered for companies top ranked as Most Admired, Best
Places to Work, Most Innovative, or Global 500, but not for theothers. The most notable examples are the use of data to makedecisions and predict talent needs as distinguishing features of
Most Admired companies, use of coaching/mentoring programs
and leader risk avoidance for Best Places to Work, leader
capabilities in change management and customer orientation
for Most Innovative, and using external coaching and leader
readiness to manage global risk for Global 500 companies.
Although merely emulating top-ranked companies is no
guarantee that their success can be replicated, this research
is unique in identifying the specific talent practices that top
companies successfully pursue more consistently and effectively
than their unranked counterparts.

!

a culture of data-driven decision making
and carefully crafted development
assignments.

.03 Emulate the Best Places to Work byfostering coaches and mentors (beyond
the immediate manager) and by seeking
leaders’ reactions about the talent
programs they experience.

.04 Emulate the Most Innovative bybolstering leaders’ skills in change
management and understanding
customer needs.

.05 Emulate the Global 500 by connecting
leaders with external mentors andpreparing them to handle global risk
factors.

.05 Finally, recognize that being ranked asa best company is more than good
publicity—companies ranked on one ormore lists also outperform unranked peers
on key talent metrics, as shown below.

Average Percent on Key Talent Metrics for
Ranked and Unranked Companies

55
Global Leadership Forecast 2014|2015

What Happens When Organizations Get It Right?

Developing
Across the
Entire Pipeline
A Key to Financial Success

56
Global Leadership Forecast 2014|2015

What Happens When Organizations Get It Right?

Avoid Caps on and Gaps in
the Leadership Pipeline
Current and projected future leadership quality largely has remained
consistent—and by most measures weak—since 2011. In the
Global Leadership Forecast 2014|2015, only 15 percent of HR
professionals rate their future bench as strong. As organizations
respond to deficiencies in ready-now talent, their aspirational goal
often is a pipeline approach that aligns key program components (e.g.,competencies required for success, transition management) acrossleader levels, creating a smooth flow of individual contributors into
first-time leader roles and existing leaders into more advanced levels of
responsibility.
Although the logic for a full pipeline model is clear, we found that fewer
than 20 percent of organizations actualize it, because either they don’t
see the value to justify the greater levels of planning required or they aretrying, but struggling with, the logistics of execution. Also, until now,
research linking a pipeline model to financial outcomes was lacking due
to cross-organizational sample requirements, which allow comparisonsof companies with varying levels of success.
In our research we used a composite of financial metrics—profitability,
earnings per share, five-year rate of return to investors, and stockholder
equity—to compare four groups of companies:
1. T hose without highly effective leadership development programs forany of the three levels
2. T hose with high effectiveness for only one of the three levels
3. T hose excelling at two of the three levels
4. Those with highly effective leadership development for all three levels
We then compared these groups based on how they fared, on average,on the external financial composite. We expected a steady and evenprogression of financial success with each additional level of highquality leadership development in place. What we found, however,
was different than anticipated and is shown on the previous page.
The incremental increase of each new program was far from even.
Successful development at each additional level was linked to a small
financial advantage, but only when organizations were successfully
extending their leadership development programs across all three levels
did they financially outperform their peers, and decidedly so.

Now What.01 Target a full-pipeline approach to!

leadership development: Organizations
that don’t are much less likely to achieveeven average financial performance.

.02 Create competency models that cascadeand link between job levels, emphasizing
cross-level commonality when appropriate.
These models are key to building thecommon leadership language that isnecessary for a full-pipeline development
model.

.03 Extend high-potential programs acrossall levels of leadership using streamlined
and scalable tools to avoid “capping” thepipeline before it can extend through thefull leader ranks.

.04 Install tracking metrics as early indicatorsof falling short at any section of theleadership pipeline—frontline, mid-level,or senior. These gaps result in severe
consequences for the overall health of
the talent development system. Vigilant
measurement will help to ensure they
are spotted and addressed as soon as
possible.

.05 When expanding or revising development
programs for any level of leadership,revisit and consider adjusting programsfor other levels within a similar timeframe to allow program improvementsfor one level to transfer to other levels,
keeping all programs well synchronized.

