Leadership Competencies

Introduction

Leadership competencies are leadership skills and behaviors that contribute to superior performance. By using a competency-based approach to leadership, organizations can better identify and develop their next generation of leaders.² Essential leadership competencies and global competencies have been defined by researchers. However, future business trends and strategy should drive the development of new leadership competencies. While some leadership competencies are essential to all firms, an organization should also define what leadership attributes are distinctive to the particular organization to create competitive advantage.

Essential Leadership Competencies

A focus on leadership competencies and skill development promotes better leadership.³ However, skills needed for a particular position may change depending on the specific leadership level in the organization. By using a competency approach, organizations can determine what positions at which levels require specific competencies.⁴ Researchers at the Center for Creative Leadership have identified some essential leadership competencies that are consistent among organizations. They divide the overall structure into competencies for leading the organization, leading the self and leading others in the organization (see Figure 1).

When selecting and developing leaders, HR professionals should consider the competencies that the individual possesses and compare those to the ones that need further development for success in a leadership role. By looking at his/her current competencies and comparing those to the skills necessary to fill a leadership position, organizations can make better informed decisions in hiring, developing and promoting leaders.⁵

Global Leadership Competencies

Developing successful global leaders is a competitive advantage for multinational organizations.⁶ In addition to essential leadership competencies, global leaders face special challenges that require additional competencies. To clarify, a global leader is commonly defined as someone that cultivates business in a foreign market, sets business strategy at a global level and manages globally diverse and diffused teams.⁷ According to a Conference Board research report, 73% of managers agree that domestic business leadership and global leadership differ in the skills required. Some of the challenges that global leaders may face are managing a diverse group of employees and business processes; adaptively approaching problems and challenges; adjusting to new values and cultures; and adapting to different types of business and personal stressors.⁸

To address the unique challenges of global leaders, researchers have identified global leadership competencies that can contribute to success. Among these global competencies, developing a global mindset, cross-cultural communication skills and respecting cultural diversity are paramount to succeeding in the global workplace.⁹ Morgan McCall and George Hollenback studied successful global leaders and developed a list of common competencies specific to the global leader (see Figure 2).¹⁰ HR practitioners can use global leadership competencies to support the development of leaders and thus the overall global business strategy.

Business Trends and Strategy Drive New Leadership Competencies

According to the 2008 SHRM report, Changing Leadership Strategies, the rise of competition caused by the knowledge economy and globalization will bring significant changes in the leadership strategies for organizations. ¹¹ Given the future business environment trends, researchers agree that the most important leadership competencies will include effective change management, developing talent/teams and being an effective collaborator/network builder.¹² In fact, since competencies should be driven by future business strategy, it is important to consider the major business trends of the future.¹³ The Center for Creative Leadership (CCL) identified some future business trends that will affect the leadership skills needed to support business (see Figure 3).

In addition to looking at future business trends to shape the development of leadership competencies, organizations must also look to the specific strategy and preferred business results of the particular organization. By creating competency models that reflect the future strategy of the business and the important results to stakeholders (i.e., customers, shareholders, investors), organizations can successfully create a leadership brand.14 Dave Ulrich and Norm Smallwood define a leadership brand as "a reputation for developing exceptional managers with a distinct set of talents that are uniquely geared to fulfill customers' and investors' expectations."¹⁵ Researchers have found that when investors have confidence in the leadership talent of an organization, share price will increase.¹⁶ By creating a unique leadership brand via leadership competencies that produce results to stakeholders, organizations gain a competitive advantage.

Literature and Research

The Leadership Skills Strataplex: Leadership Skill Requirements across Organizational Levels¹⁷

The authors of this article conceptualized and empirically tested a strataplex model for leadership skills. Leadership skills are divided into four broad categories: cognitive, interpersonal, business and strategic. The "strataplex" model refers to how the four categories of skills vary based on respective management levels in an organization. The researchers tested the model on more than 1,000 new, midlevel and senior managers. The results showed that higher levels of management in the organization required greater leadership skills. The most important skill across all the levels of leadership was cognitive skill. This skill is thought to be the basis of all leadership skills because it encompasses the ability to acquire new knowledge and learn new ways of solving problems. Interestingly, business skills and strategic skills were the two most important skills to acquire when moving into high levels of leadership. This research is important because it empirically demonstrates that leadership skills do differ at different management levels on the career ladder. Most importantly, business acumen and strategic skills must be acquired to be effective at the higher levels of management/leadership. HR professionals should take into account the change in competencies required as managers move into higher level leadership positions.

Managers' Justice Perceptions of High Potential Identification Practices¹⁸

High potentials are often regarded as the possible future leaders of an organization. Consequently, the process of identifying high potentials is very important to both succession planning and leadership development practices in an organization. The purpose of this research was to identify the various processes that organizations are using to identify high potential leaders and how the employees perceive the fairness of the process. Researchers distributed a survey at a leadership conference to leaders from a variety of organization sizes and industries. The survey asked questions about the high potential identification process as well as the perceived fairness of the process. The findings revealed that competencies were used to identify high potentials 69% of the time. The most important competencies used to identify high potentials were orientation toward results, communication skills, adaptability, strategic skills and ability to make decisions. Additionally, the survey found that the high potential identification process, the communication of the process and evaluation were all significantly related to feelings of perceived fairness. This example illustrates how leadership competencies can be used in the workplace. A fair process for identifying high potentials, such as a competency approach, may lead to higher perceived fairness.

