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Leadership competency gap 1
Running head: Leadership competency gap
The coming leadership gap: An exploration of competencies that
will be in short supply
Steven B. Wolff
Hay Group
116 Huntington Ave, Boston, MA
[email protected]
617-425-4525
Ruth Wageman
Hay Group
116 Huntington Ave, Boston, MA
[email protected]
617-425-4557
Mary Fontaine
Hay Group
116 Huntington Ave, Boston, MA
[email protected]
617-425-4000
Keywords: Leadership crisis, Leadership gap, Competencies
Submitted for the special issue of the International Journal of Human Resource Development and
Management on "Aging Workforce and HRM – Challenges, Chances, Perspectives." Guest
editors: Wolfgang Guttel, Florian Kohlbacher, and Beate Haltmeyer.
Leadership competency gap 2
Keywords: Leadership gap, Leadership development, Competencies
The coming leadership crisis: An exploration of competencies that
will be in short supply
Abstract
Demographic trends show that the workforce in the developed world is aging: approximately
50% of senior level managers will be retiring in the next ten years. This mass exodus of senior
managers will leave many companies with a leadership crisis. But the leadership capabilities
that are most threatened by retirements have yet to be identified. What core leadership
competencies will become especially rare as senior leaders retire; and what are the implications
for the kinds of leadership development activities that might mitigate the effects of these losses?
We draw on two existing archival databases to explore these questions. Together, these
databases allowed analyses to identify leadership capabilities that are likely to become both
especially rare and especially desirable in the next ten years. Although many competencies
were displayed to greater degree by leaders at higher levels in the organization than those at
lower levels, four particular competencies show especially large gaps between senior- and midlevel manager populations. This study contributes to our understanding of the effects of
demographic trends on leadership by identifying competencies that are likely to be in short
supply as aging managers retire. Implications for leadership development practices are
discussed.
Leadership competency gap 3
The coming leadership crisis: An exploration of competencies that
will be in short supply
The world workforce is aging (see Figure 1). Workers age 50 or older have become an
increasingly larger percentage of the overall workforce in developed nations. In the US alone,
between 1996 and 2006, the number of workers in the 50-54 age group grew by 51%, the 55-59
age group grew by almost 70%, and the 60-64 age group grew by 63% (see Figure 2). At the
same time the number of workers between 30 and 39 decreased by almost 10%.
----------------------------------------------Insert Figure 1 and Figure 2 about here
----------------------------------------------Similar trends have been noted in the United Kingdom and in Japan. The aging
workforce means that a greater percentage of leaders than ever before are approaching retirement
age. According to a Hewitt Associates survey, 41% of baby boomers expect to retire within the
next ten years (Hewitt Associates, 2006). As these workers retire, they will potentially leave
behind a gap in talent (Bernhart, 2006; Rappaport et al., 2003; Wahl & Bogomolny, 2004).
Although many observers have noted that demographic trends will create a skills and
leadership gap, there is no research that specifically examines the leadership capabilities that are
likely to be in short supply as those in the senior management ranks begin to retire. Individuals
who have reached senior management positions have, on average, a wealth of work experiences
and learning opportunities that contribute to the development of higher-level leadership
capabilities than those possessed by less experienced managers (Davies & Easterby-Smith, 1984;
McCall et al., 1988).
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Moreover, the capabilities that senior leaders develop may be especially important to
organizational effectiveness (Hall & Foulkes, 1991). For example, the accumulation of
leadership experiences across decades can contribute substantially to the ability of senior leaders
to conceptualize and to articulate compelling purposes for complex social systems. This kind of
meaning-making activity is an essential function for organizations (Merron et al., 1987;
Wasserman et al., 2001). Further, the leadership functions fulfilled by effective senior leaders
tend to be more complex than those fulfilled by junior leaders. Large numbers of retiring senior
leaders prevent the natural replacement process as junior leaders have less time to prepare before
being asked to perform more complex leadership functions. While a relatively slow rate of
retirement allows younger leaders development time and mentoring opportunities to prepare for
more senior roles, accelerating senior leader departures increases the chances that relatively rare
and important leadership abilities depart the organization before they are developed in remaining
leaders.
The present study examines the typical competencies of managers at three management
levels. We identify those that are found prevalently in the population of managers who are likely
to retire within the next ten years, but that are not found at the same levels in those likely to fill
their shoes. We contribute to theoretical understanding of the shape of the coming leadership
gap. Further, understanding more specifically what competencies will need to be replaced will
allow intentional and targeted approaches to talent retention and leadership development in
organizations.
Leadership competency gap 5
The Leadership Gap
Succession planning is an important activity designed to identify and develop a pool of
leaders who are capable of filling leadership positions as they become vacant (Fernandez-Araoz,
2005; Gupta, 2002; Kesner & Sebora, 1994). The demographic trends showing 50% of senior
managers retiring in the next ten years means that succession planning is going to become all the
more critical for organizations—and all the more difficult.
While the demographic trends are well-documented, the implications for leadership
capabilities and development are as yet unresearched. Numerous writers in the fields of human
resources and adult education, especially those focused on leadership development, have called
for closer attention both by organizations and by researchers to the long-term implications of the
demographic trends (see, for example, Caudron, 1999; Hannon et al., 2004; The Conference
Board, 2007). We have identified four common themes among analysts writing about the
coming leadership crisis, that together make up an agenda for coping with these phenomena.
These four themes are a call to researchers, to management schools, and to organizations to: (1)
Analyze what kinds of leadership roles will be most affected by coming departures; (2) Assess
the competencies needed to perform those roles; (3) Develop means of identifying internal talent
(individuals within the organization who show signs of those necessary competencies); and (4)
Design developmental opportunities for organization members who show early signs of
beginning to have those most-needed competencies. The purpose of our exploratory research on
leadership competencies is to begin addressing the first two items: identifying the coming gap
and the competencies that are most critical for the performance of those leadership roles.
