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Talent Assessment | 8 Min Read

17 Key Leadership Competencies Critical for Embracing the New Business Reality


Leadership, in its entirety, is the interplay between the leader and the collaborators aimed at achieving specific goals that reflect their common purposes. Great leaders create a vision, exhibit influence and inspiration, build relationships, coach others, and demonstrate consistency in a wide variety of circumstances. However, some challenges characterize leadership in the new-age world. For example, organizations worldwide are experiencing transformation at a phenomenal pace. The continual and rapid changes in the business environment have underlined the need to adapt, adopt and reposition businesses to remain relevant.

It is the survival of the fittest, and organizations that brace up and align their strategies accordingly are likely to stay relevant in the long haul. Most importantly, due to this transformation, leaders must address multi-faceted demands (reduce costs but increase innovation; think globally, act locally; achieve more with less). These challenges have underscored the need for versatile leaders who are proficient in core leadership competencies and can address a wide range of challenges. These competencies are the sum and substance of effective leadership, and hence, organizations that focus on leadership competencies’ development can make the right decisions on hiring, developing, and promoting leaders.


What are leadership competencies?

Leadership competencies are essentially the skills, knowledge, behaviors, values, and abilities that define effective leaders. They define the standards of excellence which organizations can focus on to develop a blueprint for identifying and developing leaders for current roles and potential future roles. Hence, an organization’s steadfast focus on leadership competencies will enable its leaders to develop proficiencies that will help them lead organizations to success.

However, leadership competencies are not based on a one-size-fits-all approach, and there is no definite set of competencies that will cater to all companies and industries. That’s why organizations need to frame their own leadership competency frameworks to achieve their leadership development goals.

For businesses to achieve the goals they want, they must engage competent leaders with skills well suited to overcome challenges and fulfill these ambitions. Leadership competencies are the skills used to steer firms towards collaborative success. Competencies aid leaders by giving them the ability to create strategies for managing operations; making decisions and creating solutions for unique problems; managing politics and influencing stakeholders; adapting to change and taking risks and innovating.

Alex Mastin
CEO and Founder of Home Grounds


Types of leadership competencies

Aspiring leaders, managers, and executives are expected to develop their competencies in accordance with the organizational vision to become better leaders. Researchers at Mercer | Mettl have identified some crucial leadership competencies that provide a structural basis for organizations to decide areas where their leaders excel and lack. This makes selecting and developing leaders seamless based on their current skill sets and competencies they need to build for specific leadership roles.

Listed below are the various types of leadership competencies, and each one of them can support the individual to become a better leader:

1. Learning Orientation

Learning orientation is critical because it keeps leaders inspired, curious, and well-equipped on the developmental journey. It represents the tendency to internalize a learning mindset and seek learning opportunities. Learning-oriented leaders are open to feedback and draw on past experiences to learn from successes and failures.


Criticality for Business

The illiterate(s) of the 21st century will not be those who cannot read and write but those who cannot learn, unlearn and relearn.

Future Shock
Alvin Toffler (1970)

The willingness and intent to continually learn and grow are crucial in the current VUCA (volatile, uncertain, complex, and ambiguous) environment, making it a critical leadership competency. Assessing and imparting learning orientation is the only way to thrive in the new business reality, where emerging technologies and trends impact business patterns. Learning orientation helps reduce complexities as leaders learn about different forces of change and the interplay that create these complexities. Adapting to evolving strategies, working on cross-functional projects and undertaking challenging situations require agile and learning-oriented leaders.


Behavioral Indicators at the Workplace


  • Openly shares knowledge and actively seeks opportunities to upgrade technical and professional skills, also inspiring others toward them
  • Possesses the ability to unlearn old models and processes that no longer serve the business
  • Critically utilizes the lessons learned from past successes and failures
  • Regularly engages oneself and others in training and development opportunities


2. Resilience

Resilience is today’s must-have competency for leaders because it determines their ability to tackle challenges and see new opportunities in those confrontations successfully. It represents the tendency to remain focused on adversities and uncertainties and handle difficult situations by managing emotions effectively.


