It is widely accepted that effective leadership is essential for the long-term success of any business. Indeed, high-quality leadership is imperative for transforming a group of individuals into a team and shaping them into a force that operates as a competitive business.

Recent research carried out by the Chartered Institute for Personnel and Development (CIPD) and by talent management consultancy DDI entitled UK Highlights: Global Leadership Forecast has revealed that today’s leaders are not equipped to handle the challenges that organisations face in the new economic scenario. The study carried out on 367 business leaders and 56 HR professionals in the UK revealed that only 36 per cent of business leaders and 18 per cent of HR professionals rate their organisation’s quality of leadership as “high”. Furthermore, the research revealed that only 38 per cent of both UK leaders and HR professionals rate their organisations’ leadership programmes as being highly effective. Indeed, 20 per cent of leaders and 24 per cent of HR professionals rate these programmes as “highly ineffective”.

Another similar study entitled 2011 Talent Survey, which was carried out by global human resource consulting and outsourcing solutions business Aon Hewitt – which questioned 1,328 employers nationwide – discovered a significant capability gap in leaders, as most organisations focus on growth in today’s post-recession environment. While most respondents believed that leaders were vital for meeting business goals (56 per cent), profitability targets (56 per cent), delivering service (56 per cent) and retaining talent (44 per cent), only a minority said their leaders were extremely effective in these roles. A mere 12 per cent of respondents believed that their leaders were extremely effective at meeting business goals. What is more, just 14 per cent believed they were extremely effective at meeting profitability targets, 17 per cent said the same holds true for delivering service and finally only seven per cent believed their leaders were extremely effective at retaining talent.

Commenting that such a capability gap in leaders is alarming, Aon Hewitt vice president Amy Mills said the results illustrated a crisis in confidence over whether or not corporate leaders would be able to reposition their companies for profitable growth and create an engaging work environment.

It could well be argued that these two studies paint a worrying picture for businesses today, as the quality of leadership is vital for the success and sustainability of an organisation. The UK research demonstrated that businesses that have the highest quality leaders stand a better chance of outperforming their competitors in key basic areas such as financial performance, quality of products and services, employee engagement and customer satisfaction. In addition, the research revealed that organisations with leaders of the highest quality are the ones that are able to retain the highest number of employees and have the most engaged and passionate leaders.

In the face of this, CIPD head of HR Practice Development Vanessa Robinson said: “Leadership development budgets remain tight, particularly in the UK, yet effective leaders make a real difference to the success of organisations. If UK organisations are to continue to be successful on the world stage, then leaders need to be equipped with the key skills that our survey identified.”

Like Robinson, Mills also believes that in order to address this capability gap in leaders, senior executives should “develop new leadership skills” that can “improve workforce productivity and stimulate employee engagement”. At the beginning of the year, the CIPD launched the 2011 Public Policy Platform – an agenda designed to secure economic recovery, improve job prospects for everyone and boost UK productivity. The agenda, entitled Blueprint for Growth, called on policy-makers to encourage more investment in the key leadership and management skills that will underpin economic success in the coming decades. The skills identified in the UK study as being necessary to ensure success in the next three years were driving and managing change (69 per cent), making difficult decisions (34 per cent) and executing organisation strategy (32 per cent). These skills reflect the efforts of UK organisations to sustain their business during the downturn by focusing on the effective execution of organisational strategy while at the same time protecting the organisation and adapting to the changing economy.

Finally, the UK study uncovered three key drivers that would help improve the quality of leadership within the organisation. These are leadership development, talent management and management culture. The report states that for organisations to be able to achieve the high-quality leadership needed to drive business success in the coming years, organisations need effective leadership development systems along with effective talent systems, surrounding leadership development – which includes selection, performance management and succession management.

The studies have identified the key skills leaders need and the kind of development and talent management processes that are most effective. The HR function’s role in all this lies in being able to truly understand who its customers are to ensure that it plays a crucial role in the success of its leaders and, more importantly, the success of its business. As Warren Bennis, a leadership expert, said: “A business short on capital can borrow money, and one with a poor location can move, but a business short on leadership has little chance of survival.”

Angele Camilleri is a researcher with the Foundation for Human Resources Development