Australia’s largest ever survey of leadership has found significant shortfalls in business performance, innovation and leadership development across the nation.
Workplaces investing in leadership development activities have more capable leaders, yet the findings reveal many workplaces do not invest in leadership development at all, or invest very little, and those that do often spend in the wrong places, found the Study of Australian Leadership (SAL).
The study, which was undertaken by the Centre for Workplace Leadership at the University of Melbourne and marks the first major leadership review since the 1995 Karpin report, highlights the need to promote innovation and get management basics right.
SAL shows that investing in frontline leaders can be effective in improving performance through better employee outcomes and driving innovation. But recent evidence for the Asia-Pacific region (including Australia) shows that for every $10 spent on senior leaders, only $1 is spent on frontline leaders.
Professor Peter Gahan, Director of the Centre for Workplace Leadership, says the business community is facing a period of seismic change as Australia shifts from a resources based economy, turns outwards to new trading opportunities and grapples with new technology that is transforming business models and jobs.
“We need to take urgent action using leadership skills and innovation capabilities as the levers for responding to these challenges,” said Professor Gahan.
“Over the longer term organisations need to increase investment in leadership and ensure sufficient investment is being made at all levels, particularly frontline leaders who have been shown to have a real impact.”
Only 18% of private sector firms reported high levels of radical innovation, defined as experimentation and identifying new products and markets, with the lowest levels occurring in mining, transport and postal businesses.
Public sector organisations were more likely to report high levels of both radical innovation and incremental innovation – improving the efficiency of existing ways of working and expanding existing markets.
SAL found that more than 40% of workplaces did not meet their performance targets for return on investment and profitability, and around a third miss their sales target. Many organisations were not mastering basic practices such as performance monitoring, target setting and appropriate incentives.
“We must act to use the levers of leadership to get the basics right, to innovate, improve communications and increase investment in the right training across all levels of management,” Professor Gahan says.