The Crisis in Business Leadership, Employee Engagement, and Confidence

In just a little over a year, some sobering research has come to light regarding the effectiveness of contemporary, executive leadership.  In a time, quite literally defined by economic uncertainty, the quality and importance of business leadership cannot be overstated.  Yet, what is coming to the surface through the research of truly world class consultancies and institutions is nothing short of unsettling.  A simple canvasing and triangulation of several recent studies is worth examining:

1.)  In the most recent edition of The McKinsey Quarterly®, an article entitled, “Do You Have The Right Leaders For Your Growth Strategies?” combined two independent databases to evaluate and correlate leadership competencies with high growth, high performing organizations.  The study identified the dearth in excellent leadership.  Only 1% of the executives in the combined sample database (based upon 5,560 executives at 47 companies) achieved a competency score of 6 or 7 out of a possibility of 7 in eight key leadership attributes.  Only 10% had an above average score of 5 out of 7.  Ninety percent of “C” level, and one level down executives, score below average in critical leadership competencies that drive performance.

Not surprisingly, the research goes on to identify the correlation between executives in high performing companies scored higher, on average, than those in lower performing companies across all leadership competencies.

2.)  A Maritz® Research employee engagement poll published in June, 2011 reported that only 10% of employees trust management to make the correct decisions during times of uncertainty.  In addition, only a little more than on in ten employees believe their company’s leaders are honest and ethical.  Only 12% of employees believe their employer genuinely listens and cares about their welfare.  And sadly, only 14% of Americans report their companies’ values are in alignment with their own, personal values.

3.)  Gallup® has been conducting research on employee engagement levels on an regular basis for more than a decade.  Currently, approximate three out of four employees are emotional and cognitively disengaged from their employer.  Only one out of every four employees shows up with passion and enthusiasm for their work.  The critical engagement factor is emotionally based.  The report goes on to indicate, companies that engage both their employees and their customers on and emotional and cognitive level enjoy a 240% improvement in financial performance.

4.)  The 2010 IBM® CEO Study (of 1,500 global CEOs) identified the single most critical attribute they are looking for in future leaders is creativity and the ability to cultivate creativity throughout the organization.  In addition, fewer than half of the interviewed CEOs indicated they were successfully handling the growing complexity of the global business environment.

5.)  A peer-reviewed study conducted by the University of Pennsylvania, Cornell University, and the Indian School of Business that was published in the Journal of Experimental Social Psychology demonstrated up and coming leaders that express creative thinking are often passed over for promotion and side tracked from opportunities for greater levels of responsibility.  The paper, a culmination of three separate studies and scenarios summarized that, “the negative association between expressing creative ideas and leadership potential is robust and underscores an important but previously unidentified bias against selecting effective leaders.”

So, where does this leave us?  Clearly, we can see an erosion of leadership skills that have resulted in mistrust, disengagement, and a growing malaise that threatens future productivity, revenue growth, and competitive advantage for many, if not most, firms.

This leadership crisis is exacerbated by the fact that value creation in today’s economy emerges from the commercialization of intellectual property.  Human talent is the raw material of our age.  Single-dimensional, managerial competency (meaning technical management skill) is no longer sufficient for creating value…that began fading away with the passing of Henry Ford, Thomas J. Watson, and Alfred Sloan along with the emergence of our information and technologically based economy.  Differentiated performance now demands authentic leadership talent be strategically developed in preparation to take the helm.  The mission-critical attributes of market insight, strategic orientation, adaptability, creative thinking, team engagement, and organizational development; grounded in customer-centric, results oriented thinking must be cultivated.

A new perspective must emerge.  One that embraces the value of multi-dimensional leadership; of developing true generalists that can engage, inspire, and adapt in real time.  This is our challenge.  How we choose to address this challenge will have a lasting impact on the competitive positioning of our nation and the quality of life of the generations to come.

1.)  “Do You Have The Right Leaders For Your Growth Strategies”, Katharina Herrmann, Asmus Komm, Sven Smit, McKinsey Quarterly®, July, 2011.

2.)  “Maritz Research Hospitality Group 2011 Employee Engagement Poll”, Research White Paper, Maritz® Research, June, 2011.

3.)  “Manage Your Human Sigma”, John H. Fleming, Curt Coffman, James K. Harter, Harvard Business Review®, Reprint R0507J, with compliments of The Gallup Organization®.

4.)  “IBM 2010 Global CEO Study:  Creativity Selected as Most Crucial Factor for Future Success – Fewer than half of CEOs Successfully Handling Growing Complexity.”, IBM® Press Release, May 18, 2010.

5.)  “Recognizing Creative Leadership:  Can Creative Idea Experssion Negatively Relate to Perceptions of Leadership Potential?”, Jennifer S. Mueller, Jack Goncalo, Dishan Kamdar, Cornell University ILR School, IRL Collection, Journal of Experimental Social Psychology, January, 2010.

© Terry Murray, 2011.

5 Comments

Filed under Leadership Development, Organizational Culture, Strategic Planning, Team Building

5 responses to “The Crisis in Business Leadership, Employee Engagement, and Confidence

  1. It comes down to an emotional connections with your leaders. That is how teams are feeling valued, and are engaged with their leader –
    Great article and thanks for the references

  2. Pingback: Five Steps for Solving the Endemic Employee Disengagement Crisis | The Neuroscience of Leadership Development

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s