Leading indicators: the development of executive leadership; in a survey of Chief Executive readers, the Center for Creative Leadership provides a window into what CEOs are doing to enhance leadership in turbulent times - CEO Survey: Advertisement

Chief Executive, The, Oct, 2002 by Peter Haapaniemi

Today, there's no shortage of challenges for CEOs. Rapidly changing technologies and markets. An increasingly sophisticated workforce. A shifting economy. Terrorism. Corporate scandals.

It's a world where sound leadership has become critical, and a climate that prompts many CEOs to reflect on their own approach to leadership. To find out what executives are thinking, the Center for Creative Leadership (CCL[R]) conducted a survey of Chief Executive readers earlier this year, asking questions in three broad areas: What kind of leader are you? What is the state of leadership in your organization? And, how do you develop leadership in your company?

Those topics apparently struck a chord, with more than 750 executives responding to the survey. The overall results: CEOs believe that good leadership is critical to a company's success, and they believe that a central part of the top executive's job is developing leadership in other executives and managers. At the same time, however, CEOs find it difficult to drive enhanced leadership deeper into the organization in a systematic, large-scale manner.

Fortunately, leaders are made as much as they are born -- and many aspects of sound leadership can be learned. That includes not only process- and strategic-management skills, such as the ability to allocate resources, understand markets, assess risk and so forth. It also includes people skills, which can be "developed and improved over time through a combination of relevant work experiences and formal development opportunities," according to Cynthia McCauley, CCLs vice president of leadership development.

In short, the effective nurturing and development of leadership is an ongoing process. This survey provides a snapshot of where CEOs are in that process today, and where they are going tomorrow.

WHAT READERS SAID

* CEOs see leadership development as critical for competitive advantage. A majority of respondents (78.6 percent) said that the ability to develop leaders is the most important or one of the top 5 factors in achieving competitive advantage. [See Chart 1] A mere 2.2 percent did not consider it a success factor.

* Executives consider the development of leadership in the organization as a key personal responsibility. Almost all respondents (90.3 percent) indicate they are very or somewhat involved with leadership development practices in their organizations. More than half (54.2 percent) indicated that they are primarily responsible for that development. These responses are in line with CEOs' opinion that leadership is closely linked to competitive advantage.

* The so-called "soft stuff" of people management skills and personal characteristics is key to effective leadership. At the CEO and executive-team levels, people skills ranked highest in importance, followed closely by personal characteristics, such as adaptability and flexibility. [See Chart 2] According to the Center for Creative Leadership, these characteristics are related to an executive's ability to perform four key leadership tasks: setting direction, gaining commitment, creating alignment and facing adaptive challenges. Strategic-management skills and process-management skills ranked third and fourth, respectively, among higher-level executives.

* The importance of personal characteristics rises with management level. Just over 20 percent of respondents said such characteristics were a key success factor for mid-level managers. That figure rose to nearly 30 percent for the executive team, and to nearly 40 percent for the CEO. [See Chart 3]

* CEOs are taking succession planning very seriously. When asked, "For the future leadership of my company, I am currently more concerned about..." a majority of CEOs chose "succession planning" (61.6 percent) over "executive compensation and retention packages" (18.8 percent) and "external executive selection" (10.7 percent).

* CEOs use a variety of methods for their own development. More than 70 percent of respondents cited "reading books on leadership," followed by activities such as attending seminars, working with colleagues, joining professional associations and personal coaching. [See Chart 4]

* CEOs are interested in more personal coaching. The personal coaching area showed the largest gap between executives' current and desired methods for development: 9.5 percent of respondents indicated that they had hired a personal coach in the past two years, but 16.8 percent said they would like to do so. This is in keeping with CCL's observation that there is a general shift toward the use of more customized, one-to-one options for development.

* Organizations often try to mix development with existing job responsibilities. Nearly half of the respondents said that they rely primarily on "on-the-job opportunities" to encourage leadership development. Other approaches include "creating development plans that include leadership:' and in-house and external training. [See Chart 5]

* Companies tend to blend in-house development with external training. Almost a quarter of CEOs (21.3 percent) said that they always or usually use external resources to develop leadership. Two-thirds (66.7 percent) use them sometimes. Larger companies -- those with more than $250 million in revenues -- are more likely than smaller companies to outsource leadership development (28.3 percent vs. 18.2 percent, respectively). CEOs said that the most valuable external partners are typically individual consultants (38.1 percent) and executive training resources (35.8 percent).