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Next-generation leaders are critical to leading in a more purpose- and people-oriented paradigm, but they themselves are a huge retention risk.
When asked what will impact their businesses in the coming year, lack of availability of employees and leaders with key skills was the highest ranked issue for global business leaders. 72% of leaders surveyed cited this as a top issue, compared to 59% last year. The battle for talent landed ahead of other key challenges, such as uncertain economic growth, health threats and geopolitical uncertainty.
Progressive leaders are acutely aware of the interplay between talent and other risks. They recognize that to navigate economic and geopolitical uncertainty they need resilient and adaptable people at all levels in their organization.
59% of leadership teams who cited the availability of talent and skills as a top threat are not prepared to face threat
Top External Factors Impacting Business Health in next 12-18 Months
% of leaders ranking in top 5 (from list of 20 threats)
This challenge is not simply one of acquiring talent but, more importantly, one of retaining and engaging one’s existing employees. In the era of stakeholder capitalism, tight labor markets are giving employees more power and more voice. Leaders who under-invest in employee engagement and understanding are creating significant risk for their organizations. Our 2022 Monitor finds that employees are on the ascendency as critical stakeholders. 51% of global leaders cited employees as one of the stakeholder groups that will most impact organizational strategy over the next five years, a figure that is up 10 percentage points compared to just a year ago. While employees still sit in the second spot behind consumers/customers, the gap has narrowed considerably.
The gap between employees and customers as critical stakeholders has closed by 18 percentage points in the past year
Top Stakeholders Most Impacting Organizational Strategy Over Next Five Years
% of leaders ranking each group in top 3 (from list of 7)
Often, the turnover of senior leaders is left out of the conversation about tight labor markets and competition for skills. Our analysis shows that turnover risk at senior levels is very real. Of the leaders we surveyed, 45% told us that executive level turnover has increased at their organization in the past year. More importantly, 56% of next-generation leaders are willing to make a move to another employer for the right opportunity. This creates double-pronged risk—not only is attrition at this level problematic from an operational standpoint and a risk to future leadership succession, but next-generation leaders act as the lynchpin between the C-suite and employees. Losing them amplifies the challenge of engaging with an increasingly purpose-driven employee base.
What factors can convince next generation leaders to stay? A more transparent plan for career advancement and a succession path into the C-suite (or equivalent leadership position) is the place to start. Career advancement was the top driver of attrition for more than half (55%) of next-generation leaders who changed jobs in the past year. This dynamic may in part be due to problems with succession planning. Over 7 in 10 next-generation leaders and C-suite leaders do not have confidence in their organizations C-suite succession plans. CEOs are more evenly split on the issue, but still 57% lack confidence.
Deepening the issue, organizations cannot forget the needs of their C-suite officers either, among whom 44% are willing to change organizations today, finding their own career advancement top of mind and among their main reason for considering a move. A critical lesson for CEOs and HR leaders: among C-suite officers who did change jobs recently, finding a better company culture and a different type of leadership were their ultimate reasons for seeking new opportunities.
Career growth outstrips pay for next-gen leaders, while culture evenly matches it for C-suite
Top Reasons for Changing Employer* in Past Year
% of leaders selecting each item as a top 3 reason (from a list of 18 reasons)
What this means for leadership
Two critical leadership implications rise to the fore as a result of the talent challenge.
First, ensuring the capability and capacity of leadership teams to engage in people leadership is paramount if one is to create the deep engagement needed to retain and harness the talents of an empowered and purpose driven workforce. Second, next-generation leaders are a key lever in this, and their retention and engagement are contingent on providing more transparency around succession practices and more robust and engaging development plans.
What Our Experts Are Saying
People, purpose, performance, in that order. Put people first, engage the team around a shared sense of purpose, and performance beyond expectations will follow. People are our most valued asset. As leaders, we need to be authentic. We need to be courageous. We need to be vulnerable. We need to be accountable for developing our people to their fullest potential. Leaders need to be in a service mindset, not one of authority and power. It’s not about you, it’s about everyone else. Leaders need to be positive, but also pragmatic and transparent, creating the right environment and culture for people to succeed. Help everyone see their potential, understand what they need to succeed, and trust and invest in their capacity." Kimberly Archer
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Strong succession plans are dependent on three factors: (1) being clear on what future leadership success looks like, (2) understanding and tailoring development for successors that speak to their ambitions, development priorities and capability, and (3) the ability to build strong connective tissue between successors and their sponsors. Next-generation leaders have a heightened awareness of future leadership challenges, and organizations that prepare them to lead in the external arena, disrupt and transform their organizations, and enable them to harness their own character and capability will be the most attractive career destinations." Anita Wingrove |
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MethodologyEvery year, Russell Reynolds Associates administers The Global Leadership Monitor, an annual survey of executives and non-executive directors, which tracks key threats to organizational health and leadership preparedness to face them, as well as indicators of confidence in leadership, and leaders' engagement and career aspirations.
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Authors
Jemi Crookes and Tom Handcock of RRA’s Center for Leadership Insight conducted the research and authored this report.
Learn more about the authors and The Center for Leadership Insight
The authors wish to thank the 1,500+ leaders from RRA’s global network who completed the 2022 Global Leadership Monitor. Their responses to the survey have contributed greatly to our understanding of leadership in 2022 and beyond.
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2022 Global Leadership Monitor
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