Akankasha Dewan explores the top skills leaders need to survive in a challenging VUCA world, and how to optimise the leadership development process.

Despite the economical, political and cultural differences between developing and developed countries, the greatest challenges of companies, whether private, public or non-profit organisations, in all countries are the same.

All these businesses face and have to function in nebulous, constantly evolving conditions – in fact, the social, political, economic and cultural environment is constantly in flux. In the face of these changes, organisations and societies need to adjust and respond competitively, collaboratively and sustainably in today’s world.

It is, therefore, of little surprise that industries and companies are facing critical challenges that are hampering their growth amid this climate of change.

“The banking industry landscape itself is going through a challenging era,” says Li-Ki Khaw, head of HR for ANZ Banking Group.

“These challenges are mainly driven by increasingly stringent compliance requirements, as well as changing business models in banking as we move into the digital environment.

“Couple that with the geopolitical, natural disasters, and global economic uncertainties – we get ‘chaos’. One can sum it up with the acronym ‘VUCA’, which stands for volatility, uncertainty, complexity and ambiguity.”

But what is perhaps one of the most disastrous consequences of a changing working climate is the implications it has on talent supply and demand.

“Asia is still home to the fastest growing populations and economies and a very important place for us to invest,” says Ilja Rijnen, regional HR director for Asia Pacific and India at Edrington.

“From a talent point of view we are facing the same challenges as any other industry in Asia. There is a big talent gap in Asia, in particular around senior local commercial leaders and key specialists in supply chain and finance.

“From a talent point of view we are facing the same challenges as any other industry in Asia. There is a big talent gap in Asia, in particular around senior local commercial leaders and key specialists in supply chain and finance.
- Ilja Rijnen, regional HR director for Asia Pacific and India at Edrington
“And it’s not unheard of that our talent gets offered 30% to 40% more in some of our markets by start-up companies that don’t have to comply with the many rules we have to deal with as an international player. At the same time, the rise of the Millennial generation results in people expecting more flexibility and showing less loyalty.”

Clearly, organisations are not easy to run today. In order to make the best use of capital, human and material resources, they require sound systems, policies and procedures. In essence, they need to be not only managed, but importantly, led.

Leaders of these companies have to make sense of information and knowledge delivered to them in different forms and by different means 24 hours a day. They have to listen, reflect and act in the present in a rhythm and pace and in ways that consider the past to shape the future.

“The said environment translates into talent beyond technical capabilities. We look for talent with broader capability – people who can lead through thought leadership, change leadership and people leadership, therefore, creating followership to bring a positive outcome for the business,” Khaw explains.

The need for leadership development

Indeed, it is precisely to deal with such a chaotic corporate climate that leadership development is becoming more and more important today.

In fact, investing in talent management programmes to help develop leaders has become the primary focus for human resources professionals over the past few years.

According to the Talent Management: Accelerating Business Performance survey by Right Management, 47% of HR professionals in Singapore stated 2014 was a year of growth marked by increased spending on talent management initiatives to help develop leaders and build talent pipelines.

This focus on enhancing talent management strategies was a trend observed worldwide, with HR leaders in China/Hong Kong (88%), India (77%), Brazil (75%) and the United Kingdom (45%) also planning to increase investments in talent management programmes.

The greatest skills leaders need today

However, a big unresolved issue remains – what sort of leadership behaviour should organisations encourage via such developmental programmes. This is mainly because of the fact that the very definition and core responsibility of a leader is a contentious issue.

According to a survey by The Alternative Board, 46% of respondents thought accomplishing goals is the most important function of running a company.

The survey – which included 336 entrepreneurs from New Zealand, United Kingdom, Canada and the United States – found 38% of bosses placed more importance on providing a vision for their business.

Nearly one in 10 (9%) respondents selected establishing rules and structure in the organisation.

Only 7% selected setting an example for their employees.

The survey found North American companies placed more emphasis on providing a business vision and communicating that to staff, compared with New Zealand and UK businesses which placed the greatest weight on getting things done.

No matter which task one might choose as the most important responsibility of a leader, it is arguable that leadership has almost become so contextual that it defies standard definitions or development approaches.

Instead, companies are now concentrating their efforts on priorities such as role modelling, making decisions quickly, defining visions and shaping leaders who are good at adapting.

We look for talent with broader capability – people who can lead through thought leadership, change leadership and people leadership, therefore, creating followership to bring a positive outcome for the business.
- Li-Ki Khaw, head of HR for ANZ Banking Group
“Every organisation is different and leaders need specific skills depending on the business objectives of the organisation,” observes Vidisha Mehta, principal and talent strategy practice leader for Mercer Asia.

“However, being able to operate in a complex global environment is becoming increasingly critical; and aspects such as an entrepreneurial spirit, catalytic learning, cultural literacy and sophisticated networking are a few factors that drive success.”

For Khaw, however, one of the key skills leaders need today is learning agility.

“I mentioned earlier we are operating in a disruptive environment. A learning agile leader, according to research by Korn Ferry, demonstrates the ability to use his/her experiences and translates that into a new and/or untested situation, which often is complex. The good news is learning agility can be developed,” she says.

