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Talent Assessment | 8 Min Read

10 Key Leadership Competencies Critical for Embracing the New Business Reality

Ushering in the New-age Business Reality

We, as leaders, need to be confident with not knowing all the answers, comfortable with who we are at our core, ask for help, and figure out questions as we go along in this tsunami of change. We need to trust more and question more. We need to pass on energy, confidence, and trust to our teams.

Henna Inam
Executive Coach and Author, ‘Wired for Disruption’

Organizations are globally 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. However, those that are not equipped to manage the change and ambiguity are likely to become obsolete.

This surge in volatility, uncertainty, complexity and ambiguity is referred to as VUCA. The United States Army first coined the term in the 1990s to describe the stark difference and extreme conditions in Iraq and Afghanistan war zones. Initially coined by the US Military, the term soon resonated with the corporate world after the global crisis of 2008-2009 as businesses began competing in an unpredictable and ever-changing environment. Since then, the concept has been used by organizations to define their leadership attributes and competencies.

These four components are the foundation for organizations to re-work their current processes and brace-up for the new reality. They catalyze a forward-looking approach, setting the ground for effective management and leadership.

The new-age business reality has multiple dimensions to consider, is less predictable and characterized by how differently organizations perceive, re-align and adapt to the transformation. More than ever, leaders must quickly  process a stack of information and decide for businesses to flourish. Evaluating your leaders can be achieved by leadership competencies assessment.

Impact of VUCA on the Leadership Competency Model

According to the Ashridge Executive Education report, future global leaders must be skilled in negotiating three key factors: context, complexity, and connectivity.  The challenge for organizations is to equip future leaders with these ‘three Cs’ instead of merely developing them on traditional leadership practices.

In the VUCA world, leaders need to learn new skills to adapt to the change and unlearn old practices to stay abreast of modern tools and technologies, besides handling their teams. This requires the right leadership competency model under which leaders can be better prepared and positioned to further hone their skills amid the transformation. The new model necessitates creative freedom, agility, adaptability and a culture that brings people together. The modern world requires companies to anticipate the risks and revisit their outdated leadership competencies.

The Value of Core Leadership Competencies

Leadership competencies are essentially the behaviors or skills that enhance a leader’s performance. A competency-based leadership development method enables companies to identify and develop future leaders. Organizations may have internal competency frameworks, but the future requires developing key leadership competencies. Businesses must align their vision with the leadership attributes, critical in fulfilling the company’s short and long-term goals, to create a competitive advantage in the market. Leaders feel valued when their organization invests in their learning and growth. A discussion with learning and development (L&D) head and consultants can further assist businesses to chart out a precise leadership competency framework, suited for a particular function and level.

A research report by Mercer echoes the existing critical concerns on leadership competencies in organizations

  • The  current leadership capabilities are not aligned with current or emerging trends
  • A weak bench of leadership talent unprepared to step into key roles
  • Shortage of potential succession candidates for mission-critical roles
  • Insufficient bench strength to support business growth and meet future demands

Overcoming these challenges demands L&D departments to revise their existing leadership competency models to align with future business requirements. We have created a list of key leadership competencies to help organizations build sustainable competency models, which would empower businesses to sail through challenging times.

Ten Core Leadership Competencies

1. Learning Orientation

Demonstrate a tendency to internalize a learning mindset and always seek learning opportunities. Be open to feedback and reflecting on past experiences to learn from successes and failures.

Criticality for the 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 environment, making it one of the key leadership competencies. Assessing and inculcating learning orientation is the only way to thrive in the new business reality, where emerging technologies impact business patterns. Learning orientation helps reduce complexities as leaders learn about different forces of change and their 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 the past successes and failures
  • Regularly engages oneself and others in training and development opportunities

To Know More, Read Learning Agility: How to Measure it?

2. Resilience

Demonstrate a tendency to remain focused in adversities and uncertainties and handle difficult situations by effectively managing emotions.

Criticality for the 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 the changes is one of the most important leadership attributes and competencies. Resilience enables leaders to react calmly to VUCA and inculcate a positive attitude when faced with challenges. 

