The SHRM special expertise panels recently identified top workplace trends for 2007-2008. Among these, building leadership capability through attracting, growing and leveraging organization talent will be vitally important for organizations to differentiate and thrive in the next decade.
Leadership competencies are leadership skills and behaviors that contribute to superior performance. By using a competency-based approach to leadership, organizations can better identify and develop their next generation of leaders.2 Essential leadership competencies and global competencies have been defined by researchers. However, future business trends and strategy should drive the development of new leadership competencies. While some leadership competencies are essential to all firms, an organization should also define what leadership attributes are distinctive to the particular organization to create competitive advantage.
Essential Leadership Competencies
A focus on leadership competencies and skill development promotes better leadership. However, skills needed for a particular position may change depending on the specific leadership level in the organization. By using a competency approach, organizations can determine what positions at which levels require specific competencies. Researchers at the Center for Creative Leadership have identified some essential leadership competencies that are consistent among organizations. They divide the overall structure into competencies for leading the organization, leading the self and leading others in the organization (see Figure 1).
When selecting and developing leaders, HR professionals should consider the competencies that the individual possesses and compare those to the ones that need further development for success in a leadership role. By looking at his/her current competencies and comparing those to the skills necessary to fill a leadership position, organizations can make better informed decisions in hiring, developing and promoting leaders.
Figure 1: Leadership Competencies
Leading the organization:
- managing change
- solving problems and making decisions
- managing politics and influencing others
- taking risks and innovating
- setting vision and strategy
- managing the work
- enhancing business skills and knowledge
- understanding and navigating the organization
Leading the self:
- demonstrating ethics and integrity
- displaying drive and purpose
- exhibiting leadership stature
- increasing your capacity to learn
- managing yourself
- increasing self-awareness
- developing adaptability
- communicating effectively
- developing others
- valuing diversity and difference
- building and maintaining relationships
- managing effective teams and work groups
Source: Adapted from McCauley, C. (2006). Developmental assignments: Creating learning experiences without changing jobs. Greensboro, N.C.: Center for Creative Leadership Press. Permission granted from the Center for Creative Leadership to republish CCL’s Model of Leader Competencies.
Global Leadership Competencies
Developing successful global leaders is a competitive advantage for multinational organizations. In addition to essential leadership competencies, global leaders face special challenges that require additional competencies. To clarify, a global leader is commonly defined as someone that cultivates business in a foreign market, sets business strategy at a global level and manages globally diverse and diffused teams. According to a Conference Board research report, 73% of managers agree that domestic business leadership and global leadership differ in the skills required. Some of the challenges that global leaders may face are managing a diverse group of employees and business processes; adaptively approaching problems and challenges; adjusting to new values and cultures; and adapting to different types of business and personal stressors.
To address the unique challenges of global leaders, researchers have identified global leadership competencies that can contribute to success. Among these global competencies, developing a global mindset, cross-cultural communication skills and respecting cultural diversity are paramount to succeeding in the global workplace. Morgan McCall and George Hollenback studied successful global leaders and developed a list of common competencies specific to the global leader (see Figure 2). HR practitioners can use global leadership competencies to support the development of leaders and thus the overall global business strategy.
Figure 2: Global Executive Competencies
▪ Open-minded and flexible in thought and tactics
▪ Cultural interest and sensitivity
▪ Able to deal with complexity
▪ Resilient, resourceful, optimistic and energetic
▪ Honesty and Integrity
▪ Stable personal life
▪ Value-added technical or business skills
Source: McCall, M., & Hollenbeck, G. (2002). Developing global executives: The lessons of international experience. Boston, MA: Harvard Business School Publishing.
Business Trends and Strategy Drive New Leadership Competencies
According to the 2008 SHRM report, Changing Leadership Strategies, the rise of competition caused by the knowledge economy and globalization will bring significant changes in the leadership strategies for organizations. Given the future business environment trends, researchers agree that the most important leadership competencies will include effective change management, developing talent/teams and being an effective collaborator/network builder. In fact, since competencies should be driven by future business strategy, it is important to consider the major business trends of the future. The Center for Creative Leadership (CCL) identified some future business trends that will affect the leadership skills needed to support business (see Figure 3).
In addition to looking at future business trends to shape the development of leadership competencies, organizations must also look to the specific strategy and preferred business results of the particular organization. By creating competency models that reflect the future strategy of the business and the important results to stakeholders (i.e., customers, shareholders, investors), organizations can successfully create a leadership brand. Dave Ulrich and Norm Smallwood define a leadership brand as “a reputation for developing exceptional managers with a distinct set of talents that are uniquely geared to fulfill customers’ and investors’ expectations.” Researchers have found that when investors have confidence in the leadership talent of an organization, share price will increase. By creating a unique leadership brand via leadership competencies that produce results to stakeholders, organizations gain a competitive advantage.
Figure 3: The Top 10 Business Trends Affecting Leadership
- The Rise of Complex Challenges: The problems that organizations are facing are becoming more complicated.
- The Innovation Revolution: Organizations are looking to drive innovation to stay competitive.