57
Global Leadership Forecast 2014|2015

Conclusion

Looking Back
to Look Ahead
Talent Management Predicts
Financial Success

There’s one proven way to forecast how your current talent management and leadership development practices will affect yourorganization’s financial performance over the next three years: Learn from the past. The best forecasters spend more time looking
backward than forward because they know that to forecast future trends accurately, they first must recognize historical trends.
We applied this “learn from the past” approach to this report by looking at the historical data from organizations that participatedin our 2011 Global Leadership Forecast. When we compared their talent management and leadership development practices
then with actual financial performance now, we found some compelling links (illustrated below). Organizations with highly
rated leadership development programs were 8.8 times more likely to have high leadership quality and bench strength comparedto those organizations with low-rated programs. This indicates that effective leadership development is a strong driver of leader
quality—not just now, but also for the future. Another benefit for organizations with higher-quality programs is that they were
7.4 times more likely to have leaders who were highly engaged and inclined to stay with the organization, demonstrating how
development programs positively shape a leader’s experience and, in turn, affect their engagement and retention.

The 2014 Payoff of Better 2011 Leadership Development Practices

58
Global Leadership Forecast 2014|2015

The bottom line? Leader quality helps predict financial performance. Organizations with high leader quality were six times
more likely to be among the top 20 financial performers of all organizations. Although there was no evidence of a direct link
between leader experience and financial impact, positive leader experiences amplified the link between leader quality andfinancial impact greatly: Organizations with both high levels of leadership quality and leader engagement/retention werenine times more likely to outperform their peers financially. These links point to the future impact talent management andleadership development practices can have on financial success.
Looking forward, how can you ensure the right practices are in place to help your organization be where you want it to be,both in leadership quality and financial success, in three years?

!

Now
What
.01 Establish or reinforce the business case for prioritized and high-quality
leadership development. Achieving improved leadership quality,
bench strength, and leader engagement/retention along with theresulting financial impact will be much more challenging without an
integrated and solidly reinforced strategy for leader growth.

.02 Measure the effectiveness of current talent programs with a focus on
improving the leader experience. The more engaged, developed, andempowered your leaders are, the more they can help drive businessoutcomes.

.03 Use analytics to continuously learn from historical trends andimpending talent needs in order to determine where to focus and how
to optimize talent programs. The key to predicting future outcomes isto track, make sense of, and guide action using the right data.

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Global Leadership Forecast 2014|2015

Leadership Practices Scoreboard—Across 1,500+ Organizations, Which Matter Most?
This table shows 20 leadership practices in three categories. For each practice HR professionals indicated whether it is the norm fortheir organization as well as what impact the practice had on four outcomes captured in the research: high-quality development; leader
experience (engagement and retention); leadership strength (current and next three years); and the organization’s financial performanceover the prior year.

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Global Leadership Forecast 2014|2015

Organizational Factors Scoreboard—Across 1,500+ Organizations, Which Matter Most?
This table shows several organizational factors and their impact on four outcomes captured in this study: high-quality development,
leader experience (engagement and retention), leadership strength (current and next three years), and the organization’s financial
performance over the prior year. Because most factors listed are supported by a range of individual leadership and talent management
practices, the cumulative impact of these factors tends to be stronger than many practices on their own.

HR Benchmarks
We asked HR participants to provide general information about the makeup and turnover and success rates of their leaders. The figure
below provides median benchmarks from organizations across the globe. The bars represent the general range of responses received
from HR respondents (between the 10th and 90th percentiles); the blue dots indicate the median of all organizations; and the green stars
indicate how leading organizations (represented by those with the highest leader quality and bench strength) responded on average.

