Research Finds that Companies Neglected Leadership during the Pandemic, Impacting Organizational Performance

Published: 08 Nov 2023

The Josh Bersin Company has released research that shows companies have fallen far behind historic levels of investment in leadership development and management training, leading to a weakness in management capability around the world.

Findings include:

● 25% of companies believe their leadership development is delivering high value to the company

● 24% of companies say their model is "up to date" or "highly relevant"

● 11% of companies embrace executive mentoring and only 18% give coaching to managers and leaders

● 15% of companies consciously take care of leaders and actively monitor and mitigate leader burnout

● 17% of companies are growing their leadership development budgets, with 40% of companies spending less than $500 per employee on leadership development

● 17% of companies have a succession management and leadership assessment process in place

● 26% of companies feel ready for an unplanned or emergency CEO replacement

● And 12% of companies score in the top level of The Josh Bersin Company maturity model.

The pandemic, coupled with accelerating transformation driven by technology and industry convergence, has led companies to over-focus on business issues, neglecting the need to develop leaders in the process. In fact, almost every company Josh Bersin Company researchers spoke with admitted deep concerns about burnout and performance issues among their first-line managers, mid-level leaders, and even senior directors.

This two-year study conducted in collaboration with human transformation company BetterUp, which involved interviews with more than 50 CHROs and other business leaders, and surveys on more than 1,000 leading companies, also points to a dramatic change in leadership strategies.

In prior decades, organizations evaluated business leaders through their ability to execute and drive results. This new research finds a major change: high-performing leaders prioritize people issues first, business issues second. They consider issues like inflation, burnout, flexible work, and the need to help people improve skills as a core part of the role. Top leaders are also aware of the issues related to "quietly quitting," and they focus on building energy in their companies, not just focusing on output.

The gulf between these forward-thinking employers and their lower-performing counterparts is considerable: fewer than 20% of companies are actively investing in developing leaders at all levels, despite the highest maturity (Level 4) companies being four times more likely to financially outperform companies with fragmented or uncoordinated investments in leadership.

Today's Post-Industrial age has given rise to a whole raft of challenges for employers, including a worker shortage, the rapid acceleration of transformation, economic uncertainty, and the disruption of war. Furthermore, employees are burned out post-pandemic, creating the risk they will leave their company or lose motivation if their needs are not met. As entire industries are disrupted and reinvented, organizations must move to re-skill and upskill their people, incentivizing and empowering employees to do new jobs at a time when individuals hold more power in the work environment than ever before.

In response, trailblazing employers are developing younger people to assume leadership roles: those who inherently think laterally and equitably, and who may be more capable and skilled at driving cultural change and transformational business change, rather than just immediate business results.

Doing so yields benefits, according to the research, as when a leader demonstrates empathy, the organization is three times more likely to exceed financial targets and two times more likely to be an innovator or a market leader.

Josh Bersin, global HR research analyst and CEO of The Josh Bersin Company, said:

"After studying leadership for more than 25 years, I have never seen such low levels of investment and maturity in leadership development.

"Leadership is no longer about hitting the numbers and ensuring operational rigor. It's now a game of driving change, empowering and developing people, and giving people the flexibility, rewards, and growth they need. Every company is now "people-dependent" for their operational performance."

"Again and again we see stories of companies falling behind, doing a layoff, and then struggling to grow. These strategies must be accompanied by a strong and connected leadership strategy, otherwise employees simply quietly quit or refuse to adapt."

"Leaders must also respect the fact that younger professionals are often ready for more senior positions early in their career, so they must often "get out of the way" for new leaders to emerge."

Janet Mertens, The Josh Bersin Company Senior Vice President of Research, said:

"Most companies are a long way behind here, and not correctly prioritizing leadership development, especially for those often-overlooked first- and second-line managers who really run the company. Among the many things CHROs need to consider now is a doubling or even tripling of the effort and investment they make in support for lower-level management."

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