Executive Development Trends 2004: Filling the Talent Gap

Survey Suggests Companies Face Major Gaps in Executive Talent Necessary to Compete in the Future

SAN FRANCISCO, CA--Leading companies around the world lack the quality and depth of executive talent needed to grow and compete in the future, according to a recent survey of 101 senior-level learning and executive development professionals in Global 500 corporations.

More than 70% of respondents in the 2004 Executive Development Associates' Trends Survey said “the lack of bench strength” will be a major influence on their efforts in the next two to three years. This far outdistanced such bread-and-butter issues as increased competition (53%) as a driver of companies’ development efforts.

“Many companies face increasingly complex strategic and managerial challenges even as their current executive teams are approaching the traditional retirement age. Cultivating the next generation of business leaders is imperative," says James F. Bolt, chairman of Executive Development Associates, headquartered in San Francisco, California. Conducted about every two years since 1983 by Executive Development Associates, the Trends Survey allows senior executives and leadership development practitioners to compare their experience to others in the field and to anticipate the changes most important to the future.

To address the expected shortfall in executive talent, fully 80% of respondents said that “increasing bench strength, ensuring replacements for key jobs or people” will be a top objective of their companies’ development programs and processes in the years to come.

"Executive and leadership development directors worry that their companies will lack the leadership capacity to achieve their strategic objectives. And the answer isn’t hiring talent away from other companies, everyone is facing the same problem,” says Bolt.

For its 2004 Trends Survey, EDA polled senior-level learning and executive development professionals in the Global 500 corporations, as well as members of its Executive Leadership Development Networks—groups of leading corporate practitioners who meet regularly to share ideas and best practices. In all, 101 people responded to the survey. Among the participating companies, 91% have more than $1 billion in revenue; 54% have more than $10 billion in revenue; 79% are based in the United States.

The survey clearly identified the problem and pinpointed the solution for filling the talent pipeline. Fully 70% of respondents say that a system that integrates all executive and leadership development activities will be a top priority. This approach, Bolt explains, would treat executive education, succession planning, developmental job experiences, the identification and development of emerging leaders, and other such activities as a unified system, rather than a series of stand-alone programs. However, creating such a system appears to be a challenge; only 40% say they currently have a well-integrated talent management system, and only 41% have an effective process for placing the “right executive in the right job at the right time.”

In another gap between future need and current capacity, nearly 60% of respondents said they will “highly emphasize” the use of systematic measurement to assess the impact of their development efforts. Yet most are unsure how to fully measure the impact on leadership effectiveness and business performance. Indeed, less than 20% of companies claim to excel at metrics. The most frequently expressed sentiment in the survey was, “Measurement will be our biggest challenge in the next few years.” At the same time, the survey revealed a growing commitment to executive and leadership development. Overall, the companies surveyed spent an average of $6.8 million on executive development activities, and 71% expect their spending to increase in the next two to three years.

“The need to invest in the next generation of business leaders is crystal clear,” says Bolt. “Leadership—creating vision, enrolling and empowering others—has always ranked as the No. 1 topic in executive development programs around the world. But our 2004 findings suggest the increasing complexity of the challenges facing organizations means we need to invest equally in building business acumen. Also, if companies are going to have the talent needed to grow and to win in the marketplace, they will have to invest heavily in integrated talent management systems that build deep bench strength, and create metrics to assess their effectiveness.”