61
Global Leadership Forecast 2014|2015

Appendix
Demographics
Organization Characteristics
Industry

Number of Employees

4%

Business Services

11%

1–200

2%

Construction15%

201–500

6%

Energy & Resources11%

501–1,000

11%

Financial & Insurance

24%

1,001–5,000

6%Health Care

11%

5,001–10,000

22%

Manufacturing9%

10,001–20,000

11%Pharmaceuticals

9%

20,001–50,000

3%Retail & Consumer Business

9%50,001 or more

5%

Technology & Telecommunications

14%

Transportation

16%

Other Industries

Presence in Global Market
38%

National

62%	Multinational (own, operate, or have affiliate
offices outside own country)

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Global Leadership Forecast 2014|2015

Leader Characteristics
Leader Level

Age

34%

First-level leader

2%Less than 25

33%

Mid-level leader

23%

26–35

27%

Senior or Higher-level

41%

36–45

6%

Executive or Senior-level

27%

46–55

6%

56–60

1%

Over 60

Organizational Tenure
6%

Less than 1 year30%

1–5 years21%

6–10 years

16%

11–15 years

27%

More than 15 years

High-Potential Status
52%

Yes

48%

No

Generation
7%

Millennials

78%

Generation X

15%

Baby Boomers

Gender
72%

Male

28%

FemaleResponses by Region
HR

LeaderAfrica/Middle East

3%

2%

Asia

58%

58%

Australia/New Zealand

7%3%

Europe5%2%Latin America

14%

20%

US/Canada/Puerto Rico

13%

14%

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Global Leadership Forecast 2014|2015

About DDI’s Center for Analytics andBehavioral Research
The Global Leadership Forecast 2014|2015 is part of the continuing series of trend research conducted by DDI’s Center for
Analytics and Behavioral Research (CABER). CABER’s publications are designed to produce actionable, evidence-based
insights to advance knowledge of current and emerging talent management topics such as leadership development, succession
management, and talent acquisition.
CABER also conducts, coordinates, and champions analytical research with DDI’s clients to benchmark, evaluate, forecast
the effects of, and optimize their talent management practices toward the goal of prescriptively aligning talent readiness withbusiness objectives. CABER’s research, including this report, is available at www.ddiworld.com.

About Development Dimensions International (DDI)
Who We Are. Development Dimensions International (DDI) is the world’s premier talent management consultancy.
Forty-five years ago, we pioneered the field; today we remain its chief innovator.
What We Do. We help companies transform the way they hire, promote, and develop their leaders and workforce.
The outcome? People ready to instigate, understand, and execute business strategy and address challenges head-on.
How We Do It. If you have ever had a leader you revered or marveled at how quickly a new hire came up to speed,
you might very well be experiencing DDI at work. Often, we are behind the scenes, creating custom training or assessmentsthat clients can roll out on their own. Other times, we are more visible, helping clients drive big changes in their organization.
Always, we use the latest methods, based on science and the test of time.
Who We Do It With. Our clients are some of the most successful companies on earth. They’re Fortune 500s andmultinationals, doing business across a vast array of industries, from Berlin to Bangalore and everywhere in between.
We serve clients from 42 DDI-owned or closely affiliated offices.

About The Conference Board
The Conference Board is a global, independent business membership and research association working in the public interest.
Our mission is unique: To provide the world’s leading organizations with the practical knowledge they need to improve theirperformance and better serve society.
Founded in 1916, The Conference Board is an objective, independent source of economic and business knowledge with one
agenda: to help our member companies understand and deal with the most critical issues of our time.
We conduct research and convene business leaders in forums large and small, public and private. The insights captured throughour extensive network feed directly back into our research and meeting agendas, ensuring that our activities remain sharply
focused on the key issues of the day.
The Conference Board works within and across three main subject areas—Corporate Leadership, Economy & Business
Environment, and Human Capital—to create a unique, enterprise-wide perspective that helps business leaders respond today,
anticipate tomorrow, and make the right strategic decisions every day.