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We anticipate, consistent with other commentators, that the individuals who are retiring
from the workforce within 10 years come disproportionately from the executive ranks. A recent
descriptive study by Development Dimensions International (2003), an organizational
development firm, reveals that one-fifth of large U.S. established companies will be losing 40
percent or more of their top-level talent in the next five years as senior executives reach
retirement age. These openings are occurring at the same time that there are statistically fewer
people to fill the jobs; that is, leaders from lower levels of the organization may also be too few
in number in certain kinds of jobs to move into the roles vacated by retiring executives.
Consistent with these observations, we anticipate that senior leaders will be retiring at a greater
rate than midlevel managers who will in turn be retiring at a greater rate than front-line
supervisors. Thus, our first research question is as follows:
RQ1: Will senior organizational roles see the largest proportion of departures due to
retirements in the next ten years relative to middle and frontline managers?
Leadership Competencies
More than numbers, some knowledge is essential of just what leadership competencies
will begin disappearing from the workforce as a generation retires and fewer lower-level leaders
are there to take their place. That is, to anticipate and prepare for a leadership gap requires
identifying not just who will be retiring, but what capabilities will be lost when they do.
Competencies that are present in lower-level leadership ranks are less problematic than those that
appear only at the higher levels of executive leadership that are most threatened by demographic
changes. By contrast, leadership capabilities that are unique to or are well-represented only by
Leadership competency gap 7
those in high-level leadership roles are those especially in need of specific developmental
attention in organization succession planning and in leadership education practices.
In our analysis, we draw on data derived from previous research on a competency-based
approach to leadership effectiveness. We use the term “competency” to mean a persisting
characteristic of a person, displayed through defined types of behavior, which is causally related
to effective performance in a job or role (Boyatzis, 1982; Meger, 1996; Spencer & Spencer,
1993). While competencies typically are identified by establishing their relationship to
performance in a particular job or role, the most generalizeable competencies for understanding
leadership performance are those that show usefulness across many leadership jobs and roles.
For example, some individuals in a sample of mid-level managers in a high-technology firm are
shown to have the ability to identify another party’s interests and shape one’s influence strategy
to fit those interests. This is an influence-related competency, and would be included in an
organization-specific leadership competency model when leaders who display this behavior
perform their roles better than do those who do not have the behavior in their repertoire. Certain
leadership competencies originally identified in particular settings have shown themselves to be
important predictors of performance across a broad range of settings. We refer to these as
“generic leadership competencies” (Boyatzis, 1982; Spencer & Spencer, 1993).
When defining competencies it is important not to confuse them with leadership tasks
and functions such as “motivating one's team” or “providing strategic direction.” These items
are functions that must be fulfilled for any group or organization to be effective, and are
characteristics of situations rather than characteristics of leaders. Competencies, by contrast,
describe how a person typically goes about accomplishing leadership functions, e.g., the skills,
the attitudes, the level of complexity in their thinking, and the depth of perception applied to the
Leadership competency gap 8
task (Spencer & Spencer, 1993). The competencies we examine in this paper are a generic set of
leadership competencies derived from the work of Boyatzis (1982) and Spencer & Spencer
(1993).
We anticipate that the generic competencies will, on average, be present at more
sophisticated levels in more senior managers than in more junior managers. However, certain
leadership competencies may be relatively well-developed by the time leaders reach middlemanagement roles, while others are not elicited until leaders acquire higher-level experience
(Jacobs & Jacques, 1987; Jacobs & Jacques, 1990; Mumford & Connelly, 1991). For example,
emotional maturity—defined in the literature as accurate self-awareness and an orientation to
self-improvement—may require time and experience in positions of responsibility for others in
order to develop, but may be fully present in midcareer or even junior leaders (Bennis & Nanus,
1985; Bennis & Thomas, 2002). By contrast, analytic thinking of the kind that allows a leader to
conceptualize the relationship of an organization to its environment, and the opportunities and
challenges the environment places before it, may not develop fully until the leader is obligated
by high levels of authority to think at an enterprise level (Tushman & O'Reilly, 1996; Wageman
et al., in press; Yukl & Lepsinger, 2004). Indeed, some leaders, even at the CEO level, never
develop it at all (Ginter & Duncan, 1990; Miller & Cardinal, 1994). To date, research has not
identified the leadership competencies that develop especially late in leader careers. We
therefore address in our analyses the following research question:
RQ 2: What competencies are especially associated with the effective performance of
leadership roles that face accelerated levels of retirement in the next ten years?
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By addressing the two above-described research questions jointly, we hope to identify
some indicators of what leadership competencies will become (a) especially rare and (b)
especially desirable within the coming decades. If there are consistent patterns in the kinds of
competencies that are becoming rare, researchers and organizations can then begin to identify an
agenda for leadership development, talent retention, and management education initiatives in the
shorter term.
Research Strategy
We drew on two existing archival databases, each containing data about individual
managers across a broad spectrum of industries, organizations, nations, and job levels. One
database contained over 60,000 assessments of individual employees, conducted over a 30-year
period. These assessments usually were conducted for the purposes of selection or for
developmental feedback. This database, while skewed heavily towards managerial (rather than
front-line) populations, served as the basis for assessing the proportions of employees in various
job kinds likely to retire in the next ten years.
The second database contained in-depth assessments of the leadership competencies of
more than 1400 individuals. While demographic information such as age was not available for
these individuals, the database did contain assessments of the effectiveness of the individuals as
well as a description of the job they were performing at the time of the assessment. We drew on
these data to identify the leadership capabilities that are associated with the effective
performance of threatened job kinds in organizations.
Leadership competency gap 10
Methods
Sample
Individuals represented in the two databases typically are those who were assessed either
for developmental or for selection purposes. The databases are proprietary and were
accumulated in the course of 30+ years of leadership consulting. As a consequence, they do not
represent random samples of employees, but rather contain data about people whom organization
leaders chose to have assessed, usually as part of a selection process for vacant leadership
positions and succession planning.
The larger database from which we derive our estimates of the distribution of retiring
managers within certain kinds of jobs contains 63,500+ employees, all assessed on a range of
instruments such as the Managerial Styles Inventory (Hay/McBer, 2000). This database
represents assessments done, typically for management development, in over 500 organizations
in over 180 countries around the world. The relevant data contained in the database are
participant age and assessments of job level, where Level 6 refers to executives (n = 21,006),
Level 5 to mid-level managers (n = 21,214), and Level 4 to first-line supervisors (n = 12,292).
