Why investing in leadership skills is crucial

Posted on 31.01.12 by

Brian Callaghan

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The focus on people development should not be lost during tough economic conditions. Brian Callaghan, vice president for leadership development, discusses how the right leadership skills make a critical difference to business performance.

Leadership effectiveness, especially in a volatile economic environment, is one of the strongest drivers of business performance in a global organisation.

A recent study suggested that organisations with the highest quality leaders are 13 times more likely to outperform their competition in key bottom-line metrics such as financial performance.

This is my experience at ArcelorMittal. During these turbulent times our leaders have been able to adapt very quickly to the changing environment, refocus on the priorities and deliver against new expectations. And throughout, the group management board and management committee, ArcelorMittal’s senior leadership, have remained committed to leadership development and have spent time focusing on key processes such as performance management, succession management and career committees. We have also participated in ArcelorMittal University programmes, ensuring that we continue to have a pipeline of talent available to take up leadership positions.

For this reason, the role of human resources has become more complex – in this period of slow economic growth we have to think of alternative ways to provide development opportunities to employees and support managers with creative suggestions to keep employees motivated and engaged.

To bring about positive change, we first need to understand the organisation’s strengths and weaknesses compared with others. The survey for ‘Aon Hewitt 2011 Top Company for Leaders’ was one such detailed benchmarking exercise, comparing ArcelorMittal with the best in the world. It was very useful in identifying specific areas in leadership development where we need to improve, as well as showing us what we are already doing well.

One area where the best companies place a strong emphasis is on developing women to take up senior leadership positions. Steel and mining have traditionally been male-dominated industries, so this is an area where we need to adapt. What we require are both processes and a cultural environment that encourage women leaders.

Organisations should look at challenging times as an opportunity to assess how they can work more effectively. Leadership is going to be crucial if organisations are to survive. People will go the extra mile if they believe in what they’re doing, if they feel it’s worthwhile, if they feel fairly treated and if they have opportunities for personal growth. Keeping our finger on the pulse of employee morale and maintaining our commitment to developing people, despite strong pressures to cut costs and lose headcount, is what leadership in uncertain times is about. Companies that stay committed to talent and keep faith with employees reap the rewards of innovation, performance and growth. Maintaining investment in developing the leaders of the future will produce significant payback and enable us to gain competitive advantage through turbulent times.