Whitepaper - Leadership Reimagined
Leadership Reimagined
LEADERSHIP REIMAGINED Shaping Tomorrow with Purpose STATE OF AUSTRALIAN LEADERSHIP FOR 2024
Executive summary
Introduction For decades, the phrase In 2021, we asked Australians to describe ‘it’s nothing personal, it’s what quality leadership means in a just business’ was standard professional work context. Their responses operating procedure for many emphasised that effective leadership hinges on having the skills to motivate and organisations. Leadership was 1. They also stressed the engage your team about authority, top-down importance of emotional intelligence for decision-making, and never leadership success2. showing vulnerability. In the wake of the global pandemic, Now, in an era characterised by relentless managers and leaders have continued to change, leadership success calls for a new encounter a turbulent business landscape. mantra. Global disruptions, new ways of With inflationary pressures, talent shortages, working, and emerging technologies are and the adoption of remote and hybrid challenging leaders to 昀椀nd ways to: working environments, we know that emotional intelligence remains a critical • Inspire and engage people amid reports component of effective leadership. But how of rising exhaustion levels have things changed since 2021 in terms of • Communicate effectively and build a what Australians think of as a good leader? strong culture, especially in virtual and To understand the current state of leadership, hybrid work arrangements we conducted our fourth annual leadership • Find and keep staff with the right survey at the end of 2023. As a result, skills while ensuring they have a solid we gained insights from more than 586 foundation of skills to adapt to jobs that respondents across 68 industries in Australia. don’t yet exist We wanted to know what makes for great • Make meaningful progress in achieving leadership and to discover how good (or bad) a diverse, equitable, and inclusive leadership affects the relationship between workplace employees and the organisations they have worked for. We asked participants to • Prioritise environmental and social assess their own leadership skills and areas sustainability for improvement, as well as those of their managers.
Executive summary cont.
Leadership survey respondents In addition, we wanted to know: 10,000+ 1 - 10 9% 8% • How have organisations’ learning 5,001 - 10,000 11 - 50 13% 14% and development (L&D) strategies 1,000 - 5,000 changed since our last survey, given 13% ORGANISATION how important L&D is to effective SIZE leadership? 501 - 1,000 51 - 200 8% 26% • How are companies adapting to 201 - 500 15% arti昀椀cial intelligence (AI) technology? • What do people think of virtual and hybrid working environments? PUBLIC 35% PRIVATE • What influences employees’ decisions VS to stay or leave an organisation? PUBLIC PRIVATE 65% • How are environmental sustainability and diversity, equity, and inclusion (DE&I) considerations incorporated 65+ 18 - 24 into leadership objectives and aligned 4% 2% 25 - 34 within an organisation? 55 - 64 14% 18% This report delves into our survey 昀椀ndings, uncovering the ever-evolving AGE nature of leadership in an environment 35 - 44 30% where change is the norm. Read on to 45 - 54 discover the crucial attributes of effective 32% leadership, and, in the process, learn how GRADUATE / to position yourself to seize the future as a ENTRY LEVEL OWNER/EXECUTIVE / 4% C-LEVEL catalyst for positive change. 14% INDIVIDUAL CONTRIBUTOR 21% JOB SENIOR LEVEL MANAGEMENT 1 The State of Australian Leadership - Findings from the 2021 26% AIM Leadership Survey, 2021, Australian Institute of Management 2 The State of Australian Leadership - Findings from the 2021 AIM Leadership Survey, 2021, Australian Institute of MIDDLE Management MANAGEMENT 35%
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SECTION 1: LEADERSHIP | 4
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LEADERSHIP REIMAGINED WHITEPAPER | 5 Leadership Top 4 leadership skills ranked most valuable for 2024 compared to 2021: : 2024 2021 % Communication % Emotional Intelligence 60 48 % Emotional Intelligence % Communication 54 42 % Decision-making % People Management 30 30 % Collaboration % Coaching and Mentoring 23 28 Contemporary leadership: making it personal Our leadership survey 昀椀ndings underscore the signi昀椀cance of building and maintaining strong interpersonal relationships, with the top four most valued leadership skills squarely focused in this domain. Essentially, they are about understanding, connecting, and working effectively with others, then making informed and strategic choices based on these connections. As in 2021, ‘communication’ and ‘emotional intelligence’ are the top two most valued leadership skills in 2023. Both skills are vital for leadership success, as they are key drivers of organisational success in the face of workplace change, economic uncertainty, and rapid technological advances.
