The Changing Face Of Leadership: 10 New Research Findings All Leaders Need To Understand Kathy CaprinoSenior Contributor Careers I cover career, executive and personal growth, leadership and women's issues. TWEET THIS now more than ever, they need to be able to identify and develop other digitallysavvy leaders. Organizations with more women in leadership are 1.4 times more likely to have sustained, profitable growth. Part of the series “Today’s True Leadership” Diversity and collaboration in leadership are needed today PHOTO: ISTOCK One of the questions I hear frequently from emerging and current leaders is this: “How has leadership changed from 10 years ago and what do I need to understand about running a successful enterprise that I don’t know today? A recent study attempts to address this question in a fuller way than ever before. Jointly published by DDI, The Conference Board, and EY, the Global Leadership Forecast 2018 is one of the most expansive leadership research projects ever conducted. Integrating data from more than 28,000 leaders and HR professionals at 2,488 organizations around the world, the report offers insight into the state of global leadership and provides evidencebased recommendations for organizations to change their people strategies to meet upcoming challenges. Evan Sinar, Ph.D., Chief Scientist and Vice President at DDI, leads the company’s global research on leadership and people strategies, and shares with us below the key findings from this latest study. DDI is a global leadership company that helps organizations transform the way they hire, promote, and develop leaders at every level. Today In: Leadership Here’s what Dr. Sinar shares on the key findings about leadership today: Kathy Caprino: From this study, what are you seeing as the ways in which leadership overall has changed in the past 10 years? YOU MAY ALSO LIKE Grads of Life BRANDVOICE Providing Pathways to Education UNICEF USA BRANDVOICE Kindness Counts On International Day Of Friendship Civic Nation BRANDVOICE Michelle Obama’s Message To Students At Our Beating The Odds Summit: You Belong Here Evan Sinar: The Global Leadership Forecast 2018 is the eighth edition of the study, which we’ve published every few years going back to 1999. As a general trend, we’ve seen a continued slippage in leadership bench strength (ready-now leaders who can step in to replace those who retire or move on) – in 2018, only 14% of companies have a strong bench, the lowest number we’ve ever seen. More specifically, we’ve seen digital transformation and the constant threat of disruption having a profound impact on leadership at every level. While not every leader needs to be a technical expert, leaders do need to be able to understand the impact of digital tech on their business and more importantly, predict the impact of technology in the future. They also need to be highly adaptable, hypercollaborative, and able to leverage data to make better decisions. And now more than ever, they need to be able to identify and develop other digitally-savvy leaders. Caprino: What are the 10 most critical findings of this study? Sinar: In brief, here were 10 of the most important data points that came out of the study: #1: CEO concerns about talent CEOs are incredibly worried about the leaders they’ll need to drive enterprise success. Only 14% of CEOs say they have the talent they need to execute their business strategies. #2: Need for digital leadership skill Digital leadership skills are becoming increasingly critical. Companies who have the most digitally-capable leaders financially outperform the average by 50%. #3: Why gender diversity improves profitability The value of gender diversity continues to be proven. Organizations with more women in leadership are 1.4 times more likely to have sustained, profitable growth. #4: Develop leadership potential earlier Organizations need to take a broader view of what it means to have “leadership potential,” and start developing leadership potential earlier in careers. Organizations that extend development of high-potential talent below senior levels are 4.2 times more likely to financially outperform those that don’t. #5: Value Gen X more Most companies are overlooking the value of Gen X. As the first generation to grow up with video games, they are nearly as digitally savvy as millennials, but also excel in more conventional leadership skills associated with Baby Boomers, such as building talent and driving execution. #6: Tech leaders are failing Four out of ten tech leaders are failing, which is the highest leadership failure rate of any industry. The high failure rate is likely due to the fact that the industry puts little effort into developing its leaders. In fact, 32 percent of tech leaders reported that they never meet with their manager to have performance discussions. #7: Senior leaders need greater alignment Leadership is being redefined as a team sport. As companies increasingly rely on teams, we found three areas where it’s critical for senior leaders to be aligned: energy and development passion, future-focused leader skills, and views on company culture. A lack of alignment in these three areas quickly derails a senior team. #8: HR needs developed skill in “people analytics” Using data to make decisions about people—known as “people analytics”—is becoming an incredibly important skill for HR. However, only 18% of organizations are managing to implement advanced people analytics. #9: The 3 cultural shifts needed most Organizations need to focus on three cultural factors to improve their leaders’ ability to respond to disruption: Inform decisions through data and analytics Integrate multiple and diverse perspectives to drive change Embrace failure in pursuit of innovation #10: Do-it-yourself leadership growth doesn’t cut it Too many organizations are taking a “do it yourself” approach to leadership development, which usually begins