Top team effectiveness remains a challenge

Leadership and succession planning are key concerns this year, according to Henley Business School

The effectiveness of management teams could be one of the biggest challenges of the next three years, according to Henley Business School’s Corporate Learning Survey 2016.

The report, seen exclusively by HR magazine, found that the number of firms who consider effectiveness of management teams to be a major challenge rose from 58% in 2015 to 63% this year. Organisation-wide leadership capability was also an area of concern, chosen by 59% last year but 62% of firms this year.

Larger businesses were more likely to see these as areas for concern, with 67% choosing management effectiveness as a challenge and 72% organisation-wide leadership, compared to only 57% and 45% of smaller companies respectively.

Bernd Vogel, associate professor of leadership and organisational behaviour and director of Henley Centre for Engaging Leadership at Henley Business School, said: “Our data shows [organisation-wide leadership capability] is very high on the agenda of businesses. We also see firms investing in developing business-specific leadership principles.

“The question remains: how consistent and with how much effort and commitment is that carried through the entire business? Some companies do that exceptionally, while others invest in top people only.”

Vogel said organisation-wide capability is most effective for firms where many work under line managers. “Here is where systemic leadership as organisation-wide capability might be particularly valuable,” he said. “However, we are only at the beginning of understanding how this can work”.

Ade Adetukasi, head of HR and OD at social care provider ECL, agreed with the findings. “Strengthening management capability by investing in organisation-wide leadership is one of our top OD priorities,” he said. He added developing future leaders was another priority.

Succession planning is also high on boards’ agendas. Every year the researchers ask respondents what their objectives will be for the following year. There has been a 70% increase from 2015 in those citing senior succession planning.

Tania Goodman, partner and head of employment for Collyer Bristow, told HR magazine that the difficulty of knowing when older workers may retire creates uncertainty over succession. She advised employers to monitor staff performance carefully to justify discussing retirement plans with older employees. “Try to apply competency assessments fairly, and not single people out,” she said. “Don’t micromanage your older workers.”

Nick Holley, co-director of the Henley Centre for HR Excellence, said that it is not surprising senior-level succession planning is going to become more important in the coming years. “Organisations are experiencing a perfect storm of issues around loyalty, generational challenges, and the breakdown of trust from endless restructuring,” he said. “Many organisations are struggling with succession and are putting a lot of work into the transition, which is needed to develop good leadership. The big leap from running a business unit to leading an enterprise is difficult to manage well because it requires an entirely different set of skills.

“Smart organisations have found ways to give future leaders an experience of how that leadership role will be different.”

Holley said that more inventive firms are helping high-potential employees to map out wide-ranging career paths, both in terms of their functions and geographically. “The best finance people did not spend all of their careers in finance, and the best operations people have experience in other functions,” he said. “It’s especially true for HR. There’s no substitute for that broad experience.”