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SECTION 1: LEADERSHIP | 6 According to a recent survey of business Our leadership survey 昀椀ndings revealed leaders conducted by The Harris Poll on that ‘communication’ was ranked among behalf of Grammarly Business, effective the top three skills leaders considered their communication resulted in a: strongest. Yet, only 24% of respondents • 72% boost in productivity identi昀椀ed ‘communication’ as one of the top • 63% increase in customer satisfaction three leadership competencies where their organisation’s management team excels. • 60% rise in employee con昀椀dence3 What’s more, ‘communication’ was among Knowledge workers (workers who use the top three skills identi昀椀ed by employees analytical, theoretical and high-level as the most important for their organisation’s knowledge to contribute to a business) management team to improve. surveyed in the study also reported a 55% Across the total skill set needed for effective 4 increase in work satisfaction . leadership, Steve Smith, Executive Director A 2023 study conducted by Harvard for AIM Future Skills, says communication is a Business Publishing further emphasises the fundamental element. importance of communication and emotional “Ultimately, the common thread running 5 intelligence skills for leaders . The study through all leadership skills is the ability to involved an extensive survey of nearly 1,300 communicate effectively. And that means L&D and human resources (HR) professionals being able to communicate well to different and functional heads from Fortune 500 people with different ways of working using 6 companies . The 昀椀ndings revealed that different mediums and technologies.” ‘empathic communication’ and ‘emotional and social intelligence’ ranked among the top “As managers and leaders, we have to be three most in-demand leadership skills for able to communicate in the moment in 7 compelling ways. We’ll also need to start addressing business challenges . collaborating in new ways, as this is an area While the study results show communication that is going to rapidly evolve.” is highly valued as a leadership skill, leaders’ and employees’ perceptions about communication abilities differ. 3 The State of Business Communication, 2023, The Harris Poll and Grammarly Business 4 The State of Business Communication, 2023, The Harris Poll and Grammarly Business 5 2023 Global Leadership Development Study, Harvard Business Publishing 6 2023 Global Leadership Development Study, Harvard Business Publishing 7 2023 Global Leadership Development Study, Harvard Business Publishing
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What’s changed since the The underappreciated skills of pandemic? adaptability and flexibility Since our 2021 survey, ‘collaboration’ and ‘decision-making’ have replaced ‘people JUST of survey respondents management’ and ‘coaching and mentoring’ %regarded ‘adaptability’ as the third and fourth most valuable 18 as one of the top three leadership skills. This change in skills leadership skills they values may be related to changing business consider the most valuable. challenges over this time. For example, a key focus for many leaders NO of respondents chose and managers in 2021 was to support MORE ‘flexibility’ as one of the employees in adapting to remote work THAN top three leadership skills due to pandemic-related lockdowns, all % they deemed crucial for while striving to maintain productivity in a 5 improvement. stressful and uncertain environment. ‘People management’ and ‘coaching and mentoring’ A of respondents recognised were vitally important skills in a business MODEST ‘adaptability’ as one of landscape like this. %the top three leadership In 2023, organisations faced different 24 competencies where their challenges, such as rising inflation, organisation’s management tightening budgets, and the ongoing team excels. optimisation of hybrid working environments. Given these challenges, ‘decision-making’ and ‘collaboration’ are much more relevant ONLY of respondents cited skills now. %‘flexibility’ as one of the top 10 three areas requiring the Steve Smith says that the nature of most improvement for their collaboration also changed in 2023, organisation’s management making it a factor for leaders and managers team. to consider when developing their skills. “It’s not just about collaborating in a team A MERE of respondents identi昀椀ed or within your organisation these days. It’s % ‘adapting to market trends changing into real collaboration between 2 and disruptions’ as what they different organisations. Businesses are believe should be one of their working together in partnership models to manager’s top three primary help solve common problems and bring focus areas as a leader within different skills to the table.” their organisation.
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SECTION 1: LEADERSHIP | 8 Interestingly, the survey 昀椀ndings indicate that adaptability and flexibility skills in leadership are underappreciated (see page 7), even though they hold signi昀椀cant importance in contemporary leadership practices. For example, a KPMG survey of 400 business % leaders found that improving agility and 36 flexibility is one of the top 昀椀ve challenges AI is not a signi昀椀cant 8 consideration Australian businesses faced in 2023 . A McKinsey & Company report also identi昀椀ed the need for resilience, agility, and adaptability as one of the top ten most signi昀椀cant 9 organisational shifts facing businesses today . Their report states that research “points to a clear link between organisations fostering a culture of adaptability and achieving superior economic performance.”10 Steve Smith says that the pace of change makes adaptability and flexibility skills even more important for leaders today. “We are seeing things change at an ever- increasing rate. While leaders have always had to evolve to cope with change, the ability to keep pace is what drives success for leaders. They have to be able to thrive on change.” For leaders looking to enhance their adaptability and flexibility skills, AIM’s The Change Management – Embrace Evolve Thrive short course focuses on successful approaches to managing in a dynamic business landscape. You’ll learn how to lead change effectively and build resilient, agile organisations. 8 Keeping Us Up At Night - The Big Issues Facing Business Leaders in 2023, 2023, KPMG 9 The State of Organizations 2023, 2023, McKInsey & Company 10 The State of Organizations 2023, 2023, McKInsey & Company
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LEADERSHIP REIMAGINED WHITEPAPER | 9 Success in the age of AI % 1 AI is fully integrated % 25 % AI is gradually 36 being introduced AI is not a signi昀椀cant consideration % 39 AI is being considered but not yet sustantial How would you describe the level integration of AI technologies within your processes? According to an IBM survey of 3,000 CEOs worldwide, the majority believe that the most 11 successful companies will be those who employ cutting-edge generative AI technology . Results from the same survey revealed: • 43% of organisations are using generative AI to inform strategy decisions. • 36% are using it to guide operational decisions. 12 • 50% are integrating generative AI technology into their products and services About generative AI Generative AI technology refers to arti昀椀cial intelligence (AI) designed to generate content or data, often in the form of text, images, audio, or other media. This technology is particularly adept at creating content that appears to be produced by a human, and it is based on models that have been trained on large datasets of existing human- generated content. 11 IBM Institute for Business Value, CEO Decision-Making in the Age of AI, 2023 11 IBM Institute for Business Value, CEO Decision-Making in the Age of AI, 2023
