Australian businesses failing in leadership: Study

by L&D29 May 2016
There are significant shortfalls in leadership development throughout organisations across the nation, according to the largest survey of leadership in Australia, the Study of Australian Leadership (SAL).

SAL is the most comprehensive study on leadership for a generation and is based on interviews with almost 8000 people including CEOs, frontline leaders and employees in more than 2700 organisations.

One of the most interesting findings was the gap between managers’ perceptions of their own leadership skills and the way they are viewed by their workers. 

In particular, employees saw their managers as less effective at information sharing, and gaining commitment than managers perceive themselves. 

While 84% of frontline managers believe they are effective in gaining employee commitment, only 50% of employees agree that their manager involves them in decision making.

The study also shows that workplaces who invest in a range of leadership development activities have more capable leaders with a stronger belief in their ability to do the job.

However, the study also revealed that many workplaces invest little or nothing in leadership development.

It also found that those who do invest in leadership development often get their spending wrong.

SAL shows that investing in frontline leaders can be effective in improving performance through better employee outcomes and driving innovation.

However, recent evidence for the Asia-Pacific region (including Australia) shows that for every $10 spent on senior leaders, only $1 is spent on frontline leaders.

“Our advice to Australian businesses is to get some quick wins on improving management, but also take an urgent review of what leadership skills you need for the future,” said Professor Peter Gahan, Director of the Centre for Workplace Leadership.  

“Quick wins include taking a look at your basic management practices such as setting goals and communicating KPIs.” 

Gahan added that over the longer term, organisations need to increase investment in leadership and ensure sufficient investment is being made at all levels, particularly frontline leaders who have been shown to have a real impact.

“The business community is facing a period of seismic change as we shift from a resources based economy, turn outwards to new trading opportunities and grapple with new technology that is transforming business models and jobs. We need to take urgent action using leadership skills and innovation capabilities as the levers for responding to these challenges,” said Gahan.

Meanwhile, Libby Roy, Managing Director, PayPal Australia said it concerns her that the study shows more than 80% of senior leaders in large Australian organisations are male and only around 10% speak a language other than English at home. 

“This doesn’t reflect the Australian population or the make-up of our customers and stakeholders. Diversity drives innovation and can have significant outcomes on performance. It’s an area we need to focus on,” said Roy.

“Leadership is an art and a science. Management basics, what I like to think of as ‘Management 101’, can be taught. 

“But while MBAs are great for learning theory around organisational structure and business administration, it’s on-the-job experience where you really learn the ‘art’ of leadership.

“We all need to invest in on-the-job mentoring and coaching to ensure the next generation of managers have both the basics and the experience to become great Australian leaders of tomorrow.”

The survey was undertaken by the Centre for Workplace Leadership (CWL) at the University of Melbourne and funded by the Commonwealth Department of Employment.

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