She elaborates on critical thinking skills – being able to exercise sound judgment and decision-making is a big component in being agile in learning.

“Giving leaders more opportunities to learn and exercise judgment earlier on in the leadership ladder and giving them critical experiences in learning through failures helps position leaders for greater success when they assume bigger responsibilities,” she says.

“However, in my view, possessing learning agility alone is only half the journey. In most global organisations, we run the risks of operating ‘silos’ in a matrix environment. To ensure it all comes together, leaders need to think ‘enterprise’.

“It’s about thinking and acting for the enterprise first, then business units, followed by department/function. That includes the talent agenda which is as important as business outcomes.”

Rijnen reminds leaders, however, that it is also integral for them to have “enough functional depth in at least one area”.

In addition, he explains, it is key for them to have “transformational skills, understanding of end-to-end business processes and how to impact effectively”.

Being able to “translate strategic objectives in one’s own role and function” is a last component he identifies, adding it is helpful for leaders to understand “how they can impact business performance effectively and how to inspire and enrol their teams in it”.

Why leadership development programmes are failing

Unfortunately, merely being able to identify the types of skills needed to become an excellent leader in today’s workplace isn’t proving enough for companies to develop leaders effectively.

In fact, for the third year in a row, leadership soared to become one of the most pressing talent challenges faced by global organisations.

Despite a rise in leadership spending, nearly nine out of 10 global HR and business leaders (86%) in a Deloitte survey have cited leadership as a top issue. A full 50% of respondents in the survey rated their leadership shortfalls as “very important”. Yet, only 6% of organisations believe their leadership pipeline is “very ready” – pointing to a staggering capability gap.

To make matters worse, this problem seems to be especially prevalent for companies in the Asia Pacific region.

Mercer’s Leadership Practices Study found only 15% of businesses in Asia Pacific are identifying who is ready for the next move or position within their leadership pipeline.

This was 5% lower when compared with firms in Latin America, which was leading the way among the 1,000 companies studied across Asia Pacific, Latin America and the Middle East on the overall development of leaders in the organisation.

Nearly three-quarters of organisations in the region had a defined leadership development strategy – significantly higher than companies in Asia Pacific and the Middle East.

Rijnen highlights several reasons why leadership development programmes are failing today.

These range from not having “long-term, multi-year talent development plans” that are in place within businesses to “cultural clashes at senior level” when it come to leadership.

Explaining the latter point, he says that in his opinion, many MNC western companies would like to have local seniorleadership in place, but struggle to build a good rapport between their global board and local leaders.

“This is causing a cognitive bias which should be addressed both at a corporate and local level,” he says.

Another possible factor he highlights is the lack of interaction between leaders and organisations.

“Talent development becomes a tick-in-the-box exercise. There are no real partnerships between the employee (future leader) and the company with clear and ongoing feedback,” he explains.

He also highlights the danger of treating talent as entities with “a static trait instead of something that develops and changes over time”, just like the needs of the organisation.

Adding to the possible causes of why leadership development programmes fail, Mehta adds that organisations rarely reach into their talent pipeline soon enough.

“In a recent Mercer study on global leadership, we found that almost two-thirds of the organisations did not conduct leadershippipeline projections regularly.

“Succession planning efforts are often focused on the senior leadership levels, hence, talent is identified and developed when people have already spent a lot of time in their roles and careers. Identifying talent earlier on ensures that organisations have a longer ‘runway’ to develop this talent.”

She explains another key issue is around sustainability of the process.

“Often organisations carry out a one-off ‘talent identification’ exercise, with not enough follow up on how this talent will bedeveloped beyond an immediate set of training interventions. This fragmented process delivers sub-optimal results due to a lack of continuous monitoring of where people are in their development journey.”

Getting past the hurdles

To overcome such problems, Khaw adds that an organisation must be committed in their leadership programme through both the good and bad times.

“Often at times, costs (versus being seen as an investment) become a common reason to pull back programmes, resulting in a disrupted and inconsistent experience, as well as messaging from the organisation,” she says.

Underpinning the above, she adds a robust HR infrastructure, that is, recruitment, promotion, pay/rewards in driving the same purpose and outcome will be crucial in ensuring the success of a leadership development programme.

“We take great pride in the fact that we have a structured learning pathway for the development of our leaders at every level of the organisation.

“From first-time first-level line managers to leadership at the enterprise level, our courses aim at providing all the necessary knowledge and tools for our managers to perform their roles well,” Khaw explains.

“I am pleased to share there has been an overall significant increase in the employee engagement survey (MyVoice) results over the last five years. In addition, we have also seen our attrition rates decline in a big way. I believe our leaders play a large part in making our organisation a great place to work.”

In essence, firms need to remember constantly that the nature of work is changing, and this is impacting where and how people work together.

As such, bosses need to better understand how to lead in this environment – and properly structured, sustainable and flexibleleadership development programmes are key in helping them do this.

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