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SECTION 1: LEADERSHIP | 10 However, in our survey: While these challenges are not insigni昀椀cant, • Only 0.81% of respondents mentioned the potential rewards of AI integration could that their organisations have fully be substantial. A recent Boston Consulting integrated AI. Group (BCG) analysis of a number of ASX100 companies suggests that AI integration has % • 36% said that AI is not a signi昀椀cant 36 consideration for their organisation. the potential to generate $100 million+ in No incremental EBITDA (earnings before interest, 13 Integrating AI into an organisation is not tax, depreciation, and amortisation) . straightforward, which might be why AI The BCG researchers also highlighted adoption and consideration rates are so low studies showing that AI integration has among our survey respondents. Successful AI resulted in enhanced organisational culture, 14 integration means navigating through myriad collaboration, and customer experience . challenges, such as: They concluded that for businesses, “AI is not a choice – it’s an imperative.”15 • Managing data security and privacy risks • Addressing AI skills shortages To get started on integrating AI into your • Handling ethical and regulatory organisation, Steve Smith recommends considerations testing various applications, establishing • Ensuring interoperability with existing policies, and providing proper staff training. IT systems “Begin by trialling the technology in parts The graphic below outlines the top three of your organisation that you think could challenges of implementing AI according bene昀椀t the most. You’ll need to set some to the organisations in our survey that have ground rules 昀椀rst. Develop AI policies that started the process. align with your IT policies and also make sure that staff have adequate training.” 1. Lack of understanding about “Here at AIM, we’re all about helping how AI can enhance decision- individuals build skills that make them making processes (54%) more capable. For example, our one-day training program, AI is My Co-Pilot, is the 2. Dif昀椀culty in identifying perfect entry point to understand the AI suitable AI applications for tools currently available, how to get the tasks (43%) most out of them, and what to watch 3. Insuf昀椀cient budget allocation out for.“ for AI implementation and training (39%)
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LEADERSHIP REIMAGINED WHITEPAPER | 11 To stay or go? Leadership matters % % 36 26 No Yes, because of the management team % 23 % Yes, because of both the 25 management team and Yes, because of my my direct manager direct manager Thinking about your last 3 roles, have you ever left an organisation because of a poor management team or manager? The impact of leadership on employee retention cannot be overemphasised. A substantial 75% of respondents in our survey said they had left a job because of the management team, their direct manager, or both. Leaders play a pivotal role in shaping the work environment, influencing job satisfaction, and either inspiring employees to stay committed to a company or pushing them to consider other opportunities. In the next chapter, we will uncover how leaders can embrace pioneering employee retention strategies and optimise flexible working models to unleash their teams’ full potential, enabling them to thrive in the future of work. 13 Accelerating Australia’s AI Adoption, 2023, Boston Consulting Group 14 Accelerating Australia’s AI Adoption, 2023, Boston Consulting Group 15 Accelerating Australia’s AI Adoption, 2023, Boston Consulting Group
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SECTION 2: WAYFINDING FOR THE FUTURE OF WORK
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LEADERSHIP REIMAGINED WHITEPAPER | 13 Way昀椀nding for the future of work For many people, the COVID-19 pandemic changed how they think about work and their priorities. People also reported more mental stress, with workers being almost twice as likely to report 16 feeling mental stress than they were before the pandemic began . Now, employees have begun to place more emphasis on wellbeing and work–life balance. In fact, 48% of Australians indicated in a recent Randstad survey that they would quit a job if it prevented 17 them from enjoying their life . How we work has changed, too, with the rise of virtual and hybrid workplaces. Many employees 18 are enjoying having more flexibility around where and when they do their work . However, organisations have raised concerns about the productivity and cultural impacts of virtual and 19 hybrid working . 20. Due to these profound shifts, many Australians have already changed jobs or are considering it Compounded by a skills shortage not experienced in Australia since the 1960s21, retaining talent has become more challenging. In this environment, what can leaders do to retain staff while unleashing the full potential of their teams? Finding answers is critical for both organisations and employees to thrive in the future of work. Before discussing solutions, though, let’s explore the problem further and learn more about what employees want. 16 2023 State of the Future of Work, 2023, Work Futures Hallmark Research Initiative - The University of Melbourne 17 Workmonitor 2023, 2023, Randstad 18 NAB Behavioural Insights – The Changing Workplace (Q2 2023), 2023, NAB 19 NAB Behavioural Insights – The Changing Workplace (Q2 2023), 2023, NAB 20 NAB Behavioural Insights – The Changing Workplace (Q2 2023), 2023, NAB 21 National Press Club Address: Toward a National Jobs and Skills Roadmap, 2023, Professor Peter Dawkins
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SECTION 2: WAYFINDING FOR THE FUTURE OF WORK What employees want Survey results: top 3 reasons for leaving jobs 1. Lack of career and development opportunities 2. Poor leadership 3. Lack of support Our survey results closely match those of the LinkedIn 2023 Workplace Learning Report, which outlines the following top four reasons people seek new jobs in the Asia Paci昀椀c region: • Opportunities to develop and learn new skills • Compensation and bene昀椀ts • Flexibility to work when and where they want 22 • Opportunities for career growth within the company and work–life balance support Clearly, providing opportunities for learning and development (L&D) is incredibly important for staff retention. In Chapter Three, we explore all aspects of L&D, offering valuable insights into current trends, the future of L&D investment, and the key skills to prioritise in your next L&D strategy. In order to address poor leadership as a contributor to employee turnover, it’s crucial to gain insight into our survey respondents’ interpretation of this issue. Chapter One outlines the leadership skills our respondents value most, highlighting where leaders should focus their learning and development efforts. Compensation is also a pivotal factor in talent acquisition and retention. However, according to Mercer’s Global Talent Trends 2022–2023 study, once organisations offer salaries deemed fair, 23. candidates weigh up a broader set of considerations than their potential pay packets
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LEADERSHIP REIMAGINED WHITEPAPER | 15 An element that’s grown increasingly Working in a supportive environment is important for many employees is flexibility in another crucial factor for employees. More how and when they do their work. Currently, and more, they are choosing to work for data shows that the average Australian works organisations that support their wellbeing and remotely for one-third of the week but would desire to maintain a better work–life balance. prefer to work from home at least half the According to a recent Randstad survey, 61% 24 time . of people “wouldn’t accept a job if they Our survey results show that 62% of thought it would negatively affect their work- 25 employees are comfortable with the idea of life balance” . working virtually or in a hybrid environment. How leaders can create a The results also identi昀椀ed the top three win-win for all reasons that impacted their preferences for Balancing employees’ needs and the needs of virtual or hybrid work: your organisation can be tricky, but there are 1. Flexibility in work hours three areas where leaders can make progress: and location • Fine-tuning flexibility • Enhancing engagement 2. Reduction in commute • Working on wellbeing time and associated costs Fine-tuning flexibility Some companies have expressed concerns 3. Better integration of about employee productivity when working work and personal life from home and the loss of culture in hybrid workplaces. However, recent research suggests that organisations that embrace flexibility, particularly time-based flexibility, can simultaneously enhance productivity and 26 improve company culture . 22 2023 Workplace Learning Report - Australia and New Zealand, 2023, LinkedIn Learning, 23 Global Talent Trends 2022-2023, 2023, Mercer 24 NAB Behavioural Insights – The Changing Workplace (Q2 2023), 2023, NAB 25 Workmonitor 2023, 2023, Randstad 26 Future Forum Pulse, 2023, Future Forum
