Human Capital Is Important; Leadership Is Critical

In The Conference Board CEO Challenge®, more than 1,000 respondents indicated that human capital remains their top challenge, with customer relationships rising in importance in the past two years. Also, operational excellence and innovation remain vitally important for driving business growth and ensuring a sustainable future. These challenges, albeit in varying order, were the top challenges in all four regions included in the survey: the United States, Latin America, Europe, and Asia.*
When asked about the strategies to address the human capital challenge, 4 of the top 10 strategies CEOs selected (the full top 10 are presented in the chart at right) are focused on leadership: improve leadership development programs, enhance effectiveness of senior management teams, improve the effectiveness of frontline supervisors and managers, and improve succession planning. CEOs know their organizations cannot retain highly engaged, high-performing employees without effective leaders who can manage, coach, develop, and inspire their multigenerational, globally dispersed, and tech-savvy teams.

CEOs also were asked to identify the leadership attributes and
behaviors most critical to success as a leader. The top five prominent
in every region globally were:
• Retaining and developing talent.
• Managing complexity.
• Leading change.
• Leading with integrity.
• Having an entrepreneurial mind-set

The CEO Challenge looked at what must be done. For the first time, the Global Leadership Forecast asked leaders to assess their own readiness to execute these tasks. Their self-assessments are sobering. For instance, less than half of leaders are “very prepared” to address most of the challenges (see illustration at left). About 39 percent of HR professionals reported that leaders in their organization are slightly or not at all prepared to handle human capital related
challenges. This puts a lot of pressure on leaders because of the misalignment between the CEOs’ top priority and leaders’ confidence in their ability to drive talent as an agenda.

* Mitchell, C., Ray, R.L., & van Ark, B. (January 2014), The Conference Board CEO Challenge® 2014: People and Performance, New York, The Conference Board,

Now What

1. Better leadership can have a positive impact on CEOs’ top challenges; this study shows how better development can positively affect leadership. All leaders can learn to bring the customer voice into their organization, become talent scouts and advocates, and create an environment where innovation flourishes.
2. Improve performance management processes and accountability (the third human capital strategy below) is often the most neglected talent management system. To address this gap, ask these questions about your performance management.

  • Is it used as a business system to help execute top-down strategy?
  • Do employees understand their goals, and are they held accountable for achieving them?
  • Do employees get feedback about strengths and development opportunities so they can grow?

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