Levels 1-3 (n = 9,028) refer to individual contributor roles (such as engineers, scientists, and
other non-management performers). Our analyses of this database suggested that the sample was
heavily skewed towards leaders rather than individual contributors, and toward higher levels of
the organization. This finding is not surprising given that in-depth assessments are more often
conducted for higher-level leadership roles than for other kinds of roles. We use this database to
estimate the relative proportion of individuals holding leadership roles of different kinds that are
retiring within ten years.
Leadership competency gap 11
The second database contains individuals whose competencies were assessed, usually for
selection purposes. See the next section on measures for a detailed description of how the
competencies are assessed. The competency sample consists of 1408 managers from 74
organizations around the world. The sample includes 85 first-line supervisors, 758 mid-level
managers, and 565 senior-level managers.
Measures
Competencies. Each subject participated in a Behavioral Event Interview (BEI)
(McClelland, 1998). The BEI is a specific form of the critical incident interview technique
(Flanagan, 1954), which has been shown to be a reliable and valid method for obtaining accurate
descriptions of work behavior (Motowidlo et al., 1992; Ronan & Latham, 1974). The BEI
involves asking interviewees to describe (1) incidents or events on the job in which they felt
effective in the job and (2) those in which they felt ineffective in the job.
The interviewers are blind to the performance level of the interviewees (i.e., in this study,
their nomination as top performers in their organizations.) The role of the interviewer is to
obtain detailed descriptions of events while remaining as unobtrusive as possible in order to
avoid leading the interviewees. Interview questions are limited to the following: "What led up to
the event?" "Who did and said what to whom?" "What happened next?" "What were you
thinking or feeling at that moment?" and "What was the outcome?" Because the interviewer
probes for thought processes that occurred while interviewees were engaging in specific
behaviors, the BEI uncovers information about cognitive competencies that may not be directly
observable.
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Interviewers who collected the data first completed an intensive three-day interview
training program, and submitted a completed interview for evaluation before being allowed to
conduct interviews for this study. BEIs lasted 3-4 hours on average, and three events were
discussed in each interview, thereby providing a range of contexts for assessing the individual’s
capabilities and many instances of codeable behavior. Despite the retrospective nature of
interviewee accounts of events, both the validity and the reliability levels of data from these
interviews have been shown to be strong (Motowidlo et al., 1992; Ronan & Latham, 1974).
BEIs provide valid and reliable data because described events all have occurred within the past
year, and a very high level of descriptive detail is demanded by the interview protocol.
The BEI provides a conservative measure of specific competencies demonstrated by the
interviewee because only those behaviors and thoughts that are explicitly described as having
occurred during the particular events are defined as codeable data; behaviors and thoughts that
are not described fully and explicitly (i.e., they are described in general or vague terms or are
mentioned for past events), are not coded by interview coders (McClelland, 1998).
Leaders’ interviews in this study were transcribed and coded using codes for the set of
generic leadership competencies developed from a meta-analysis of more than twenty years of
research, conducted with managers in 200 different job categories (McClelland, 1998; Spencer &
Spencer, 1993). Each competency was defined using specific behaviors and thoughts, and these
are ordered by levels of complexity or scope (see Spencer & Spencer, 1993). Table 1 provides
the definitions of the competencies that were used in this study.
-------------------------------Insert Table 1 about here
--------------------------------
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The coders of transcripts followed specific rules. Coders were taught to code only
behavior that is clearly described as (1) having been explicitly done (said, thought or felt) by the
interviewee (i.e., they may not code a statement that uses the term “we” did something or where
the action itself is general: “I influenced him.”); (2) as having taken place in the course of this
specific recent event (i.e., nothing that the person plans to do, or “usually does” or thinks they
should do or might do or did in previous cases); and (3) with adequate detail as to how it was
accomplished (i.e., “I presented a business case to Joe. I showed him the costs and benefits of
purchasing the new machine;” rather than “I convinced Joe to buy the machine.”).
In addition to identifying codeable statements, coders also identified the specific
competency and level being demonstrated. Codebooks for each competency include behavioral
descriptions and examples of each level of each competency and additional coding rules as
required to maintain inter-rater reliability. Coders were rigorously trained and accredited to
maintain at least 75% inter-rater reliability in identifying the set of competencies used by the
interviewee in the incidents discussed.
For each leader in this study, individual competencies were recorded by highest level
shown. If a competency was not coded in the transcript of an executive’s interview, it was
assigned a level zero. It is important to note that we assumed all executives had a fair
opportunity to display any and all of the competencies in the model during their three to four
hour interview.
Performance. Outstanding performers were those nominated by at least two people,
typically 4 to 5, as being in the top 10% of executives in their company. Raters included
executives more senior to the participant and Human Resources professionals who used criteria
Leadership competency gap 14
that are valued and commonly used in the organization to determine pay and promotions.
Information from performance appraisals and objective measures appropriate to the position and
organization, e.g., profitability, organizational climate, turnover, etc. were examined.
Researchers acted as sounding boards to push raters to use the most appropriate criteria and
ensure that they nominated executives who were “fully accomplishing” the organization’s
desired outcomes.
Results
Job Levels and Retirements
Figure 3 shows our estimate of the age distribution of managers by level in the
organization for the years 1996 and 2006. We estimated these numbers using the larger database
of over 63,500 employees at all levels in an organization. To eliminate any potential bias from
over sampling employees at a given level we standardized the age distribution of employees
within each level. Based on the standard age distributions for first-line managers, mid-level
managers, and senior-level managers, we calculated the relative percentages of employees across
levels for each age group, i.e., for any given age group we estimated the percentage of employees
that would be expected to be first-line managers, mid-level managers, and senior-level managers.
We then multiplied this distribution by the actual bureau of labor statistics numbers for each age
group to obtain an estimate of the number of employees at a given level of management who are
in each age group.