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SECTION 2: WAYFINDING FOR THE FUTURE OF WORK A recent study of 10,000+ workers worldwide Enhancing engagement demonstrated that those who have full Employee engagement is key to achieving control over when they work are 39% more both employee and company goals. In fact, 27 productive than those who do not . In engagement may even be more important the same study, those with flexible work than flexibility for employees. The 昀椀ndings arrangements were 57% more likely to say of Gallup’s State of the Global Workplace: their company culture had improved over 2023 Report identi昀椀ed that the impact of 28 the previous two years . Respondents said engagement on employee stress is 3.8x remote work policies were the biggest driver 31 greater than that of work location . 29 behind this cultural improvement . According to Mercer’s Global Talent Trends For companies, employee engagement 2022–2023 study, organisations that has been linked to improved 昀椀nancial experienced high growth had focused on 昀椀ne- performance. A recent Microsoft study tuning their flexibility offerings by: of stock price movements across 200 companies found that organisations with • Consulting employees about their ideal highly engaged workforces outperformed the 32 working conditions and preferred work S&P 500 after a year . locations Some of the suggested actions for improving • Giving the employees the option of employee engagement, according to the working a four-day week Microsoft study, include: • Changing their talent strategies to appeal • Establishing metrics to measure and to freelancers and other unconventional report on employee engagement talent sources • Supporting leaders to develop skills based • Adapting their workspaces to better on best practices for achieving employee support a hybrid work model with a engagement stronger focus on technologies. • Setting goals for managers to achieve 30 • Embedding flexibility into cultural norms around engagement • Sharing engagement metrics with managers so they can implement 33 solutions If you want to gain more insights into the best strategies and actions to effectively engage with employees at every stage of their journey, our People and Culture for Managers short course is an ideal starting point.
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LEADERSHIP REIMAGINED WHITEPAPER | 17 Working on wellbeing Wellbeing isn’t just a top priority for employees – it’s also correlated with increased engagement in the workplace. A Gallagher survey of more than 2,500 Australian workers in 2023 found people with 34 high wellbeing are 2.3x more engaged at work . The Gallagher researchers also identi昀椀ed actions that leaders could take to improve employee wellbeing, including: • Setting up mechanisms to listen to employee feedback around wellbeing • Establishing wellbeing-related metrics to fuel data-driven decisions • Basing wellbeing initiatives on employee feedback • Working on small pilot projects to gradually build momentum Our Mini MBA in Health and Effectiveness will equip you with the skills to drive meaningful organisational change. You’ll gain the expertise needed to create a workplace that is both psychologically safe and productive. But the learning doesn’t stop there. In the next chapter, we’ll cover what leaders need to know about the latest L&D trends and what to prioritise in your next L&D strategy. 27 Future Forum Pulse, 2023, Future Forum 28 Future Forum Pulse, 2023, Future Forum 29 Future Forum Pulse, 2023, Future Forum 30 Global Talent Trends 2022-2023, 2023, Mercer 31 State of the Global Workplace: 2023 Report, 2023, Gallup 32 The New Performance Equation in the Age of AI, 2023, Microsoft 33 The New Performance Equation in the Age of AI, 2023, Microsoft 34 2023 Workforce Trends Report: Workplace Wellbeing Index Australia, 2023, Gallagher
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SECTION 3: LEARNING AND DEVELOPMENT | 18
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LEADERSHIP REIMAGINED WHITEPAPER | 19 Learning and development Survey results: L&D trends L&D BUDGETS 66.8% of respondents say their organisation’s training budget has either stayed the same or increased during the last 昀椀nancial year. 75.4% expect the training budget for the 2023–24 昀椀nancial year to either stay the same or increase. L&D SPENDING ACROSS INDUSTRIES DAYS ALLOCATED (2022–23 FINANCIAL YEAR) FOR L&D of respondents 16.7% receive more than HEALTHCARE seven days of training per year. MANUFACTURING TOP TWO L&D IMPLEMENTATION CHALLENGES CONSTRUCTION Time availability of employees (68%) NON-PROFIT Budget limits (50%) GOVERNMENT
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SECSECTTION 1: LEADERSHIP | ION 3: LEARNING AND DE20 VELOPMENT | 20 Investing in L&D is more Where to focus your important than ever L&D spend Despite recent economic turbulence, our survey results show most organisations are 1. Leadership and either maintaining or increasing their L&D management (54.71%) spend. While there is some variation among industries, the survey results indicate that the 2. People management healthcare, manufacturing, and construction (40.97%) sectors will see an uptick in their L&D spending. As we covered in earlier chapters, leaders and managers play a critical role in employee Surprisingly, only 16.7% of respondents retention and satisfaction. It’s one of the reported receiving over seven training days many reasons investing in L&D for leaders and per year. The respondents identi昀椀ed time managers is such a strategic imperative for and budget constraints as the top challenges any organisation. Based on our survey results, facing L&D departments. It’s crucial that many of the respondents agree. organisations prioritise L&D investment In terms of speci昀椀c leadership skills to despite these constraints, especially when focus on, ‘communication’ and ‘emotional you consider: intelligence’ are the top two most-valued • Job skill sets have changed by around leadership skills according to our 2023 survey 25% since 2015 and are expected to results. As highlighted in Chapter One, both 35 double by 2027 . skills are vital for leadership success. • 86% of business leaders in PwC Another key L&D key priority, according to Australia’s 26th CEO Survey said they are Steve Smith, Executive Director for AIM Future 36 invested in upskilling their workforce . Skills, is ensuring that leaders and managers • 89% of L&D professionals agreed that are well-versed in technology. “proactively building employee skills for today and tomorrow will help navigate “I think the one thing we can’t get away from the evolving future of work”, according is the fact that technology is becoming more to LinkedIn’s 2023 Workplace Learning critical to leadership,” he says. 37 Report . “From having the ability to harness and • 75% of employees say they’d stay at their interpret data to recognising the potential company longer if they could receive more of technology to bene昀椀t your organisation, L&D support, according to recent Microsoft leaders today must embrace technological research38 . pro昀椀ciency. The future demands that leaders be tech-savvy.”
