Talent management: Demographics and the Leadership Development Crunch

I recently came across an interesting article (Two Trends That Could Kill Business) by Nathanael Baker that explores the repercussions of facing an external contextual demographic leadership issue in combination with how organizations are/are not planning for it. I wish to further explore some implications of what is touched on in this article.

First the demographic context:

“The latest data from Statistics Canada paint the picture clearly:  just about one-fifth—almost 19%—of the workforce in Canada is aged 55 or older.  To put this number in context, in 1971 only 8% of the Canadian population fell within this age demographic.

Drastic change is being driven by the aging of Canada’s largest generation, the Baby Boomers.  Given both the sheer numbers of Baby Boomers and the nation’s lower fertility rates, aging of Canada’s workforce is projected to continue through 2050.  By 2021, the percentage of workers over 55 is expected to climb to 25%.

This is not a Canadian phenomena:  it is being felt throughout the developed world including in the United States, Germany, Japan, and the United Kingdom.

What’s truly concerning for business is the role this aging demographic currently plays in the economy.  Baby Boomers sit in powerful management positions.  In Canada, currently 35% of senior management positions in major industries such as transportation, energy, health, and education are held by those 55 and over.  Will these numbers push to 50% in the next ten years?  Imagine if half the senior management vanished from organizational charts.  What affect would that have? How would that impact the economy?”

Anyone who has been (even casually) in the talent management field is aware of this demographic context spectre. I would go further and say the implications are equally (sometimes even worse) in certain technical fields.

The first thing to remember, is not everyone is going to be affected at the same time, or to the same degree (some may not even notice the issue) as one another. The leadership issue here is to practically assess one’s exposure to this contextual demographic setting. So some real work needs t be done to know “what, when (if), where, how, and who. What is fortunate is we can deal with this as a risk management not uncertainty management issue.

Now what are organizations doing?

“What’s the plan for replacing these current managers and decision makers?  Organizations are scrambling to put succession strategies together.

Succession planning is where the second significant threat to business comes into play.  Organizational success relies on filling management positions with talented and exceptional leaders.  The problem is the business world doesn’t focus on developing strong, effective leaders.

After researching more than 17,000 individuals, Zenger|Folkman, a leadership development firm, discovered the average agepeople begin receiving leadership training is 42.  The average age people assume a management position, on the other hand, is around 30.

This means managers are “leading” (projects, teams, individuals) for an average of 12 years before they receive any training and directed skill development in leadership.  A great technical skill set does not make a strong leader:  something that is too often overlooked.

Lack of this awareness means a dearth of potential leadership talent lies in the pipeline.  Company executives surveyed by Deloitteconfirm this:  56% say they will soon face a shortage of qualified executive talent.”

This is where I begin to take a deviating course from the above “very conventional” approach to dealing with the eventual loss of leadership capacity.

Succession planning assumes that the best course of action is to effectively replicate what we have done in the past: replace like for like (with improvements of course).

This strategy omits the fundamental option of rethinking, reengineering and redoing what and how leadership is made part of the business of the business.

I am not the least troubled by the observation above that people are in leadership roles (actually managerial ones if we go by the provided list) for about 12 years before receiving any leadership development. This makes sense because the principle role in these roles is operational optimization of their assignments and responsibilities. People become skilled at risk management. Leadership in terms of most seem to talk about it (vision setting, setting direction around priorities, processes and resources, and engaging the focus and energy of those involved) are the domains of few organizational roles (N.B. I accept that the role of a manager is to engage people too). The key underlying principle about leadership is it deals with an organization’s exposure to uncertainty (NOT RISK).

The difficulty with the action implication of the above is that we should start leadership development earlier. If true, I find this a weak proposition because the one thing we know about almost all leadership development efforts is they fail to deliver much in the way of visible and sustaining benefits. Why? Because, if I don’t use the education, I lose the opportunity to develop the habits of leadership.

Another aspect of this troubles me: the issue of role design and degrees of freedom in potential leadership development in low and middle management roles. Look at the list noted in the first set of quotes (education, health, transportation and energy). In Canada at least, these are some of the most bureaucratic, rule bound operational settings imaginable. These are top to bottom risk management operations where the mantra is to take as few risks as possible (and don’t get caught doing otherwise). Where would any low or middle manager person get an opportunity to deal with uncertainty management?

Why is leadership at its heart a matter of uncertainty management? Let’s take an example – Nokia. This was an organization that some months ago had the “burning platform” riot act read to it by the new CEO (Elop). He and a close small group of associates made the necessary “leap to another platform” decision Microsoft’s Window Phone system. Whether we agree, or whether it was a good enough decision is besides the point. This was a basic leadership role responsibility. Similarly, once the decision was made, this senior team had to work overtime to deal with the confusion, fear, anxiety, etc. in those in the organization who were directly, indirectly or not even affected.

So my question comes back to this: How do you develop these capabilities? I am certain no leadership development program/intervention is going to do it if the lessons imparted are not put to practice very quickly and repeatedly reinforced thereafter.

My concerns I believe are surmountable. It really comes back to how we picture (operationally) leadership in every managerial role and design the role such that we cannot only get the operational deliverables but begin cementing the bits and pieces of potential leadership habits that each role provides (or could provide if w did it right).

Leadership really matters when the going is not fun in any sense of the word.

My pessimism to seeing how we can embed suitable leadership lessons in various managerial roles concerns those that operate in risk averse settings. many organizations operate and will willingly beat their managers up if they take any risks (that end up badly). This is not a comment about the people wanting it that way. In many cases it is the customer/shareholder that insists upon it. I have had the opportunity  over the years to witness how customers and shareholders (especially governmental ones) react when shit happens. The result is always the same: find someone to blame. Also, some businesses deal with severe public risk issues (energy sector is one in particular). We would want nothing less than an extremely conservative approach to risk management by everyone in these organizations. Developing leadership muscule in these settings is going to be very much more difficult than it would be in other business settings.

As to the Leadership Development Traveling Peddler’s Industry,  I just haven’t observed much astuteness about these important matters. All too often I am left with the sense that we are being offered some form of tonic without any diagnostic context about relevance, practicality, and ongoing value.


About 123stilllearning456

As a management consultant I am passionately interested in talent management and risk/uncertainty issues. In the area of talent management I propose that we seek strategies that look beyond the staffing/employee centric frames of reference. I have been frustrated at the "closing down on possibilities" by these more conventional staffing/employee centric approaches. I have been impressed where people have found systematic solutions to their talent management issues by going beyond the conventional approaches. In the area of risk and uncertainty, I am interested in making this topic relevant to more normal decision making situations. My conceptual foundation is to use the micro-economist's fixed/variable cost theme. I also think it is important to look at these issues for people through their emotional and psychological lens. As a premise I think risk and uncertainty only exist where there is a person who cares about possible events and its consequences. Hence, risk and uncertainty are social based concepts (no sentience, no risk and uncertainty). A major influence on my thinking in this area is Nassim Taleb of "Black Swan" fame. This BLOG provides me with an opportunity to express my thoughts on topics that interest me. As this is an online diary, content is more important to me than polish. I apologize if this distracts from readers' enjoyment and learning. Still I find this a useful way to live up to my namesake, learn more from others and hopefully provoke creative thoughts and ideas in others.
This entry was posted in Decison Making, Performance Management, Risk & Uncertainty, Strategy, Talent Manangement, Values and tagged , , , , , , . Bookmark the permalink.

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