HUMAN CAPITAL
New assessment research reveals
surprising findings about leader skills.
36
TD | March 2016
Copyright 2016 ATD
PHOTO: THINKSTOCK
podcast
Cracking
the C de
to leader growth
BY EVAN SINAR AND RICHARD S. WELLINS
L
eaders grow fastest when given accurate, detailed, and
actionable information about the gap between their
current skills and future potential. Companies seeking to create and channel development energy by providing
this information often turn to assessment centers to gauge a
leader’s readiness for new job challenges. These assessment
centers—which include “day in the life” simulations of what it’s
like to be a higher-level leader—are highly realistic, reliable,
and predictive of future leadership success because they provide real opportunities to demonstrate leadership skills.
Assessment center data have benefited individual leaders who seek personal and professional growth. The data
also benefit individual organizations that can look across
a group of their leaders to pinpoint development needs or
make placement and promotion decisions. However, for
senior-executive and HR professionals, there has been an
untapped need. By looking at a large body of aggregate data,
encompassing a large number of leaders across multiple
organizations, we can begin to “crack the code” to leader
growth by providing useful insights about leaders and how
organizations need to go about developing them.
Copyright 2016 ATD
March 2016 | TD
37
That was our starting point as Development Dimensions International (DDI) recently
undertook a research project integrating our
assessment data from more than 15,000 leaders across 300 organizations. This data set
allowed us to explore leader skill patterns and
how these patterns intersect with the context
within which these leaders operated, including
economic forces such as the 2007-2008 global
financial crisis and key facets of leader experience, such as function and level.
Our analyses drew on this expansive and
varied data to reveal interesting answers to
questions about the impact of having skilled
leaders, where organizations can uncover leadership talent, and the varying skill requirements
for leaders as they advance to higher levels. We
will cover four of the 18 initial findings identified in our report, High-Resolution Leadership.
What’s the organizational payoff
of higher leader skill?
Before our detailed look at leader skill trends,
we started by verifying the link between the
leadership assessment and company-level outcomes. That is, were assessed skills related to
organizational health?
We compared growth rates between organizations whose leaders scored at the highly
competent (top-third), competent (middlethird), and less competent (bottom-third)
level on the assessment, using a composite
index of leadership skill. We found a significant link between a company’s average
leadership assessment scores and five-year
revenue growth: Companies whose leaders
scored in the highly competent range increased revenue by 45 percent, compared
with just a 20 percent increase when a
Figure 1. Leader Skills Ranked by Average Skill Level, 2006-2014
Highest Ranking
Operational Decision Making
Customer Focus
Cultivating Networks
Leading Change
Driving Execution
Empowerment/Delegation
Establishing Strategic Direction
Lowest Ranking
Coaching and Developing Others
Entrepreneurship
Building Organizational Talent
2006
2008
2010
2012
Global Financial Crisis
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Copyright 2016 ATD
2014
IN MOST CASES, IT WILL BE BEST TO TARGET FUNCTION-SPECIFIC
SKILLS GAPS FIRST.
company’s leaders scored in the competent
range and a 4 percent contraction for leaders
scoring in the less-competent range.
How has the past decade reshaped
leader skills?
Our data set reached back almost a decade,
which means that it includes data from both
before and after the most critical economic
event of the past nine years: the 2007-2008
global financial crisis. The occurrence of the
crisis in the middle of the timespan for the
data we examined provides a unique perspective on how leader skills have shifted alongside
economic pressures. We ranked leaders’ skills
based on their average assessment scores at
five points: 2006, 2008, 2010, 2012, and 2014,
shown in Figure 1.
Four major trends were clear from this view
of leader skills over time. First, the crisis’ turmoil dramatically reshuffled leader skills (as
shown by the many intersecting lines between
2006 and 2010). Second, the average leader’s strongest two skills, operational decision
making and customer focus, were consistent
across the entire time period. Third, leaders
became more adept at taking personal accountability by leading change and establishing
strategic direction, while at the same time,
they more often involved others via empowerment and delegation. And fourth, skills related
to the longer-term components of leadership
slipped, as driving execution, coaching, and
building organizational talent all slid.
What does this tell us about the changing state of leadership and the most pressing
targets for leadership development? As businesses have adapted to a new economic
reality, so too have their leaders, becoming
more adept at doing more with less. However,
this unfortunately has come at the expense of
growing talent and taking risks.
To counteract these trends and avoid having an excess of leaders unprepared to step
into new roles, organizations should restore
their focus on building talent, and should push
leaders to pair their stronger ability to delegate
decisions (which has increased over time) with
high-quality coaching and a talent development
focus (which have decreased). Only through this
combination—increasingly rare in recent years—
will employees be armed with the guidance and
know-how to take action successfully, locking
in the benefits of empowerment. Delegation
without coaching is simply not a sustainable
approach for organizational health.
Where are an organization’s untapped
talent pools?
In considering emerging leader skills gaps, we
also examined the question of where companies can turn to deepen and replenish their
leadership talent pools. As organizations increasingly take a strategic approach to talent
planning, they can’t risk neglecting pockets of
leaders who either have the skills they need
now, or who can be developed as promising
leaders for the future. Though all organizations have well-worn paths to the top of the
leadership ranks, often through core business
functions such as finance and operations, our
data allowed us to determine whether these
historical patterns accurately match leader
skills, or instead if pockets of leader skills are
hidden in functions that are less conventional
sources for higher-level leadership talent.