and ends with giving leaders access to a generic self-study resources. But what leaders really want is a personalized experience and the opportunity to learn from internal and external mentors and their fellow-leaders. Caprino: What finding was the biggest surprise and the most controversial (going against what many believe about leadership success today)? Sinar: One of the most controversial subjects we studied is the impact of performance ratings. Many people dread the annual performance review discussion, which are often focused on ratings. We found that when performance ratings were eliminated, there was a small boost in effectiveness. However, eliminating performance ratings was tied to a sizeable increase in leader quality and bench strength, and also led to more gender diversity in leadership. It’s somewhat surprising, because eliminating ratings seems to go against the wisdom of making data-driven decisions. But what’s important is not the ratings themselves, but the fact that many organizations replaced ratings with a conversation focused on future development and growth. So regardless of whether you eliminate ratings, leaders should be having more conversations about development. Caprino: Tell us more about the findings regarding the impact of women in leadership? Sinar: As we have found in the past, our research showed that having more women in leadership is linked to better financial performance. Organizations that fill at least 20% of senior leadership roles with women and have at least 30% women overall are 1.4 times more likely to experience sustained, profitable growth. Furthermore, the data showed about why having more women leads to better profitability. It’s not because women necessarily have superior skills. Instead, the key is that the organizations have built inclusive cultures that enable everyone to thrive. Organizations with greater gender diversity reported higher levels of collaboration, higher quality leadership, greater agility, and more likely to experiment in pursuit of innovative approaches. Caprino: What about the decline in reputation of HR and the changes needed within that field? Sinar: The biggest reason HR’s reputation is worsening is that HR professionals are struggling to keep up with digital transformation. HR leaders lagged far behind leaders in every other functional area on skills that are key in a digital environment, such as using data to guide decisions and anticipating high-speed change. Conversely, those HR professionals who are succeeding at applying analytics to their jobs are bringing a lot of value to their employers, and are 6.3 times more likely to report having new advancement opportunities. The lesson is clear for HR: Gain digital and analytics skills now to boost your own career and be seen as a more strategic and valuable business partner in your organization. Caprino: According to the study, the impact of mentorship on success for employees and leaders has been significant - what do we need to know about that? Sinar: The most important lesson about mentoring is that it’s a mistake to leave mentoring to chance. Organizations that have a formal mentoring culture have 20% lower turnover, 46% higher leader quality, and can immediately fill 23% more roles immediately. Formal mentoring programs were also associated with greater financial success. They also enable organizations to capture significantly more of their vital knowledge before it gets lost as senior employees retire or leave the organization, a major and growing problem for many companies. Despite the benefits, only about a third of organizations offer formal mentoring. In fact, six in 10 leaders say they’ve never had a mentor, and a third of senior leaders say they’ve never mentored anyone. The good news, however, is that mentoring is growing among Millennials, with nearly 50% saying they’ve had a mentor. Interestingly, Gen X seems to particularly crave mentorship from outside their organization, which they aren’t getting enough of. Caprino: What is the impact of having a purpose-driven culture on the success of the organization? Sinar: In today’s disruptive business environment, people need purpose to drive their work and focus more than ever. In fact, our partner organization EY found in a 2017 study that 96% of leaders said that purpose was important to their job satisfaction. In the Global Leadership Forecast 2018, we found that organizations that operated without a purposedriven culture, or even a purpose statement, financially underperformed the average by 42%. In organizations that at least have a purpose statement, twice as many leaders say they get meaning from work, and their energy levels are 60% higher. In truly purpose-driven cultures beyond simply having a statement, leaders weave purpose into the fabric of work.These companies financially outperform the market average by 42%, and a strong culture build on trust, loyalty, and a sense of working toward a common goal. Caprino: What should every leader and emerging leader take away from this study that will help them succeed at a higher level? Sinar: No matter what business function you work in, leaders today need to understand the impact of technology on their business. You don’t have to be a technical expert, but you do need to be able to predict both opportunities and potential negative effects of technology. Part of being a great leader in the digital era also depends on developing other leaders. Success in today’s world depends on how leaders perform as a team. The unpredictable and rapidly changing business landscape means you need to have people with a variety of skillsets and mindsets who can quickly step in to show leadership in response to a variety of challenges. It’s become more important than ever that part of your job as a leader is to be a talent scout and a mentor who develops other leaders. For more information, visit www.ddiworld.com/glf2018.