12 Mar 2020

Companies face a crisis of confidence in their business leaders

Odgers Berndtson’s Leadership Confidence Index reveals that only 15% of executives are confident in their companies’ top leadership to successfully navigate rapid change.

There is very little confidence in the top leadership of businesses to successfully manage a world of rapid changes. These include ongoing technological advances, shifting demographics and climate change, to name just a few.

What’s more, 95% of executives also believe that managing accelerating change well is vital to the success of their companies.

The findings come in a new global analysis of leadership confidence from Odgers Berndtson executive search. It concludes there is a worldwide crisis of confidence in top business leaders which will force successful companies to “reinvent leadership” for the modern world.

“Business executives across companies in Asia-Pacific, like the rest of the world, 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.

Nearly 2000 responses to global leadership survey

Using a methodology developed with Harvard Business Review Analytic Services, the firm today launches the first 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 the 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 change to increase over the next five years, and almost as many (85%) say it has already had an impact on their organisations.

Sharpening corporate competitive edge

The stakes are high. According to Harvard Business Review Analytic Services (HBR-AS), 95% of senior executives around the world now believe managing a world of accelerating change well is not only vital to the success of their company but also brings a “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.

“The quality of leadership has never been more important to the success of companies– on which employees, shareholders and even economies also depend,” Kester Scrope, Chief Executive of Odgers Berndtson said.

“For the first time, this Index shines a unique light on the attributes leaders need most to develop confident organisations aligned to the modern world.”

Only 16% of senior managers believe their company’s top leadership has managed change well to date, and only 15% are confident they will do well in the future. The majority (61%) are tentative, but a quarter (24%) actively worried – with similar results across all global regions.

Focus on CEO’s crucial role

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 accelerated change 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 change.”

However, the Index shows confidence is also lacking in all C-suite roles. This includes key top jobs such as finance, human resources and technology. Further, there are clear differences between the top 15% of leaders, who inspire the most confidence, and the rest.

“The more progressive leaders only see an opportunity,” Steve Potter, Chief Executive of Odgers Berndtson US, noted. “What is required is a healthy attitude toward change.”

Learning from confident companies

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,” Kester Scrope 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 change.”

Building cultures of collaboration

“What we are finding is that the leaders who are successfully thriving now are much more collaborative with their colleagues, observed Mark Braithwaite, Managing Partner of Odgers Berndtson APAC, and author of “Leadership Disrupted”, a book published last year which explores how senior leaders of MNCs across APAC are managing 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. This will need to combine the drive, adaptability and curiosity required for constant change, with the vision and courage to lead change and resilience to stay the course.

Ultimately, leaders need a mindset to cope with change, and the humility to move on from old command and control structures.

This is also likely to impact the process of executive search.

Steve Potter, CEO of Odgers Berndtson US concluded, “Anyone who thinks executive search is not facing its own disruption is short-sighted. As a firm, we have certainly been thinking about what this means for us, and are making changes through the use of artificial intelligence, in pricing, additional leadership and organisational offerings, and other services that will benefit our clients as they innovate for the future.”