Criticality for Business


Leaders are not tested during good times but by their performance during difficult times. Resilient leaders have the grit, courage and composure to lead their teams in challenging situations. The courage to stay put and adapt to changes is one of the most critical leadership attributes and competencies. In addition, resilience enables leaders to react calmly and inculcate a positive attitude when faced with challenges.


Behavioral Indicators at the Workplace


  • Demonstrates logical thinking when faced with challenging situations
  • Does not let failures affect self and team and devices strategies to overcome them
  • Makes critical and difficult decisions in the interest of the organization
  • Manages conflicting pressure


3. Developing Teams

This core competency demonstrates a tendency to focus on team members’ professional growth and development by identifying their strengths and development areas. Those leaders who are capable of building and nurturing competent teams tend to create learning opportunities for the team members and mentor them to achieve their developmental goals.


Criticality for Business


Team members who work well together help achieve organizational goals by maximizing output and productivity. However, leaders need to develop team members to build such a team. They are expected to find the gaps, pose challenging tasks, and drive them to achieve the targets in a defined timeframe. Therefore, they can use leadership competency assessments to understand their teams’ strengths and key improvement areas.


Behavioral Indicators at the Workplace


  • Provides challenging projects to the team, closely monitors the progress and offers constructive feedback
  • Identifies blind spots and areas of improvement by working closely with the team
  • Helps the team troubleshoot and solve problems as needed
  • Encourages coaching for professional development


4. Fostering Diversity and Collaboration

Inclusive leadership is a vital competency that demonstrates the tendency to value diversity and inclusion to lead a team of diverse individuals successfully. In addition, it represents the tendency to build a collaborative team culture and leverage diversity to work effectively.


Criticality for Business

Inclusive teams make better business decisions up to 87% of the time. In addition, decisions made and executed by diverse teams deliver 60% better results.


Leaders who value the importance of diversity and inclusion don’t let biases and preferences creep into their decision-making process. Instead, they tend to anticipate different views and perspectives to make well-informed decisions. They are expected to build an inclusive, collaborative team culture and leverage diversity to work effectively.


Behavioral Indicators at the Workplace


  • Respectful and sensitive to people from different backgrounds
  • Encourages and incorporates diverse points of view
  • Ensures there are no biases in the team and treats everyone equally
  • Promotes a collaborative approach to fulfilling tasks


5. Fostering Innovation

Developing competencies around innovation is crucial for effective leadership. It represents the tendency to approach issues differently, thinking out-of-the-box and striving for continual innovation. Innovation-oriented leaders tend to foster a culture that encourages people to innovate by experimenting and ‘failing fast’ with new ideas and sharing their learnings across the organization.


Criticality for Business

Forward-thinking business leaders are tapping the collective intelligence of their employees, partners, and customers to drive creativity as a daily habit throughout their businesses.

The 2017 Business Innovation Report

With the advent of new technologies and processes comes the need for organizations to think innovatively to stay competitive and plot their path to success.  That’s why innovation-oriented leadership has taken precedence over traditional business thinking. This way, leaders can bring new ideas, approaches, and energy to foster a culture of innovation.  Hence, implementing new ideas to create better processes, products or customer experiences catalyzes steady business growth.


Behavioral Indicators at the Workplace


  • Generates and applies ideas to tackle business challenges
  • Not averse to taking risks and considers taking novel approaches to adapt to the change
  • Optimally utilizes available resources and makes a special effort to devise new strategies
  • Encourages the team to ideate and provides the necessary assistance


6. Navigating Ambiguity

Dealing with ambiguity is a competency rapidly pushing its way up on the list of most crucial competencies for leaders. It represents the ability to handle ambiguous or unpredictable situations comfortably. Leaders who can successfully manage ambiguity in unforeseen situations are better equipped to deal with risk and uncertainty. Besides, they know how to adapt to change and solve problems.


