Chief executives tend to be out of touch with their teams in critical areas such as inclusion, burnout and readiness for future business challenges like the adoption of AI, according to a new study.
Analysis of over 500 CEOS in the CEO Leadership Report 2023, carried out by global leadership consulting firm DDI, revealed a notable discrepancy between CEOs’ perceptions and those of their management. While most CEOs express high levels of confidence in their ability to foster an inclusive culture, only 24% of frontline managers say that inclusion is a strong part of their organisation’s culture. Similarly, while most CEOs claim to be well-equipped to prevent burnout, only 27% of leaders say their organisation is committed to employee wellbeing.
“Our research suggests CEOs are often out of sync with their managers, who witness first-hand the demanding and complex challenges that play out on the front lines,” said Stephanie Neal, Director of DDI’s Center for Analytics and Behavioral Research. “There’s encouraging news, though. We found CEOs can largely bridge this perception gap by using objective data, such as leadership assessments, to inform their decision-making.”
CEO BLIND SPOTS
In addition to the challenge of CEO blind spots, the research highlighted the following findings:
Executive teams have become more fractured and ineffective since the pandemic.
Around seven out of 10 (68%) of CEOs say their executive team is not very effective at driving strategy forward; an increase from 63% of CEOs in 2020. And this number has grown even higher among the leaders working underneath them: about three-quarters of mid-level leaders and senior leaders now report their executive team is ineffective.
CEOs with poor frontline management feel unprepared for AI.
Of all the challenges ahead for CEOs, they feel least prepared to tackle AI and emerging technologies. But the quality of their frontline leadership makes a big difference. For example, 56% of CEOs with frontline leaders who are rated as high-quality think they can succeed with these technologies, compared to only 36% of those with low-quality frontline leaders.
Inflexible work kills senior leader credibility.
Leaders are nearly five times more likely to say they trust their senior leaders when flexible work is common and supported. Flexible work is also a critical factor in talent retention and recruitment efforts: CEOs that support flexible work are 3.3 times more likely to feel prepared to engage and retain talent.
Unexpected CEO promotions drive greater diversity.
The study found about 20% of CEO promotions involved individuals who were surprised by their appointment to the top role. The organisations that promoted these “unexpected CEOs” were more likely to have used assessment data and thoroughly evaluated the successors from a high-potential talent pool – resulting in greater diversity. On average, unexpected CEOs are 1.8 times more likely to be a woman, 1.6 times more likely to be from a diverse racial/ethnic background and five years younger than CEOs who anticipated their promotion.
TALENT CHALLENGES
“Despite economic uncertainty, we’ve found talent challenges are still the top concern keeping CEOs up at night,” said DDI’s CEO Tacy Byham. “The first step CEOs should take today is to double down on investments in their people and their culture. They should prioritise the CEO-CHRO relationship to achieve greater leadership alignment and build the organisational resilience they’ll need to tackle future challenges.”
DDI’s CEO Leadership Report 2023 outlines more data on the risks facing CEOs and their organisations, as well as tips for strengthening leadership succession processes. Click here to access the full report.
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