© 2004 Center for Creative Leadership The Leadership Gap The Overwhelming Case for Leadership Development Presented by Mary Hollingsworth Washington, D.C. – August 19, 2004

© 2004 Center for Creative Leadership Poll: How important is the quality of an organization’s leadership to shareholder value? A)Not at all important B)Somewhat important C)Important D)Very important E)Extremely important

© 2004 Center for Creative Leadership August 2003 e-Newsletter: How important is the quality of an organization’s leadership to shareholder value?

© 2004 Center for Creative Leadership The Present State of Leadership Pending retirements of those born in the late 1940’s ’s will leave an estimated 21% of top mgt. and 24% of middle management positions unoccupied and those percentages are expected to grow. The corporate world is experiencing a “leadership gap” - leadership ranks are stretched too thin, intense recruiting wars for talent are underway, and too little thought is given to formal development systems.

© 2004 Center for Creative Leadership Four Key Questions 1.Success Profile: What leadership skills and perspectives are critical for success? 2.Current Bench Strength: How strong is the leadership bench in these critical skills and perspectives? 3.Potential Pitfalls: What potential pitfalls lie ahead for leaders? 4.Developmental Planning: What are the best development strategies for improving Bench Strength?

© 2004 Center for Creative Leadership What Was Assessed? Key leadership competencies: Importance Skill (Bench Strength) Prevalence of characteristics that can lead to being involuntarily stalled, demoted, fired, or asked to take early retirement Promotability Overall measures of performance

© 2004 Center for Creative Leadership The Study Data Over 21,000 Execs from 10 Industry Sectors & 50 Countries Rated by more than 200,000 co- workers

© 2004 Center for Creative Leadership General Demographics of Study Sample

© 2004 Center for Creative Leadership Level and Performance Status of Study Sample

© 2004 Center for Creative Leadership The Benchmarks Survey Statistically reliable, valid, comprehensive multi-rater feedback instrument Helps to identify strengths and areas for development as well as potential problems that can stall a career. Based on over 20 years of CCL research.

© 2004 Center for Creative Leadership When you think about your career as a manager, certain events probably stand out in your mind - things that led to a lasting change in you as a manager. Please identify at least three key events in your career - things that made a difference in the way you manage now. What happened? What did you learn (for better or worse)? Key Events Research Question

© 2004 Center for Creative Leadership The Variety of Experience Where Learning Occurs Hardships Challenging Assignments Learning from Others Training & Other Events

© 2004 Center for Creative Leadership The Lessons Learned Critical Leadership Skills and Perspectives Leading the Organization Leading Others Leading Yourself Change Management Resourcefulness Being a Quick Learner Decisiveness Leading Employees Confronting Problem Employees Participative Management Building and Mending Relationships Compassion and Sensitivity Putting People at Ease Respecting Individuals’ Differences Self-awareness Career Management Straightforwardness and Composure Doing Whatever it Takes Balance

© 2004 Center for Creative Leadership Skills & Perspectives Exec. Importance Ranking n=21,000 Leading Employees87% Resourcefulness79% Decisiveness74% Straightforwardness & Composure69% Building & Mending Relationships68% Change Management68% Doing Whatever it Takes66% Participative Management63% Being a Quick Learner48% Confronting Problem Employees31% Self-Awareness30% Balance27% Compassion and Sensitivity24% Putting People at Ease17% Respecting Individuals’ Differences16% Career Management11%

© 2004 Center for Creative Leadership Assessing the Current State of Leadership Next we asked the 230,000 bosses, co-workers and direct reports to rate the skills, attitudes, and perspectives of the 21,000 executives using the 115 questions from Benchmarks. 1 = Not at All 2 = To a little extent 3 = To some extent 4 = To a great extent 5 = To a very great extent Please rate the extent to which this person displays each of the following characteristics:

© 2004 Center for Creative Leadership Rank Skill Rating (All Obs) n>230,000 Skills & Perspectives Exec. Imp. Ranking n=21, Leading Employees87% 43.98Resourcefulness79% 63.87Decisiveness74% 83.84Straightforwardness & Composure69% Building & Mending Relationships68% Change Management68% 53.92Doing Whatever it Takes66% Participative Management63% 24.04Being a Quick Learner48% Confronting Problem Employees31% Self-Awareness30% 73.85Balance27% 93.83Compassion and Sensitivity24% 34.02Putting People at Ease17% 14.08Respecting Individuals’ Differences16% Career Management11%

© 2004 Center for Creative Leadership

Potential Pitfalls What potential pitfalls lie ahead?

© 2004 Center for Creative Leadership Research on Executive Derailment Based on 19 years of CCL research from thousands of senior executives in large and medium sized firms across the globe

© 2004 Center for Creative Leadership Key Terms Successful A person who has achieved the general manager level and is still seen as effective and promotable. Derailed A person who made it to at least the G.M. level, but has involuntarily stalled, been demoted, fired, or asked to take early retirement. This person did not live up to his/her full potential as the organization saw it.

© 2004 Center for Creative Leadership Poll: How often does derailment take place in your organization? A)Never B)Rarely C)Sometimes D)Often

© 2004 Center for Creative Leadership February 2003 e-Newsletter Results: How Often Does Derailment Take Place in Your Organization?

© 2004 Center for Creative Leadership Primary Reasons for Derailing Inability to change or adapt. Problems with interpersonal relationships. Failure to build and lead a team. Failure to meet business objectives. Too narrow business experience.

© 2004 Center for Creative Leadership “Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy.” Gen. Norman Schwarzkopf

© 2004 Center for Creative Leadership The Case for Strategic Executive Development Derailments are expensive. The higher the level, the more expensive they are. There are many false positives. Survival of the fittest is not the same thing as survival of the best. Leaving leadership development to chance is risky.

© 2004 Center for Creative Leadership Key Strategies for Leader Development Create a variety of rich developmental experiences that provide assessment, challenge, and support, Enhance people’s ability to learn from experience, and Use an approach that integrates the various developmental experiences.

© 2004 Center for Creative Leadership Questions?

© 2004 Center for Creative Leadership Contact CCL’s Client Services at Chad Sean Client Relationship Associates