Criticality for Business


Navigating ambiguous situations propel leaders to use the opportunity and take calculated risks to explore new challenges and complex problems. It is a global leadership competency that businesses must incorporate in their newer leadership competency models.


Behavioral Indicators at the Workplace


  • Anticipates the impact of change and accordingly prepares the team
  • Supports the team in ambiguous situations
  • Remains calm and focused on dealing with the change
  • Accepts the change and devises new processes even with inadequate information to maintain productivity levels


7. Change Management

Change management is the new leadership competency that shows the ability to communicate the need and the rationale for change and ensure that all stakeholders are comfortable with it. It also involves minimizing complexities or reducing their impact and smoothening the process of change.


Criticality for Business


According to PMI’s Pulse of the Profession In-Depth Report, 56% of organizations cite the lack of leadership as the primary reason for the failure of organizational change. Change facilitates leaders developing a broad strategy, followed by an action plan for its fulfillment. These initiatives are a part of the response to the change and can be mapped by the leadership competencies assessment.


Behavioral Indicators at the Workplace


  • Promotes and fosters the acceptance of change
  • Creates a culture of openness to discuss the team’s concerns
  • Transparently communicates the impact of the change on individuals and the organization
  • Simplifies issues by finding commonalities between old and new processes


8. Strategic Thinking

A strategic mindset is among the most highly sought-after leadership competencies. It represents a tendency to think long-term, take a broader perspective and build a shared vision with others. Moreover, strategic thinkers tend to formulate strategies to achieve the organizational vision and effectively execute the plan.


Criticality for Business


A general must see alone and know alone, meaning that he must see what others do not see and understand what others do not know. Seeing what others do not see is called brilliance; knowing what others do not know is genius. Brilliant geniuses win first, meaning that they defend in such a way as to be unassailable and attack in such a way as to be irresistible.

This passage from ‘The Art of War by Sun Tzu describes how great leaders employ and embody strategic thinking to fulfill the organizational vision and mission. Strategic thinking is a crucial element of the leadership competency model. Due to their knowledge and experience, leaders’ ability to think strategically results in the team’s high-quality deliverables. Conversely, the organization risks making hasty decisions that lack creativity and are not strategic.


Behavioral Indicators at the Workplace


  • Sets goals for the department and communicates them to the management
  • Possesses the ability to strike a balance between short and long-term business goals
  • Analyzes most complex situations and proposes solutions by taking calculated risks
  • Follows a systematic approach in exploring new territories and rigorously probes the rationale to arrive at the decision


9. Leveraging Networks

Networking competencies enable leaders to develop networks and alliances to build strategic relationships and effectively leverage them to achieve common goals.


Criticality for Business

Your internal and external networks are important leadership assets. They help you gain access to resources like information, expertise, and funding that are crucial in enabling you to help those you are leading. Networks also foster your learning by connecting you to people in organizations with different skills, perspectives, and contexts than your own.

Anthony Mayo
Professor, Harvard Business School

Leaders can achieve several goals by establishing a robust internal network. Strong relationships with key stakeholders can enable easier approval of projects. In addition, building relationships with decision-makers in the organization develop open lines of communication that assist leaders in staying abreast of strategic changes that may impact their roles.


Behavioral Indicators at the Workplace


  • Encourages and negotiates information sharing, skills and technical capability across teams
  • Builds and nurtures relationships to facilitate the work’s progress proactively
  • Identifies and leverages current or past contacts for work-related assistance
  • Fosters a relationship of mutual trust, understanding, growth and learning


10. Critical Decision-Making

How effectively and quickly leaders plan is an accurate measure of their competency. It represents the ability to solve problems, make critical decisions after considering all available data and derive valid conclusions based on the evidence and logical relationships.