Behavioral Indicators at the Workplace

  • Thinks logically, 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 Team

Demonstrate a tendency to focus on team members’ professional growth and development by identifying their strengths and development areas. Create learning opportunities for the team members and mentor them to achieve their developmental goals.

Criticality for the Business

Team members who work well together help to achieve organizational goals by maximizing output and productivity. However, leaders need to develop team members to build such a team. They identify the gaps, pose challenging tasks and drive them to achieve the targets in a pre-defined timeframe. Therefore, leadership competency assessment provides a correct evaluation of developing teams.

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

Demonstrate the tendency to value diversity and inclusion to successfully lead a team of diverse individuals. The tendency to build a collaborative team culture and leverage diversity to work effectively.

Criticality for the Business

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

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Having individuals from different backgrounds in the team allows leaders to leverage their differences and hone their strengths, enabling them to work on this core leadership competency. Consequently, when a team possesses a host of skills in a particular team, it creates a more competent talent pool. Additionally, collaboration allows organizations to complete projects and meet deadlines efficiently. Diversity and collaboration are some of the core leadership attributes and competencies needed by the companies in current times.

Behavioral Indicators at the Workplace

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

5. Fostering Innovation

Demonstrate the tendency to approach issues differently, thinking out-of-the-box and striving for continual innovation. Demonstrate the tendency 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 the Business

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

The 2017 Business Innovation Report

Implementing new ideas to create more efficient processes, products or improve customer experiences catalyzes a steady business growth. Outdated methods that no longer serve any purpose need to be replaced with innovative methodologies. Leadership competencies assessment allows organizations to effectively gauge this competency.

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

Demonstrate the ability to comfortably handle ambiguous or unpredictable situations. Demonstrate the ability to manage one’s work even without having all the necessary details.

Criticality for the Business

Navigating ambiguous situations propel leaders to use the opportunity and take calculated risks to explore new challenges and complex situations. It is a global leadership competency that must be incorporated by businesses 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

The ability to communicate the need and the rationale for change and ensuring that all stakeholders are comfortable with it. It also involves being able to minimize complexities or reduce their impact and smoothen the process of change.

Criticality for the 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 with 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

Demonstrate a tendency to think long-term, take a broader perspective and build a shared vision with others. Formulate strategies to achieve the organizational vision and focus on effectively executing the plan.

Criticality for the Business

A general must see alone and know alone, meaning that he must see what others do not see and know what others do not know. Seeing what others do not see is called brilliance, knowing what others do not know is called 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. Leaders’ ability to think strategically, owing to their knowledge and experience, results in the team’s high-quality deliverables. Without strategic thinking, the organization risks making hasty decisions that are not based on qualitative data and lack creativity.

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

The tendency to develop networks and alliances to build strategic relationships and effectively leverage them to achieve common goals.

Criticality for the Business

Your internal and external networks are important leadership assets. They help you in gaining 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. 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 proactively facilitate the work’s progress 
  • 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

Demonstrating 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 the Business

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

Leaders think, consider, and then make decisions. How they think, what they choose to consider, 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

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

Conclusion

21st-century leadership demands more tolerance for risks. However, any changes in established processes instinctively startle people. Insecurity about the 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 the confidence in their teams to continually push their boundaries. VUCA requires a different leadership response approach that can be achieved with new-age key leadership competencies.

Leadership Response Style

How Can Mercer | Mettl Help ?

Mercer | Mettl’s expertise in leadership assessment has enabled us to devise effective leadership evaluation tools, such as Virtual Assessment and Development Centre. It is a combination of psychometric and behavioral tools, used to generate a detailed competency profile of the leader, followed by a report and insights on how to undertake individual development plans. Additionally, our psychometric assessments analyze the competency gaps in leaders and provide a holistic report on the development areas.

Originally published July 17 2020, Updated July 17 2020

Megha Singh

Written by

A writer at heart, Megha has been in the content industry for 4 years. Starting her career from print, her journey spans across IT, legal and consulting industries. She has been associated with Mercer | Mettl as Assistant Manager, Content Marketing for 2 years.

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