Leadership competency gap 15
-------------------------------Insert Figure 3 about here
--------------------------------
Our analyses of these data show that, as expected, leaders at higher levels in the organization
(Level 6) are retiring within 10 years in large numbers (more than 50% by our estimates), while
leaders in mid-level (Level 5) and frontline (Level 4) leadership roles are leaving the workforce
to a much lesser degree. We concentrate our analyses of the competencies that differentiate
effective performance among these three levels of organizational leadership.
Leadership Competencies
Table 2 shows descriptive statistics for the competencies used in this study. We are
interested in understanding which competencies are possessed by senior managers who are set to
retire in the next decade. Figure 4 shows the mean level of each competency for both seniorlevel managers (level 6) and mid-level managers (level 5). The chart is ordered by the size of the
gap in competency level with the largest gaps at the top of the chart. Similarly, Figure 5 shows
the mean levels of each competency for mid-level managers (level 5) and first-line managers
(level 4).
----------------------------------------------------------Insert Table 2, Figure 4, and Figure 5 about here
-----------------------------------------------------------
Leadership competency gap 16
When the gaps are examined between both senior-level managers and mid-level
managers and mid-level managers and first-line managers, four competencies show consistent
and significant tendency to increase with level. These competencies are: Organizational
Awareness, Team Leadership, Impact and Influence, and Initiative (see Figure 6). That is,
executives’ roles are higher on these four competencies than are mid-level leaders, who are in
turn higher than first-line leaders. Table 3 provides a summary of the four competencies with the
greatest gaps as well as brief suggestions for their development, which we go into in more detail
in the discussion section.
-------------------------------Insert Figure 6 and Table 3 about here
-------------------------------Two additional competencies show the largest gaps when comparing senior-level and
mid-level managers. These are: Achievement Orientation and Self Confidence. Although the
displayed levels of these competencies increases to some degree between first-line and mid-level
managers, the largest increase by far is seen between mid-level and senior managers.
Two additional competencies show the largest gaps when comparing mid-level and firstline managers. These are: Conceptual Thinking and Information Seeking. These two
competencies also show relatively large gaps when comparing mid- and senior-level managers
(average mean difference is approximately .6). However, the gap is smaller than the
competencies of Achievement Orientation and Self Confidence mentioned above (average mean
difference is approximately .75).
Leadership competency gap 17
Discussion
This study took advantage of an existing competency database to identify the leadership
capabilities that are most likely to be lost as senior leaders retire in the next ten years. We found
four particular competencies that distinguish, at increasing levels of sophistication, between
executive and mid-level, and mid-level and first-line managers, respectively. Although many
more than four competencies were displayed in more sophisticated ways at the senior leadership
level than at lower levels, four particular competencies show the greatest gap in the skill level of
senior managers versus mid-level managers. These competencies are termed Organizational
Awareness, Impact and Influence, Team Leadership, and Initiative. All four competencies have
been shown to be predictors of effectiveness in a wide range of organizations and managerial
jobs (Boyatzis, 1982; Spencer & Spencer, 1993).
This study was intended to shed light on the leadership gap by starting to identify some
competencies that a broad range of organizations may find in short supply. We deliberately
examined competencies that were generic and broadly applicable across leadership contexts.
Although any particular organization may show some variation in the distribution of
competencies in their organization and in the competencies required for effective performance of
managerial jobs, the breadth of the data that we analyzed leads us to be confident that gaps in
these particular competencies will exist in a wide range of organizations, and that they are
generally important to leadership effectiveness. We do not suggest that these are the only
competencies that are important to leadership effectiveness in specific organizations, nor do we
assert that they are the only competencies for which there is a looming gap. We have, however,
Leadership competency gap 18
provided evidence that if present trends continue, these four leadership capabilities are at risk of
being underrepresented in the next ten years, to the detriment of organizational effectiveness.
Below, we elaborate on the meaning and impact on organizational effectiveness of each
of the four threatened competencies we identified, and we pose questions about the potential for
intentional development of them in young leaders.
Organizational Awareness
The competency titled “Organizational Awareness” is about understanding the power
dynamics and political structures of an organization. At basic levels, Organizational Awareness
involves recognizing the formal hierarchy of an organization and how to use it to get things
done. At increasingly sophisticated levels, it involves understanding the informal structure,
identifying key power holders and decision-makers, and understanding unspoken boundaries and
norms of influence in the organizational culture.
The retiring leaders in our sample were significantly more likely to display these latter,
more sophisticated forms of Organizational Awareness than were mid-level and first-line leaders,
respectively. Two examples from coded interviews serve to illustrate the distinction. The first is
a mid-level leader displaying basic Organizational Awareness in her behavioral event interview
(she was scored at level 1 for this competency): “I was thinking at that moment that we have a
very difficult task right now, because we don't have a President who will support any definitive
direction. And he was clear about that. He could not. He was not there for the duration.” Her
comment reflects an understanding of the most basic aspect of power: a higher-level leader’s
formal authority. She comments on the unlikelihood that he would use that authority to support
an initiative, and the impact of that fact on her ability to implement it.
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Contrast it with this analysis of a reorganization by a senior leader scoring 4 on
Organizational Awareness: “I lost, by the way, one of them. One of them quit the company
because of that (I would say). It meant a power change, also. The new model means a power
change between the regions and the companies. They were no longer the guys who were totally
running the business. They now had these business owners that I was talking about who will
also give them a lot of direction. So it was also a change of the management model.” His
comment reflects an understanding of the power dynamics among multiple parts of the
organization, and articulates how a change of formal structure was creating a shift in the informal
structure and in implicit elements of organizational politics. This high level of understanding of
the power-relevant consequences of change enable leaders to anticipate resistance and support, to
build coalitions, and to help system members cope with changes to their own routes to influence
(Krackhardt, 1990; Pfeffer, 1992).
That level of Organizational Awareness, in this instance, reflects deep and particular
knowledge of the organization in which that executive had operated for many years. Likely it
had been acquired by long acquaintance with and reflection on just who could affect his own
attempts to make things happen or to exercise influence in the organization. How do leaders
develop deeper Organizational Awareness--and what might systematically be done to accelerate
the development of this competency?