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LEADERSHIP REIMALEADERSHIP REIMAGINED WHIGINED WHITEPTEPAPER | APER | 2121 However, Steve also emphasises that successful leaders still need to have a solid foundation in people-centric skills. “Even though leaders will need to be comfortable with technology, it doesn’t diminish the fact that they must also have incredibly strong people skills. Both are crucial.” While the skills mentioned above are essential, there’s another important aspect often overlooked when determining where to allocate your L&D budget: giving your employees the freedom to choose. According to a global survey of 42,000+ employees, leaders, and HR professionals, 90% of respondents say they value 39 the opportunity to choose the skills they need to learn . What’s more, when asked which training topics were most relevant and interesting to them, employees were: • 5x more likely to say they felt connected to their leaders • 5x more likely to report feeling autonomous at work • 4.5x more likely to express that they have 40 what they “really want” at work With our AIM Partnerships, you can empower your team members to choose from a diverse range of professional development courses while achieving your L&D goals in a cost- effective and flexible way. For example, our Short Course Partner Pack, delivered via online and virtual learning, includes on-demand access to 64 different courses across all key business functions and skill sets. 35 2023 Workplace Learning Report, 2023, LinkedIn learning 36 PwC Australia’s 26th CEO Survey, 2023, PwC Australia 37 2023 Workplace Learning Report, 2023, LinkedIn learning 38 The New Performance Equation in the Age of AI, 2023, Microsoft 39 2024 Global Culture Report, 2023, O.C. Tanner 40 2024 Global Culture Report, 2023, O.C. Tanner
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SECSECTTION 1: LEADERSHIP | ION 3: LEARNING AND DE22 VELOPMENT | 22 How to measure L&D success Evaluating L&D effectiveness using employee feedback and engagement level metrics can provide valuable insights into employee satisfaction with the L&D programs. But these metrics alone do not reveal whether employees are putting their newly acquired knowledge into practice. Instead, measuring behavioural outcomes is essential. Feedback from managers gives you some insight. However, for this to be effective, Steve Smith says it’s crucial to establish behavioural benchmarks initially for a comprehensive ‘before and after’ comparison rather than just the ‘after’ perspective. “Managers must set clear learning outcome expectations from the start – not after training. You’ve got to be really clear upfront about what you’re going to measure and then communicate that as your team goes through the journey.” To truly measure L&D’s success, Steve adds that L&D outcomes should also align with the overall goals of the organisation. “Think about how to tie in your L&D metrics with achieving business outcomes, such as measuring increased customer satisfaction, enhanced employee engagement, and improved operational ef昀椀ciencies or other similar indicators. Just remember, though, if you can’t measure it, then it’s probably not worth focusing on.” The mechanics of L&D TOP 3 TRAINING METHODS TOP 3 TRAINING METHODS TOP 3 TRAINING METHODS FOR SENIOR MANAGEMENT FOR MID-LEVEL MANAGEMENT FOR INDIVIDUAL WORKERS 1 Online training Online training Online training (55%) (57%) (68%) 2 Conferences and Conferences and On-the-job seminars (50%) seminars (47%) training (67%) On-the-job On-the-job Coaching by managers 3 training (39%) training (41%) or peers (45%)
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LEADERSHIP REIMALEADERSHIP REIMAGINED WHIGINED WHITEPTEPAPER | APER | 2323 Online training is still the most popular Steve also highlights the value of practising training method, according to the survey learning in a secure setting, a hallmark of results. A greater proportion of individual AIM’s in-person and virtual course offerings. workers are doing on-the-job training than “With our courses, participants can learn mid-level and senior managers. In the latter new skills in a safe environment with group, conferences and seminars emerged as an experienced facilitator. Students are the second most favoured training method. encouraged to step out of their comfort Considering the pivotal role of management zones in a safe and supportive atmosphere. and leadership in organisational success, This helps them gain con昀椀dence as they shifting the focus from conferences and explore new skills.” seminars to ongoing, targeted education for senior and mid-level managers may be of Learning that underpins strategic bene昀椀t. This emphasis on continuing people, planet, and pro昀椀t education, rather than traditional professional One area organisations may need to development, acknowledges that managers increase their L&D spend on is diversity, and leaders must also adapt to the rapidly equity, and inclusion (DE&I) training. changing skill sets required in the future of Only 39% of Australian HR professionals work. say their companies require managers to 41 Nonetheless, according to Steve Smith, this undergo DE&I training . doesn’t mean focusing exclusively on formal However, according to a separate survey, education training methods. 41% of respondents considered employee “It’s not necessarily about suddenly wellbeing the primary business case for 42 dedicating huge amounts of L&D time to DE&I . And as we discussed in Chapter being in a classroom. It’s really important Two, employee engagement is vital to to start with a foundation that is practical in organisational success. nature and not just theory,” he says. In the next chapter, we’ll explore key trends “While theory certainly has its place, it can in DE&I and also take a closer look at another be incredibly bene昀椀cial to jump into hands- critical area for Australia’s leaders and on experiences to start practising what managers: environmental sustainability. we’ve learned.” 41 The State of Diversity, Equity and Inclusion in Australian Workplaces, 2023, Australian HR Institute, 42 Global Blueprint for Belonging and Diversity, 2022, Workday
