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Crisis of Confidence in Business Leaders to Manage Disruption, Like Coronavirus

Odgers Berndtson
2020-03-12 07:30 4256

Only 15% of executives believe their companies' top leadership will succeed  

SINGAPORE, March 12, 2020 /PRNewswire/ --  Only 15% of business executives worldwide have confidence in their company's own top leadership to successfully manage disruption – including unexpected events like pandemics, technological advances, shifting demographics and climate change, a global analysis from the international executive search firm Odgers Berndtson reveals today.

This lack of confidence is striking since 95% of executives also believe that managing disruption well is now critical for companies to succeed in turbulent times. Odgers Berndtson, concludes that successful companies will have to "reinvent leadership" for the modern world.

"Business executives across companies in Asia-Pacific, like the rest of the world, lack confidence in the ability of their top people to drive future success. This is a crisis not just for those businesses, their shareholders and employees, but also the wider economy," said Mark Braithwaite, Managing Partner of Odgers Berndtson APAC.

Using a methodology developed with Harvard Business Review Analytic Services, the firm today launches The Odgers Berndtson Leadership Confidence Index. Using data from almost 2,000 senior executives, managers and board members of companies with sales from $50 million to $5 billion around the world, this gives a first measure of confidence in the ability of top leaders to drive success in changing times.

The Index also identifies what qualities and attributes in top people companies need most to thrive in changing times. In its report, Odgers Berndtson notes that 88% of senior managers and executives expect disruption to increase over the next five years, and almost as many (85%) say it has already had an impact on their organisations. 

The stakes are high. According to Harvard Business Review Analytic Services (HBR-AS), 95% of senior executives[1] around the world now believe managing disruption well is not only vital to the success of their company but also brings "discernible competitive edge". The longevity of top companies is getting ever shorter, with some in the US for example, predicting half of the current Fortune 500 companies will disappear over the next decade[2].

"The quality of leadership has never been more important," Kester Scrope, Chief Executive of Odgers Berndtson said. "For the first time, this Index shines a unique light on the attributes leaders need most to develop confident organisations aligned to the modern world."

Only 16% of senior managers believe their company's top leadership has managed disruption well to date, and only 15% are confident they will do well in future. The majority (61%) are tentative but a quarter (24%) actively worried – with similar results across all global regions.

This crisis of confidence appears most stark when it comes to individual roles and leaders, notably chief executives. While 85% of respondents believe the CEO has the most critical role to play, 40% express doubts that the person in the top role will manage disruption well over the next five years.

"The uncomfortable truth for some CEOs is that a strong track record does not equate to having the capabilities to deal with future disruption," Odgers Berndtson notes in its report.

However, the Index shows confidence is also lacking in all C-suite roles – including key top jobs such as finance, human resources and technology – and that there are clear differences between the top 15% of leaders, who inspire the most confidence, and the rest. "The more progressive leaders see only opportunity," Odgers Berndtson notes. "What is required is a healthy attitude towards change."

The Index also compares companies that score highly on confidence in their top leaders with those that don't. Confident companies are the most positive about their leadership's courage, vision, and curiosity, plus their ability to drive a sense of purpose.

"Successful companies will recognise that mindset as well as skillset is critical in their leadership," Mr Scrope said. "Agility is key, both at the organisational level and in the individual characteristics of leaders inspiring confidence. Attributes of mindset are now very important if individuals are to adapt and seize opportunities in the face of unprecedented disruption."

"What we are finding is that the leaders who are successfully thriving now are much more collaborative with their colleagues, says Mark Braithwaite, Managing Partner of Odgers Berndtson APAC, and author of "Leadership Disrupted",  a book published last year which explores how CEOs across APAC handle disruption. "If leaders have the humility to accept that they don't know everything, they can create a culture of innovation where they include a lot more people in thinking through business problems, not expecting to be right every time."

Odgers Berndtson believes an evolution in leadership is required for companies to thrive in a world of complexity and uncertainty, combining the drive, adaptability and curiosity required for constant change, with the vision and courage to lead change and resilience to stay the course. Leaders need a mindset to cope with change, and the humility to move on from old command and control structures.

Notes

1. HBR-AS   Harvard Business Review Analytic Services, The State of Leadership: Is Disruption Creating a Crisis of Confidence? (2020)

2: Innosight  https://www.inc.com/ilan-mochari/innosight-sp-500-new-companies.html

Key Findings, Methodology and Notes overleaf

SUMMARY OF KEY FINDINGS:

Taken from The Odgers Berndtson Leadership Confidence Index 2020. Full report here

  • 85% of global organisations have been impacted by disruptive change, and even more (88%) expect this will increase over the next five years.
  • 95% of senior global executives believe managing disruption is vital to the success of their company and brings competitive edge.  
  • Only 16% of senior executives and managers worldwide have confidence in what their top team has delivered to date.
  • Only 15% of global leaders are inspiring confidence about succeeding through disruption. 24% of respondents are actively worried about leaders' performance.
  • Confident organisations are also the most positive about their leaders' vision, courage and curiosity – scoring over 80%, against under 5% for the most worried organisations.
  • Confident organisations are better at overcoming common obstacles to managing disruption well, which all face. 58% of worried organisations said resistance to change was their biggest obstacle to managing disruption well, compared to just 31% of confident organisations.
  • Confidence in top bosses is low across all different geographic regions. Between 14% and 17% of organisations across all parts of the world believe top leaders have what it takes to succeed. The Index found North America had the highest level (27%) of organisations actively worried about the ability of their top leaders to manage well.   
  • There are major gaps between the importance attached by senior executives to top leadership roles, and their confidence in the ability of those in them. When it comes to CEOs, 85% believe they have a critical role, but 40% doubt the current CEO will succeed in the next five years.
  • Senior executives are least confident in their leadership team's abilities to manage talent and drive change.
  • Among those most worried about disruption, resistance to change is cited as the biggest obstacle to managing disruption, followed by lack of vision from their top leaders (respectively at 58% and 56%). The challenges are greatest for organisations that are worried, and not managing well – not because they are greater, but because their top leaders are less effective in these areas.

NOTES TO EDITORS:

For this study we defined disruption as the unsettling forces that can impact an organisation's strategic direction and challenge its operational capabilities, such as emerging technology, competition from unexpected quarters, the impact of unforeseen global events,  climate change, regulatory oversight, innovative business models, rising customer expectations, and shifting demographics.   

THE ODGERS BERNDTSON LEADERSHIP CONFIDENCE INDEX

Methodology

The Odgers Berndtson Leadership Confidence Index is believed to be the first measure of confidence in global business leaders and their ability to manage through disruption and drive success.

The methodology has been developed by Odgers Berndtson with Harvard Business Review Analytic Services (HBR-AS). Our analysis is based on responses to a study of 1,890 senior executives, representing companies with revenues ranging from $50 million to over $5 billion.

The Index provides a single measure of confidence in leadership's ability to succeed through disruption by combining the responses to questions examining 44 attributes and activities of leadership. The Index also measures confidence in leadership skills, experiences, motivations and behaviours. Companies with high and low confidence scores are compared to highlight those leadership activities and attributes that are found to a much greater degree in organisations that feel positive about future success.

About Odgers Berndtson

Odgers Berndtson delivers executive search, assessment and development to businesses and organisations varying in size, structure and maturity around the world. The firm has specialist practices which focus on over 50 sectors, commercial, public and not-for-profit, involving over 250 partners and their teams in 29 countries. Across the Asia Pacific region, the firm has offices across Australia, India, China, Japan and Singapore. www.odgersberndtson.com, @odgersberndtson

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Source: Odgers Berndtson
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