In a resurgent economy and competitive labor market, companies will need to develop leaders and work hard to retain them (Photo by Gradyreese/iStock by Getty Images)

As businesses look forward to an economy emerging from the pandemic, a large majority of HR leaders expect their corporate revenues to grow over the next 18 months, according to a new Stewart Leadership survey of more than 300 HR leaders in more than 15 industries in the U.S. With an accompanying growth in demand for skilled labor, the HR executives said their top strategic imperatives will be engaging and retaining employees, building an inclusive culture, and aligning strategic direction and goals. Their top leadership-development priorities will be to promote development conversations and action plans, as well as using virtual tools to develop all levels of leaders.

Are business leaders ready to follow through on those goals? While the majority of HR executives in the survey, conducted in partnership with From Day One, felt their company’s leaders were prepared to deliver on their business and people priorities, a notable minority (35%) said their leaders may not be prepared. In a similar vein, respondents were nearly evenly divided about whether their organizations have a leadership-development strategy in place–and only 41% were confident that their current strategy will produce the leaders needed in the next 18 months.

In terms of leadership-development investing, the employees getting the largest shares are at the manager and director level, the survey showed. Among the factors holding back more leadership-development solutions, the respondents said, are competing priorities, along with a lack of budget and internal resources. What needs to change, the respondents said: better alignment of strategies and goals, as well as three related factors: engagement, listening, and communication. The results of the survey were the focus of a From Day One webinar.

The Survey Participants: The survey included 310 respondents representing more than 15 industries, including health care, professional services, technology, education, finance and government. The participants represented five levels in their organizations, with 80% at the manager level and above. Among generations represented, Gen X was the most numerous, at 55%, with Baby Boomers (23%) and Millennials (21%) in nearly equal proportions, and Gen Z coming in at 1%. Most of the participants work for companies with more than $50 million in revenues, with 17% in the $1 billion-to-$10 billion range, and 6% at more than $10 billion.

Daniel Stewart, president of Stewart Leadership, will be exploring his firm's newest survey in a From Day One webinar (Photo courtesy of Stewart Leadership)

The Growth Outlook: Like most economists right now, our HR leaders are expecting a boom. Twenty-five percent of participants say they anticipate “significant growth” and another 55% are looking forward to at least some growth; less than 5% anticipate negative growth. Key insights: Senior managers and above were more bullish on growth compared to other respondents; growth expectations were consistent across all generations; and employees at larger companies tended to be the most confident about future business activity, with 88% expecting some growth or significant growth.

Top Strategic Imperatives: With expectations of their businesses expanding and calls for diversity, equity and inclusion ringing in their ears, HR leaders said their top five strategic priorities will be to engage and retain employees (19%), build an inclusive culture (18%), align strategic direction and goals (15%), find the right workplace balance between remote work, in-person and hybrid (12%), and upskill managers to lead change and transformation. Key insights: C-suite respondents put a particular emphasis on engaging and retaining employees, while directors and senior managers tend to focus on building an inclusive culture, as do Millennials, for whom it was the top priority.

Leadership Development Priorities: When the survey asked participants to choose among several priorities for the near future, 78% of the responses chose one of these four: promote development conversations and action plans (22%), acquire micro learnings and virtual tools for all levels (20%), create cohort development programs for specific audiences (18%), and get back to the basics (17%). Key insights: Respondents put a higher priority on cohort programs vs. targeted ones; all levels of management put an emphasis on promoting development conversations and action plans; and smaller companies tended to focus more than larger ones on getting back to the basics of leadership development.

Are Leaders Prepared to Deliver Results? Corporate representatives in the survey said they agree (49%) or strongly agree (16%) that their leaders are prepared to deliver on their business and people-related goals. However, that leaves 35% with leaders who may not be prepared. Key insights: Among generations, Baby Boomers are most optimistic about their corporate leaders, with more than 67% saying leaders are prepared. In terms of company size, the largest companies are most optimistic that their leaders are prepared, vs. 40% of representatives of organizations with revenues of $500 million to $1 billion feeling neutral or pessimistic on the issue.