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SECTION 4: ENVIRONMENTAL SUSTAINABILITY AND DIVERSITY, EQUITY AND INCLUSION | 24
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LEADERSHIP REIMAGINED WHITEPAPER | 25 Environmental sustainability and diversity, equity and inclusion Survey results: L&D trends 3.95 out of 5: the average rating 3.34 out of 5: the average rating respondents gave for the importance respondents gave for their efforts at of aligning leadership goals with prioritising environmental sustainability environmental sustainability objectives when making decisions Taking steps in the green direction Our survey 昀椀ndings indicate that respondents recognise the importance of environmental sustainability when it comes to leadership goals and decision-making. However, the ratings also suggest that there may be opportunities for improvement to further emphasise and integrate environmental sustainability into leadership practices. Increasingly, organisations are paying attention to environmental sustainability as not just an ethical imperative but a strategic one, too. Considering that more than one in three Australian consumers strongly agree that businesses have a responsibility to operate sustainably, it’s not hard to see why43 . But people want real progress. PwC Australia recently reported that stakeholders have become increasingly discerning, seeking genuine commitment and greater transparency instead of ‘greenwashing’44 . For example, the report highlights that ASIC has “made greenwashing a priority, issuing at least 8 infringement notices and penalties since October 2022 in a range of industries.”45 Those who participate in greenwashing have a lot to lose. In addition to 昀椀nes and legal action, an organisation making false claims about its green credentials also risks its reputation and could lose investors in the process. For leaders and managers, it’s about recognising how important it is to take concrete steps towards sustainability. The same can also be said about implementing diversity, equity, and inclusion measures (DE&I). 43 NAB Business Insights March 2023 - The growing importance of sustainability as a consumer issue & are SMEs ready? 2023 44 ESG Trends in 2023, 2023, PwC Australia 45 ESG Trends in 2023, 2023, PwC Australia
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SECTION 4: ENVIRONMENTAL SUSTAINABILITY AND DIVERSITY, EQUITY AND INCLUSION | 26 Room for improvement in DE&I Survey results: diversity, equity, and inclusion % % 4 6 % 7 All None 75-99% Diversity and inclusion: 4.22 out of 5: the average % Percentage rating respondents gave 21 of women in 32% for their commitment to 50-75% leadership 1-25% fostering diversity and teams inclusion in the workplace Similar to our 昀椀ndings on environmental sustainability, the survey results show that respondents acknowledge 30% he importance of fostering DE&I at work. But there is also 25-50% room for improvement. For example, when asked what percentage of women make up their leadership team, a signi昀椀cant portion of respondents answered only 1–25%. In the broader Australian business context, there has been some improvement. According to Kantar’s Inclusion Index 2022, Australia has made some progress in DE&I initiatives since 46. However, analysts point out that this rise was 2019, increasing its ranking score by 7% primarily due to changes in gender representation and that the country did poorly in other 47 aspects of DE&I, such as disability representation . Likewise, research by the Australian HR Institute on the state of DE&I in Australian organisations found that “DEI activity in Australian workplaces focuses largely on gender and to a lesser extent Aboriginal and Torres Strait Islander peoples. Less effort is directed towards other underrepresented groups; for example, people living with disability, people who are LGBTQIA+ and those from a lower socio-economic background.”48 46 Inclusion Index 2022, 2022, Kantar 47 Australia improves DEI scores but APAC lagging in overall representation, 2022, The Drum 48 The State of Diversity, Equity and Inclusion in Australian Workplaces, 2023, Australian HR Institute 49 Keeping Us Up At Night - The Big Issues Facing Business Leaders in 2023, 2023, KPMG
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LEADERSHIP REIMAGINED WHITEPAPER | 27 Across all aspects of DE&I, more progress The researchers state that their previous is needed. Not only is it a moral and legal research on adaptability found it “to be imperative, but enhancing DE&I initiatives associated with a 2x improvement in EBIT could also give organisations a distinct margins, 2x in total shareholder return, and 52 competitive advantage. Consider one of the 1.5–3x in revenue growth.” top 昀椀ve challenges that faced Australian 49 businesses in 2023: improving adaptability. How exactly can DE&I initiatives help with this? 32% 1-25% Researchers at global management consulting 昀椀rm Bain & Company did a detailed study of 79 large companies to evaluate their adaptability to change in 50 . relation to their DE&I ratings They found that each 0.1-point improvement in a company’s DE&I rating corresponded to a 13% increase in its 51 adaptability score .
