—Peter F. Drucker
Study after study demonstrates that the main reasons employees leave organizations are poor management and lack of leadership. In fact, a 2013 white paper from the Center for Creative Leadership (CCL), “The Challenges Leaders Face Around the World,” notes that 56 percent of organizations indicate a lack of leadership would impede organizational performance, and 31 percent predict that a leadership shortage would impact organizations over the next few years.
Meanwhile, the CCL white paper also reports that 80 percent of executives cite the ability to develop leaders as one of the most important factors to impact an organization’s competitive advantage. Another bottom-line implication is that organizations with top-tier leadership have up to 10 percent higher three-year total shareholder returns.
To be sure, many books have been written on leadership, and billions of dollars have been spent on leadership development programs. Yet, despite these major investments in leadership development, the majority of people trust a stranger more than their boss. Why? One reason may be that the wrong people are in leadership roles, contends David Rock in the 2013 Fortune article, “Why Organizations Fail.” Rock explains that organizations continue to fail because they hire and promote managers with robust analytical skills but poor social skills.
Clearly, the importance employees place on leadership is significantly different than their organizations—and this disconnect is not new. For example, in the 2005 ASAE article, “The 7 Hidden Reasons Employees Leave,” Leigh Branham reported that 89 percent of managers believe that employees leave organizations for more money, but only 12 percent of employees agree with this analysis. Similarly, a 2013 Gallup study reports that 80 percent of managers believe employees are just glad to have a job, while only 53 percent of employees feel this way. In fact, one estimate claims that 51 percent of employees leave organizations due to their managers.
The implication of these staggering stats is that employees are just waiting for an opportunity to move on. Worse, in 2005 Branham estimated that this inability to retain workers could cost an organization 150 percent of an employee’s salary. We can only assume that estimate has increased significantly a decade later. Indeed, in recent times, particularly during the economic downturn, there still appears to be a major disconnect between the importance organizations and employees place on leadership.
The good news: This disconnect provides organizations, and especially human capital professionals, an opportunity to ensure proper development for their leadership cadre. This is particularly imperative with an increasingly diverse workforce, and as Baby Boomers prepare to move on to retirement or another phase of their work lives.
Also, there are opportunities for improvements as more women take on leadership roles. Just consider the 2013 Inc. article, “Between Mars and Venus: 7 Traits of True Leaders,” which highlights the blend of male/female traits that effective leaders demonstrate. Author Leigh Buchanan, Inc. magazine’s editor-at-large, makes the case that effective leaders demonstrate empathy, inclusiveness, vulnerability, generosity, humility, balance, and patience. And I tend to agree with this assessment. While conducting hundreds of leadership workshops over the last 30 years, I ask participants to describe the characteristics of effective leaders. Not surprisingly, a couple of traits continuously cited are communication and trust.
Bottom line: Current leadership development isn’t working—only 32 percent of organizations are satisfied with their senior leadership team, remarks the 2013 Harvard Business Review article “How Google Sold Its Engineers on Management”—all while leaders face increasing demands to deliver faster results and improve their interactions with others. Perhaps, we are at a point where organizational leaders must transition from transactional and transformational models, as described by the Corporate Leadership Council in Driving Performance and Retention Through Employee Engagement. More importantly, these changing and challenging times are moving the needle to an even newer model: the network leader.
Are you attending ATD 2015? If so, hear Edwin speak at his session, The Perfect Storm: Human Capital Challenges and Opportunities in the 21st Century, on Wednesday, May 20, from 1:30 to 2:30 ET.