Companies face crisis of confidence in business leaders: report

| March 12, 2020

Only 15% of business executives worldwide have confidence in their company’s own top leadership successfully to 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 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.

The report said successful companies will have to “reinvent leadership” for the modern world.

“Business executives 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.

‘The added challenge for business leaders in Australia is that we are likely to enter our first recession in over 30 years,” said Tim Sleep, Managing Director of Odgers Berndtson Australia.

“Business leaders who know how to lead organisations in a downturn and have the right qualities to succeed in the face of accelerating future change will be in high demand as few will prove able to win market share in more challenging business conditions.’

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 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.

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 Sleep 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.