Deloitte: Investing in leadership pipelining

Written by
Anne-Marie Malley

17 Sep 2015

17 Sep 2015 • by Anne-Marie Malley

Is leadership becoming a persistent issue? With just 8% of organisations believing their leadership pipeline is excellent. Anne-Marie Malley, UK human capital leader at Deloitte, explains why it is so important for your business to identify why leadership is a crucial factor.

Tacking the leadership dilemma

It is clear that leadership is currently at the forefront of talent issues for UK organisations.

In our most recent human capital trends survey, that had respondents from 3,300 business and HR leaders from across the globe, the problem came out at the forefront of talent problems facing companies. In the UK alone, almost nine in ten cited leadership as one of their biggest challenges, remaining the most pressing concern for companies for the third year running.  

At the same time, only 8 % of organisations stated that they believe that their leadership pipeline, to help address the problem, is “excellent”. The issue is even more apparent in developing future millennial leaders, with a mere six per cent of UK respondents declared that they have “excellent” programmes in place. Incredibly, half of UK organisations said that their succession plans are not clear and current.

Time is not on these organisations side. With four million baby boomers retiring each year, by 2025, Millennials will represent 75 % of the workforce. This generation will become ever more important to the success of UK business. Indeed the group is determined to do so, with six in 10 Millennials hoping to gain a senior position in their organisation during their working life, according to separate Deloitte research.

Therefore, whilst the ambition is clearly there, many UK organisations are not offering commitment to their development. Companies are treating leadership development sporadically, focusing their efforts on a select few employees, rather than making the long-term investments to develop leaders across all levels. Clearly something needs to be done to address this.

Are L&D investments lagging behind?

The 2015 results revealed that learning and development (L&D) has increased as a talent challenge for UK organisations, moving from the eleventh most important issue in 2014, to become the fourth biggest challenge in 2015. Over seven in 10 rated learning as a “very important” or “important” problem. 

Technological change makes a big impact here. For example, despite the increase in the availability of mobile learning tools, only 8% of respondents rated themselves as “excellent” at providing mobile learning. Furthermore, only 15 % rated themselves as “excellent” in using advanced media such as audio, video and simulations. 

As it stands, almost eight in 10 UK businesses surveyed cited workforce capability as one of their most important challenges, and yet, only four % believed they are “very ready” to address the issue. 

Businesses cannot expect workforce capability to increase, if investment is not made in L&D. Unfortunately, L&D investment is often one of the first things cut when a business is under performing. This is short-term thinking.

As the economy and businesses in turn are on the road to recovery, clearly L&D is back on the agenda for many organisations. Whilst it is positive to see it back in the picture, when an organisation’s investment in L&D is cut, they still suffer from the consequences in their workforce capabilities for years to come.

Is there a lack of employee engagement?

An organisation’s “culture” has also become a real issue in recent years. Defined as deep employee engagement, meaningful work, strong leadership importance, and job and organisational fit , it is now believed to be “key” to attracting and retaining talent.  

In the UK alone, less than two in10 organisations believe that they can clearly define their culture, and communicate and measure it. As a result, eight out of ten respondents said they suffer from a lack of employee engagement.

Once seen as a “soft” or “nice to have” concept, organisational culture is now fundamental to employee engagement. It is crucial that culture aligns with, and supports, the business’ strategy.

What role can HR play?

Traditionally viewed as an administrative function, HR is now expected to be agile, business-integrated, data driven and deeply skilled in attracting, retaining and developing talent, to align to the overall goals of the organisation. 

As it stands, only one in 10 UK organisations rated their HR performance as “excellent”, yet little is being done to address this. No respondents this year, for example, felt that their organisations provide “excellent” development for HR. As a result, almost seven in 10 %  cited that their HR functions were lacking the capabilities to meet the rate of change across the organisation. 

As we move back in to an era of business growth, technology changes the way we do business, skills become more specialised and generational transitions occur, the war for talent is growing ever more challenging. Business leaders should be looking to HR for advice, as they develop strategies to address this issue, respecting and admiring the fundamental role that the function can play.

But improvements are not happening fast enough. It is clear that something needs to change in order for UK companies to effectively navigate the new world of work. These issues are too fundamental for businesses to ignore any longer.