24 March 2015
Hong Kong, Hong Kong
Improving leadership talent is key to realizing growth expectations
Leadership development is viewed as critical to business success and a key priority for companies in Latin America, according to a series of research reports conducted by Mercer. Nearly three-quarters of organizations in Latin America have a defined leadership development strategy – significantly higher than companies in Asia Pacific and the Middle East.
Mercer’s Leadership Practices Study comprised a series of research reports based on surveys conducted from 2012 to 2014 that explore and compare current leadership trends in Asia Pacific, Latin America and the Middle East.
Using data gathered from nearly 1,000 companies across the three growth market regions, these studies examine how companies approach leadership strategy, assessment, development and succession planning.
“The study reveals critical insights into current trends across three important growth markets. Our clients tell us that building their leadership pipeline is one of the biggest challenges they face,” said Kate Bravery, Mercer’s Growth Markets Leadership & Organizational Performance Practice Leader.
“To achieve long term success, a more strategic approach to nurturing the pipeline of leaders is required. This starts by translating core business objectives into a leadership strategy that defines the talent pool, competencies and the tactics required to build leaders from within. It continues with an execution plan that helps businesses identify, develop and accelerate the critical talent moves that will help them achieve real competitive advantage,” she added.
The research programme found that companies in growth market regions are adopting effective practices for nurturing leadership talent, for example:
- Businesses in Asia-Pacific are investing heavily in training and developing senior level and global leaders at the top of their organizations.
- Companies in Latin America are leading the way in the application of experience-based solutions for developing leaders.
- Firms in the Middle East are doing a good job of using global leadership capability models to help with talent development and creating opportunities for international assignments to which any employee can apply.
However, the studies also identified critical gaps in current planning that potentially limit organizations’ ability to produce the multi-skilled leaders required in modern, rapidly-growing businesses, as well as differences in the leadership competencies that are deemed critical for success by companies in each region.
Key findings included:
- Companies can do more to plan and prepare for the next generation of leaders – fewer than half of those companies responding conduct regular pipeline projections, very few have specific plans for developing key segments of their workforce (e.g. women or grooming local talent) and even fewer have metrics for tracking progress on pipeline management.
- Many businesses are not effectively identifying who is ready for the next move or position within their leadership pipeline – 15% of businesses in Asia Pacific, 20% in Latin America and just 6% in the Middle East report that they have strong, “ready-now” successors in place for critical leadership roles.
- Under investment in the development of frontline leaders – Companies are spending less annually per person on training and developing middle level and frontline leaders than they do on global or senior level leaders. Fewer than 20% of companies in the Middle East and Latin America are spending US$ 5,000 or more per person each year to develop their youngest future leaders. In Asia-Pacific, under-investment is even starker, with just 5% of companies achieving this level of spending for individuals at the earliest stage of the pipeline – the next generation of leaders.
- Companies view a leader’s ability to ‘create strategy’ as one of the most critical competencies for leadership success – 64% of companies in Middle East, 52% in Latin America and 36% in Asia Pacific prioritize strategic competencies above other operational, people or personal capabilities.
Copies of the regional reports for Asia Pacific, Latin America and Middle East, as well as select individual markets, are available on request. Please contact email@example.com for more information.
Key insights and statistics from Mercer’s Leadership Practices Study
- While leadership development strategies are in place in many organizations, execution remains a significant problem as performance management processes are not effectively identifying who is ready for the next move or position within their leadership pipeline.
- Systems and processes for executing talent management processes are extremely inefficient, still relying on paper-based and email resources.
- Organizations are not focusing leadership development efforts on women as a segment, despite women making up a small percentage of senior management in organizations.
- Companies continue to rely on expatriates, rather than local talent, for top leadership roles, calling into question the effectiveness of leadership development and localization strategies.
- Investment in leadership development is concentrated on top-level leaders, organizations need to also reach deeper and earlier into their leadership pipelines to build talent from within.
- Leaders and managers are not being held accountable for grooming future leadership talent.
- People-related competencies are not among those seen as most critical by organizations for leadership success.
- There is a disconnect between the development methods rated most effective by respondents (“stretch” assignments) and those methods that are most widely used such as classroom training and individual development plans.
- Nearly three-quarters of companies in Latin America have a defined leadership development strategy, indicating that firms view leadership development as critical to business success.
- Only half of those with a defined strategy are regularly conducting pipeline projections to plan for future leadership needs and nearly half lack metrics for tracking progress.
- Reaping the full benefits of their leadership development strategies will require a greater commitment from businesses and organizations.
- Performance and succession management systems used in the region are not robust enough to reliably identify the right leaders, for the right roles, at the right time.
- Businesses draw from a wide range of methods to develop their leaders – “stretch” assignments and action learning programs are widely used and have been found to be effective.Leadership competency assessments are commonly used and are often tied back to individuals’ development goals. However, these can be applied more widely by businesses to evaluate leadership potential.
- Companies view strategic and operational competencies as more critical to leadership success than people-related competencies.
- Half of the companies have defined leadership development strategies in place, although this is more likely in larger organizations.
- Those organizations without a defined leadership development strategy are often reliant on buy/borrow talent strategies.
- Short-term focus of companies jeopardises their ability to build strong leadership pipelines.
- Organizations are missing some critical infrastructure to support leadership development.
- Many companies recognize the lack of attention paid by organizations and top executives to leadership development.
- Companies are relying on traditional methods such as classroom training to develop talent and leadership expertise and these are not proving to be effective in nurturing future leaders.
- Key talent pools are under-represented in leadership positions and often overlooked in talent development programs, including local staff and women.
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s more than 20,000 employees are based in more than 40 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With 57,000 employees worldwide and annual revenue exceeding $13 billion, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit www.mercer.com. Follow Mercer on Twitter @MercerInsights