Experiencing any of these red flags?

On the heels of the pandemic and Great Resignation, companies are now facing an historic crisis of leadership, the likes of which we haven’t seen in over a decade. Trust in leadership has eroded substantially, creating hesitancy among up-and-comers to pursue leadership roles.

Aiming to quantify the leadership gap and provide insights on how the most successful companies are closing it, DDI has just released findings from its 2023 Global Leadership Forecast, the largest and longest-running global leadership study of its kind. Spanning over 50 countries and 24 industries, the study surveyed thousands of leaders to understand the current and future state of leadership.

As I dug into the results, they confirm what I’m hearing from many leaders first-hand: There’s a restless pipeline of leaders who are struggling to trust their senior leaders, and in turn, lack trust with their own teams. And the result is a deep threat to companies’ innovation, competitiveness, talent retention, and growth.

Five Red Flags

Based on key findings from the DDI study, I’m summarizing five red flags deemed as leadership deficiencies, along with some tips for overcoming them. 

1. Employees have very low tolerance for poor leadership

Only 40 percent of leaders report that their company has high-quality leadership — a significant drop from two years ago and measuring nearly as low as in the wake of the economic crisis in the early 2010s. While leaders felt greater confidence in company leadership during the crisis of the pandemic, they are now becoming more burned out and skeptical about the effectiveness of their company leaders. In fact, when managers didn’t view their company’s leadership as effective in interpersonal skills, they were 3.5x more likely to say they wanted to leave within a year.

“The way to build high-quality leaders is by prioritizing leadership development and career growth across the entire pipeline. It has to start much earlier,” says Stephanie Neal, director of DDI’s Center for Analytics and Behavioral Research. “We also can’t forget about those who are already in senior leadership positions — in many cases, companies are under the mindset that because they’ve established themselves in their role or in the organization years ago, they don’t need the continued support and frequent acts of empathy, which is untrue.”

2. Turnover is growing

Over the last year, 54 percent of companies saw an increase in turnover, which is bound to create more leadership hurdles. In fact, three out of five CEOs named attracting and retaining top talent as their primary challenge. Even amid recession rumbles and layoffs in the tech sector, leaders are desperate to hire and retain the most valuable workers.

To offset a potential exodus, organizations must prioritize employee well-being and open communication and lead with empathy. Offering flexible work arrangements and mental health resources and implementing better delegation and workload management can relieve some of the burdens. But CEOs and other executives must set the tone with a holistic, human-centered approach.

3. Trust in leadership is broken

Only 46 percent of leaders report they definitely trust their direct manager to do what’s right, and even more troubling, fewer than one-third say they trust senior leaders at their organization — directly impacting retention and engagement. Employees who don’t trust their managers struggle to build connections; they also struggle to commit to the company’s mission and are more likely to “quiet quit” or just quit altogether.

Building trust starts at the top and requires displaying transparency and accountability. Leaders can foster both by genuinely acknowledging their failures or shortcomings and listening and responding to their teams with empathy. A great example of this was when Zoom CEO Eric Yaun took ownership of the mistakes resulting in the company laying off 15 percent of its workforce. In addition to this, Yuan immediately turned his attention to building trust and demonstrating empathy to his remaining staff, announcing that he and Zoom’s executive team would be taking significant pay cuts.

4. Lack of trust disrupts innovation

Leaders who trust their senior leaders are three times more likely to develop novel ideas or solutions because they’re less concerned with failing and more willing to try new things. They aren’t afraid to suggest new methods and processes or challenge the status quo. In fact, employees who “definitely trust” their managers cite behaviors like displaying authenticity and empathy, actually inquiring about their well-being, and sharing their thoughts and rationale for decision-making.

“Treating people with empathy and respect as individuals — as people and not just employees — is very powerful when it comes to nurturing innovation,” Neal says. “It gives them the confidence and clearance to push the envelope, to experiment, to iterate, without fear of criticism.”

5. Lack of vulnerability deteriorates strong relationships

It turns out that employees want leaders who are human after all. According to DDI’s survey, employees were over five times more likely to trust leaders who regularly displayed vulnerability, and 7.5 times more likely to trust those who acknowledge their failures or shortcomings.

By demonstrating that it’s acceptable — and completely normal — to make mistakes, leaders not only give employees the confidence to do their best work, but also to see themselves in a leadership role. That helps organizations build a pipeline of leadership talent that’s steeped in a culture of empathy and compassion to fulfill future roles.