Over the last few years, there has been a growing concern with the pending leadership shortage. Almost every week there is an article about a shortage of qualified leaders in major corporations, government, community colleges, public schools, or other organizations. Different empirical studies have revealed between 50 and 70 percent of organizations feel they are being impacted by a shortage of qualified leaders. A good example is the 2008 Aon Consulting Worldwide study (http://www.aon.com/benefits_survey) that found that 56 percent of respondents were experiencing some form of leadership shortage. The cost of this shortage is high. The absence of leadership reduces the organization’s ability to meet its business goals, satisfy clients, and engage employees. Moreover, without leadership an organization rarely reaches optimal levels of efficiency or effectiveness.
So, what has led to this shortage? As with any market, there are supply and demand factors. The supply factors relate not only to demographics changes, but typical business practices: the aging of the baby boomers coupled with the smaller size of Generation X, more international competition for talent as lucrative opportunities arise in China and India drawing managers away from the US and Europe, lack of retention of middle managers during corporate flattening as well as in response to the economic downturn, and inadequate engagement of junior level leaders. The demand side of the shortage pertains to the growing need of qualified leaders throughout the world, shorter tenures of leaders in organizations, and more competition to attract and retain highly qualified leaders.
What can we do to address the shortage in our organizations?
Although succession planning has become a fairly accepted method of assessing the current and future capabilities of an organization’s workforce, developing and retaining leaders requires another level effort. Just as we develop more focused methods to address “critical” classes when there is greater competition for those candidates, we should consider leaders as permanent, critical classes. As human resource professionals and organization leaders, we need a specific plan that addresses our current capability, what the pipeline looks like, and the methods we will consistently utilize to attract, develop, and retain high quality leaders.
Leadership ability is not as simple as it you have it entirely or not at all. Like many complex capabilities, there are different facets or abilities and levels that make up an effective leader. Although it is estimated that organizations spent $12 billion in 2009, most organizations when surveyed indicate they are not doing all they can to develop leaders. A key part of a plan for addressing the leadership shortage includes a specific and well-conceived set of methods for offering continual leadership training. Leadership training should begin when someone assumes a leadership position. Conversely, effective leaders are grown over time.
The expectations and environment that a leader works in is becoming more complex. The Center for Creative Leadership found that 84 percent of executive surveys in an international sample felt that the meaning of successful or effective leadership was changing. The people part of leadership is becoming more important as leaders are being called on to be more flexible, work more with others, and interact in an environment of greater diversity. As a result, organizations must realign their leadership development efforts to better match the actual capabilities that effective leaders need in the modern workplace.