Criticality for Business

Leaders think, consider, and then make decisions. How they think, what they choose to believe, and what criteria they use in making decisions will inform every aspect of the organization’s success or otherwise.

Roger Delves
Dean of Qualifications and Professor of Practice, Ashridge Executive Education

Great leaders know when to move quickly and proceed with the available information versus when to take more time and gather additional information.


Behavioral Indicators at the Workplace


  • Possesses the mindset to think critically, analyze the problem and weigh in the pros and cons before concluding
  • Makes and commits to decisions with integrity and transparency
  • Factors in all the complexities, available options and means to address issues
  • Takes full responsibility for one’s decisions and the team members’ actions


11. Emotional Intelligence

Emotional intelligence (EI) competency is vital to successful leadership because perfect leaders know how to manage and monitor their emotions and understand others’ emotions. Leaders with high EI are self-regulated, motivated, empathic, self-aware, and friendly, which means they have the crucial ingredients to grow into superior leaders. Emotionally intelligent leaders respect and understand the intricacies of their feelings and are conscious of how these feelings can affect other individuals.


Behavioral Indicators at the Workplace


  • Able to understand, use, and control emotions in healthy ways; able to manage impulsive feelings and behaviors; addresses commitments quickly adapt to change and takes new initiatives
  • Recognizes one’s own emotions and how they exert influence on behaviors and thoughts
  • Understands the needs, issues, and emotions of others; shows empathy and receptivity to various emotional cues, and is socially comfortable
  • Develops and maintains positive relations at work, communicates effectively and clearly to inspire and encourage others for teamwork


12. Conflict management

Also known as reconciliation competency, this leadership competency comes in handy at resolving workplace conflicts. Leaders who are good at managing conflicts can address and iron out conflicting interests between two or more parties in a sensitive environment where mutual distrust may prevail. In addition, leaders can instill trust, empathy, and understanding between parties by effectively managing conflicts. Conflict resolution is all about finding common ground for ideas and opinions that are poles apart.


Behavioral Indicators at the Workplace


  • Identifies differences of opinions and suggests rational ways to help involved parties work through differences
  • Focuses on areas of agreements when resolving conflicts within teams or groups
  • Never digresses from broad-ranging, long-term objectives and ensures that all teams stay aligned to these goals while performing their responsibilities
  • Expresses own point of view and respect point of view of others (peers, superiors, subordinates, clients, etc.)
  • Responds to conflicting opinions intelligibly


13. Results orientation

Results-orientation is an essential competency that focuses on improved performance and timely results within the assigned budget. Failure to deliver is an uneasy feeling that can even send shivers down the spine of most people in leadership positions. That is why a balanced approach is needed. For example, leaders with excessively team-centered conceptions are less likely to push their teams to the next level. Similarly, leaders who are too concerned with the organization’s demands and goals will bring their teams on the verge of exhaustion.


Behavioral Indicators at the Workplace


  • Identifies and seizes any opportunity that comes his/her way
  • Sets high-performance standards for self and others based on the organization’s strategic plan and ensures everyone stays accountable concerning the objectives
  • Never shies away from trying new methods to achieve goals and perseveres until the objectives are attained
  • Works to achieve goals on both individual and organizational level and acknowledges and supports others in achieving their goals


14. Leading ability

Leadership is not about imposing orders. It is multifaceted, and leaders are expected to know all the facets. Good leaders understand their teams. They stand by their teams to show that they have them covered. Leaders wear many hats at work, whether it is about coaching and guiding their teams and peers, pushing someone past their comfort zone, or helping people find their calling. They also need to build and keep strong relationships with their direct reports, subordinates, and juniors.


