The two top challenges facing today’s leaders are employee engagement and effective strategy execution, according to a survey of 1248 senior directors and executives of which 10% come from the Middle East. Almost three quarters of the total respondents come from global organizations, multinationals and large companies.

Also among the top five challenges are talent management, driving work across organisational boundaries and collaborative working across teams.

These are just some of the findings from a new study carried out by London Business School’s Leadership Institute which explores the issues facing the world’s leaders of business and other organisations.

“Importantly, these top five issues are all intertwined: disengaged employees are unable to put strategy into place effectively. The commercial imperatives are clear: without an effective strategy which the workforce fully supports, organisations suffer and results fall,” explained Randall S. Peterson, Academic Director of London Business School’s Leadership Institute.

He continued: “This is particularly pertinent today given the growth in the service economy: people really are an organisation’s most important asset. So for success, employee engagement has never been more important.

“Furthermore, this widespread study demonstrates that four of the top five issues facing organisations relate to managing the workforce. The UK, for example, is plagued by poor productivity, so organisations need to address the full range of people management issues to up their game.”

“To engage staff, leaders may be tempted to simply ‘sell’ reasons for staff to be passionate about their role.  But this approach won’t succeed. The best performers are motivated by work that is rewarding in itself: work that gives meaning to their lives or develops their skills.”

Aligned to this, the survey also asked respondents about the most important skills required by leaders for success. Communicating purpose ranked as the single most important skill.

Professor Peterson argues that firms need to be focused not only on issues such as staff needs, fair pay, a safe working environment and resources, but also on individuals’ goals and aspirations which also support organisational goals.

“Ensuring staff and stakeholders share a joint sense of purpose encourages them to go above and beyond what’s required. This is critical for long term organisational success – and is complemented by the other key leadership skills highlighted by the survey, namely, integrity, setting direction, critical thinking and practising what you preach in terms of beliefs, values and behaviours,” explained Professor Peterson.

Drive change through collaboration

Almost 80% of respondents said that change was driven, or mandated, by senior management while only 10% was driven by people lower in the organisation and 9% consider that their organisation resists change.

Commenting on the results, Vyla Rollins, Executive Director of the Leadership Institute, said:

“In an age when change is increasingly accepted as a constant, it’s important to approach the development and execution of change initiatives in a way that works in organisations facing 21st century challenges.

She added: “For example, according to our study, a ‘bottom-up’ approach to change is rare and the prevalence of senior manager-led initiatives may go some way to explain why employee engagement is such a concern for many organisations. It’s therefore well worth organisations acquainting themselves with some of the emerging collaborative approaches to change, whereby senior leaders’ responsibility is to facilitate and orchestrate change, rather than mandating and driving change via clusters of individuals in senior roles.”

“The results also suggest that individuals may lack the skills to lead and manage complex change involving multiple stakeholders. We find many organisations still use a linear approach for large-scale organisational change, which can often be more disruptive than the change they are trying to introduce.”

A focus on day-to-day delivery is leaders’ main barrier to success

The primary reason leaders are unable to reach their full potential is a focus on day-to-day delivery, according to 54% of respondents, followed by a lack of strategic thinking (45%) and organisations’ inability to adapt to change (35%).

“These results indicate that cultures overly focused on tasks and delivery can make it difficult to feel okay with stepping back and creating time to think about what the organisation should be achieving strategically,” said Vyla Rollins.

Effective senior management teams

Respondents were also asked how well they perceive that senior management figures work together. Worryingly, 58% of participants have concerns about how their organisation’s top executive team appear to work together from focusing on their own agendas to regular conflict and even in-fighting within the team.

Professor Peterson commented: “So it’s no surprise that respondents also feel they are struggling with executing strategy, building engagement and creating meaningful change in their organisation.

“Behaviour at the top of an organisation informs how individuals further down lead and behave, as well as influencing organisational performance.

“Effective conflict resolution is critical to building trust for the future in any group or organisation. This means all parties need to accept the decision as legitimate and commit to implementation. The problem with simple voting procedures, which are extremely common, is that some members’ views are typically shut down and this can de-legitimise the team’s decision and undermines commitment.”

Managing failure

The survey also explored how organisations deal with failed initiatives and there is an overwhelming feeling that such projects are met with negativity.

In fact, 59% of responses suggest that the results of failed initiatives are not shared across the organisation, or else not talked about. However, what’s more concerning is that a further 11% of responses demonstrate that individuals involved typically disappear from the organisation, while 14% suggest that the results are shared but the individuals concerned are stigmatised.

Only 11% of responses reflect that results from projects which have failed are celebrated as important learning opportunities. Start-ups and SMEs appear more likely to embrace failure than larger organisations.

Professor Peterson notes: “For any organisation to succeed at innovation, they must develop ways to make it acceptable to talk about projects that don’t progress as planned and then turn them into learning opportunities. It takes a real shift in beliefs, mindsets and behaviours for companies to start to innovate more effectively.”

“So to help organisations thrive, leaders must learn how to manage failure. Naturally you need to minimise potential downside costs by beginning with a small pilot project, for example, but also by maximising benefits and extracting as much value as possible from what is learnt. Simple questions can be valuable, for example: ‘What went well, and why?’, and, ‘What could have been done to help bolster possibilities of success?’”

How is failure managed in your organization?