Leadership development is a continuously evolving component of the business landscape. The pace of change has grown rapidly in the last few years across all industries, particularly in regulated industries facing increased scrutiny. New realities require a fresh approach to talent management and retention, including increased empowerment at lower levels, stronger mentorship roles, and more flexible career path options. Employees can rise from any level, provided they think and act like leaders. Leadership role models, such as women CEOs, will play an increasingly important part in ensuring talented staff achieve their full leadership potential.
Key Components of Leadership
Today, companies continue to understand how fundamental a strong leadership team is to their organization, and, therefore, are still investing in leadership programs. However, it is important to invest strategically. Leaders and their management styles shape the culture of a workplace, which means leaders have an impact on employees throughout their organizations. Unfortunately, many companies—particularly in the financial services industry—struggle with this endeavor as people still lead the way they did during the financial crisis without truly appreciating the necessity of altering their leadership plans.
One of the most important components of successful leadership development is visibility, both internally and externally. Communication of expectations with external stakeholders such as clients and investors is a determining factor of a successful leader. There is a great need for leaders to be genuine and authentic in their organization and also relatable. Employees should view leaders as sources of intelligence and information and be able to trust their guidance.
Good leaders also share certain characteristics. They have a clear vision for the company, are able to tell a story, have a strong sense of empathy, and are accessible to employees. They should be able to deliver on their promises in order to gain their employees’ trust.
To cultivate good leadership, companies need to have a strong leadership development program in place. Traditional leadership development—through coaching and seminars—still takes place today, but it increasingly is becoming more kinesthetic and action based. There is more empowerment of emerging leaders earlier in their career path to provide the building blocks of leadership that later will support a more robust foundation. Learning is critical to leadership development, and it is something that needs to be refined over time. Leaders need to learn the correct methods for managing projects and people and be given the flexibility to make mistakes, with mentors and coaches helping steer them on the right path. This strategy negates the practice of putting individuals in leadership roles with little guidance. Such an oversight sets a bad precedence, since stakeholders can view an organization negatively if they realize the leadership team is underdeveloped or weak.
Leadership Retention
PwC’s 17th Annual Global CEO Survey found that 62 percent of U.S. CEOs plan to increase headcount this year, reflecting an expected pick-up in the U.S. economy in 2014 and certainly contributing to the concerns about talent shortages. CEOs remain as concerned as ever about the availability of the key skills they need. Some 70 percent cited this as a problem, the highest level since PwC started tracking this, according to the survey. It is clear that retaining leaders with critical skills is a growing concern among CEOs. Thus, it is crucial that companies have a comprehensive talent management program to maintain a cadre of professionals with needed skills.
Often, companies struggle with defining succession plans and putting career paths in place that encourage and enable leaders to develop. The challenge is executing these plans successfully. Succession plans and career paths may encounter certain circumstances, such as a particular business initiative, that can constrain talent. Flexibility and monitoring are important when creating an effective talent management program. The adaptability of a talent management program to new challenges and opportunities will define its success or failure. Monitoring the progress and effectiveness of talent management programs allows for the identification of problems and creative solutions to address them.
Social Media
Social media can play a fundamental role in leadership development by enabling leaders to promote an additional element of their personality and identity. It is also a medium for them to distribute their leadership style to others. Outside an organization, social media allows leaders to have a farther reach, while within an organization, it helps create personalities and allows leaders to share insights and messaging around corporate initiatives.
The nature of social media is that it invites feedback, which enables employees of all levels to voice their opinions. The struggle with social media is that leaders need to determine to what extent they should use it as a mode of communication. If they engage with it, they need to address feedback by being attentive and responsive. In today’s business environment, leaders need to embrace social media in a thoughtful and responsible manner.
Short videos also are becoming a popular tool of social media. They allow for communicating more personally, effectively, and quickly. Often, employees prefer to watch a short video on a certain topic rather than read about it in an e-mail. These outlets will become increasingly more effective as employees’ in-boxes become inundated with a deluge of other messages.
Millennials
PwC’s NextGen: A global generational study found that younger workers are more tech savvy, globally focused, informal, and willing to share information. PwC also predicts that by 2016, almost 80 percent of its workforce will be composed of Millennials. This is a significant portion, and leaders need to understand the characteristics they look for in the workplace in order to build a sustainable company and promising leadership pipeline.
This new generation of workers is looking for leaders who communicate at their level. They expect transparency and authenticity and want to feel empowered. Millennials want opportunities at a lower level, and they also expect themselves to be leaders among their peers. They trust leaders who are connected and accessible, and they respect leaders who dole out responsibilities and ownership to their employees.
Women in Leadership Roles
According to PwC’s thought leadership piece, “Mending the gender gap: Advancing tomorrow’s women leaders today,” women continue to lag behind their male counterparts in leadership roles. Unfortunately, the lack of women in leadership positions could take a significant financial and competitive toll on companies across all industries. Women hold only 17 percent of senior level positions, 12 percent of board seats, and 5 percent of CEO roles. Studies suggest companies with a gender-diverse board perform significantly better than their competition—42 percent higher return on sales, 66 percent greater return on invested capital, 53 percent higher return on equity. Because women make up only 24 percent of middle management, companies have a limited pipeline to feed senior-level roles.
Companies need to invest now in developing women leaders. It will help diversify their workplace and create one that is more successful. Obstacles such as fewer mentors and opportunities can be overcome with a talent strategy that has a specific gender-focused component. Organizations with women role models in strong leadership positions will support achieving a more equitable hierarchy by inspiring women earlier in their careers to follow suit.
Leadership—An Evolving Practice
Ultimately, leaders need to be upfront and honest, possess true business skills, be able to build relationships, have a strong presence, be honest, and be receptive to feedback. To do this effectively, organizations must be ready to develop and execute responses to the following key questions:
- What is the role and desired behaviors of leadership? To what extent do you see this evolving in the next three to five years?
- What is the process to identify and address leadership capability gaps?
- How can leaders be highly visible and leverage multiple internal and external media platforms?
- Who are the most influential leaders? What contributes to their success? How does leadership success vary across levels, regions, business units, generations, ethnicity, and other diversity components?
- What is the overall business case for investments in hiring and developing emerging leaders?
Bhushan Sethi currently leads PwC’s Financial Services People & Change practice, where he works with business and HR executives to define and execute targeted organization and talent strategies and lead large-scale business transformations. PwC US is a member of the PwC network of firms in 158 countries with more than 180,000 people. It is committed to delivering quality in assurance, tax and advisory services. For more information, visit http://www.pwc.com/us