Behavioral Indicators at the Workplace


  • Casts a positive influence on others and motivates team performance
  • Helps build trust and credibility among employees
  • Possesses the skills to anticipate, locate, rectify, and learn from mainstay problems in the work environment
  • Recognizes the efforts and achievements of subordinates, direct reports and peers
  • Encourages and aids others to meet organizational objectives


15. Authenticity

The most critical leadership competency is authenticity. People are very well attuned to identifying an inauthentic behavior; they know it and do not respect it. People demand honest communication, and authentic leaders are aware of this fact. They step up and nurture sincere relationships with their teams and give importance to their opinions, ideas and suggestions.

Authentic leaders are more receptive to the feelings of their subordinates, encourage them to be more open and help them understand their value in ensuring organizational success. Authentic leadership is a significant predictor of an employee’s job satisfaction.


Behavioral Indicators at the Workplace


  • Acts ethically and with transparency, encouraging open information sharing and seeking input from team members while making decisions
  • Committed to service of others, develops genuine relationships, and values trust and compassion
  • Believes in continuous learning and empowering others to drive high team performance


16. Interpersonal skills

Interpersonal core competencies represent how leaders interact with their teams and how actively they listen and respond to their concerns, provide and receive feedback and what kind of non-verbal communication occurs between them. Developing strong interpersonal skills can drive high team performance and employee engagement, critical for organizational growth.


Behavioral Indicators at the Workplace


  • Understands the perspective of others and establishes a genuine connection with them through communication
  • Able to convey relevant information to the audience clearly and eloquently
  • Possesses reasonably well written and oral skills
  • Active feedback-seeking and learning ability
  • Initiates the process of conversation and involves people in the process to understand the perspective of everyone involved


17. Vulnerability

Vulnerability can be that new competency that can teach leaders to embrace their vulnerabilities as it takes courage to open yourself up to others. Most of us are conditioned to put on emotional armor when entering the workplace and never let go of that armor. Yet, it is paramount to experience vulnerability for productive workplace behaviors. Why? Because it gives us the courage to admit our mistakes or accept responsibility for poor outcomes. Those leaders who own up to their mistakes know the importance of failure in life. They tend to appreciate the innovative and “learning by doing” approach, and team members are likely to imbibe these cues from the boss.

On the other hand, if leaders never accept their mistakes and try to protect their fragile egos, team members are sure to mimic this behavior. They will also wish to keep a distance from their boss and never understand the value of healthy team dynamics, such as transparency, trust, and team spirit.


Behavioral Indicators at the Workplace


  • Sets professional boundaries and respects those of others
  • Delivers on promises and refrains from overpromising at work by being realistic about self-potential and limitation
  • Owns up to mistakes at work and corrects them
  • Holds a firm conviction, no matter how tough the going gets, and remains true to values and vision even when nobody is watching
  • Never hesitates to ask for help, even if it’s from employees and similarly helps without judging those who seek
  • Consistently demonstrates sincere care towards employees beyond just the job
  • Perfectly handles and regulates emotions by understanding the balance between how much to share and when to stop

Now that we have already discussed the several types of leadership competencies, we will focus on crucial aspects of developing leadership competencies.


How to develop leadership competencies?

Developing leadership competencies is not an overnight process and demands significant efforts. Leadership is not to be learned from books only. It is about experiencing specific situations, overseeing people regularly, and addressing challenges that seem perplexing.

Wading through complexities can help leaders decide which competencies they need to develop. Some do this intuitively, without requiring external help. Others like to learn the trade trick, so they prefer taking different coaching sessions or courses.

Most importantly, leaders should address the following questions that lay the foundation for competency development:


  • Who do you model yourself after?

Successful leaders always have inspirational role models to look up to. But why? They possess admirable characteristics and skills that make them worth following, and leaders can turn to them for mentoring or advice.


  • Are you an agile learner?

Learning agility is critical for becoming an effective leader. Those who keep learning new things hold the key to a sharp mind and improved skills, stay abreast of all the latest developments in their industry, and are in a better position to lead. In addition, they are primed for unforeseen challenges that may come their way, which is always desired in leaders.


  • Do you treat all employees equitably?

