Why Context Matters to Leaders’ Success

September 20, 2017 | CEB | HCI
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The majority of today’s leaders are failing to handle a more complex and volatile business environment; HR teams must think about the context in which leaders work.

The way employees at all levels of a company now do their jobs has changed remarkably in the past five years or so. Employees must cope with far more change and collaborate more closely with people in different parts of the business and the world.

In 2016, 78% of senior managers said that they must now work with more individuals than they once did to complete the same day-to-day tasks and 70% say they have had to adjust to more frequent changes to their company’s objectives, according to CEB data.

Worse than that, for companies that need to be agile and responsive to shifting conditions, competitors, and markets, 50% of leaders say they now need approval from more individuals to make decisions and 52% spend more time reaching decisions than before.

The Leadership Implications

Among the many other problems this poses, most companies and management teams still haven’t properly thought through the leadership implications of this shift.

This is becoming a serious problem. Nearly half of all leaders who move into new roles now fail to meet their objectives, and two-thirds are not adapting quickly enough to meet their goals, according to recent data.

Even more worrying however, is that in 2016 senior executives reported that nearly 75% of their business units do not have leaders in place that they feel can handle the company’s future. And this is despite the fact that leadership programs account for around one quarter of the annual HR budget in most companies.

Time to Find Some Context

Much like someone in a maze who can see the exit but has little idea how to get there, companies know they need to get a lot better at predicting who is likely to succeed in a given leadership role, but aren’t sure how.

A clear route out of the maze is offered by a huge three-year survey on what makes a leader effective in today’s work environment. It showed that incorporating a leader’s “work context” – the unique situations and challenges that a leader faces – can improve the ability to predict leader performance by as much as 300%. Out of hundreds of combinations of work contexts from product, strategy, team, and organization dynamics, 27 contexts matter most to making or breaking leaders’ performance, up and down all levels of the corporate hierarchy.

As a whole, these contexts are more people intensive, involve more change and risk, and are more strategic in nature, meaning they require leaders to produce results by managing more complexity and uncertainty.

Importantly, the contexts also present unique challenges. They contain an inherent degree of difficulty and require certain characteristics for leaders to navigate them.

Four Themes

The challenges can be grouped into four themes: driving team performance, leading change, delivering results, and managing risk and reputation (see chart 1). Although these contexts are inherently demanding, leaders with certain traits and experiences will thrive.

The trick of course is to match leaders to challenges for which they are best suited, and to align leadership development to current and future challenges the leader or company as a whole may face. The next post in this series will look at how to do that.

Chart 1: Example contextual challenges  Source: CEB analysis