The Downstream Damage of the Leadership Skills Gap

Companies are struggling with a critical problem — finding managers with the right skills to lead their organizations. This problem not only has damaging downstream effects for businesses, but it’s also hurting the global economy.

An analysis by job market analytics company Burning Glass Technologies found that management skills “represent one of the biggest skills gaps in the job market” and that managers have larger skills gaps than the people they manage. The Bank of England’s chief economist has argued that poor management is the principal cause of the U.K.’s stagnant productivity. Studies indicate that “bad management could be an important factor behind the lower levels of productivity and development of many countries,” according to the International Growth Centre. A major reason is that people commonly advance into managerial positions before acquiring the requisite skill set for effective leadership. Indeed, the Peter Principle in organizational behavior states that employees are promoted to their level of incompetence — and there is evidence that this may actually be true.

So what’s happening to the billions of dollars that companies spend on leadership development each year? Managers take plenty of time out of busy schedules to sit in classrooms and attend residential business schools. But these efforts often fail.

And unfortunately, managers often don’t realize that they need to engage in development. Gallup research has found that “most managers believe they are doing their jobs well and don’t see the need for change.”

This creates further problems downstream. When managers don’t focus on gaining new skills, their reports are less likely to do so as well.

Working with businesses on these efforts for more than six years as cofounder of Filtered, I’ve repeatedly seen that employees feel comfortable taking time to learn if, and only if, there’s encouragement — and participation — from line managers all the way down the chain. Otherwise, they understandably assume that any encouragement for learning and development coming from the C-suite is just lip service.

Until leaders can get serious about their own development as managers, the skills gaps throughout their organizations will only continue to grow.

Guidance From Executives

Solving this problem requires action from senior executives.