Leaders should inspire their teams and inspire and motivate those they work with when collaborating across teams, functions, and departments. Besides, they must offer guidance and support to team members should the need arise. Sometimes, simply listening to others and expressing concern go a long way in establishing a genuine connection as a leader.


  • How good are your listening skills?

Active listening skills are pivotal to successful leadership because being a leader is not about garnering spotlights. Instead, active listening entails paying heed to ideas, suggestions, and feedback from others and incorporating them. Moreover, this skill is about making effective verbal communication and deciphering non-verbal cues, such as body language, eye contact, etc.


  • Do you advocate a positive attitude?

Leaders are as good as their employees, and hence their attitude will directly reflect on their teams’ performance. The success, happiness, productivity, and willingness of employees at work are dependent on how positive and passionate leaders are about their work and their people. Therefore, negative emotions and behaviors must be kept at bay, and a positive attitude and outlook must take precedence.


  • How disciplined are you?

Influential leaders are the veritable disciples of discipline. Leadership warrants discipline. Developing a regimented plan for professional and personal commitments is crucial for leaders and managers. By showing discipline at work, leaders can inspire others to be disciplined.


  • Do you make time for self-reflection?

Zack Blenkinsopp, owner, Digital Roofing, asserts, “Self-reflection is often the best way to practice and develop leadership competencies. It begins with fine-tuning your emotional intelligence to master impeccable communication skills that are vital to making things run smoothly and solving problems before they even become problems”.


Developing leadership competencies is not a one-off affair but a continual process that requires thorough deliberation, creating and implementing a leadership development framework. The process can be materialized using a holistic leadership model based on extensive research to help leaders identify and work on competencies and behaviors considered crucial for next-level roles.


  • Are you situationally aware?

Situational awareness is a valuable skill for leaders because the ability to foresee and devise solutions to circumvent upcoming problems is the need of the hour. Someone who can predict uncertainties and look at challenges from multiple perspectives will recognize opportunities that others may overlook, making such leaders indispensable for the organization.


How Can Mercer | Mettl Help?

Mercer| Mettl’s decade-old expertise has laid the groundwork for developing a proprietary leadership development model that offers a description of the competencies and behaviors considered integral to the development of leaders, helping them take on new challenges.

This empirically derived model is supported by a comprehensive suite of tools to assess leadership competencies, such as Mercer | Mettl Personality Map (MPM), Mercer| Mettl Personality Profiler (MPP), Virtual AC/DC, 360-Degree Feedback System, Behavioral Assessments, etc. Mercer| Mettl’s leadership assessment tools will help you generate a detailed competency profile of the leader, followed by a report and insights on how to undertake individual development plans.

In addition, Mercer|Mettl’s psychometric assessments analyze the competency gaps in leaders and provide holistic information on the development areas. We make it incredibly easy for you to leverage the power of data science and psychometrics to deliver the right leadership assessment tools for your needs.





21st-century leadership demands more tolerance for risks. However, any changes in established processes instinctively startle people. Insecurity about employment or growth in leaders may hamper their engagement and productivity levels. In such circumstances, leaders need to be agile in thinking clearly, decision-making and re-strategizing. When leaders consider minor setbacks as a learning curve, it instills their teams’ confidence to push their boundaries continually. The rapidly changing business environment requires a different leadership response approach that can be achieved with new-age key leadership competencies.

Originally published July 17 2020, Updated December 14 2021

Abhilash Malguri

Written by

Abhilash works with the Content Marketing team of Mercer|Mettl. He has been contributing his bit to the world of online business for some years now. Abhilash is experienced in content marketing, along with SEO. He’s fond of writing useful posts, helping people, traveling, and savoring delicacies.

About This Topic

A leadership assessment is a type of personality test used to identify and develop the competencies required in a good leader - decision-making, empathy, communication, inspiring others, etc. A leadership test can contribute to organizational planning initiatives, such as promotion decisions, succession planning, etc.

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