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About the Authors van Sinar, Ph.D., is DDI’s chief scientist and director of its Center for Analytics and Behavioral Research
E(CABER). Evan and his team conduct comprehensive analytical evaluations of talent management programs
to gauge their impact and to forecast opportunities to better align with business strategy. They also produce
contemporary, prescriptive thought leadership about talent management practices. Evan serves as a thought
leader for DDI on topics such as leadership development, talent management analytics, data visualization,
generational differences, social media, and preemployment assessment. He is a member of the Society
for Industrial and Organizational Psychology’s executive board and a frequent presenter at professional
conferences. Evan’s work has been featured in Chief Learning Officer, the Journal of Applied Psychology,
Personnel Psychology, and numerous other publications.
 ichard S. Wellins, Ph.D., is senior vice president at DDI. He is responsible for launching DDI’s new
Rproducts and services, leading DDI’s Center for Analytics and Behavioral Research and its major research
projects, and developing and executing DDI’s global marketing strategy. An expert on leadership development,
employee engagement, and talent management, Rich has written for more than 40 publications and published
six books, including Empowered Teams, Inside Teams, and Reengineering’s Missing Ingredient. He has mademore than 100 presentations at professional conferences worldwide and is a judge for CNBC’s Asia Business
Leaders Award. His research and insight have been featured in The Wall Street Journal, BusinessWeek, Forbes.
com, USA Today, and numerous international publications and on National Public Radio.
 ebecca Ray, Ph.D., is executive vice president, Knowledge Organization and Human Capital Practice LeadR
for The Conference Board. She oversees the research planning and dissemination process for three practices
areas (Corporate Leadership, Economics and Business Development, and Human Capital); she is responsiblefor defining the research agenda that also drives The Conference Board’s business planning process. She
is responsible for overall quality and the continuing integration of The Conference Board’s research andengagement efforts. Rebecca is author of numerous articles and books, including her coauthored work,
Measuring Leadership Development (McGraw-Hill), and Measuring Employee Engagement.
 my Lui Abel, Ph.D., is managing director of Human Capital at The Conference Board. She leads researchAefforts focusing on human capital analytics, leadership development, labor markets, strategic workforce
planning, talent management, diversity and inclusion, human resources, and employee engagement.
Amy was recently published in People & Strategy Journal, The SAGE Handbook of Workplace Learning,
Human Resource Development Quarterly, and ATD’s T+D (Training and Development) magazine.
 tephanie Neal, M.A., is a research associate in DDI’s Center for Analytics and Behavioral Research. SheSconducts evaluation studies and research on leadership and human talent in the workplace. Stephanie also
has worked with clients from a wide variety of industries to design and execute analytics initiatives that
demonstrate the impact of assessment and development programs on individual-level behavior change andorganizational-level business objectives.

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Global Sponsors
Association for Talent Development

The Association for Talent Development(ATD), formerly ASTD, is the world’s
largest association dedicated to those who
develop talent in organizations. These professionals takethe knowledge, skills, and abilities of others and help themachieve their full potential. ATD’s members come from
more than 120 countries and work in public and privateorganizations in every industry sector. ATD supports thework of professionals locally in more than 125 chapters,international strategic partners, and global member
networks. Visit www.astd.org.

Berlitz

Berlitz has been the world’s premierprovider of language solutions for morethan 135 years. With more than 500
locations in 70-plus countries, Berlitz
offers a comprehensive portfolio of language services,
communication, cultural consulting, and global leadershipdevelopment solutions via multiple deliveries, including
face-to-face, virtual, and blended. Visit www.berlitz.us.

Gutemberg Consultores

Gutemberg Consultores considers humanresources as human, rather than simple
resources. Gutemberg Consultores provides
its clients with tailor-made services through amultidisciplinary team consisting of consultants
with solid credentials, fluent in English and Spanish, andproven professional experience in Brazil and elsewhere. See
moreat www.gutemberg.com.br.

HR.comHR.com, is the largest online community
where human resource professionals can
showcase their talent, share their expertise, learn fromindustry experts, and network with more than 240,000
HR professionals to take advantage of invaluable
resources. HR.com offers unlimited e-learning credits forcertification and recertification, a guaranteed pass PHR/
SPHR exam preparation course, personal excellence app
for your organization, online monthly excellence essentials
publications, and global leadership programs. Learn
more at www.HR.com.

