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Company leaders not prepared for future demands, report warns

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Leaders may have been able to get by in the past solely on their abilities to meet the bottom line, demand changes and make difficult strategic decisions. But such a purely strategic approach won't be enough to survive the management challenges of the next few years.

What will ultimately separate the great leaders from the rest as the economy recovers will be their focus on people and development of their organizations' bench strength, according to the survey of more than 12,000 top executives and 1,800 human resources officers worldwide by Development Dimensions International Inc.

The demands for developing and retaining talent will also fall on chief financial officers in the future, another study found. Eighty per cent of 275 Canadian CFOs polled by Robert Half Management Resources said they believe it is much more difficult to be a company leader now than it was pre-recession.

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Forty-three per cent of the CFOs said they are concerned about losing talented financial professionals to competing job opportunities. And nearly half said they are facing increasing responsibilities for maintaining staff morale and motivation and creating development opportunities to retain employees.

The most sobering finding of the DDI poll is that leaders in Canada are not developing the strengths they know they will need to keep pace with coming demands, the report warns.

While most Canadian leaders said they see employee coaching and developing internal talent as a priority, 12 per cent of organizations actually trimmed their leadership development budgets this year, the study found. And only 20 per cent of the Canadian organizations said they plan to ramp up spending on leadership training next year, compared to 29 per cent worldwide.

"The fact is that leaders of only 19 per cent of organizations said they feel they have the leadership capacity and capability and bench strength to execute on their future growth," said Sylvie Ste-Marie leader of Canadian operations for DDI, who analyzed the data.

The managers were asked to rank the three biggest challenges they faced in the past three years and the major challenges they expect in the next three years. Driving and managing change came out as the top factor in both the past and future lists. But strategic skills that ranked high in the past were bumped lower on the list of future priorities in the opinions of the 357 Canadian executives and human resources managers surveyed.

Large companies scored the worst. Only a third of organizations with more than 10,000 employees scored as highly effective , while 44 per cent of those with fewer than 500 scored as effective. The big differences in the cultures of smaller organizations is that they have more open discussion about strategy, values shared by employees at all levels and more opportunities for individuals to innovate, the study concluded. Larger organizations have the opportunity to "think small" by having smaller and more nimble teams and giving employees more autonomy, it recommended.

"As an aging work force starts to retire, the talent coming in to organizations is younger and less engaged," the report warned. "Organizations need to start making decisions that give all their employees opportunities to have a real impact … to begin better utilizing their greatest asset, human capital."

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It's a glaring need in Canada, Ms. Ste.-Marie said. Over all, only a third of the Canadian leaders rated their organization's leadership development programs as highly effective, while about 20 per cent rated their effectiveness as low or very low.

"There is a perceived need to focus more on people in preference to strategy and crisis management that dominated priorities in the fallout from the recession," Ms. Ste.-Marie said. More than half of the Canadian respondents considered the development of future talent, fostering employee creativity, and coaching and developing employees to be higher leadership priorities than executing organizational strategy.

Despite the awareness, many aren't making talent development a priority, Ms. Ste.-Marie said. "The take-away message is that most Canadian leaders are not fully committed to the kind of talent management they know they will need to be successful in the future."

The benefits are not just in feeling better about the organization and retaining talent, she added. The survey found that 78 per cent of organizations whose leaders rated their leadership development and talent systems as excellent said their overall performance was better than their competitors. Only 6 per cent who ranked their leadership and people programs as poor could claim to outperform the competition.

"If anyone had doubts before about the priority of developing people, there shouldn't be doubts about it now."

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About the Author

Wallace Immen is an award-winning staff writer for The Globe and Mail whose stories about workplace trends and career advice, as well as about cruising and travel destinations around the world appear regularly in print and on-line. He has worn many hats in his career with the Globe, including science writer, medical writer and columnist, urban affairs reporter and travel writer. More

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