There is growing concern about the comparatively low standing of leadership and management of Australia’s enterprises – and Innes Willox says the time to act is now.
The evidence, from both academic research and business surveys, shows that workplaces with more effective leadership and management capability are more productive, profitable and innovative.
It follows, therefore, that lifting Australia’s leadership capability in order to enhance productivity, innovation and sustainability is critical to our future.
It sounds like a no-brainer – but the leadership challenge is a complex one for policymakers and businesses. The action we take now can create a turning point for Australia.
Australia’s low standing
While of course there are exceptions, there remains a growing concern about the comparatively low standing of leadership and management of Australia’s enterprises.
Using the measures of the International Institute of Management Development (IMD) World Competitiveness Yearbook, the perception of management practices by Australian employees relative to other countries has been dropping, with our ranking falling from 8th in 2009 to 18th in 2014.
Australia’s IMD ranking in the measure of ‘attitudes and values’ has dropped from 4th place in 2010 to 17th place in 2014. This is significant and is of particular interest as it correlates to factors critical to organisational culture, including our ability to be flexible and adaptable when faced with new challenges, and also how well our corporate values take into account the values of employees.
Alarmingly, the Towers Watson 2014 Global Workforce Study has found that only 51% of employees report that their senior leaders are very flexible in their approach to new situations.
The ability to adapt to changing internal and external conditions and new situations, as well as respond to growth opportunities, is of course central to the capacity to innovate.
Using another measure, the World Economic Forum Global Competitiveness Report, Australia’s leadership ranking has also slipped significantly in recent years.
Ai Group has a range of activities underway to stress this issue, including our major conference in September in both Brisbane and Melbourne entitled ‘The Leadership Revolution’.
Yesterday, we launched a key policy paper, Addressing Enterprise Leadership in Australia, in which we have identified some key barriers to the improvement of leadership practices:
- Organisational cultures that constrain contemporary leadership practices;
- A focus on the short term leading to under-investment in longer-term goals and people development – 63% of respondents to the 2013 McKinsey Global Survey said that the pressure on company executives to deliver short-term financial performance had increased in the previous five years; and
- Limitations in current leadership development frameworks that do not consider collective leadership capability.
A step change is needed
On reading the report, our position may seem hard-hitting. But the changes needed must be shared by all – businesses, government, the education sector, and organisations such as ours.
What is clear is that a step change is needed regarding the commitment to developing our leadership capability and evolving our organisational structures and systems if Australia is to improve its productivity and capacity to innovate.
Ai Group urges the following to kick start this change:
- Businesses must recognise that existing levels of leadership capability in Australia need to be improved.
- Organisations should be encouraged to cultivate a longer-term orientation and to consider how they create value for all stakeholders in the short, medium and long term.
- Australia must continue to reform its leadership and management education through context-specific programs. Equally, organisations must commit to a more complete approach to the development of their workplace culture and the leaders within them.
- Collaboration between our schools, academic institutions and business will be fundamental to innovation and sustainability. When it comes to converting research dollars into innovation and commercial success, Australia ranks poorly at 116th out of 142 countries in the latest Global Competitiveness Report – and we’ve been ranked dead last for collaboration by the OECD (2013) out of 33 countries.
- Culture impacts on strategy and in the case of Australia it is impacting on our ability to innovate. We need to better understand how our culture at both the organisational and national level is impacting on Australia’s ability to remain competitive.
Ai Group is practising what we preach. We are committed to helping Australian industry and its leaders to thrive, and we are doing this by:
- working on furthering our understanding of Australia’s unique cultural barriers as they relate to our leaders and their ability to effectively lead their organisations. This will help enormously in informing our development approach and methodology;
- forming alliances with relevant education partners to cultivate a longer-term outlook across businesses at the Executive and Board level;
- developing a leadership community where we can collaborate, offer insight, listen and discuss leadership challenges and important issues with industry;
- working with Government to advocate and support further reform in the education sector as it relates to management education;
- seeking out opportunities to collaborate in areas of practical leadership research relevant to Australia;
- continuing to develop leadership tools and information to support the practice of leadership; and finally by
- sharing and promoting leadership success stories from across our membership to celebrate exceptional leadership and recognising its importance to innovation and sustainability.
Australia’s future, its level of innovation uptake and its ongoing competitiveness and sustainability will largely depend on the capability of our leadership and the changes we make now.
Does your experience support the low standing of leadership and management in Australian enterprises? Or is your organisation one of the exceptions? Share your thoughts and ideas below.