Transformational Leadership and Market Orientation: Implications for the Implementation of Competitive Strategies and Business Unit Performance¹⁹

This article explores the relationship between competencies of the organization and firm performance. The researchers hypothesize that competitive strategies link organization competencies to firm performance. Specifically, this study investigated the link between transformational leadership as an organizational competency and the competitive strategies of marketing differentiation, innovation differentiation and low-cost strategies. These competitive strategies are thought to have positive benefits to firm performance.

More than 200 organizations from a range of industries were included in the research sample. The results showed that transformational leadership was significantly related to market orientation. In this study, the authors define market orientation in terms of culture. The organization culture clarifies values and norms that positively contribute to customer satisfaction and worth. Transformational leaders are thought to impact and help form the organizational culture. Transformational leadership was also positively linked to marketing differentiation and low-cost strategies. Further, market differentiation was positively related to firm performance metrics. Consequently, the competency of transformational leadership was found to have a positive impact on firm performance through market differentiation. The results imply that one way to advance market orientation is to develop the competency of transformational leadership. This study shows that leadership competencies can have an impact on the bottom line of organizations through competitive strategies. HR professionals can influence firm performance by identifying and developing key leadership competencies in the organization.

In Closing

Leadership competencies can be used to effectively select, develop and promote leaders in an organization. Certain factors such as business strategy and future trends should be taken into account when creating leadership competencies. All business strategies are different and HR practitioners should use the business strategy, including the global business strategy, to drive the use of competencies in selecting and developing leaders. By effectively building a unique set of skills for the organization's leaders, the firm will sustain competitive advantage.

End Notes

[1] Society for Human Resource Management. (2007). The 2007-2008 workplace trends list. Alexandria, VA: Author.

[2] Brownwell, J. (2006, Fall). Meeting the competency needs of global leaders: A partnership approach. Human Resources Management, 45(3), 309-336.

[3] Mumford, T., Campion, M., & Morgeson, F. (2007). The leadership skills strataplex: Leadership skill requirements across organizational levels. The Leadership Quarterly, 18, 154-166.

[4] Garonik, R., Nethersell, G., & Spreier, S. (2006, Winter). Navigating through the new leadership landscape. Leader to Leader, 30-39.

[5] Spencer, S., & Watkin, C. (2006). Potential for what? Retrieved January 4, 2007, from www.haygroup.com.

[6] Caligiui, P. (2006). Developing global leaders. Human Resource Management Review, 16, 219-228.

[7] Caligiui, P. (2006). Developing global leaders. Human Resource Management Review, 16, 219-228.

[8] Kramer, R. (2005). Developing global leaders: Enhancing competencies and accelerating the expatriate experience. New York: The Conference Board.

[9] Rosen, R., Digh, R., Singer, M. & Phillips, C. (2000). Global literacies: Lessons on business leadership and national cultures. New York: Simon & Schuster.

[10] McCall, M., & Hollenbeck, G. (2002). Developing global executives: The lessons of international experience. Boston, MA: Harvard Business School Publishing.

[11] Society for Human Resource Management. (2008).Changing leadership strategies. Workplace Visions, 1.

[12] Barret, A., & Beeson, J. (2002). Developing business leaders for 2010. New York: The Conference Board.

[13] Robinson, M., Sparrow, P., Clegg, C., & Birdi, K. (2007). Forecasting future competency requirements: A three-phase methodology. Personnel Review, 36(1), 65-90.

[14] Intagliata, J., Ulrich, D., & Smallwood, N. (2000). Leveraging leadership competencies to produce leadership brand: Creating distinctiveness by focusing on strategy and results. Human Resource Planning, 23(3), 12-23.

[15] Ulrich, D., & Smallwood, N. (2007, Jul-Aug). Building a leadership brand. Harvard Business Review, 85(7/8), 93-100.

[16] Ulrich, D. & Smallwood, N. (2007). Leadership Brand. Boston, MA: Harvard Business School Publishing

[17] Mumford, T., Campion, M., & Morgeson, F. (2007). The leadership skills strataplex: Leadership skill requirements across organizational levels. The Leadership Quarterly, 18, 154-166.

[18] Jerusalim, R. & Haursdorf, P. (2007). Managers' justice perceptions of high potential identification practices. Journal of Management Development, 26(10), 933-950.

[19] Menguc, B., Seigyoung, A., & Shih E. (2007). Transformational leadership and market orientation: Implications for the implementation of competitive strategies and business unit performance. Journal of Business Research, 60, 314-321.

Project Team

Project leaders: Courtney Ledford, SHRM Research Intern; Nancy R. Lockwood, MA, SPHR, GPHR, Manager, HR Content Program

Project contributor: Steve Williams, Ph.D., SPHR, Director, Research

Editor: Nicole Gray, Copy Editor

Disclaimer

This article is published by the Society for Human Resource Management (SHRM). All content is for informational purposes only and is not to be construed as a guaranteed outcome. The Society for Human Resource Management cannot accept responsibility for any errors or omissions or any liability resulting from the use or misuse of any such information.