Prior research has shown that in general, as leaders are given more responsibility in an
organization, they tend naturally to increase their Organizational Awareness (Avolio, 1999;
Spencer & Spencer, 1993). However, the size of the gap between the number of senior leaders
retiring and the far smaller number of less sophisticated leaders below them waiting to take their
place suggests that waiting for experience to teach younger leaders Organizational Awareness is
Leadership competency gap 20
an inadequate response for organizations hoping to have the kinds of leaders necessary for
organizational effectiveness.
Unlike others of the competencies our research has pinpointed (as will be discussed
below), Organizational Awareness is largely a cognitive capability, rather than a behavioral one
(Krackhardt, 1990). That is, it mainly requires an individual to observe, interpret, and make
sense of social cues. Sophisticated Organizational Awareness combines (1) attending to
important stimuli that provide information about social relations (and tuning out irrelevant ones);
(2) accurately interpreting the meaning of those stimuli for power relations; and (3) constructing
a theory of power dynamics in the context in which they were observed.
Broken down in this way, these sub-competencies suggest that Organizational Awareness
might be to a large degree developed by using standard leadership teaching practices in the
classroom (French & Grey, 1996). That is, written cases and video enactments of social
dynamics could serve as stimulus material, and guided interpretation of their meaning for power
relations could sharpen young leaders’ Organizational Awareness. Learners could engage in
analysis of the power dynamics of a known context (such as their own classroom or the
organization where they are employed; Pfeffer, 1992). Superb execution of the kinds of teaching
at which management educators already excel could be quite fruitful for developing this
competency—unlike others, as will be seen, of the distinguishing leadership competencies this
research has identified.
Impact and Influence
Impact and Influence is about the sophistication with which a person develops and uses
strategies to influence others. At lower levels of this competency, individuals rely on logical
Leadership competency gap 21
argument about the rational correctness of their points of view to persuade others to support their
agenda. At higher levels of sophistication, the individual is able to understand and anticipate
others’ interests and to adapt her influence strategies to the interests of others. The outstanding
executives in our sample were operating at higher (4 and up) levels of sophistication with respect
to Impact and Influence than were mid-level and first-line leaders, respectively.
For example, one executive in the competency database scoring high on this competency
reported the following thought process about her influence strategy: “I was kind of trying to
balance, to explain this in a way that they could see what I thought was the beauty of it, and the
solidness of it, yet not leave them with the sense that it was a ton of bureaucracy, that it was
gonna be this lumbering machine that was gonna add a lot of cost and take forever to crank
anything out and whatever. So there was the danger, I mean again it was a question of needing
to figure out how to lay it out to keep their attention, convince them, you know, that this could
work, get them excited about it, and leave them willing to take the next important step which
was, okay, go do it. Here's the money, go do it, make it happen.” Her strategy shows an
understanding of her peers’ interests: a desire to avoid bureaucracy, the appeal of “solidness” and
“beauty” in the program that she was intending them to take on and launch.
A second example illustrates a lower level of sophistication. This mid-level manager
shows an ability to offer rational argument, but shows no thought to appealing to the underlying
interests of his peers: “I broke it into more digestible chunks and by then had effectively peeled
away the business and the hard bit, the numerical bit, and there was a process running to
establish that and to get the numbers, and I could get a little bit more of people’s attention on the
organizational side.”
Leadership competency gap 22
In essence, more sophisticated influence strategies are customized to the influence target,
context, and influence agenda, while simpler influence strategies—lower levels of this
competency—reflect uncustomized, generic strategies. How do leaders develop the capability to
customize their strategies, and what might systematically be done to accelerate the development
of this competency?
High-level Impact and Influence involves both cognitive and behavioral skills (and
perhaps emotional skills, as well). That is, a leader displaying sophisticated Impact and
Influence must first understand and anticipate the interests and concerns of her colleagues. This
aspect of Impact and Influence reflects a high degree of social intelligence. Second, the leader
must also be able to adapt her strategy to the social context. She must have a broad behavioral
repertoire of strategies to address the different needs and concerns of those she seeks to influence
(Gist & McDonald-Mann, 2000).
Thus, unlike Organizational Awareness, Impact and Influence is unlikely to be amenable
to development in a typical management education classroom. We know a great deal from
research about training procedures that can help people develop new behavioral skills or to hone
existing ones, and one thing we know is that behavioral skills cannot be mastered by reading
books or doing case analyses (Campbell, 1988; A. P. Goldstein & Sorcher, 1974; I. L. Goldstein,
1991). Instead, skill training involves intensive practice, detailed feedback, and reiteration.
Certainly social learning—observing others in action—can play a role in developing new
behavioral routines. But ideally the learner would have opportunity to try out the new behaviors,
apply them in a suitable context, experience the consequences of that interaction—and reflect on
what was learned (Tannenbaum & Yukl, 1992). Sophisticated levels of Impact and influence
thus might benefit most from a reflective practice pedagogy—a combination of deliberate
Leadership competency gap 23
practice in the work context itself, and subsequent reflection on and discussion of lessons about
influence (Angaran, 1999; Densten & Gray, 2001; Smith, 2001).
Team Leadership
The Team Leadership competency is about the degree to which a person desires to lead
groups of others and assumes leadership responsibility. At higher levels of this competency
managers obtain resources for a team, position themselves as the team leader, and articulate a
compelling vision of the purpose of the team. Certainly as managers move up in the
organization they have more opportunity to develop and display these behaviors. At lower levels
in the organization, team purposes and a leader’s authority to lead others are most often
conferred from higher in the organization rather than crafted out of the leader’s own vision.
Leaders in our sample who are in first-line and mid-level leadership roles frequently operated at
lower levels of sophistication on the Team Leadership competency. In essence, they were
executing the standard managerial role of providing information and explanations for corporate
policy, and handing out assignments and deadlines.
For example, one manager in our sample who scored a 3 on Team Leadership displayed
the following actions: “And then I had lots of, I started having meetings in here with my people
that were left. I said, ‘Okay, I'm going to tell you guys what is going on so we can start to
reassure the clients and see if we can keep the business together.’” His actions are centered on
communicating information from higher in the organization and reenergizing their focus on the
clients after a downturn. These are vital functions to fulfill for a team, to be sure. They also are
capabilities that are readily learnable in a classroom context in teams formed for learning
purposes. They can be demonstrated, practiced, and discussed in such a context.
