Executives who demonstrate certain business and leadership skills empower their companies to increase profit and revenue by as much as 45 percent, according to data from Development Dimensions International.
The findings in DDI's report, called "High-Resolution Leadership," are based on testing of real behaviors in assessment center simulations across a dataset of more than 15,000 leaders, according to Evan Sinar, PhD, chief scientist at DDI and the study's lead author.
The five following leadership skills drive profitable growth, according to the report:
- Entrepreneurship — Crafting plans to capitalize on market opportunities
- Business Savvy — Quickly and accurately assessing the merits and risks in complex business scenarios
- Driving Execution —Devising specific plans and mobilizing people to achieve strategic objectives
- Decision-Making — Making effective day-to-day judgments about short-term issues
- Leading Change — Identifying the need for organizational change and effectively leading people through it
To identify these skills, DDI worked with Ernst & Young to evaluate a subset of 2,077 senior-level executives — including CEOs, CFOs and executive vice presidents from 44 large companies in the U.S. and Canada — to determine the relationship between leadership competency and revenue growth.
Researchers found when executives were highly competent in "business management," "leadership of people," "communicating a compelling vision" and "influencing stakeholders," it was associated with 45 percent higher revenue growth between 2009 and 2014. Over the same six years, organizations whose executives were only moderately competent at these leadership competencies realized 20 percent growth, while the organizations with the least competent leaders realized a four percent decline.