Published November 2007

Inadequate Leadership Development Cited as Threat to Business Growth
MediaTec Publishing

Leadership development deficiencies are threatening the future performance of major global businesses, according to results announced in Corporate University Xchange’s latest study on leadership. Ninety-seven percent of study participants are concerned about leadership strength, and 73 percent say current leadership ability is not sufficient to support company growth initiatives.

Significant concern about ongoing leadership development also exists. Only 3 percent expressed confidence in their firms’ ability to develop future leaders to effectively ensure long-term success. In addition, commitment to leadership development is weak or not supported by appropriate financial investment at 70 percent of organizations polled. Seventy-three learning and business executives from Fortune 500 and Global 2000 companies participated in CorpU’s study. (A complete list of participants and an Executive Summary can be found at www.CorpU.com/leadership.)

“Given the increasing complexity of today’s business environment, where companies focus on a growing number of markets, countries and regions, leadership talent is even more critical for long-term success,” said Alan Todd, chairman of the board, Corporate University Xchange. “Failure to build leadership talent at a pace on par with aggressive company growth strategies and expansion to emerging markets may severely inhibit business results.”

CorpU found that leadership talent identification and development initiatives are lacking, with 91 percent of organizations challenged to identify high potentials early in their careers. Developing talent often receives minimal attention in formal leadership development programs.

Commitment to leadership development is not supported at the executive level, the study indicated. Only 32 percent said executives demonstrate strong commitment to leadership development and are willing to finance that commitment, while 81 percent are challenged to persuade managers to release high potentials for development assignments. Yet, participants cite lack of leadership as a threat to business growth. Sixty-nine percent are concerned that insufficient leadership talent will prevent their firms from capitalizing on new markets in emerging economies.

“Human capital is becoming the competitive differentiator in today's business world,” said Peter Capelli, director of The Wharton School's Center for Human Resources. “CorpU’s latest report provides an eye-opening look at the state of leadership development in major corporations and should motivate organizational change.”

CorpU identified three areas where leadership development improvement is necessary. First, processes for leadership talent identification, selection and development are not integrated. As in other organizational functions, from marketing to finance, leadership activities need to be more formally structured and managed cohesively for efficiency in building necessary leadership capacity.

Organizations also lack a centralized infrastructure for monitoring processes that verify the potential of future leaders. Many participants employ independent systems such as 360-degree assessments and engagement studies to track leadership activities. Without integrating this information in a common data model, it is difficult to develop comprehensive evaluations of leadership talent pools. Lastly, development assignments, which are critical for cultivating successful executives, must be standardized and monitored for efficacy, which is not the case at the majority of organizations studied.

The report, titled “Leadership 2012,” includes an in-depth analysis of leadership data and trends, and detailed information about leadership development practices used by specific businesses

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