Companies Doing Little to Close Leadership Gaps, Study Finds

Senior HR Leaders’ Competencies Expected to Multiply

By Theresa Minton-Eversole Feb 18, 2009

Organizations worldwide face strikingly similar challenges regarding workforce and succession management, but a majority of them are neither prepared nor taking the necessary steps to address the leadership gaps they’ll face in the future, according to a global study conducted by research and training firm CPP, Inc.

“If businesses continue to ignore the oncoming leadership gap, they may see devastating consequences,” said Jeff Hayes, CEO, CPP, Inc., in a Feb. 10 statement about the survey results. “As it becomes increasingly difficult to obtain and retain top performers with strong leadership experience, organizations may find their greatest asset—their workforce—in jeopardy.”

The report, titled Workforce and Succession Management in a Changing World, summarizes the opinions of hundreds of human resource (HR) professionals and business managers from North America, Europe, Asia-Pacific, Brazil and South Africa on their preparations and projections for the coming decade, as well as their current challenges and practices. Among the most noteworthy findings:

  • While 58 percent of respondents expect their organizations to grow over the next 10 years, all regions, except Brazil, also expect hiring, retaining and developing leaders to become more difficult.
  • Despite this broad anticipation, only 40 percent of respondents reported their organizations have a formalized succession or executive coaching program in place in their organization.
  • Only 54 percent reported having a process in place to identify potential leaders.

“Companies should be concerned, because poor leadership can have serious top-to-bottom ripple effects, from employee burnout to underperformance of the entire company,” said Mike Morris, Ph.D., senior research scientist for CPP, Inc.

Respondents cited several challenges to their leadership development plans, including:

  • A rapidly changing competitive environment.
  • Knowledge retention.
  • Pressure to innovate.
  • Generational differences.
  • Pressure to cut costs.

“With the slowing economy and changing workforce, organizations face significant leadership challenges in the coming years,” said Josh Bersin, president of Bersin & Associates, a leading analyst firm in enterprise learning and talent management. “Consequently, leadership development, executive coaching and career development should be among the priority investment areas for most companies today.”

Developing HR Leadership Competencies

Identifying the competencies required of the most successful senior HR leaders is important for understanding what sets apart superior performance for that role.

In 2008, the Society for Human Resource Management (SHRM) convened focus groups of HR practitioners, consultants and academics with subject matter expertise in a variety of HR functional areas to identify the knowledge, skills, abilities and attributes that are most important for the role of the successful senior HR leader.

Top Leadership Competencies for Senior HR Professionals

  1. Knowledge: Business, HR and organizational knowledge.
  2. Strategic thinking and critical/analytical thinking.
  3. Leading change.
  4. Effective communication.
  5. Credibility.
  6. Results orientation/drive for performance.
  7. Ethical behavior.
  8. Persuasiveness/influencing others.

Source: Society for Human Resource Management, 2009.

This set of competencies, outlined in a February 2009 report titled Leading Now, Leading in the Future: What Senior HR Executives Need to Know, may serve as a benchmark for HR leaders at the senior level as well as provide a guide for HR professionals who aspire to the senior leader level. They also provide a framework for understanding the expected contribution of the senior HR leader’s role or function within the larger organization currently and five years from now, as well as what is required of senior HR leaders in a global organization.

The eight most important leadership competencies for senior HR professionals reflect knowledge, communication, approach to getting things done and professional reputation.

Successful senior HR leaders are expected to bring a high degree of knowledge to the role. This includes literacy in the language of business, a broad understanding of financials and a firm knowledge of human capital management issues and how they affect business operations. Beyond understanding these issues, senior HR leaders should be well-versed in their specific organization’s core business issues and able to understand multiple perspectives from within the organization.

“The more senior you get, the more you have to understand how the business works, what the important business drivers are and how you can link the people processes and programs to make the business successful.” Focus Group Participant

At the senior HR leader level, reputation matters. The most successful senior leaders are cognizant that HR is an influential force in shaping the organization’s culture, and that the behavior of top management, including HR leaders, serves as a model for the rest of the organization. To this end, it is particularly important for senior HR leaders to consistently demonstrate ethical behavior throughout their decisions and actions on behalf of the organization and in their interactions and communications with organization stakeholders.

Effective communication is another key competency for senior HR leaders, and it underscores several other competencies, including credibility, persuasiveness/ influencing others and leading change. The combination of these competencies contributes to an HR leadership that is credible, consistent and characterized by integrity and authority.

Said one focus group participant: “…Whether internally or externally, there are threats in the environment that force the business to look at things in a different way—and this [can] change the roles of employees. Management needs to be able to figure out a way to manage that change so that employees feel comfortable with their new roles or with the way the organization is moving, whether or not they feel that they have a part in it.”

Senior HR leaders’ approach toward their work reflects another cluster of competencies. They must develop a strategic approach to their thoughts and decisions about the organization and keep a higher view and long-term perspective in mind. Further, critical/analytical thinking skills continue to be important at the senior HR leader level. It is expected that at this level, those skills will encompass:

  • Actively seeking information.
  • Analyzing and interpreting it.
  • Understanding how it fits into the wider business picture.
  • Understanding how it relates to various lines within the organization.

Successful senior HR leaders also must be oriented toward setting goals and holding people—and themselves—accountable for achieving results. These, along with global mindset and flexibility/ adaptability, represent competencies needed by their counterparts at global organizations.

Global Mindset

“The biggest difference between competencies required of senior HR leaders working for a global organization and general competencies of the senior HR leader role is a shift in perspective to include an increased global mindset. This includes both what is known about conducting business in other countries as well as the awareness that there are inherent human capital issues that may not be fully known or understood,” notes the report.

Flexibility and adaptability are traits needed to adjust the company’s approach as required by shifts within the organization and in the external business environment—also viewed as particularly important competencies for senior HR leaders in global organizations. As one HR practitioner described it, successful senior HR leaders must have “a willingness to dance” if dancing is part of the culture of doing business in the other country.

Study participants generally agreed that the competencies identified as most important now are “fundamentals” that will remain very important in the not-too-distant future. However, some argued that some skills and abilities will increase in saliency and that a few additional competencies may also be required as a result of changes in the market, work force or technology. For example, two issues that figured prominently in the discussions were global intelligence and technological savvy. The most successful senior HR leaders five years from now may need to develop a mastery of these in addition to today’s competencies, the report concludes.

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