Business leaders of the future will guide, mentor, and inspire the most diverse and dispersed workforce in history. And it won’t be easy, to say the least. Over just the next decade, leaders will face the challenges of accelerating technology, a new generation of coworkers, and still-unknown consequences of the pandemic. To succeed, they will need to be adaptable, forward-thinking, and, as we introduced in last year’s report, modern.
Modern leaders are an effective, progressive, emotionally intelligent species who reject the traditional leadership model of commanding, evaluating, and gatekeeping. Instead, they focus on coaching, developing, and empowering their people to do great work. These leaders connect the work to a greater sense of purpose, facilitate collaboration and inclusion, openly share information, and show appreciation. They also know how to combine the skills of a diverse pool of talent and create magnificent results from the mix. Organisations and teams with modern leaders are much more likely to have thriving cultures with higher engagement, retention, and employee Net Promoter Scores.
Regrettably, modern leaders are rare. A survey of CEOs by Fortune found only 7% of CEOs think their company is building effective global leaders.1 Another survey found only 21% of employees believe their managers effectively lead them.2
Organisations must develop their future modern leaders now by taking a new approach. In fact, our research suggests organisations should train and empower every employee—whether they directly manage people or not—to view themselves as a leader.
Modern leaders act much more like mentors than bosses, and they care deeply about the growth of the people who report to them. They excel at connecting employees to purpose, accomplishment, and one another. This year, we created an index to measure modern leadership. We found that while 64% of leaders qualify as average, only 17% are bona fide modern leaders. Of the remainder, it’s important to note that any leader who fails to connect employees to purpose, accomplishment, and one another isn’t just metaphorically treading water—they’re negatively impacting employee experiences, their culture, and business outcomes.
Figure 7. MODERN LEADERSHIP INDEX
The three key connections leaders create for employees.
Connection to purpose at work is important, particularly during challenging times. When employees struggle to find meaning and direction in a world disrupted by crisis, their organisation’s purpose gives them an invaluable lifeline. Purpose inspires individuals to see the why in their work and collaborate with others to find a common way forward. Modern leaders help employees understand the organisation’s purpose and their place in it.
Modern leaders also excel at helping employees see the importance of their work relative to the purpose. This entails understanding their employees’ jobs, so they can articulate the impact of contributions in ways that are meaningful to employees. We found 60% of leaders connect the purpose of employees’ work to what employees value, but fewer than half (44%) of leaders completely understand what their employees do. This discrepancy leads to much poorer cultural and business outcomes.
Principles of modern leadership have existed for decades. We all know the famous story of the janitor who, when asked by US President John F. Kennedy what he did at NASA, said, “I’m putting a man on the moon,” and promptly went back to mopping the floor. But what you may not know is NASA leaders identified and connected the dots for each one of their thousands of employees.
Focusing on a specific part of NASA’s purpose (advancing science by first landing on the moon), leaders built milestones and objectives to achieve it—essentially creating a “ladder to the moon” that clearly showed how every employee’s daily contributions made the landing possible. Employees felt they were more than just a part of something bigger; they understood exactly how they fit and why they were important. The mission succeeded because NASA employees saw their efforts connected to a milestone that connected to an objective that connected to the overall purpose.4
Modern leaders regularly communicate what success looks like, appreciate their employees when they achieve it, and make others aware of their employees’ accomplishments.
Currently, 62% of leaders communicate what success looks like and 52% make others aware of their employees’ success. Only 57% of employees feel appreciated by their leaders. And leaders who do not connect their employees to accomplishment see diminished cultural and business outcomes.
Instead of acting as gatekeepers (or even barriers) to information and relationships, modern leaders function as links. They are invested enough in the success of their employees to encourage collaboration both in and outside their teams. They oppose silos and introduce people who can help each other succeed, which also fosters a sense of belonging.
Our research shows only about half (52%) of leaders introduce their employees to potential mentors, and only slightly more (56%) encourage employees to collaborate outside their teams. Connecting employees to one another has an enormous impact on feelings of inclusion. Whether intentional or not, when leaders don’t make an effort to connect employees, employees perceive the leader doesn’t care about them and doesn’t want to help them feel included in the organisation. This, predictably, has cultural consequences.
Modern leadership requires work in all three areas of the index. We found only 35% of leaders connect their employees to purpose, 36% connect employees to accomplishment, and 38% connect their employees to one another.
In situations where inclusion and connection are critically important (like now), leaders play a major role in helping employees feel seen by both leadership and their peers. And in organisations where diversity is high, recognition is a great way to showcase how everyone can work and succeed together.
Recognition is such a valuable tool because it can improve all three areas of modern leadership. Leaders who recognise their employees’ accomplishments connect them to:
Purpose—by affirming how great work contributes to the organisational purpose
Accomplishment—by helping employees feel appreciated and motivated to continue to do great work
One another—by ensuring employees are seen, feel they belong, and know why
Leaders can maximize the power of recognition by doing it frequently, making it personal, and applying it to everyday efforts, not just major achievements. Some leaders believe the more recognition they give, the less meaningful it will become. The data would disagree. As long as it’s genuine and sincere, more recognition is always better than not enough. When done right, recognition dramatically increases the odds of connecting employees to purpose, accomplishment, and one another.
