Investment in Leadership During a Recession

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Investing in leadership talent during tougher economic periods is more important than ever!

During boom times companies can make do with a less than stellar leadership team and as a result can get away with greater leadership risk. But when the economic tide turns as it has, and who knows how long for, now is the time to act to ensure investment in leadership continues unabated.

Over the last few years companies have become increasingly savvy with regard to investing in their leadership team and measuring, monitoring and managing the connection and return on that investment with improved organizational and financial performance. However given the recent changes in global markets, brought on by events such as the sub-prime fallout, increasing commodity prices and rising inflation, there is a tendency to react by reducing or eliminating this investment. Steven Meredith, Global Knowledge Director at Talent Intelligence said, "Our research and insights, from advising Global Fortune 500 level companies, indicates that it is more important than ever for organizations to invest in their leadership during recessionary periods so that the business not only survives but emerges stronger than the competition".

Steven added, "What is leadership risk management?" He explains, "It is the risk factors linking an organization's succession management with the strategy, business continuity and performance. There are four components to leadership risk namely: Retention, Readiness, Integration and Alignment. All four pillars are linked and in play at any given time within a company."

Best practice companies know that leadership risk management is non-negotiable so that the Board, CEO, executive leadership team and those responsible for strategic human resources management know on demand what their leadership risk is and what is being done on behalf of stakeholders to mitigate the risk now and over the longer term to protect business continuity, create market advantage and improve the value of the company. There are currently numerous examples of icon firms either filing for bankruptcy or being acquired at bargain basement prices due to poor leadership risk management.

During tougher economic times many organizations often drift in to a period of decision inertia around leadership investment. An example is a "hiring freeze", or as one business leader recently coined, a "hiring frost". The thought process is that this approach saves money but in fact it is the wrong business lever to pull as the opposite occurs through increased leadership risk. Examples include increased turnover, poor employee engagement and disenfranchised teams. This approach is flawed and does not actually address the underlying and ongoing leadership risk issue of having highly engaged leadership and aligned capability within the business to deliver against the increased market pressures brought on by the external environmental factors.

Steven commented, "By not aligning talent to the business strategy, market conditions and forward direction of the company the practice of making do with the existing leadership team is a dangerous approach. By not continuing to focus on investing and building a talent rich readiness organization the company is exposed to a thin pool of talent that will be truly tested in the current market conditions. By not having effective integration processes the risk of failure of appointing any new executives in to key roles in such an environment is increased dramatically. By not filling planned or unplanned critical positions quickly and accurately the ability for an organization to sustain optimum performance and respond to changes in the market is significantly hindered".

As a result in today's markets a sharpened focus on the structure, composition, performance and potential of the leadership team, and depth and breadth within the company, has to be more of a priority than ever if the business is to navigate the current conditions and outperform competitors.

Steven said, "During boom times companies can make do with a less than stellar leadership team and as a result can get away with greater leadership risk. But when the economic tide turns as it has, and who knows how long for, now is the time to act to ensure investment in leadership continues unabated."

About Talent Intelligence:
Talent Intelligence is the premier provider of Leadership Risk Management solutions.

Talent Intelligence currently has long term agreements with leading companies from the Global Fortune 500, major private companies and private equity firms. Talent Intelligence has regional headquarters in Chicago (Americas), Sydney (Australasia), Hong Kong (Asia) and London (Europe).

Contact:
Stephen Harvey, Founder & Chief Operating Officer
+614 3800 1975
http://www.talentintelligence.com

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