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Global Leadership Forecast 2014|2015

HRoot

HRoot is a leading human resources media
and Internet company in China, withbrands and services such as www.HRoot.com, Human
Capital Management magazine, Overclass, Society for
HR Executives, and more. More than 20,000 people haveattended HRoot’s off-line events each year, while its
publications have a readership of 30,000. It serves over
20,000 customers now, including more than 95 percent of theFortune 500 companies in China. Visit www.HRoot.com.

Institute of Executive Development

The mission of the Institute of Executive
Development (IED) is to drive innovationin executive development. IED supports business executives,boards, and talent management professionals to benchmark
their practices, design their strategies, and create high-impact
executive development services. More information is at www.
execsight.com.

Mexican Association for Human Resources Direction
The Mexican Association for Human
Resources Direction (AMEDIRH)
was founded in 1947, and fromits inception achieved significant
growth in membership as well as in services and allianceswith organizations in the United States and Canada. The
association partners with more than 12,500 human resources
executives from its member organizations. AMEDIRH’s
mission is to promote the development of these executives
and help them achieve their growth objectives. For more
information, visit www.amedirh.com.mx.

People Matters

People Matters is a leading humanresources knowledge and media platform
in India. People Matters’ print, online,
digital, and events platforms provide thousands of HR andbusiness stakeholders with information, best practices,
trends, and industry news. In a short span of four years, it has
emerged as India’s single point of reference for knowledge inthe HR industry. Visit www.peoplematters.in.

The Next Step

The Next Step is a specialist consulting practicein the human resource market within Australia
since 1998. Its activities cover all areas of humanresource recruitment, including search, advertised selection,
human resource contracting, and interim human resource
management. For more, see www.thenextstep.com.au.

Acknowledgments
This study was a true global effort, and the authors would like to acknowledge the invaluable contributionsof the following people:

Research Advisors

Chuck Mitchell (The Conference Board), Tom Schott, Mike Kemp

Global Project Team

Project Management: Jennifer Pesci-Kelly, Kim Cimarolli, James Court, Nikki Dy-Liacco, Heather Leach, Amanda Popiela(The Conference Board), Justin Yopp

Participant Recruitment

Alberto Albónico Alcayaga, Malu Arredondo, Amit Arte, Stella Chang, Trixia Co, Joanne Colley, Debbie Conway, Julia
Farias, Priscilla Giglio, Cindy Gong, Cagla Gunduz, Ozgur Guner, Frisca Harmala, Chiqui Ho, Yumi Ikeda, Katrina Isaguirre,
Sirin Kont, Denise Laurie, Angela Lopez, Aki Nagashima, Stephanie Nam, Panmanee Ong-art, Stephanie Weng, andSamantha York

Editorial

Mike Crawmer, Shawn GarryGraphic Design

Janet Wiard, Susan Ryan, Stacy Infantozzi

WebMark Hamilton, Keri Hritz

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References
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Busine, M., Watt, B., Wellins, R.S., & Boatman, J. (2013). Driving workplace performance through high-quality
conversations: What leaders must do every day to be effective. Pittsburgh, PA: Development Dimensions International.
Johansen, B. (2009). Leaders make the future: Ten new leadership skills for an uncertain world. San Francisco:
Berrett-Koehler Publishers.
Kellerman, B. (2012). The end of leadership. New York: HarperCollins.
Matson, E., & Prusak, L. (2010, September). Boosting the productivity of knowledge workers. McKinsey Quarterly.
McCall, M.W., Yost, P.R., McHenry, J.J., O’Connor, P., & Plunkett, M. (2014, May 15). Beyond 70-20-10 leadershipdevelopment. Panel discussion presented at the meeting of the Society for Industrial and Organizational Psychology,
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Mitchell, C., Ray, R.L., & van Ark, B. (2014, January). The Conference Board CEO challenge 2014®: People andperformance. New York: The Conference Board.
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We asked leaders what would help increase their effectiveness. They answered:
My Organization Needs to STOP...
Assuming that development happens by itself without external stimulus | Implementing procedures/processes across countries without
understanding local abilities | Being paternalistic | Treating leaders as technicians | Centralizing everything at a regional/global level as this is
reducing our nimbleness and time to market | Assuming that I do not want to grow as a leader | Promoting people
that have no leadership skills but are engineers, doctors, or MBAs | Creating sporadic training and management events with no relation between
them | Allowing executives to use a punitive approach to get others on the right track | Accepting when leaders display inappropriate behaviors
or competencies | Being secretive about development plans for future leaders | Promoting people without adequate