Recognising effectively also impacts cultural measures:
As employees transitioned to remote work or social distancing in the workplace during the first months of the 2020 pandemic, BASF used recognition and appreciation to help employees feel valued.
The multi-national chemical company encouraged leaders to make its recognition platform a point of connection for their teams to appreciate and recognise great work. Additionally, it asked leaders to reward more behaviors. Things like:
BASF also coached leaders to celebrate employees’ years of service in meaningful ways. Samantha Elliot, Total Rewards Program Lead, explained, “Managers are in a position to help create those memorable experiences that tie the employee back to something bigger, especially during these times when everything feels so uncertain.”6
Most modern leaders don’t arrive at organisations with their abilities to lead. Nor do they find and practice their skills instinctively. On the contrary, they are the product of cultures that have integrated leadership development and responsibilities into everyday organisational life, where everyone from executives to individual contributors know and live common leadership principles, and where leadership development is open to and expected from all employees. Modern leaders develop in cultures that believe every employee is a leader.
This belief requires every employee to take ownership of their work, projects, and sphere of influence. It allows every employee to develop leadership skills, and the organisation benefits from improved cultural and business outcomes and a strong pipeline of leaders as a result. Our research shows the organisations most successful at developing modern leaders don’t consider leadership to be an exclusive club—they see and cultivate the potential in everyone.
We also see modern leaders are concentrated (81%) in organisations where all employees are considered part of a shared leadership responsibility, even if they don’t have people who report to them.
The paradigm “every employee is a leader” can guide how organisations rethink, develop, and implement leadership development.
A study by McKinsey found organisations that had the most effective leadership development programs were 6–7x more likely to extend development opportunities across the organisation.11 Our research indicates organisations should ensure every employee has access—and encouragement—to develop leadership skills. In fact, leadership development should saturate organisational culture with formal training opportunities.
Finally, leadership development must not be an empty gesture—it has to advance peoples’ careers and it needs to be continuous. Leaders can learn concepts in courses, but if they aren’t reminded of, exposed to, and practicing what they learn, they will lose 40–80% of it.12
To fully synthesise leadership development into the culture, it must be inclusive, abundant, and meaningful.
Dick Conrow, founder of the manufacturing company C&A Tool Engineering, has taken a shared leadership ethic to the next level—an extremely horizontal level. The company doesn’t have supervisors or management in the conventional sense.
Conrow asks: “Why should I pay someone to watch other people do the work? Management means control and nobody wants to be controlled.” He trusts his employees know how to do their jobs and believes his job is to help them utilize their individual strengths and then get out of the way.
At C&A, employees are free to work how they see fit. They create their own schedules and choose their jobs. They even decide for themselves if they need to put in overtime to get the job done. They take full responsibility for their work and don’t depend on a leader to tell them what to do or how to do it.
With this mindset, Conrow has led C&A from a garage operation to a diversified manufacturing company with more than 650 employees and $100 million in annual sales.7
Josh Bersin, global analyst at Bersin by Deloitte, argues that the model of “getting people ready for leadership” is outdated.13 Traditionally, leadership development has been offered to only “high potential” employees or current leaders. And currently, less than half (49%) of organisations offer leadership training to all employees. Of employees who have not participated in their organisation’s leadership programs, the most commonly cited reason is they were not invited (36%).
How organisations approach who gets leadership training has a significant impact on how employees view leadership at their company.
Organisations who give individual contributors access to leadership training have significantly higher positive cultural and business outcomes compared to those that do not. This increases even more when individual contributors actually participate in leadership development opportunities and when it’s common knowledge that every employee can participate.
Not surprisingly, organisations that offer leadership development opportunities to all employees see an increase in inclusion and a decrease in exclusion. They have a higher likelihood of employees agreeing that their leaders have diverse backgrounds and identities, further improving diversity and inclusion efforts.
The most successful leadership programs are available to all employees in the organisation. See how these companies handle theirs:
Goldman Sachs believes in “maximizing the potential of all employees, old and new,” so it gives every employee access to classroom or online-based training through Goldman Sachs University and encourages them to participate every year.
Deloitte built the $300 million Deloitte University Learning Center so all employees could participate in training for their development and advancement. It shows the company’s long-term commitment to be an education center for employees.
Seattle Genetics, a biotech company, offers every new employee a one-year pharmacy fellowship where they get hands-on experience, attend leadership courses, meet with executives, and receive opportunities to publish their work.
