Employees at all levels of a big company have had to negotiate a day-to-day work environment that has become far more complex, volatile, and unpredictable across the past decade. And while this poses problems for all, it makes leadership roles – those that require an ability to understand business conditions, form a plan to take advantage of them, and then galvanize a disparate group of people to implement that plan – particularly difficult.
The problem is that, with the skills needed for leadership changing drastically, current practices for supporting leaders are incomplete. As a result, an alarming number of companies must deal with newly minted leaders failing at the job for which they have supposedly been groomed.
To deal with this work environment, leadership programs must consider the broader context in which leaders work – the unique situations and challenges specific to that leader and the company. And, as the first post in this series explained, this analysis of context shows there are 27 types of challenge that leaders are likely to face.
This context should then determine how companies assess the relative strengths and weaknesses of any leader, their suitability for a particular role, and their development and performance within that role. There are four principles that underpin this context-specific approach to managing leaders.
The number and type of contextual challenges matters a lot: The more challenges leaders face, the more likely they are to fall short of their objectives. While this might seem an obvious point, the data show companies how a more complex work environment is harming the performance of their most important employees. Leaders at all levels of an organization navigate an average of seven challenges simultaneously, and nearly one-quarter face nine or more challenges.
And the percentage of underperforming leaders increases significantly once leaders face seven or more challenges simultaneously (see chart 1). This goes some way to explaining the high failure rate for leaders in complex roles that involve multiple challenges.
Chart 1: Percentage of underperforming leaders by the number of contextual challenges faced n=1,983 leaders Source: CEB analysis
Leaders must be given the right challenges: Although these contextual challenges can undermine leader performance, this does not mean that all leaders fail in all of these situations. In fact, leaders thrive when facing challenges that are suited to their personality and experience.
For example, in situations that call for growth by keeping costs competitive, the best leaders are methodical, organized, detail oriented, and competitive. By contrast, in companies that value innovation, the best leaders tend to be ambitious, creative, collaborative, and optimistic.
Matching the personality traits of the leader with the challenges they are expected to handle is a much better way to ensure such important employees are successful.
Experience compensates for a lack of the right attributes: Personality traits are not the only factor companies must consider when identifying the right leader. Prior experience in dealing with similar challenges can be more important than a leader’s traits in determining whether or not they will thrive in taking on a particular set of contextual challenges.
In addition to matching leader traits to the right role, companies should also look at the candidate’s experience with similar challenges in the past. For example, in companies that demand exceptional levels of customer service, leaders perform better if they have experience with underperforming teams and dealing with change.
This requires good workforce planning so that not only are leaders matched to the right kinds of challenge now, but are also given experience to be able to handle the most likely challenges the company will face in the future too.
Leadership roles aren’t all the same: One leader’s role can differ dramatically from another’s even if they have the same title. A CFO in a fast growing company has a very different job from the CFO in a company focused on improving profit margins.
Leader performance is at its best and the risk of failure lowest when an individual’s traits and experience are matched to the challenges in a specific role. As a result, assessment tests to identify leaders are far more successful when context in factored into the test. Compared to a one-size-fits-all approach, this context-specific approach enhances the predictive power of an assessment by 300% (see chart 2).
The cost of placing the wrong leader in the wrong role can be significant when taking into consideration lost revenue, the negative impact on their colleagues and their teams, and their heightened likelihood of the leader leaving for a new job.
Chart 2: Impact of incorporating context in predicting which leader will succeed in a given role Source: CEB analysis