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  • CORPORATE LEADERSHIP COUNCIL

    CORPORATE EXECUTIVE BOARD

    CORPORATE LEADERSHIP COUNCIL®

    Managing Leadership Performance Risks

    Webinar

    February 2010

  • COPIES AND COPYRIGHT

    As always, members are welcome to an unlimited number of copies of the materials contained within this handout. Furthermore, members may copy any graphic herein for their own internal purpose. The Corporate Executive Board Company requests only that members retain the copyright mark on all pages produced. Please contact your Member Support Center at +1-866-913-6447 for any help we may provide.

    The pages herein are the property of The Corporate Executive Board Company. Beyond the membership, no copyrighted materials of The Corporate Executive Board Company may be reproduced without prior approval.

    LEGAL CAVEAT

    The Corporate Leadership Council has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and the Corporate Leadership Council cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Corporate Leadership Council is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither The Corporate Executive Board Company nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Corporate Leadership Council or its sources, or b) reliance upon any recommendation made by the Corporate Leadership Council.

  • 3

    From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

    © 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

    ROAD MAP FOR THE PRESENTATION

    Managing Three Risks to Performance

    Current State of Leadership Performance

    Council Resources

  • 4

    From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

    © 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

    CONTINUOUS MARKET TURBULENCE

    World GDP Growth Percentage Change, 1999–2009

    CBOE Volatility Index (VIX) 1999–2010

    Note: Vix shows the market’s expectation of 30-day volatility and is a widely-used measure of market risk. Advanced economies are the G7 countries, the 16 members of the euro area, and the four newly industrialized Asian economies. Emerging are 149 countries not classified as “Advanced Economies.”

    Source: IMF World Economic Report.

    Global Stock Market Performance Percentage Change 1999–2010 (NYSE, Tokyo Stock Exchange, and EURONEXT)

    (4)

    (2)

    0

    2

    4

    6

    8

    10

    19 9

    9

    20 0

    0

    20 0

    1

    20 0

    3

    20 0

    5

    20 0

    7

    20 0

    2

    20 0

    4

    20 0

    6

    20 0

    9

    20 0

    8

    Ja n

    . 9 9

    Ja n

    . 0 0

    Ja n

    . 0 1

    Ja n

    . 0 3

    Ja n

    . 0 5

    Ja n

    . 0 7

    Ja n

    . 0 2

    Ja n

    . 0 4

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    . 0 6

    Ja n

    . 0 8

    Ja n

    . 0 9

    Ju ly

    9 9

    Ju ly

    0 0

    Ju ly

    0 1

    Ju ly

    0 3

    Ju ly

    0 5

    Ju ly

    0 7

    Ju ly

    0 2

    Ju ly

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    Ju ly

    0 6

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    0 8

    Ja n

    . 1 0

    Ju ly

    0 9

    0.00

    10.00

    20.00

    30.00

    40.00

    50.00

    60.00

    1999 2000 2002 2004 2006 2008 2010

    60%

    40%

    20%

    0%

    (20%)

    (40%)

    Tokyo Stock Exchange

    New York Stock Exchange

    EURONET

    World

    Advanced Economies

    Emerging and Developed Economies

  • 5

    From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

    © 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

    27%  Confident They

    Will Exceed Business Targets

    30%

    41% 49% 51%

    LEADERS ARE UNDERPERFORMING

    Percentage of Leaders Who Exceed Business Targets1 2008 Versus 2009

    2008 2009

    52%

    29%

    Percentage of Leaders Confident That They Will Exceed Business Targets in Next Six Months

    Percentage of Leaders Who Agree They Have the Right Leadership Team at Their Organizations

    1 Leaders rated 7 or above on a 9-point scale on achievement of revenue, profit, budget, and efficiency expectations.

    These Are the Best Group of Leaders with

    Whom I’ve Worked

    Leaders Effectively Manage the Talent

    of Our Business

    Leaders Motivate the Organization to Higher Performance

    Leaders Have a Strong Vision for the Future

  • 6

    From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

    © 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

    LEADERSHIP PERFORMANCE HIGHLY VARIABLE ACROSS AND WITHIN ORGANIZATIONS

    In d

    ex ed

    P er

    ce nt

    ag e

    o f

    Le ad

    er s

    E

    xc ee

    d in

    g B

    us in

    es s

    Ta rg

    et s

    Surveyed Organizations

    Leaders Exceeding Business Targets Across Surveyed Organizations

    A

    8.7x

    B C D E F G H I J K L M N O P Q R

    1.0x

    Leaders at Company E performed relatively well despite coming from Financial Services.

  • 7

    From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

    © 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

    PARTICIPANTS IN LEADERSHIP STUDY

    Partial List of Participating Organizations

  • 8

    From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

    © 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

    ORGANIZATIONS TEND TO USE TWO STRATEGIES TO ADDRESS LEADERSHIP PERFORMANCE ISSUES

    STRATEGY #2: FOCUS ON ORGANIZATION

    62%  Made or Plan

    to Make Major Leadership Team

    Changes

    61%  Restructured

    or Plan to Restructure

    39%  Did Not Restructure or Do Not Plan to Restructure

    38%  Did Not Make or Do Not Plan to Make Major Leadership Team Changes

    Percentage of Business Units Undergoing Major Restructuring 2009

    Percentage of Business Units Making Major Leadership Team Changes 2009

    STRATEGY #1: FOCUS ON LEADERSHIP TEAM

    Leadership Team Examples

    ■ Layoffs to existing leadership team ■ Significant investment in new leaders ■ Redeploy leaders to other parts of the organization ■ Change leadership team responsibilities

    Organization Examples

    ■ Significant business process transformation ■ New market strategy focus ■ Widespread pay/benefit reductions or freezes ■ Product or service redesign/reposition

  • 9

    From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

    © 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

    LEADERSHIP TEAM CHANGES FAIL TO ACHIEVE DESIRED RESULTS

    Three Reasons Why Leadership Team Changes Fail

    2008 2009

    62% 63%

    2006 2009

    22%

    38%

    Percentage of Business Leaders Effective at Leadership Competencies

    Percentage of Leaders Who Are Passive Candidates

    Time to Leader Effectiveness at Competency

    Leaders Are Strong at Most Competencies

    Labor Market for Leaders Is Tighter Than You Think

    Leadership Development Strategies Are Long Term

    Le ad

    er C

    o m

    p et

    en ce

    Time Since Development Experience

    H ig

    h 1

    0 L

    o w

    1

    2 Years

    1 Year

    18 Months

    6 Months

    Percentage of Leaders Who Exceeded Business Targets

    Did Not Have Leadership Team Change

    Did Not Have a Leadership

    Bench Change

    Had a Leadership

    Bench Change

    39%

    16%

    Had Leadership Team Change

    Source: Recruiting Roundtable. Source: Learning and Development Roundtable.

    2009 2009

    321

  • 10

    From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

    © 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

    Did Not Have Organizational

    Change

    Had Organizational Change

    32%

    21%

    ORGANIZATIONAL RESTRUCTURING FAILS TO IMPROVE LEADERSHIP PERFORMANCE

    Three Reasons Why Organizational Restructuring Fails

    Did Not Have Organizational

    Change

    Had Organizational

    Change

    67% 55%

    Did Not Have Organizational

    Change

    Had Organizational

    Change

    51% 46%

    Percentage of Leaders with Clear Decision-Making Authority

    Percentage of Leaders with Good Working Relationships

    Decision-Making Authority Is Unclear

    Workplace Networks Are Breaking D

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