In our research, we examined leaders from
seven major functions found in most organizations. All leaders completed the rigorous
assessments described above, providing a
direct comparison of their strengths and deficiencies on a wide range of leader skills (we
limited our analysis to the 10 skills that varied most among functions). As illustrated
in Figure 2, for each skill, we identified the
strongest two functions, weakest two functions, and the functions that were midrange
(neither strongest nor weakest).
Leaders from two functions distinguished
themselves as particularly well-rounded: marketing/advertising and sales. Leaders across
both functions excelled in communication,
Copyright 2016 ATD
March 2016 | TD
39
selling the vision, and entrepreneurship, while
marketing/advertising leaders additionally
outperformed other functions in financial
acumen and business savvy, and sales leaders
were strong in building talent and global acumen. Leaders in the oft-maligned function of
IT were in the midrange for most skills while
being particularly adept in leading teams. Engineering and operations leaders were similar
to each other in their weak communication,
financial acumen, and executive disposition.
Finance, the function found to be the most
common source of candidates for senior leader
roles, did excel in the core business skills of
financial acumen and business savvy, but these
strengths were counteracted by notable gaps
in building talent, leading teams, and customer
focus. HR leaders, often responsible for setting
up talent programs, were expectedly strong in
building organizational talent, but struggled
to demonstrate their skills in business savvy,
customer focus, entrepreneurship, and global
acumen. Some of these latter skills are crucial
for the increasing need of HR to become adept
at talent analytics.
It’s worth pointing out that no one function shows mastery across the full range of
leadership skills. This being the case, inclusive,
development-focused organizations should
recognize both the vastly varying skill development needs across functions and the risks of a
learning model that neglects these distinctions
by myopically applying the same development
curriculum regardless of a leader’s functional
background. In most cases, it will be best to target function-specific skills gaps first (including
for the HR function itself), and to then integrate
learning cohorts once the largest betweenfunction gaps have been closed.
Organizations also can use information about
complementary skills to design cross-functional
development assignments and informal mentor-
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Figure 2. Top- and Bottom-Ranked Functions Across Leader Skills
Operations
Sales
Marketing/
Advertising
Finance
Engineering
Information
Technology
Human
Resources
Strength
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TD | March 2016
Copyright 2016 ATD
Midrange
Weakness
ing pairings to take advantage of function-based
pockets of credibility and expertise (for example,
pairing marketing leaders with those from engineering, or sales leaders with operations).
How do leaders’ skill profiles change
as they rise through the ranks?
Lastly, we examined how the typical leader’s
skill profile changes at higher levels of leadership. In one specific area, we grouped skills
into two essential clusters: executing and engaging. Leaders who execute well excel in
getting tasks done and driving courses of action for employees. Leaders who engage their
employees ensure that they are fully absorbed
in their work and inherently committed to the
organization’s purpose and values.
We created two assessment score indexes,
one for execution behaviors (for example, determining actions required to implement an
initiative; measuring progress and evaluating results) and one for engagement behaviors
(for example, creating shared purpose for a
team; convincing others to commit to a vision
and set of values). We then calculated the percentage of candidates for each of four leader
levels—midlevel, operational, strategic, and
C-suite—who scored notably higher in execution behaviors, notably higher in engaging
behaviors, or about the same in both.
We found that leader skill patterns shifted
dramatically when comparing leader candidates across levels. Overall, we saw no
evidence that higher-level leaders can remain
balanced, with similar skill levels for execution and engagement. Instead, as leaders
entered into higher-level roles, their balance consistently shifted toward execution
and away from engagement, while the “about
the same” group plummeted from 48 percent
at the midlevel to just 17 percent for C-suite
candidates. Ambidextrous leaders, those who
show similar levels of strength for both engaging and executing, become increasingly
rare at the senior-most levels of leadership.
We see several risks of poor skill balance
in the top ranks of leadership. It’s unlikely
that even the best organizational strategy
will survive if senior leaders lack the will or
ability to appropriately involve employees,
who may begrudgingly comply but eventually resist. From a development viewpoint,
this skewed skill pattern also leads to a progressive atrophying of engaging skills for the
senior leaders who need it the most, given
their span of leadership accountability.
Though execution skills are far from irrelevant, we know from the leader skill trends
identified above that they’re also a much more
common strength for leaders of all levels,
and have remained so for many years. Organizations can restore balance by considering
strong engagement behaviors in promotion
decisions and by holding leaders responsible
for engagement and culture survey metrics. Interaction skills that induce employee
engagement (empathy, involvement, communication, and esteem-building) also should
remain foundational targets for leadership development programs across all leader levels.
The value of large-scale, crossorganizational assessment data
Leadership assessments, including assessment
centers, are already in heavy use for many organizations, and justifiably so. The research
we’ve described here adds to the multitude of
studies showing a close connection between
stronger assessment performance and key organizational outcomes.
Less well-recognized, however, are the insights that large-scale, cross-organizational
assessment data can offer for diagnosing past
and projected skills gaps and for precisely
guiding leadership growth. The findings summarized in this article can be paired with
in-house data to identify high-value targets
for inclusive leadership development and to
elevate the role of proactive, long-term talent
planning in organizational strategy.
Evan Sinar is Development Dimensions International’s
(DDI) chief scientist and director of the Center for Analytics
and Behavioral Research; [email protected].
Richard S. Wellins is a DDI senior vice president and
heads up global research and marketing; rich.wellins@
ddiworld.com.
Copyright 2016 ATD
March 2016 | TD
41
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