Opening The Leadership Pipeline: 3 Vital Steps You Should Be Taking Todayby Jack Zenger September 22, 2016
It is not unusual for an organization to worry about finding the right new CEO. However, my concern goes far beyond the CEO replacement. I see a serious problem in the making. The world is about to experience a dearth of effective senior leaders. Why? Several forces have combined, as if it were a perfect storm, to generate this critical situation.
1. The financial downturn slowed retirements. Senior executives stayed on and created congestion at the top. Many organizations have one-half of their senior leadership teams who are immediately eligible for retirement or who will be within the next five years.
2. Companies have pared back investments perceived as unnecessary. In order to meet profit objectives, companies have been operating with a lean mentality. They’ve curtailed rotational assignments that formerly aided in development goals. Development positions such as “two in the box” have been abandoned. Overseas assignments are reduced, despite their proven value for executive development.
3. Formal development programs have been slowed, downsized or totally abandoned. The consulting group Gap International surveyed executives who reported that they believe talent can make or break organizations (85%) yet ironically, fewer than half are investing in leadership development in the coming year. The organizations that have continued their leadership development programs have scaled back. I see corporations providing development for 15-20 participants per year who are selected from a leadership group of 2000 or more. They want to say they are continuing their executive development program, but most realize it as merely a token effort.
These factors have been compounded by the accelerating pace of business. The good and bad news is that beginning now, about four million executives will retire each year. The outflow valve is opening and the flood of upper management vacancies will appear. However, there are serious concerns on the part of senior executives about whether or not the input valve is open that prepares the generation below them to have received the necessary development to take over. Various surveys of senior executives conclude that:
• Sixty percent of companies are facing leadership shortages that impede their performance.
• Thirty-one percent say developing leaders is their largest talent issue (Deloitte).
• There was a 30% drop in appropriately aged managers between the years of 2009 and 2015.
• According to the Ken Blanchard Company’s annual corporate issues survey, executives said there is a skills gap for corporate leadership positions, as well as trained talent at all levels. The top five priorities in order of importance are leadership development, managerial development, supervisory development, coaching skills for leaders and communications skills.
Prior Forbes reporting confirms these conclusions. They noted, “The glass ceiling has been replaced by a ‘gray ceiling’ comprised of baby boomers firmly entrenched in upper management positions.”
A study by Zenger Folkman reported in Harvard Business Review shared that in a group of more than 17,000 leaders, the average age of the participants in a leadership development initiative was 42. More than half of the participants were between 36 and 49. Less thank 10% were under 30, and less than 5% were under 27. Continued on Forbes.com.