Leadership competency gap 24
Higher-level Team Leadership capabilities, however, may need a different developmental
approach. Among the more sophisticated behaviors that distinguished Team Leadership at
higher levels is protecting the team and its reputation from the larger organization. For example,
one senior executive who scored a 4 on Team Leadership shows his concern about protecting the
team: “I owned it as the guardian, if I say protector, it's because I think one needs to create an
area of freedom for people where you can give them help and they don't get beaten up by the
system all the time, so that they need to be let off a budget for a while, or giving some support to
enable them to go into a special project.”
Leadership researchers have noted that “running external interference” is an essential
skill in team leadership (Ancona & Caldwell, 1992; Hackman, 2002); they also point out that
doing so can call for significant courage and willingness to take political risks (Hackman, 2002).
The behavioral aspects of Team Leadership would likely be amenable to the kinds of behavioral
skills teaching we suggested earlier for developing Impact and Influence. Developing courage,
on the other hand, is emotional learning. Unlike the cognitive and behavioral leadership
challenges addressed in the articles in this section, emotional maturity may be better viewed as a
long-term developmental task than as something that can be systematically taught. Emotional
learning does not take place in the abstract, by analyzing a case about someone else's risks.
Instead, it involves working on real problems in adequately safe environments with the explicit
support of others (Hackman & Wageman, 2005). Only to the extent that leader development
programs take on the considerable challenge of providing such settings are they likely to be
helpful to leaders in developing the full range of capabilities needed for high-level Team
Leadership.
Leadership competency gap 25
Initiative
The “Initiative” competency is about recognizing problems or opportunities and taking
action to address them. At basic levels, Initiative manifests as reacting to present problems and
overcoming obstacles. At more sophisticated levels, Initiative shows itself in longer and longer
time horizons; that is, leaders with high levels of Initiative anticipate and take action to address
opportunities and problems a few months ahead (level 3), a year ahead (level 4) and beyond
(level 5).
For example, a mid-level leader in our sample displaying basic Initiative said: “So, I
contacted the manager and said, "I need every bit of data you've got that you hang onto. I need
it, and I need it now so I can start a review on it." This individual, in this instance, is displaying
recognition of and responsiveness to an immediate problem. By contrast, here is a leader
enacting a much more sophisticated level of Initiative (scored at 3): “Because my sense was that
we have a calendar of 6 months. I had one global meeting in March and I had one global
meeting in September and I said that if we do the research in the first 3 months, we will be able
to use the next 3 months to do something about the research and come up with some ideas as to
what to do next. So that is why I mentally divided it into these 2 slots.” This leader displays not
only awareness of future demands, but is planning action to take place both now, in anticipation
of events, and in the future when they occur.
Very little is known about how Initiative develops in leaders. As with the other
distinguishing competencies, there is a general tendency for individuals to increase in Initiative
with time in leadership roles. Certainly a longer tenure in a leadership position increases the
range of problems—and therefore the range of time horizons for problems—that leaders
encounter. However, we found also that the very highest levels of Initiative—thinking a year or
Leadership competency gap 26
more out—is quite rare even among the most senior leaders in the sample. Related work on
leaders’ intentions (Bird, 1988) suggests that the ability to identify opportunities and act with a
long time horizon involves the personal characteristics of persistence, resilience, and courage. If
that supposition is correct, then Initiative, of all the distinguishing competencies we have
identified, seems least amenable to intentional development. Relying as it may on emotional
capacities that are characteristic of the person or are maturational (McClelland, 1985), Initiative
may be one leadership competency that organizations must aim to assess, identify and select
rather than to train and develop.
Implications for Managers. The findings of our research suggest that adequate leadership
development in organizations is about to become more complex and multifaceted than ever
before. The leadership capabilities that will become most rare and most desirable in the next ten
years develop under very different circumstances and are best supported by a wide range of
pedagogies and learning opportunities. Some of those capabilities—higher-level Organizational
Awareness and Impact and Influence—may respond well to familiar and programmatic
development approaches. Since these competencies can be learned with a combination of
classroom approaches, including case analysis and skill practice, senior leaders might approach
the coming gap in these by identifying skilled practitioners early and placing them in training
programs aimed at speeding their development. However, the findings of our research also
suggest that an increased emphasis on early assessment and training will not address the whole
leadership gap. Competencies like Team Leadership and Initiative may be so dependent on
experience and deep individual differences that more intensive development opportunities—such
as reflective practice—combined with careful selection and retention strategies may be more
fruitful approaches than programmatic training. Findings of this research therefore suggest the
Leadership competency gap 27
need for a complex—and expensive—development and retention agenda. However, the ability
to identify and target key leadership competencies such as the four we identified here offers
organizations a greater chance of that agenda successfully closing the leadership gap.
Limitations and Future Research. While our research has identified four leadership
competencies that are likely to be threatened as the present generation of leaders retires, there
are still gaps in our understanding of how those competencies best develop and to what degree
they might be accelerated. Further longitudinal research might address the organizational and
career conditions under which higher levels of such competencies are seen in younger leaders.
Moreover, limited sample sizes within certain industries prevented us from a more nuanced
analysis that might identify the leadership capabilities that are most threatened in different
organizational contexts. Finally, we acknowledge that our sample of leaders in this database is
not random. This group may well be a more competent than average sample, as they
overrepresent leaders under consideration for greater responsibility and opportunity. As a
consequence, we may even have overestimated the frequency of the four key competencies in the
generations of leaders we studied, suggesting that the coming gap for these competencies may
actually be worse than we described.
Conclusion
We have noted that to fill the coming gap in leadership, organizations will need to
provide opportunities to potential leaders earlier in their careers and to a broader range of people.