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SECTION 4: ENVIRONMENTAL SUSTAINABILITY AND DIVERSITY, EQUITY AND INCLUSION | 28 Gen Z and millennials seek Listening and communicating greater sustainability and To develop sustainability and DE&I policies DE&I focus and strategies that resonate with stakeholder Younger generations, such as gen Z (ages sentiment and values, you 昀椀rst have to 11-26) and millennials (ages 27-42), are understand what these sentiments and shaping a societal shift towards a greater values are. Mercer’s Global Talent Trends focus on sustainability and DE&I in the 2022–2023 Study recommends building workplace. According to Deloitte’s 2023 “a multi-method approach to listening” to 55 Gen Z and Millennial Survey, about one in achieve this . For example, you could gauge six respondents say they have changed jobs employee sentiments by setting up resource or industries due to climate concerns, with groups, doing surveys, and hosting virtual 56 53 town halls . another one-quarter planning to do so . In a separate Gallup survey, younger millennials The Mercer study also recommends that and gen Zs identi昀椀ed a “diverse and inclusive once you’ve de昀椀ned your organisation’s organisation” as one of the top three qualities sustainability and DE&I priorities, you should 54 they look for in an employer . communicate them to all stakeholders to 57 To effectively engage and retain younger foster a sense of “collective responsibility” . generations, leaders and managers need One way to accomplish this is by sharing to recognise the signi昀椀cance of taking all relevant data with everyone – beyond meaningful action on sustainability and DE&I. HR and marketing teams58. This empowers stakeholders to make decisions and take Walking the talk on action in a way that aligns with company 59 sustainability and DE&I priorities . Really ‘walking the talk’ on sustainability and Tying executive compensation DE&I takes more than just words. It demands to sustainability and DE&I concrete actions and a steadfast dedication to performance change. Here are two ways that leaders and managers can put values into action: To foster accountability and promote • Listening and communicating progress, forward-thinking organisations are offering incentives to their executives to • Tying executive compensation to achieve sustainability DE&I goals. According sustainability and DE&I performance to the Deloitte 2023 CxO Sustainability Report, almost a third of respondents say their organisations have implemented incentives for senior leaders to drive change in sustainability by linking compensation to 60 relevant performance metrics .
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LEADERSHIP REIMAGINED WHITEPAPER | 29 Gaining the knowledge to lead the charge Unlock the potential of your organisation’s leaders and managers by equipping them with the knowledge and skills required to spearhead sustainability and DE&I initiatives effectively. AIM’s Accredited Partnerships bundle allows you to select from a choice of 14 fully online vocational quali昀椀cations, including our Diploma of Business (Leadership). The diploma covers many essential knowledge areas, including units on developing workplace policies and procedures for sustainability, as well as how to lead for diversity and inclusion. The future holds immense promise for leaders and managers with the skills and knowledge to enact meaningful change. In the next chapter, we’ll explore the key trends shaping the leadership landscape and uncover what it takes to become a visionary leader of tomorrow. 53 2023 Gen Z and Millennial Survey, 2023, Deloitte 54 4 Things Gen Z and Millennials Expect From Their Workplace, 2021, Gallup, 55 Global Talent Trends 2022-2023, 2023, Mercer 56 Global Talent Trends 2022-2023, 2023, Mercer 57 Global Talent Trends 2022-2023, 2023, Mercer 58 Global Talent Trends 2022-2023, 2023, Mercer 59 Global Talent Trends 2022-2023, 2023, Mercer 59 Global Talent Trends 2022-2023, 2023, Mercer 60 Deloitte 2023 CxO Sustainability Report, 2023, Deloitte,
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SECTION 5: FUTURE TRENDS IN LEADERSHIP | 30
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LEADERSHIP REIMAGINED WHITEPAPER | 31 Future trends in leadership As the dynamics of effective leadership Optimising hybrid continue to evolve, staying on top of emerging leadership models trends is vital. Our 2023 leadership survey Hybrid working has become the new normal, has unearthed nine key themes shaping the and employees have readily embraced it, future of leadership: as indicated by our survey results. Most • Optimising hybrid leadership models employees (62%) said they were comfortable • Focusing on ethical decision-making working virtually or in a hybrid work setting. • Prioritising lifelong learning Managing in a hybrid workplace has become • Exploring AI-augmented leadership increasingly complex, and many managers • Replacing ‘soft skills’ with ‘power skills’ are looking for ways to increase their effectiveness in the future. • Cultivating authentic leadership • Developing digital intelligence and According to McKinsey & Company, hybrid technological fluency leadership best practices include: • Understanding the importance of agility • Emphasising work outputs over working • Taking a visionary approach hours Building upon these themes and the • Creating transparent policies around latest research, here’s our perspective on hybrid working and establishing clear the essential elements needed for future decision-making authority to remove leadership success. ambiguities in working practices • Taking an agile approach by experimenting with policies and then making changes 61 based on feedback 61 The State of Organizations 2023, 2023, McKInsey & Company
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SECTION 5: FUTURE TRENDS IN LEADERSHIP | 32 Focusing on ethical Prioritising lifelong decision-making learning In the previous chapter, we discussed According to the World Economic Forum’s how societal shifts towards environmental Future of Jobs Report 2023, ‘curiosity and sustainability and DE&I are changing lifelong learning’ ranked 昀椀fth in a list of 25 62 leadership priorities. In the future, ethical essential skills for today’s workforce . considerations will have an increasingly “The importance of lifelong learning cannot important role in leadership decisions. be overstated,” Steve says and adds that Steve Smith, Executive Director for AIM Future the ways learning is delivered will continue Skills, agrees, saying there will likely be a to evolve, as they have in recent years. renewed focus on how leaders can use ethical “We incorporated a blend of learning decision-making frameworks. methods in our courses in response “It’s going to be really, really important to contemporary interactive learning to develop a leadership skill set around preferences. For example, our Mini MBA using appropriate frameworks for ethical program mixes interactive videos, in-person decision-making,” he says. classroom sessions, and practical, group- “These frameworks can be applied in the focused activities. However, the next big same way they’ve been used in other types leap in learning will be driven by AI.” of decision-making. Leaders need to be Steve says that AI will be used to offer mindful of the various factors that influence personalised learning, providing customised, ethical decision-making and leadership real-time content based on the interactions of approaches.” each learner.
