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What Keeps CEO's and CHRO's up at Night

Amidst headlines filled with layoffs, advancements in artificial intelligence, and economic turmoil, one might assume CEOs are least concerned about their people. However, despite the volatile landscape, the labour market remains tight, with 1.9 job openings available for every job seeker in Canada, indicating that employees have significant leverage. As a result, it is the strength of their workforce that truly keeps CEOs awake at night.

A recent study conducted by the Center for Analytics and Behavioral Research (CABER) at DDI, known as the Global Leadership Forecast 2023, delved into the perspectives of 1,827 human resource professionals and 13,695 leaders worldwide, including 529 CEOs, regarding the state of leadership.

The study's findings were surprising: talent challenges have become the top three concerns for CEOs for the first time in over two decades. While these challenges may be interconnected, the C-suite needs to approach each individually, addressing the underlying factors critically.

Top Concern #1: Attracting and Retaining Top Talent

As CEOs face uncertain business and economic conditions, they recognize the importance of having a highly skilled and versatile workforce capable of swiftly adapting to new challenges. However, with a surge in resignations and a tight labour market, 54% of companies experienced increased turnover in the previous year. Many organizations struggle to fill vacant positions, lacking the usual negotiating power to attract top talent.

It is evident that companies prioritizing attracting and retaining the most talented teams will gain a significant competitive advantage in the market, regardless of how business and economic conditions evolve.

How to Address the Issue:

First and foremost, the C-suite must prioritize training leaders to practice empathy and build stronger relationships with their teams. Ineffective leadership emerges as the top reason employees cite for leaving their company. Notably, leaders who perceive their company's leaders as lacking interpersonal skills are 3.5 times more likely to express their intention to leave within a year.

Additionally, as CEOs and executive teams debate the return of remote workers, they should carefully consider the strong possibility that this decision could drive away the most talented leaders, particularly younger ones. Research shows that companies not supporting flexible work options are 1.3 times more likely to witness leaders leaving, with those under 35 being 2.2 times more likely to depart.

CEOs must thoughtfully shape the leadership culture within their organization. Embracing a holistic, human-centred approach that addresses employees' personal and practical needs is more likely to ensure success in attracting and retaining top talent, and positioning the organization effectively in the war for talent.

Top Concern #2: Developing the Next Generation of Leaders

Developing the next generation of leaders has emerged as a top priority for CEOs as they strategize for long-term growth. Young, high-potential leaders are increasingly aware of their worth in the competitive labour market, prompting companies to take decisive measures to retain them. Studies reveal that after approximately three years into their tenure, these young leaders arrive at a critical juncture where they assess the long-term growth prospects within their current organization.

One significant challenge this group faces is the prevailing culture in many companies, associating leadership with gruelling working hours. However, in the post-pandemic era, high-potential workers are seriously questioning the trade-off between demanding work schedules and their personal lives.

How to Address the Issue:

To tackle this concern, high-potential leaders must perceive a clear career trajectory within their organization. To achieve this, the C-suite should actively foster a culture of internal mobility and introduce development programs demonstrating the organization's investment in grooming these emerging leaders.

To ensure the effectiveness of such development initiatives, the C-suite must establish clear and realistic performance expectations. Leaders crave an understanding of the key factors driving success in their current roles and how they can advance to higher levels. These expectations must be realistic, as fewer high-potential leaders are willing to embrace a "burnout culture" that demands excessive working hours. Instead, C-suite leaders should consider recognizing and promoting leaders based on their effective leadership behaviours, such as delegation, team engagement and performance, and low turnover, rather than merely based on hours worked, which may not necessarily correlate with superior outcomes.

Furthermore, effective coaching plays a pivotal role in developing high-potential leaders. A substantial majority (85%) of these leaders express a strong desire for more coaching, whether provided by internal or external coaches, to enhance their growth as leaders. Younger leaders, in particular, seek feedback and support to bolster their development. Therefore, the C-suite should actively cultivate a coaching culture by encouraging coaching for others and displaying openness to receiving feedback and coaching from their teams.

By implementing these proactive strategies, organizations can better nurture and retain their high-potential talent, paving the way for their successful transition into leadership roles and securing long-term prosperity.

Top Concern #3: Maintain an Engaged Workforce

The third primary concern for CEOs centers around maintaining an engaged workforce, which directly impacts overall performance. While employee engagement is not new, recent research has revealed two crucial factors driving employees' sense of engagement in the post-pandemic world.

Traditional drivers of engagement, such as effective management, fair compensation, and growth opportunities, still hold significance. However, an often-overlooked driver of engagement is a strong sense of purpose at work. Employees who feel a strong sense of purpose in their roles are nine times more likely to be engaged and 2.4 times more likely to express their intention to stay with the company.

The C-suite plays a pivotal role in fostering a strong sense of purpose within the organization. Unfortunately, only 63% of C-suite leaders reported having a strong sense of purpose. Leaders who struggle to find their purpose at work may struggle to instill purpose in the organization, leading to significant issues.

How to Address the Issue:

It's crucial to recognize that work must not be tied to a noble cause to generate a strong sense of purpose. Even companies in industries not traditionally associated with noble causes can drive purpose-driven cultures effectively. Industries such as agriculture, retail, and pharmaceuticals have excelled in creating purpose-driven environments. The key lies in how company leaders set the tone.

The C-suite should set clear expectations and hold leaders accountable for nurturing team talent. Frequent and meaningful career conversations should be encouraged among managers. At the top level, executives must establish a clear vision of the organization's goals and how success will be measured. Lower-level managers should help their teams understand how their contributions directly impact overall success.

Creating space for self-reflection is vital for fostering purpose. C-suite leaders should allow time for leaders to reflect on personal growth through their work, not just push forward priorities relentlessly. Additionally, having the right tools in place is crucial. Leaders with the tools required to perform their jobs effectively are more likely to find their work meaningful and purposeful.

While other pressing business concerns may temporarily occupy the minds of the C-suite and board as they navigate rapidly changing conditions, it is evident that having the right talent and strong leadership culture is the most significant factor in preparing for and mitigating risks in the face of these challenges. Neglecting these aspects could jeopardize long-term success.


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