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Why companies are not producing enough leaders

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HR heads around the world are focusing on shifting their structures from traditional, functional models toward interconnected, flexible teams as companies strive to become more agile and customer-focused.

The 2016 Global Human Capital Trends report by Deloitte revealed that more than nine out of ten executives surveyed (92%) rate organisational design as a top priority, and nearly half (45%) report their companies are either in the middle of a restructuring (39 %) or planning one (6%).

The report gathered responses of 7,000 HR professionals in over 130 countries to assess the importance of specific talent challenges facing their organisation.

It highlighted traditional pyramid-shaped leadership development model is simply not producing leaders fast enough to keep up with the demands of business and the pace of change.

More than half of surveyed executives (56%) report their companies are not ready to meet leadership needs.

Only 7% state that their companies have accelerated leadership programs for Millennials, although 44 % report making progress—a jump from 33% last year.

While investment in leadership development has grown by 10% since 2015, progress has been uneven. In fact, more than one in five companies (21%) have no leadership programs at all.

To thrive in the new organisation model, companies need to raise the bar in terms of rigor, evidence, and more structured and scientific approaches to identifying, assessing, and developing leaders, and that this process needs to start earlier in leaders’ careers.

This is likely to also involve teaching senior leaders to take on new roles to make way for younger leaders.

A new organisational model is on the rise: a “network of teams” in which companies build and empower teams to work on specific business projects and challenges.

These networks are aligned and coordinated with operations and information centers similar to command centers in the military.

Indeed, in some ways, businesses are becoming more like Hollywood movie production teams and less like traditional corporations, with people coming together to tackle projects, then disbanding and moving on to new assignments once the project is complete.

This new structure has sweeping implications, forcing programs such as leadership development, performance management, learning, and career progression to adapt.

Despite seeing the needs for adopting to a new structure, executives are not yet ready for the change.

Only 14% of executives believe their companies are ready to effectively redesign their organisations; just 21% feel expert at building cross-functional teams, and only 12 % understand the way their people work together in networks, according to the report by Deloitte.

ALSO READ: Employees’ top engagement killers

89% of executives in the survey rated the need to strengthen, re-engineer and improve organisational leadership as an important priority.

An overwhelming majority of executives in this year’s survey (85%) ranked engagement as a top priority.

Building a compelling and meaningful work environment is a complex process.  At the same time, the world of employee engagement and feedback is exploding.

Annual engagement surveys are being replaced by “employee listening” tools such as pulse surveys, anonymous social tools, and regular feedback check-ins by managers.

All these new approaches and tools have given rise to the “employee listening” officer, an important new role for HR.

The report also pointed out the importance of establishing a great company culture to engage employees.

When a company’s culture is aligned with its values, it attracts those who feel comfortable in that culture, which in turn helps companies to motivate people, leading to a high level of engagement.

Yet fewer than one in three executives (28 %) report that they understand their organisation’s culture.

ALSO READ: Employee engagement is no longer HR’s top concern

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