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LEADERSHIP REIMAGINED WHITEPAPER | 33 Exploring AI-augmented Replacing ‘soft skills’ leadership with ‘power skills’ AI-augmented leadership is an emerging As we saw from our survey results, human- approach that involves human management centric leadership skills are essential for teams collaborating with AI to potentially succeeding in the future of work. These make more informed decisions, enhance skills include communication, emotional team dynamics, and better support intelligence, and collaboration. employees. According to Steve, the way we talk about A recent essay in the Journal of Leadership these skills needs to change to reflect their & Organizational Studies examined AI- critical value for leaders now and into the augmented leadership. The authors described future. it as algorithms offering recommendations “Traditionally, they have been called on team member needs and dynamics using ‘soft skills’. But, personally, I think that data from sources like employee surveys this actually lowers their importance to or automatically gathered information from a degree. Instead, ‘power skills’ is an communication channels, movement, and emerging term that I think is more 昀椀tting.” even wearable-generated physiological 63 To develop your power skills, AIM has a data . It’s a smart move to keep an eye on this number of short courses available, including innovative leadership approach. While it’s Effective Communication and Leading with an exciting development, it also raises some Emotional Intelligence. ethical questions that merit thoughtful consideration. 62 The Future of Jobs Report 2023, 2023, World Economic Forum, 63 The Now, New, and Next of Digital Leadership: How Arti昀椀cial Intelligence (AI) Will Take Over and Change Leadership as We Know It, 2023, Journal of Leadership & Organizational Studies
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SECTION 5: FUTURE TRENDS IN LEADERSHIP | 34 Cultivating authentic leadership Understanding the importance Gone are the days of authoritarian, top-down of agility leadership as the prevailing norm. Instead, In their 2023 report examining the state of Steve says that it’s all about authentic organisations, McKinsey & Company identi昀椀ed leadership. ‘increasing speed, strengthening resilience’ “Some of the companies that are currently as one of the ten most signi昀椀cant shifts 65 at the top of ‘Great Place to Work’ lists facing organisations today . Their research talk extensively about how they practise also shows that leaders in fast-moving authentic leadership. Even organisations organisations have: with tens of thousands of employees consistently achieve impressive scores on 2.1x higher operational resilience platforms like Glassdoor and in surveys related to workplace satisfaction.” 2.5x higher 昀椀nancial performance Developing digital intelligence 3.0x higher growth and technological fluency As we highlighted in Chapter One, the 66 potential rewards for integrating AI into your 4.8x higher innovation organisation could be substantial. Equally important is developing digital intelligence Clearly, agility is a key component to future and technological fluency across your leadership success. organisation. In fact, a 2023 Harvard Business Publishing study identi昀椀ed ‘tech-savviness and digital adaptability’ as the foremost leadership skill required to meet future 64 business needs . 64 2023 Global Leadership Development Study, Harvard Business Publishing 65 The State of Organizations 2023, 2023, McKInsey & Company 66 The State of Organizations 2023, 2023, McKInsey & Company 67 New leadership for a new era of thriving organizations, 2023, McKinsey & Company
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LEADERSHIP REIMAGINED WHITEPAPER | 35 Taking a visionary approach Constant change in technology, markets, and societal dynamics has created an atmosphere of uncertainty, making it challenging to anticipate what lies ahead. Nevertheless, according to a recent analysis by McKinsey & Company, the essence of effective leadership lies in the ability to harness this uncertainty and embrace opportunities as they unfold. They state that “leaders must evolve beyond being managers seeking incremental improvement to become visionaries with the courage to craft a resonant purpose and boldly imagine and pursue the future.” According to Steve, visionary leaders must be proactive rather than reactive. “To do this, you need to use data and predictive analytics to anticipate future trends and opportunities. If you base all your opinions and decisions on market research or what your competitors are doing, it’s akin to looking in a rear-view mirror. By the time you’ve done it, things have probably moved on. So you’ve got to be predictive, you’ve got to use data to do that, and you’ve got to be visionary.”
Conclusion
CONCLUSION
Conclusion
LEADERSHIP REIMAGINED WHITEPAPER | 37 Conclusion – Predicting the unseen and charting the course ahead Based on our survey 昀椀ndings and the latest research, great leadership revolves around those who practise power skills such as communication, emotional intelligence, and collaboration, as well as embracing adaptability, digital literacy, purpose-driven decision- making, and continuous learning. To remain relevant and competitive in 2024, leaders must be adaptable and forward-thinking, ready to pivot and seize the moment when the next big shift occurs. Rather than being daunted by the ever-changing nature of their environment, effective leaders are compelled to explore and take advantage of possibilities as t hey emerge. Ultimately, leadership continues to be a dynamic and exciting – but also demanding – journey. For those who continue to invest in their skills and development, the rewards will be profound. Not only will they excel in their roles, but they’ll help their teams and organisation thrive in the years to come.
About AIM
About AIM Partner Packs Show your employees support, encourage their development, and enable the growth of your organisation by becoming an AIM Partner today. AIM Partner Pricing allows you to upskill and re-skill more people across your organisation in a cost-effective and flexible way. Unlock your team’s potential and choose to partner with AIM by pre-purchasing short course or accredited training bundles. Call 1300 658 337 or visit our website for more information and advice. About AIM The Australian Institute of Management (AIM) empowers individuals and organisations to adapt and thrive in the face of relentless change. Since 1941, AIM has supported Australia’s workforce by providing innovative and industry-focused education solutions. Our portfolio of short courses, quali昀椀cations, and higher education is constantly evolving to ensure we are best positioned to support our customers. Upskill or re-skill your organisation with AIM and seize the future. Australian Institute of Management Education and Training Pty Limited (AIM); ABN 40 009 668 553; Ground Floor, 7 Macquarie Place, Sydney, NSW, 2000; AIM is a Registered Training Organisation, RTO Code 0049. The AIM Business School is a registered Institute of Higher Education, Provider ID: PRV12071, and an approved FEE-HELP provider.