Triage Consulting has a leadership development program recognised by Glassdoor and the Great Place to Work® Institute. Every new employee receives formal training to strengthen their technical skills, as well as communication, project management, and leadership skills.14
Giving all employees the chance to learn leadership skills is key to developing modern leaders. While it’s not sufficient in itself, it appears to be a necessary element given the density of modern leaders at organisations that do. Other supportive data includes the organisational probability of having modern leadership. When organisations had at least one type of leadership development opportunity, the odds increased 328%. And where there were multiple opportunities, the increase grew with them:
The definition of leadership development opportunities isn’t limited to formal training classes. Much of the development happens when people have new experiences in the workplace. Deloitte’s research finds exposure is one of the most important factors in leadership development.15 Granting employees the opportunity to lead in actual situations can help them develop skills in a memorable way.
Organisations that encourage employees to express leadership behaviors also have a higher concentration of modern leaders. Workers in these places have more autonomy, lead special projects, and provide feedback to peers. By supporting employees in continually practicing and perfecting leadership skills, organisations provide ongoing development and reinforce the idea that every employee is a leader.
Existing leaders play a pivotal role in developing future leaders by making the development opportunities more meaningful and integrating them into the organisation’s culture. Specific suggestions for leaders include:
When senior leaders model the practices and principles taught in leadership programs, more employees see what good leadership looks like and adopt the right behaviors (instead of developing bad ones or stumbling through trial and error). According to the data, organisations with senior leaders who model modern leadership practices have 226% greater odds of having modern leaders. These organisations also have 6x greater odds of having an above-average score for opportunity, 5x greater odds of having an above-average score for success, and 5x greater odds of having an above-average engagement score.
Of course, that’s not the end of the road. Employees need to see that the reward is worth the work and that participating in leadership development leads to greater advancement opportunities. Advancement demonstrates that the organisation is serious about developing and retaining its people by filling leadership positions from within. And when this happens, culture scores climb sharply:
Walmart recently made a substantial investment to bring virtual reality (VR) training to all of its retail academies. Beyond a typical classroom experience, this immersive learning will help over 140,000 employees develop leadership skills.
Training covers a range of topics, including how to staff areas of a store, hire new employees, oversee operations, and handle personnel issues. The technology is effective, in part, because it allows employees to experience situations and practice skills outside the scope of their current jobs. As the system coaches them through various scenarios, employees can feel the experiences of being a leader in a more emotional, memorable way.16
The micro-electronic products division of a large electronics company invested in a leadership development program that attendees loved. Based on surveys before and after the training, attitudes clearly improved. But just a couple of years later, participants felt the training had done little to change the company or its culture. It was difficult to apply the principles, the work environment was politically charged, and there seemed to be a lack of strategy.
So, instead of more training, the company redesigned its working processes and culture. It gathered feedback from employees to understand barriers, points of conflict, and poor managerial practices. Leaders reworked teams, roles, and responsibilities, and empowered employees to own their experiences. Then the company used hands-on coaching to help drive change, and a consultant provided guidance to leaders as they conducted performance reviews.
In just two more years, the organisation saw a transformation in leadership and teamwork. Performance improved, with double the number of new products developed, and revenue and profits followed.17
Over the next decade, organisations must adopt a new approach to leadership development if they want to create modern leaders who connect employees to purpose, accomplishment, and one another. The approach involves creating leadership development opportunities throughout the employee experience and melding the expectation that “all employees are leaders” into the culture.
Recognition can be both a point of connection for modern leaders to leverage, as well as a way for organisations to reward individual contributors who exhibit modern leadership traits. This reinforces modern leadership practices that improve the employee experience.
Modern leaders will embrace new technology, build a more inclusive workplace, be the mentors Gen Z is desperately searching for, and help see companies through challenging times. They will bring organisations together by unifying diverse employees in a common purpose. And they will appreciate and blend unique skillsets that deliver unrivaled results. In short, modern leaders are compulsory for organisations to thrive in the next decade.
1, 2, 9, 11. “6 Truisms of Modern Leadership Development,” Heide Abelli, Training Industry, January 9, 2019.
3, 5. “Inclusion a Hallmark of Modern Leadership,” Janet Foutty, Deloitte, March 7, 2019.
4. “4 Lessons on Connecting People to Purpose from NASA’s Moon Landing,” Zach Mercurio, June 2017.
6. “BASF: Tapping into the Power of Employee Recognition during COVID-19,” O.C. Tanner.
7. “Bold, Insightful Leadership Defines Manufacturer’s DNA,” Mark Albert, Modern Machine Shop, July 11, 2020.
8, 12. “Top 5 Leadership Development Trends for 2020,” Kevin Kruse, Forbes, January 15, 2020.
10, 13, 15. “Why Leadership Development Feels Broken: And How We’re Fixing It,” Josh Bersin, July 7, 2019.
14. “12 Companies that Offer Exceptional Professional Development Program for Entry-Level Employees,” Lindsey Updyke, November 19, 2019.
16. “VR Enters Corporate Learning with a Vengeance: And the Results Are Amazing,” Josh Bersin, March 9, 2019.
17. “Why Leadership Training Fails—and What to Do About It,” Michael Beer, Magnus Finnstrom, Derek Schrader, Harvard Business Review, October 2016.
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