Knowledge of the specific competencies that are likely to need development will allow
organizations to better develop their younger managers so they can effectively fill the positions
of retiring leaders. Moreover, it will allow management educators to create focused pedagogies
Leadership competency gap 28
that address specific leadership capabilities, not all of which are amenable to standard largeclassroom techniques for teaching. In conclusion, we note that the kinds of competencies that
most distinguish effective senior leaders—those individuals who are both most capable and most
likely to retire from the workforce in the next ten years—involve cognitive, emotional, and
behavior capabilities in combination. While leaders can and do get this full repertoire of
capabilities from direct experience, to accelerate that development will, we argue, require a
deliberate combination of approaches tailored to the developmental needs of particular potential
leaders. We hope that a joint emphasis on assessment of the kinds of competencies we studied
and intentional leadership development practices—in organizations and in business schools—
stands at least some chance of closing the coming leadership gap.
Leadership competency gap 29
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Leadership competency gap 33
Table 1: Definition of competencies used in this study
Competency
Achievement
Acting on
Values
Analytic
Thinking
Conceptual
Thinking
Customer
Service
Orientation
Developing
Others
Directiveness
Flexibility
Definition
Sophistication and completeness with which one thinks about meeting and/or
surpassing performance standards
A concern for working well or for surpassing a standard of excellence. The
standard may be one’s own past performance (striving for improvement); an
objective measure (results orientation); outperforming others (competitiveness);
challenging goals one has set, or even what anyone has ever done (innovation).
Amount of risk involved in “walking the talk”
Acting in a way that is consistent with what one says is important; that is, one’s
behavior is consistent with one’s values (values may come from business, society,
or personal moral codes).
Complexity of Causal Thinking
Understanding a situation, issue, problem, etc. by breaking it into smaller pieces,
or tracing the implications of a situation in a step-by-step way. Analytical
Thinking includes organizing the parts of a problem, situation, etc., in a systematic
way; making systematic comparisons of different features or aspects; setting
priorities on a rational basis; and identifying time sequences, causal relationships,
or if-then relationships.
Insightfulness or innovation of the pattern recognition
The ability to identify patterns or connections between situations that are not
obviously related, and to identify key or underlying issues in complex situations. It
includes using creative, conceptual, or inductive reasoning.
The depth of understanding and response to the customer’s needs
Focusing one's efforts on discovering and meeting the customer's or client's needs.
"Customer" may be broadly defined, including final customers, distributors,
internal "customers," or "clients."
Degree of depth into the levels of the iceberg that the development initiative is
intending to address
Involves a genuine intent to foster the long-term learning or development of
others. Its focus is on the developmental intent and effect rather than on a formal
role of training.
Firmness in holding others to standards
Implies the intent to hold people accountable to standards of performance. Makes
others comply with one’s wishes where the power of one’s position or of one’s
personality is used appropriately and effectively with the long-term good of the
organization in mind. It includes a theme or tone of “telling people what to do.”
The tone ranges from firm and directive to demanding or even to threatening.
(Note: attempts to reason with, persuade, or convince others to relate to Impact and
Influence, not Directiveness. Feedback delivered with a warm, positive, or
encouraging tone is likely to be Developing Others, not Directiveness.)
Size of change being made
The ability to adapt to and work effectively within a variety of situations, and with
various individuals or groups. Flexibility entails understanding and appreciating
different and opposing perspectives on an issue, adapting one’s approach as the
requirements of a situation change, and changing or easily accepting changes in
one’s own organization or job requirements.
Leadership competency gap 34
Table 1 (cont.): Definition of competencies used in this study
Competency
Definition
Complexity or customization of the attempt to influence
Implies an intention to persuade, convince, influence, or impress others (individuals
or groups) to get them to go along with or to support the speaker’s agenda. The
Impact & Inf.
“key” is understanding others, since Impact and Influence is based on the desire to
have a specific impact or effect on others where the person has his or her own
agenda, a specific type of impression to make, or a course of action that he or she
wants others to adopt.
Amount of time and effort being expended on collecting information
Information
Driven by an underlying curiosity and desire to know more about things, people, or
issues. It may include pressing for exact information; resolution of discrepancies
Seeking
by asking a series of questions; or less-focused environmental scanning for
potential opportunities or miscellaneous information that may be of future use.
The distance into the future that one is looking for problems and opportunities
on which to take action
Refers to the following:
1.
The identification of a problem, obstacle, or opportunity and
Initiative
2.
Taking action in light of this identification to address current or future
problems or opportunities. Initiative should be seen in the context of proactively
doing things and not simply thinking about future actions. The time frame of
this scale moves from addressing current situations to acting on future
opportunities or problems.
Thoroughness of understanding of specific others
Interpersonal
Connotes wanting to understand other people. It is the ability to accurately hear
and understand the unspoken or partly expressed thoughts, feelings, and concerns
Understanding
of others. It measures increasing complexity and depth of understanding of others
and may include cross-cultural sensitivity.
Thoroughness of understanding of one’s own or another’s organization
The ability to understand and learn the power relationships in one’s own
Organizational
organization or in other organizations (customers, suppliers, etc.). This includes the
ability to identify who the real decision makers are; the individuals who can
Awareness
influence them; and to predict how new events or situations will affect individuals
and groups within the organization.
Degree of challenge taken on in a situation
Self
A belief in one’s own capability to accomplish a task and select an effective
approach to a task or problem. This includes confidence in one’s ability as
Confidence
expressed in increasingly challenging circumstances and confidence in one’s
decisions or opinions.
Degree of commitment being exhibited in support of the organization
Organizational
Shows an ability and willingness to align one's own behavior with the needs,
priorities, and goals of the organization. It involves acting in ways that promote
Commitment
organizational goals or meet organizational needs. It may appear as putting an
organizational mission before one's own preferences.
Relationship Closeness of potentially useful relationships.
Builds and/or maintains friendly, reciprocal, and warm relationships with networks
Building
of people who may be able to assist in business.
Leadership competency gap 35
Table 1 (cont.): Definition of competencies used in this study
Competency
Team
Leadership
Teamwork &
Collaboration
Definition
Strength and completeness of assumption of the role of leader
The intention to take a role as leader of a team or other group. It implies a desire
to lead others. Team Leadership is generally, but certainly not always, shown
from a position of formal authority. The “team” here should be understood
broadly as any group in which the person takes on a leadership role, including
the enterprise as a whole.
