People Management Issues are the Top Business Leaders’ Challenges

Published 15 February 2018

Business leaders face unprecedented challenges. They need to manage and adapt their organisations to prosper in an environment of flux and upheaval. In this era of change that is both fast and unpredictable, what are their main concerns?

London Business School’s Leadership Institute conducted a survey of business leaders and analysed responses from 1,248 individuals. The top challenge that stood out as the dominant issue confronting leading executives is employee engagement.

Additionally, talent management, effective strategy execution, driving work across organisational boundaries, and collaborative working across teams are highlighted as key issues. Together, these make up the top five challenges facing today’s business and organisational leaders.

These top five challenges are all intertwined and demonstrate that people management skills, and in particular employee engagement, have never been more important What’s more, disengaged employees are unable to put strategy into place effectively and as a result, an organisation will be unable to thrive. This is particularly pertinent today given the growth in the service economy: people really are an organisation’s most important asset.

On the other hand, the Financial Impact of a Positive Employee Experience report by IBM revealed that organisations scoring in the top 25 percent on employee experience report 3 times greater return on assets.

To engage staff, leaders may be tempted to simply ‘sell’ them reasons to be passionate about their role or encourage them to feel grateful for having a job with their company – the approach is insufficient. This does not engender authentic engagement.

Leaders need to identify and employ strategies to bolster genuine employee commitment, influence, expression, and emotional engagement.

This way, both employees and organisations can benefit; it is a win-win. A key strategy would be designing and enhancing employee experience in a way that brings out the best in them.

Diversity initiatives

The survey also explored how organisations are trying to improve different aspects of diversity. Initiatives to boost gender diversity are the most widespread according to respondents across all sectors. However, initiatives to drive greater diversity according to race/ethnicity, generation, and education received less attention with fewer than half of firms running diversity activities in such areas. But even more alarmingly, 15% of respondents say there are no formal diversity initiatives at all in their organisation.

While providing clear direction and process to the team was considered the most important to drive performance across diverse teams, the most common problems for teams rarely arise from a lack of willingness to work together but are far more often a result of misunderstandings that escalate. Drawing attention to the diversity of the group signals to members that misunderstandings are likely and minimises the damage when they occur.

Leadership interventions and development

For me, the single most surprising results from our survey is that only 2% of respondents say leadership interventions are always founded on evidence-based research. This overwhelming lack of use of current research in making decisions on strategy has very worrying implications for organisational management and suggests that outdated methods are all too common. This is bad news for businesses, particularly in light of the fast pace of change in today’s workplace.

HR managers have an absolutely crucial role to play in arguing the case for serious research and how it can be translated into practical strategies to help leaders cut through complexity and drive organisational effectiveness.

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