January 27 2016, 13.51 PM IST || Pocket Press Release
New research from proprietary assessment center database redefines how leader skills, experience, personality and gender impact bottom-line business growth
Mumbai, 27th January 2016 - If you want higher profit and revenue, you’ll need senior executives with the “money skills” according to a new High-Resolution Leadership report from Development Dimensions International (DDI), a pioneer in leadership assessment and development for 45 years. In a breakthrough analysis spanning nearly a decade, DDI proves with new, more compelling data that highly competent executives who demonstrate specific business and leadership skills drive more profit and revenue—by as much as 45 percent.
The 18 findings in the High-Resolution Leadership report are unprecedented because they are based on rigorous testing of real behaviors in assessment center simulations across a massive data set of over 15,000 leaders, according to Evan Sinar, Ph.D., DDI Chief Scientist and study lead author. “Used properly, this research can revolutionize the quality of leadership around the globe and make a significant impact on business outcomes.”
The research found there were five specific skills that lead to profitable growth:
· Entrepreneurship - Crafting plans to capitalize on market opportunities;
· Business Savvy - Quickly and accurately sizing up the merits and risks in complex business scenarios;
· Driving Execution - Devising specific plans and mobilizing people to achieve strategic objectives;
· Decision Making - Making effective day-to-day judgments about short-term issues;
Leading Change - Identifying the need for organizational change, and effectively leading people through it.
“Predicting senior executive success is fraught with error; there are rampant failures,” said Matthew J. Paese, Ph.D., DDI Vice President, and Succession Management & C-Suite Services. “This new research provides a concrete method for selecting a successful leader who can drive profitable growth. CEO succession planning should be data-driven: more like Moneyball and less like Powerball.”
To determine these money skills, DDI worked with EY to evaluate a subset of 2,077 senior-level executives with titles such as EVP, CFO and CEO from 44 large companies from the U.S., Asia, Europe and Australia. Organizations with leaders scoring higher in “business management” and “leadership of people” as described in the five competencies above, showed significantly greater net profit and return on assets. The fastest-growing, most-profitable companies in the studies had cadres of executives with wide-ranging leadership skills showing the importance of developing the money skills at lower levels.
“If you really want to set your company up for future success, you need to make sure your highest-potential talent is being channeled into learning experiences that build these money skills early,” said Richard S. Wellins, Ph.D., DDI Senior Vice President.
Double Digit Revenue Growth
DDI also worked with EY to evaluate a second subset of the data including 1,028 senior executives with titles such as EVP, CFO and CEO from 33 large corporations in the U.S. and Canada to determine the relationship between leadership competency and revenue growth. The results were compelling: when executives were highly competent at a composite of leadership skills including “business management,” “leadership of people,” “communicating a compelling vision” and “influencing stakeholders,” it was associated with 45 percent higher revenue growth between 2009 and 2014. Over the same six years, organizations whose executives were only moderately competent at these overall leadership competencies realized 20 percent growth, while the organizations with the least competent leaders realized a four percent decline1.
These two studies suggest that organizations need senior executives with the full range of skills to generate growth, but to make that growth profitable, leader need to have laser-sharp business minds and be capable of engaging people and mobilizing them behind their ideas.
“Most businesses realize that having good leadership matters, but this research proves just how much highly-competent executives can impact financial performance,” said Paese. “In today’s business climate when stakeholders are demanding double-digit growth, why would any company make a senior-level hiring decision without knowing how the job candidates perform on these money skills? Doing so would be equivalent to organizational malpractice.”