Mumbai: India Inc leaders are ill- equipped to handle the challenges that the organisations face in the new business environment, according to a recent study.
"In India, 51 percent of leaders and 37 percent of human resource professionals rated the quality of their leadership as high. Though these ratings are higher than those in the global sample, they indicate a leadership quality gap. Only half of leaders in India are perceived as being of high quality," talent management firm DDI said in its 'Global Leadership Forecast 2011'.
The study, conducted in 74 countries involving 1,897 HR professionals and 12,423 leaders, said that leadership quality not only affects the bottom line but also helps in reducing the attrition level.
Organisations with higher quality leadership retained more employees than their competitors, and they also had more engaged and passionate leaders, it revealed.
To achieve high-quality leadership, companies need effective leadership development and talent management systems, the report said, adding more Indian organizations compared to their global counterparts are prioritizing development for all their leaders.
"More organisations in India increased their leadership development budgets in 2011, compared to companies globally, and even more plan to ramp up spending in the coming year. This is because India has been less affected by recession and adding new leaders at a record pace."
It further observed that Indian organisations have high expectations from their leaders, especially around speed to performance, meaning that there is just no time for them to take development slow and easy.
However, HR professionals felt that without effective leadership development programmes, companies are leaving their leaders unprepared to manage in a constantly evolving business environment, according to the DDI report.
For all organisations, including those in India, performance management systems were rated as more effective than other talent systems.
High levels of business growth have made it possible for more leaders in India to report that their management practices are a competitive advantage and that their organisational structure is flexible and fluid instead of rigid and hierarchical, it said.
However, it is difficult for Indian companies for opening up discussions when making strategic decisions.
"This reluctance to have open, uncensored discussions might be due to the large number of generation X and generation Y leaders at the lower levels. A generation gap between the younger, lower-level leaders and the older, senior-level leaders could be adversely affecting communication and hindering discussions about strategy throughout the organisation."
With changing environment, business processes are evolving at a rapid pace and leaders in India need to continue to build their skills to be effective in this new landscape, the study noted.
While effectiveness ratings for all leadership development methods were higher in India than the rest of the world, firms should consider making greater use of external mentoring and virtual classroom-based training, it said.
Companies need to ensure that efforts and investments are monitored and measured closely and also focus on opportunities to develop leaders on the job, an approach that promotes speedy development, it added.
First Published: Sunday, December 11, 2011, 11:08