Do They Have a Plan–and Confidence in It? In short, not so much. Forty-seven percent of respondents believe their companies have a leadership-development strategy and plan in place for the next 18 months, which leaves 53% either neutral or believing they don’t have a plan. Put another way, respondents were asked whether they have confidence that their organization’s leadership-development plan will produce the desired leaders in the next 18 months. Only 41% said they were confident about this, leaving 59% neutral or unconfident in their strategy and plan.

Who They’re Investing In: Asked where they’re putting the most dollars in leadership development in a range of levels from individual contributors to C-suite executives, respondents said they’re investing the most in managers (28%) and directors (23%) and at much lower levels for vice presidents (10%), senior leaders (11%), and C-suite executives (6%). Key insight: Organizations of all sizes were consistent in this focus on managers and directors.

A slide showing results of the survey notes that a minority of participants were confident in their company's leadership-development strategy and plan (Graphic courtesy of Stewart Leadership)

Desired Future Leadership Style: By strong margins, participants favored trusting, collaborative, and active-listening approaches to leadership. On a scale from micromanagement (“driving an employee’s work by providing detailed day-to-day directions and guidance”) vs. a more holistic and trusting approach (“supporting employee’s work by providing feedback, recognition and support”), more than 88% supported the latter approach. On another scale, participants were asked whether the leadership style needed to “drive results through a focus on leading functional priorities and goals” or, at the other end of the scale, if leaders should be “influencing results by breaking down silos, collaborating across functions and overcoming obstacles through clever approaches.” The collaborative approach won out, with 76% support, though a significant portion of participants (24%) put an emphasis on goal-setting.

On a third scale, participants were asked which was the better approach: “ensuring employees are completing work on time,” or “supporting employees by actively listening to their needs and working together to understand the actions needed to resolve problems.” The latter approach was favored by the vast majority, 84%. The strong sentiment in favor of these desired approaches may be influenced by calls for greater flexibility and empathy at a time of remote work and the disruption of family life.

Critical Leadership-development Skills: Participants supported a broad range of skills that will be needed, but some stood out: communication (12%), engaging experience (11%), connection (8%), and inclusion and belonging (8%), all of which showed a pattern of a need to build closer bonds among team members. Another pattern was about the importance of leading change and transitions (8%), developing self and others (8%) and leading culture (5%). Key insights: Responses putting a priority on employee experience and communication was consistent on all levels of management and across all generations.

What Prevents Leadership Development? The obstacles appear to be “other priorities” (22%), a lack of sufficient budget (18%), and lack of internal resources (11%), according to participants. Key insights: All generations and representatives of all sizes of organizations identified “other priorities” as the No. 1 issue getting in the way of more leadership development. A significant number of respondents (11%) said there is a “need to assess current needs first,” a point made most often by respondents at the director level or below.

The Best Leadership-development Approaches: Developing leaders through projects, assignments and job positions was judged to be the best overall approach to developing leaders. Key insights: This approach was supported consistently at all organization levels and all company sizes. Workshops, webinars and other approaches that can be done virtually were also favored, with Baby Boomers in particular citing virtual workshops as their preferred approach.

What Can Be Done Differently: When asked what needs to change in the organization to boost leadership development, 28% of participants said “strategy and goal alignment,” 19% endorsed better engagement, 16% put an emphasis on communication, 14% said teamwork and collaboration, 13% said more listening, and 10% called for greater diversity, equity, and inclusion.

As workplaces wrestle with remote work, social-justice issues, political unrest, mental-health challenges, and the increase of digitization, organizations will need increasingly strong leadership–and they need to do a candid self-assessment of whether they have an effective plan in place to develop those leaders.

Editor's note: From Day One thanks our partner who sponsored this thought-leadership spotlight: Stewart Leadership. You can watch our April webinar exploring the survey here, and please visit our conference page to register for more upcoming events.