What does luck have to do with building your executive team? Nothing really, except as an analogy to illustrate how many employers approach their leadership selection today – often relying on gut feel or “luck” as opposed to careful planning and the use of data to guide them. Meanwhile, moving valuable talent into executive team roles is a strategic and imperative goal, one that can have substantial impact depending on your success or failure.
Why Leaders Must Begin Developing Leaders
Executive and leadership development has risen to the top of most companies’ priority list over the past decade, with the realization that in the fast-changing, innovation-led business landscape organizations must have exceptional leaders to navigate it. In fact, studies by McKinsey & Company and J.P. Donion have found a close correlation between the skills of a company’s leaders and market performance. However, research by Deloitte and the U.S. Federal Reserve show that return on assets (ROA) and productivity growth – both key measures of leadership success – have shown a steady decline since the 1960s.
This exposes a real challenge facing organizations today – implementing effective leadership development to build stronger capabilities. This issue is particularly urgent given the youngest of the Baby Boomer leaders will turn 61 this year, raising the importance of replacing the departure of these older leaders. As a result, organizations are realizing that if they don’t start to prepare next generation leaders for future roles now, they will face an uphill battle filling them in the future. In short, top executives will need to aggressively find ways for leaders to develop leaders.
A recent study highlights a pervasive challenge facing the pharmaceutical and life sciences industry, and that is a lack of talent. The study found that 51 percent of CEOs of life sciences and pharma companies admit to greater difficulties attracting and retaining the right people, more than any other industry in the study.1
In fact, one of the greatest challenges on the horizon for pharmaceutical and life science companies is filling vacant positions and decreasing the time-to-fill for those positions. On average, pharma hiring decision-makers report they are currently 14 percent understaffed and have roughly 212 open positions at this time. Additionally, they report that it takes an average of 105 days, essentially 3 ½ months, to recruit and hire non-executive positions.1
These lengthy vacancies are quickly eating away at corporate profits. In fact, companies lose $500 a day for every job that stays vacant.2 given the average time-to-fill among pharma decision-makers is 105 days, and that amounts to $52,000 per vacancy.
While the nursing and physician shortage has been well-documented and widely-discussed, there is a far more challenging aspect of healthcare talent management today – attaining a deep pipeline of executive-ready talent equipped to lead amid a complex and chaotic healthcare industry. In fact, strong leadership is arguably the single most important driver of overall organizational performance, and well-constructed talent management and succession planning remain critical to developing a deep bench of strong leaders.
Facing unprecedented pressure to navigate new laws, regulations, care coordination and payment models, new leadership styles need to be implemented to effectively lead and manage in the new paradigm. Simply said, healthcare organizations need to simultaneously address an impending shortage of leader-ready talent while developing the competencies and behaviors of existing leaders to match the requirements of an ever-evolving landscape.
Companies are continuing to abandon top-down, formal reporting hierarchies and silo-based organizational models in favor of flatter, team-based structures as a means of adjusting to new demands for innovation and growth. In fact, 38% of all companies have moved away from traditional functional structures towards dynamic networks of teams, according to a recent Deloitte study.
The adoption of new organizational models alongside the growing cohort of Millennials in the workplace is making waves across the enterprise, driving changes in job roles and responsibilities, reshaping how goals are set and people rewarded, and altering the role of leaders – namely driving a need for more and different leadership skills at all levels of the organization.
The rules and requirements to remain competitive in today’s marketplace are evolving so rapidly that leadership is struggling to stay ahead of the course. While change used to be slow and incremental, organizations today face a whole new breed of change – one that is fast, disruptive, and unpredictable. As such, businesses are acutely aware of the need to be agile. However, to be agile you need agile people because in the end, organizations don’t change – people do.
Leading Courageously and Bringing Others Along
Optimizing leadership skills and building a deep pipeline of executive-ready talent is more critical than ever, given a fast-and-ever-evolving healthcare environment. With the introduction of new laws, regulations, care coordination, and payment models, new leadership styles need to be implemented to effectively lead and manage in the new paradigm. However, alongside the need for modern leadership competencies is the need to address an impending talent shortage of leader ready talent. In fact, executive turnover is expected to increase due to a high number of leaders eligible for retirement, combined with a shortage of senior leader ready talent.
To survive, and thrive, healthcare organizations must take advantage of all its institutional talent. Yet, this can only be achieved if leaders widely embrace the need to address the issue of leadership development. Healthcare organizations, like many, are slow to invest resources to identify and develop next generation talent. This is problematic in light of our research that shows a significant gap between what directors do well and what is needed to be a successful executive. This is a classic case of "what got you here, won't get you there".
When organizations invest in leadership coaching, they make giant strides in building a culture of coaching throughout the company. One of the many beneficial outcomes for leaders who engage with coaches is that they are encouraged to use and transfer their learned skills to their peers and direct reports throughout the organization – creating a coaching culture that can be a game changer in the way people work together and perform.
A study by the Human Capital Institute and International Coach Federation found organizations with strong coaching cultures report revenue growth well above their industry peer group (51% compared to only 38%) and significantly higher engagement (62% compared to 50%). And, organizations with robust coaching cultures are over 60% more likely to have senior leaders engaged with coaching.
