By Mark C. Perna
Oftentimes, most of us don’t interact with the president or CEO of the organization. Rather, the leaders that we interact with on a daily basis are supervisors and middle managers who can make or break our work experience. Toxic managers and workplaces played a key role in the Great Resignation of recent years.
Despite some of the big layoffs recently in the tech and finance sectors, the larger war for talent has yet to ebb. The unemployment rate is the lowest it’s been in more than fifty years. And now, more and more organizations are recognizing that there’s a growing shortage of up-and-coming leaders to stock those critical positions.
According to the just-released 2023 Global Leadership Forecast conducted by DDI, few companies (only 12%) say they have the leaders they need to fill critical roles. As a result, existing leaders are getting burned out—72% report feeling used up at the end of the day—which only leads to more turnover.
“Developing the next generation of leaders is important in any economic climate, but CEOs are recognizing how crucial it is to have the talent in place to drive business priorities forward, especially amidst a potential recession,” says Stephanie Neal, Director of DDI’s Center for Analytics and Behavioral Research.
DDI’s research reveals that companies with strong benches of leaders reap significant benefits:
They’re six times more likely to be capable of engaging and retaining top talent.
Five times more prepared in preventing employee burnout.
Three times more likely to be among top financial performing organizations in their industry compared to those with weak benches.
With the stakes so high, Neal and I discussed how organizations can address this shortage by developing younger leaders, as well as the five critical skills every leader needs to excel.
The five critical skills of leadership
According to DDI’s research, there are five critical skills every up-and-coming leader needs to master.
- Identifying and developing future talent
“This involves recognizing potential in others, making time and effort to coach and develop talented employees and providing opportunities for their professional growth,” says Neal. “Having leaders who can identify and develop future talent is critical for an organization’s future success because those leaders will be able to build a strong and capable team that can take on new challenges and drive growth.”
- Strategic thinking
“The ability to think about what goals are important to the future success of the business and to understand how to make decisions and allocate resources to achieve long-term goals is imperative,” says Neal. “Strategic thinking allows leaders to anticipate and respond to changes in the market, to effectively compete and navigate the business environment and to prioritize the work that will help yield successful results in the future.”
- Managing successful change
“Leaders should be able to identify when change is important, communicate those changes effectively and lead others through the transition to complete their work successfully,” says Neal. “We are living and working in a time of accelerated change, so this is going to be a critical skill now and into the future. Companies, regardless of what industry they operate in, will need leaders who can effectively manage changes that impact their business and employees.”
- Decision-making and prioritization
“This involves having a clear understanding of the situation and ability to identify the most important goals and actions to take,” says Neal. “This is a critical skill for the future, especially as leaders navigate challenging times. Leaders must make decisions that will impact their customers, their organization and its stakeholders, and those who are able to make sound decisions quickly and with confidence have a better chance at staying ahead of the competition.”
- Influencing others
“This skill involves understanding others’ needs and motivations, while being able to persuade others to support your own ideas,” says Neal. “To achieve their goals for the future, companies need leaders who can influence others to support their vision and follow their lead. Leaders who can effectively influence their teams are critical for the future because they can bring together diverse perspectives and better implement changes to lead their organization to success.”
“Coaching up” leaders from the younger generations
The first step to retain and develop high-potential employees into future leaders is to have conversations with those employees. They need to know they are valued and that they have a career path at the company.
“We found that when leaders understand their career path, they are four times more likely to find meaning and purpose in their jobs, which increases their likelihood of staying at the company,” says Neal.
Organizations then need to understand that high-potential leaders crave critical development experiences in a few specific areas:
Coaching from internal and external coaches to provide feedback
Instructor-led training and regular assessment to diagnose their strengths and areas for improvement
“Among workers under age 35, offering these development experiences greatly reduced the likelihood that they would want to leave their employer,” says Neal.
To develop these five essential leadership skills in young high-potential employees, organizations can provide them with regular opportunities for training and development.
“The best development and learning programs start with assessment,” says Neal. “Before anything else, people need self-awareness and an objective look at what they are truly skilled in and what they may struggle the most with. This helps to ensure training remains relevant.”
With that knowledge in hand, tailored programs can be developed that include a mix of interactive learning experiences with peers, combined with opportunities to practice those skills. The ability to practice and get live feedback is critical.
“Having a chance to learn and practice with peers is crucial because that’s where learning really gets cemented and behavior change happens,” says Neal. “Managers want and need to receive coaching training in cohorts with others so they can learn and practice in real-time with their peers. It’s also how most current leaders (61%) say they prefer to learn.”
