What’s keeping CEOs up at night?
We spoke to Stephanie Neal, Director of the Center for Analytics and Behavioral Research at DDI and author behind the global leadership company’s 2023 Global Leadership Forecast, who revealed the factors driving CEOs’ most pressing concerns as they look ahead to the next three years.
What concerns are causing CEOs to lose sleep these days?
CEOs are incredibly concerned about the state of talent in their organizations. For the first time in more than 20 years of this study, all three of the top concerns CEOs reported were talent-related and included:
- Attracting and retaining top talent
- Developing the next generation of leaders
- Maintaining an engaged workforce
Given much of the news recently about layoffs, growing recession fears, artificial intelligence (AI) and other high-profile business concerns, these concerns were surprising. But what they reveal is that CEOs are thinking about how to confront risk for their companies, with most worried they won’t have the talent and capabilities needed to meet these challenges.
Most CEOs are still feeling scarred and vulnerable from the labor market over the last few years, and they feel unequipped for the uncertainty ahead. They’re feeling the tension of unpredictability but know that their best safeguard against risk is to have highly talented, agile people who can quickly pivot to meet changing conditions.
What should CEOs be asking their leaders to do differently to meet these challenges?
First and foremost, CEOs need to be aware that top talent has a very low tolerance for ineffective leadership. Leaders who reported that their company’s leaders lacked interpersonal skills were 3.5x more likely to say they intended to leave within a year.
The pandemic and ensuing business challenges highlighted how important it is for leaders to be more human at work and think holistically about how they meet the personal and practical needs of their teams. While some may be hoping for certain things to return to the way they were pre-pandemic, the need to be more human and empathetic is not going away.
Should more CEOs consider bringing people back to the office to help build a stronger culture and retain talent?
We’re seeing strong movement among many companies to bring back remote workers, with many executive teams citing the need to preserve their company culture. Companies that take this strategy need to be prepared to lose many of their most talented leaders, especially younger ones. Among companies that did not support flexible work, our study showed that leaders were 1.3X more likely to leave, with those under 35 being 2.2X more likely.
CEOs should also consider that leaders who work remotely are more likely to be engaged in their role than their peers that work in the office. In fact, 53 percent of leaders who work remotely say they contribute beyond what is required of them, compared to only 41 percent who work in person.
In short, the most talented leaders know they can find work anywhere with relative ease. If they want to work remotely and your company doesn’t offer a remote policy (and assuming it’s not an essential part of the job), it’s likely that they will simply go elsewhere.
How should CEOs think about their next-gen leaders compared to those before them?
The top priority should be providing high-value development opportunities for next-gen leaders. Younger, high-potential employees are 2.4X more likely to stay at companies that offer key development experiences such as coaching, leadership training and assessments to help them understand their strengths and areas for improvement.
CEOs also need to understand that next-gen leaders may have a very different view about the role of work in their life. Younger leaders are still highly ambitious but are increasingly prone to burnout. If the CEO supports a leadership culture that models long hours as the only path to success, the company may struggle to engage next-gen leaders who want to create boundaries for work-life balance.
Last but not least, younger generations are looking for a strong sense of purpose in their work. CEOs need to think about how they communicate a clear and strong vision of the company’s purpose, and how their contributions serve that purpose. In fact, participants in our study who reported having a strong sense of purpose at work were 9X more likely to feel engaged in their role and 2.4X more likely to say they intended to stay at the company.
If CEOs had to focus on one action to take next, what would that be?
Across the research in this study, the most powerful theme that emerged was the importance of building a strong culture of trust. Trust is the linchpin of creating a culture that attracts and retains top talent from all backgrounds. However, few companies are exceeding in this area. Only 32% of employees say they trust senior leaders at their organization to do what is right.
CEOs and leadership teams should remember that building trust doesn’t mean employees have to think you have all the answers. Our research revealed that employees are 7.5X more likely to trust leaders who genuinely acknowledge their own failures and shortcomings.
In short, the CEOs who succeed against the talent challenges of the future will be the ones to build a culture that draws strength from the human experience at work. They need to understand that they themselves are flawed but ambitious humans and create a strong environment of trust that brings out the best in their people.