We are living in uncertain times. While we may not know how long this new normal will last or what the world will look like when it’s over, the one thing we do know is that the organizations that evolve, adapt, and turn obstacles into opportunity will be the ones who thrive. We also know that leadership is a differentiator and that the leadership development journey should never stop.
Now, more than ever, it is crucial for organizations to invest in coaching for their executives and high-potential leaders in critical roles. In times of rapid change or disruption, the responsibilities and duties of executives become even more challenging. But, through these unstable, uncertain, and complex times, inspiring leaders are needed the most. Meanwhile, high-level leaders often find they have few trusted sounding boards given their unique pressures and often confidential challenges.
According to a new global study, the majority of U.S. executives received no formal workplace onboarding in their most recent roles. Furthermore, when it comes to grading onboarding experiences on a scale of 1 to 100, executives in the U.S. rate theirs as mediocre with an average score of 59.
After investing heavily in recruiting and hiring a new member of an executive team, many organizations fail to maximize that investment when ineffective onboarding leads to dissatisfaction, poor performance or turnover. In fact, almost 60% of executives report it took them six months – and close to 20% said it took more than nine months – to have a full impact in their new roles.
While you can’t control every aspect that factors into an executives’ performance and longevity in a role, implementing a robust, data-driven onboarding program can greatly improve your odds. Considering executive failures can cost up to 40 times the base salary of leaders, which can translate to a multi-million-dollar mistake, HR leaders can’t afford to ignore the critical necessity for effective onboarding.
One of the most important opportunities for employers today is a large employment pool from which to draw new talent. The opportunity to upgrade the overall level of talent in your organization is strong. As you seek to raise the level of talent, first consider what positions are most critical to your bottom line. Positions where the level of performance varies greatly between the top and the bottom performers are a good place to start. These positions are ripe for improving the quality of new hires which will improve productivity and performance.
Imagine the consequences of not assessing someone seeking to join the police force, or someone aiming to join an airline as a pilot. Seems ridiculous, doesn’t it? While the impact of hiring the wrong person in those roles can be dire, the consequences of not assessing job candidates and employees in less complex jobs are also significant. The outcomes for businesses hiring or promoting the wrong person can range from poor performance, high turnover, lackluster customer service, to even lost business.
Research has shown that feedback is an effective way for individuals to gain insight into their need to change or develop. It permits participants to understand themselves more fully and to see the impact of their style and behavior on others and on goal attainment. The development process allows the manager or internal coach to help individuals take a more objective perspective. Using an assessment during this process results in a credible and more accurate self awareness. Raising self awareness is critical for employees to take ownership for changing behaviors (Riggio, 2008). For example, development assessments uncover blind spots: areas of weakness that were unknown to the participant. Participants are likely to learn about hidden strengths: skills or competencies that can be further leveraged or adapted for future roles.
Topics: Performance Management
The numbers don’t lie. The traditional approaches to hiring the right talent for a position haven’t exactly proven successful. The rate and cost of hiring mistakes is well, unmistakable. According to a recent survey, companies lost an average of $14,900 on every bad hire they made in the past year, and nearly three in four employers (74%) say they’ve hired the wrong person for a position.
And, consider this. Skilled researchers pored through 85 years of scientific literature in a groundbreaking meta-analysis, to identify which employee selection methods were the best predictors of job performance. Of the 19 methods studied, structured interviews came in 3rd place, unstructured interviews placed 9th, years of job experience came in 14th and years of education came in 16th.
This extensive research finds most traditional methods of selecting employees are deficient at predicting job performance and goes a long way toward explaining why there are so many hiring mistakes. As they say, the definition of insanity is doing the same thing over and over and expecting different results, yet isn’t that what we in the HR field have been doing? Applying the same, traditional methods of screening resumes, conducting interviews, and relying often on gut feel.
Interestingly, the researchers conducting the meta-analysis found the best predictors of job performance were general mental ability, such as IQ, and applying critical thinking and competency skills on work sample tests. Today, we call these methods “talent assessments,” and it is revolutionizing the way companies hire talent.
Selecting a high performing, profitable workforce is a significant challenge. When it's done right, the gains are considerable because in our people lie most of our dollars. By selecting employees who have the right competencies and other attributes required for the job, organizations can build a high performance workforce capable of sustaining future growth.
The XB Assessment Platform is designed just for this purpose. It measures the cognitive abilities, competencies, and other characteristics required for successful performance in a wide variety of industries and job families. It also develops your workforce by clarifying the strengths and areas of development to further employee growth, aid in succession planning and identify viable career paths. Unlike other selection tools, it offers a way to align organizational goals and with the company culture. It's not enough today to have the right skills and abilities. Top employees also must demonstrate the right fit with organizational culture, mission and values. In other words, top employees exemplify your brand. The XB Assessment Platform evaluates this fit by examining values and motivations. Further it provides a valid assessment of behavioral style, which has important implications for employee management and team effectiveness.