It is a well- accepted fact that organizations, particularly large ones, are rife with costly dysfunction. Even senior managers within these organizations openly express feelings of frustration, disconnect and an inability to get things done. Inefficiency and wastage are accepted as normal expectations. Managers and leaders whose mandate is to lead the organization toward achieving their strategic goals bear the most responsibility for this status quo.
Organizations invest significant resources in hiring, retaining and developing their current and future leaders, spending well over $300 Billion every year on training and development initiatives. These investments generally provide dismal results. Leadership is one of the most significant investment that an organization makes. Since a key role of leaders is to set goals and enable collective action to achieve them, then why aren’t organizations getting a greater return on this key investment?
As part of our ongoing focus on ROL, Indiggo conducted research with a broad range of corporate leaders and managers, to assess the magnitude and overall state of Return On Leadership® (ROL).
ROL is defined and measured along four complex dimensions, both individually and collectively:
· Strategic clarity — individual and collective level of clarity on strategy
· Leadership alignment — level of strategic alignment among leaders
· Execution capacity — Individual and collective leadership capacity to execute on strategy
· Focused execution — Proactive focused action on what matters most both individually and collectively
The responses of the corporate leaders that participated in our study offer valuable insights into the state of ROL in corporate America.
Background of the Study
We gathered opinions from managers at different levels from chief executives to middle managers as shown in Figure 1.
The numbers represent the typical distribution of leadership roles in large organizations with approximately two-thirds of leaders identifying themselves as “managers” vs. more senior leaders. The experiences and perceptions of lower and middle managers is critical in that they have the responsibility of mobilizing the organizational resources toward executing strategy.
We asked the participants to express their opinions on how true the following situations were in their organizations.
· Managers/leaders being clear on their top strategic priorities for the upcoming month
· Managers/leaders spending most of their time on their top few priorities
· Managers/leaders being clear on how their priorities link to overall organizational strategy
· Managers/leaders experiencing a direct connection between their daily work and their department’s strategy
· Managers/leaders experiencing a direct connection between their daily work and their organization’s strategy
· Managers/leaders being able to clearly articulate the current focus areas of other managers/leaders they work with
· Managers/leaders being able to clearly articulate the priorities of people that report to them
· Managers/leaders being able to clearly articulate the priorities of people that they report to
· Managers/leaders spending most of their time on key organizational priorities
· Managers/leaders proactively setting aside time to work on their key priorities
Consistent with the goal of understanding the state of ROL in large companies, we targeted managers from large companies as participants in the study. A total of 156 organizations were represented by the respondents. These leaders and managers represented a wide array of industries as shown in Figure 2. with (44%) being employed in organizations with annual revenue exceeding $10 billion as shown in Figure 3.
Results from the study strongly confirm that there is a significant lack of clarity and alignment among managers and leaders in large organizations.
Some of the more significant insights from the Study are:
1) Nearly half the respondents (48%) say that managers and leaders in their organization would not be able to list their priorities.
2) Only 36% of the respondents said that managers and leaders consistently felt a connection between their daily work and the priorities of their departments or organizations.
3) Less than half the respondents (46%) said that managers in their company had clear ideas on the focus areas of their direct reports.
4) Respondents said that they do not spend most of their time on the organization’s priorities, or even on their own priorities
5) While many leaders realize the strategic importance of leadership capacity management, proactively setting aside capacity to work on priorities does not appear to be common. Only 39% of the respondents indicated that managers do this consistently.
6) When it comes to alignment, only 34% of respondents indicated that managers in the organizations had clarity on the focus areas of their peers.
These insights are highlighted in the summary chart shown in Figure 4.
Summary of Results
Figure 4 below shows a summary of responses for each of the 11 questions included in the Study. Responses stating “most times” and “always” were interpreted as expressions of consistent occurrence, and “never” and “rarely” as expressions of predominant absence.
Responses to the Study revealed that managers in large organization do not feel a connection between their daily work and their organization’s priorities. This insight coupled with the lack of clarity into what their peers are focusing on, leaves managers in a flying blind environment that does not support successful execution. . Clearly, if leaders and managers feel this level of misalignment and disconnect, this will be amplified when it comes to what the employees in those organizations experience.
Leadership is the most critical investment that an organization makes. It makes or breaks success of any endeavor. However, in order to achieve return on this investment (Return on Leadership), it is essential that leaders be crystal clear on business unit and organization-wide priorities, as well as how their own priorities and those of their team-members align with and support the organization’s strategy. In the age of collaboration and agile execution, it is also imperative that they have good insight into the current focus areas of their peers across the organization.
An organization that invests in creating a high return on leadership will generate enterprise-wide strategic alignment and focused execution, and in turn see their chances of success soar.