Degree and/or depth of support given to team efforts
Implies the intention to work cooperatively with others, to be part of a team, to
work together, as opposed to working separately or competitively. Teamwork
and Collaboration may only be considered when the subject is a member of a
group of people functioning as a team, generally where he or she is not the
leader (e.g., M&A teams, functional work groups, etc.). “Team,” as is the case
with Team Leadership, is broadly defined as any task or process-oriented group
of individuals.
Leadership competency gap 36
Table 2: Descriptive statistics: Competencies by Job Level (4-6)
Level 4
(n = 85)
Median
Level 5
(n=740)
Level 6
(n=558)
Level 4
(n = 85)
Mean
Level 5a
(n=740)
Level 6b
(n=558)
Level 4
(n = 85)
Std. Deviation
Level 5
Level 6
(n=740)
(n=558)
Achievement
2.00
3.00
4.00
2.07
2.54**
3.40**
1.437
1.621
1.794
Analytic Thinking
3.00
3.00
3.00
2.18
2.51**
2.57
1.226
.933
1.191
Customer Service Orientation
1.00
.00
.00
1.61
1.54
1.65
1.753
2.081
2.248
Conceptual Thinking
2.00
2.00
3.00
1.59
2.30**
2.85**
1.391
1.343
1.503
Developing Others
.00
.00
1.00
1.34
1.58
1.90**
1.924
1.948
2.146
Directiveness
1.00
1.00
2.00
1.32
1.56
2.25**
1.590
1.708
1.836
Flexibility
.00
.00
1.00
.99
1.01
1.32**
1.277
1.317
1.478
Impact and Influence
3.00
4.00
4.00
2.41
3.17**
4.14**
1.734
1.638
1.358
Information Seeking
1.00
2.50
3.00
1.71
2.29**
2.93**
1.572
1.623
1.538
Integrity
.00
1.00
1.00
.52
.96**
1.31**
.971
1.101
1.321
Initiative
1.00
1.00
3.00
1.16
1.83**
2.65**
1.387
1.592
1.750
Interpersonal Understanding
2.00
3.00
3.00
1.95
2.43**
2.98**
1.479
1.433
1.258
Organizational Awareness
1.00
3.00
4.00
1.58
2.17**
3.49**
1.621
1.733
1.641
Organizational Commitment
.00
.00
.00
.88
.87
1.08**
1.366
1.330
1.500
Relationship Building
.00
.00
.00
.28
.42
.74**
.781
1.001
1.423
Self Confidence
2.00
3.00
4.00
2.04
2.31
3.03**
1.829
1.752
1.660
Team Leadership
.00
2.00
4.00
1.25
2.19**
3.49**
1.711
2.022
2.009
Teamwork and Cooperation
2.00
2.00
2.00
1.67
1.75
1.97**
1.577
1.503
1.634
** p < .01
a
Significance indicates the mean of level 5 is significantly different from the mean of level 4
b
Significance indicates the mean of level 6 is significantly different from the mean of level 5
Level 4: First-line leaders
Level 5: Mid-level managers
Level 6: Executives
Leadership competency gap 37
Table 3: Competencies with greatest gap between senior and mid-level managers with
suggestions for development
Brief
Type of
Suggestions for
Competency
a
Definition
Competency
Development
Involves attending to relevant stimuli,
interpreting their meaning, and developing a
Thoroughness of
theory of power dynamics in the
understanding of
Organizational
one’s own or
Cognitive
organization. This can be taught with
Awareness
another’s
standard leadership teaching practices in the
organization
classroom, e.g., cases, video, etc. as stimulus
along with guided interpretation and analysis.
 Intensive practice, detailed feedback, and
Cognitive
reiteration.
Complexity or
Impact and
customization of the
and
 Reflective practice, i.e., practice in the
Influence
attempt to influence
Behavioral
work context, subsequent reflection, and
discussion of lessons about influence.
Learning the behavioral component is similar
Strength and
Behavioral to Impact and Influence above. Learning the
Team
completeness of
and
emotional component involves providing
Leadership
assumption of the
Emotional settings where manager can work on real
role of leader
problems in a safe environment.
The distance into the
Cognitive, Least amenable to development. May be best
future that one is
Behavioral, to assess, identify, and select for this
looking for problems
Initiative
competence.
and
and opportunities on
Emotional
which to take action
a
See Table 1 for a full definition of the competencies
Leadership competency gap 38
Figure 1: Demographic trend in employment by age group
Source: based on data from the Bureau of Labor Statistics
Leadership competency gap 39
Figure 2: Change in Employment by Age Group
Leadership competency gap 40
Figure 3: Standardized Percentage of Employees Age 50-74 at Each Management Level
Leadership competency gap 41
Figure 4: Competency Comparison of Level 6 vs. Level 5
Organizational Awareness
Team Leadership
Impact and Influence
Achievement
Initiative
Competency
Self Confidence
Directiveness
Information Seeking
Level 5
Level 6
Conceptual Thinking
Interpersonal Understanding
Integrity
Developing Others
Relationship Building
Flexibility
Teamwork
Organizational Commitment
Cust. Serv. Orientation (n.s.)
Analytic Thinking (n.s.)
0
0.5
1
1.5
2
2.5
Average Level
3
3.5
4
4.5
Leadership competency gap 42
Figure 5: Competency comparison Level 5 vs. Level 4
Team Leadership
Impact and Influence
Conceptual Thinking
Initiative
Organizational Awareness
Competency
Information Seeking
Interpersonal Understanding
Achievement
Level 4
Level 5
Integrity
Analytic Thinking
Self Confidence (n.s)
Directiveness (n.s)
Developing Others (n.s)
Relationship Building (n.s)
Teamwork (n.s)
Flexibility (n.s)
Organizational Commitment (n.s)
Cust. Serv. Orientation (n.s)
0
0.5
1
1.5
2
Average Level
2.5
3
3.5
Leadership competency gap 43
Figure 6: Trend in four competencies with the greatest gap