- The Art of Virtual Leadership: With technological advances and globalization, virtual leadership will become a business challenge with necessary skill development.
- Collaboration Nation: Collaboration across boundaries is a growing business imperative.
- The World of Interruption: Executives staying on task during the many interruptions during the day is a growing problem.
- Authenticity is The Next Celebrity: Being an authentic leader (ensuring that one’s values are aligned with leadership behaviors) is a challenge many executives will face in the future.
- The Fallout From the Baby Boom: The retiring baby boomers will cause a leadership talent shortage.
- Filling the Leadership Void: Developing succession plans to fill the leadership void will be a top trend.
- Leadership for Longevity: Emulating a healthy lifestyle will be important to leaders.
- What’s next?: Executives identified collaboration and participative leadership styles as the most important to future business success.
Adapted from: Criswell, C., & Martin, A. (2007). 10 Trends: A study of senior executives’ views on the future. Center for Creative Leadership. Retrieved December 4, 2007, from www.ccl.org.
Literature and Research
The Leadership Skills Strataplex: Leadership Skill Requirements across Organizational Levels
The authors of this article conceptualized and empirically tested a strataplex model for leadership skills. Leadership skills are divided into four broad categories: cognitive, interpersonal, business and strategic. The “strataplex” model refers to how the four categories of skills vary based on respective management levels in an organization. The researchers tested the model on more than 1,000 new, midlevel and senior managers. The results showed that higher levels of management in the organization required greater leadership skills. The most important skill across all the levels of leadership was cognitive skill. This skill is thought to be the basis of all leadership skills because it encompasses the ability to acquire new knowledge and learn new ways of solving problems. Interestingly, business skills and strategic skills were the two most important skills to acquire when moving into high levels of leadership. This research is important because it empirically demonstrates that leadership skills do differ at different management levels on the career ladder. Most importantly, business acumen and strategic skills must be acquired to be effective at the higher levels of management/leadership. HR professionals should take into account the change in competencies required as managers move into higher level leadership positions.
Managers’ Justice Perceptions of High Potential Identification Practices
High potentials are often regarded as the possible future leaders of an organization. Consequently, the process of identifying high potentials is very important to both succession planning and leadership development practices in an organization. The purpose of this research was to identify the various processes that organizations are using to identify high potential leaders and how the employees perceive the fairness of the process. Researchers distributed a survey at a leadership conference to leaders from a variety of organization sizes and industries. The survey asked questions about the high potential identification process as well as the perceived fairness of the process. The findings revealed that competencies were used to identify high potentials 69% of the time. The most important competencies used to identify high potentials were orientation toward results, communication skills, adaptability, strategic skills and ability to make decisions. Additionally, the survey found that the high potential identification process, the communication of the process and evaluation were all significantly related to feelings of perceived fairness. This example illustrates how leadership competencies can be used in the workplace. A fair process for identifying high potentials, such as a competency approach, may lead to higher perceived fairness.
Transformational Leadership and Market Orientation: Implications for the Implementation of Competitive Strategies and Business Unit Performance19
This article explores the relationship between competencies of the organization and firm performance. The researchers hypothesize that competitive strategies link organization competencies to firm performance. Specifically, this study investigated the link between transformational leadership as an organizational competency and the competitive strategies of marketing differentiation, innovation differentiation and low-cost strategies. These competitive strategies are thought to have positive benefits to firm performance.
More than 200 organizations from a range of industries were included in the research sample. The results showed that transformational leadership was significantly related to market orientation. In this study, the authors define market orientation in terms of culture. The organization culture clarifies values and norms that positively contribute to customer satisfaction and worth. Transformational leaders are thought to impact and help form the organizational culture. Transformational leadership was also positively linked to marketing differentiation and low-cost strategies. Further, market differentiation was positively related to firm performance metrics. Consequently, the competency of transformational leadership was found to have a positive impact on firm performance through market differentiation. The results imply that one way to advance market orientation is to develop the competency of transformational leadership. This study shows that leadership competencies can have an impact on the bottom line of organizations through competitive strategies. HR professionals can influence firm performance by identifying and developing key leadership competencies in the organization.
Leadership competencies can be used to effectively select, develop and promote leaders in an organization. Certain factors such as business strategy and future trends should be taken into account when creating leadership competencies. All business strategies are different and HR practitioners should use the business strategy, including the global business strategy, to drive the use of competencies in selecting and developing leaders. By effectively building a unique set of skills for the organization’s leaders, the firm will sustain competitive advantage.
Project leaders: Courtney Ledford, SHRM Research Intern; Nancy R. Lockwood, MA, SPHR, GPHR, Manager, HR Content Program
Project contributor: Steve Williams, Ph.D., SPHR, Director, Research
Editor: Nicole Gray, Copy Editor
This article is published by the Society for Human Resource Management (SHRM). All content is for informational purposes only and is not to be construed as a guaranteed outcome. The Society for Human Resource Management cannot accept responsibility for any errors or omissions or any liability resulting from the use or misuse of any such information.