understanding and support for them to succeed in the initial few months | Expecting that leadershipcan come only from the top | Allowing different parts of the organization to do associate training differently | Feeling the need to be involvedin every decision | Not showing a real interest in creating development plans for leaders | Failing to recognize the presence of leadership
potential in employees | Expecting that coaching can make up most of your time when admin work is so huge | Introducing too many

leadership models and concepts without a specific business agenda | Denying employees a chance togrow professionally | Giving mixed messages between the importance of leadership and focusing on cost | Making decisions not based ondata/objectivity | Using phrases such as “do more with less”—this is unsettling for both leaders and staff | Allowing unjustified favoritism ofcertain individuals/parties | Preventing managers from focusing on each individual staff member’s

development needs | Distancing frontline management from senior leadership | Not holding supervisors accountable for not training
their subordinates | Giving too much priority to younger leaders | Assuming anyone can be a leader | Hiring people of the same ethnic andgenerational background as the most senior ranks | Talking about growing talent but neglecting to develop a strategy and accountabilities that
support this | Sending employees to training that is too generic | Being too flexible and applying different yardsticks across people and geographies| Treating “racehorses as cart horses” | Developing and implementing new processes without cultural assessments andchange management | Giving me a span of control that reduces the interpersonal time I have for individuals and team development | Assumingthat top leadership is setting good role models for leaders across the organization | Looking at a narrow geographic perspective without giving
empowerment/autonomy to regions | Pretending people are doing their jobs well when the data states otherwise | Adding formal

training without planning ahead so we can put it on our developmental plans | Looking at employee

development only during the appraisal period | Hiring new leaders without giving opportunities to existing leaders | Perceiving that the rest of theworld is underdeveloped in its skill set, resources, and capabilities | Telling us what to do and how to do it | Promoting people with no talent to lead
| Making excuses for poor performers | Talking without commitment to their own message (practice servant

leadership by not just talking a good game, but also following their own words) | Micromanaging
local business units | Limiting staff development for the newer generation | Tolerating nonperforming departments and employees | Creating
territorial business units | Changing direction without engaging people in understanding why | Failing to give us a vision or a path to the future |Second-guessing decisions I make | Being prescriptive about what is appropriate for people to lead on | Letting employees find their own ways
to develop their own skills | Expecting responsibility without empowerment | Resisting taking risks | Making the annual performance reviews
a “check the box” process | Expecting leaders to be ready and productive from day one | Limiting opportunities to a top tier of employees| Reinventing and redefining what leadership is | Hiring or promoting anything but excellent talent | Pretendingthat we have a culture | Delegating without accountability | Failing to prioritize objectives | Introducing technology which ends up being
obsolete without being used | Overloading leaders with tasks that could be done by support | Imposing rather than engaging leaders in strategy
implementation | Valuing busywork that is done to make oneself visible | Instituting change with little or no involvementof frontline leaders | Enrolling in training programs that aren’t new to us or value-adding | Burying its head in the sand that theworld is changing | Promoting people on who they know rather than on merit | Recruiting senior leadership only from outside | Random hiringfor key global positions | Teaching things not relevant to my job | Forcing

leaders to spend time managing

upward rather than on direct reports and customers | Overwhelming managers with roles they are not trained for |About DDI
DDI is a global leadership consulting firm that helps organizations hire,promote and develop exceptional leaders. From first-time managers
to C-suite executives, DDI is by leaders’ sides, supporting them inevery critical moment of leadership. Built on five decades of researchand experience in the science of leadership, DDI’s evidence-based
assessment and development solutions enable millions of leaders
around the world to succeed, propelling their organizations to newheights. For more information, visit ddiworld.com.

EMAIL: info@ddiworld.com
VISIT: www.ddiworld.com*KSM3*KSM3

MICABERSR19R© Development Dimensions International, Inc., MMXI. All rights reserved.