Study of Australian Leadership
The Study of Australian Leadership (SAL) is a national survey that provides a comprehensive picture of leadership in Australian organisations.
Supported by the Australian Government through the Department of Employment, SAL is nationally significant for a number of reasons.
It is the largest ever survey of leadership in Australia. Consisting of five matched survey instruments, SAL surveyed almost 8,000 individuals across 2,703 organisations and 2,561 workplaces. Respondents included senior leaders (such as CEOs), workplace leaders and specialists (such as HR managers), frontline leaders and employees.
The size of this study also means that, for the first time, there is a comprehensive and representative picture of leadership in Australian organisations at different levels, which can be used to assess how different aspects of leadership relate to workplace performance, innovation and employee outcomes.
This study is also significant because it is the first major review of leadership and management capability in Australia since the Karpin Report in 1995, and the first workplace study undertaken since the 1995 Australian Workplace Industrial Relations Survey.
Since then, the Australian economy has been transformed, and many new challenges now confront organisational leaders. SAL provides a thorough assessment of leadership and determines whether Australian workplaces are well-placed to meet the many challenges they now face.
Why Leadership Must Change Now
Fuelled by the resources boom, the Australian economy has enjoyed an unprecedented 25 years of economic growth, more than doubling in real terms over that period. But, now, the Australian economy is slowing. Productivity is sluggish, employment growth is weakening, and consumer confidence is faltering. Many economists are now predicting an extended period of slow economic growth and recovery.
A critical question is whether Australian organisational leaders are ready to meet these new challenges. Or whether the extended period of economic growth driven by the resources boom has made Australian organisational leaders complacent and unprepared for the future? Have Australian organisations invested adequately in their leadership and management capabilities to navigate through these complex and uncertain times? If not, will these various changes have adverse and lasting effects on future growth and prosperity? These questions have informed the surveys developed for this study.
The Study of Australian Leadership (SAL) specifically addresses the global debate about the impact of leadership and management on performance. The findings show the significance of leadership and management in shaping Australia’s future performance and prosperity, as well as what behaviours and forms of training are most effective.
Specifically, the findings show:
Leadership matters in different ways at different levels of the organisation.
SAL confirms that the role leaders play varies considerably at different levels of any organisation. At the most senior organisational level, leaders play a critical role in scanning their external environment, making sense of the many factors likely to influence the competitive position of their organisation. At the workplace level, leaders have a critical role in building and maintaining efficient operations to meet targets and improve performance. Frontline leadership matters most for employees, shaping the experience of work and creating a positive climate for innovation and performance.
Leadership and management matter for workplace performance.
Leadership matters for performance in a number of ways. Leadership drives the development of core organisational capabilities associated with meeting and exceeding targets, performance relative to competitors and profitability.
Leadership and management matter for innovation.
Innovation is a critical source of productivity growth and competitiveness. SAL shows that workplaces with more capable leaders are more innovative – regarding both incremental and radical innovation performance. It also confirms the importance of innovation for business performance.
Leadership and management matter for employee engagement and talent management.
One of the main reasons why leadership matters is because it influences employee attitudes and behaviours. Positive attitudes and behaviours translate into greater productivity and employee creativity. SAL shows that leadership capability and efficacy are related to a range of employee outcomes, including: employee engagement, voice, creating a culture of learning and innovation, trust and intentions to quit.
Investment in leadership capability pays.
Investing in leadership matters for leader self-efficacy (a leader’s belief in their ability to lead) and leadership capabilities. Workplaces that invest in a range of leadership development activities have more capable leaders with a stronger belief in their ability to do the job. Both of these factors are associated with better performance and more innovation.
Significant Gaps and Weaknesses in Australia's Leadership and Management
SAL also reveals that Australian organisations should be concerned about the state of leadership and management capability. The findings reveal a pattern of mediocre leadership in many organisations that will likely impair their capacity to shift to a knowledge economy and impede their efforts to raise productivity. Seven gaps and weaknesses stand out as areas of concern, painting a worrying picture of the ability of Australian organisations to address future challenges:
Many Australian workplaces are underperforming.
A significant proportion of Australian workplaces – more than 40% – are not meeting their performance targets for return on investment and profitability. Around one-third of workplaces underperform against their sales targets.
Many Australian organisations do not get the basics right.
Many leaders and managers are not mastering basic management fundamentals such as performance monitoring, target setting, and the appropriate use of incentives. Mastery of these is important for improved performance and better employee outcomes, above and beyond leadership capabilities and self-efficacy.
Few Australian organisations report high levels of innovation.
Innovation drives growth and productivity. Yet most organisations struggle to turn knowledge and ideas into successful innovations. Too few (18%) private sector organisations report high levels of radical innovation. Surprisingly, public sector organisations were more likely than private sector organisations to have reported high levels on both types of innovation. However, findings show those organisations that do innovate successfully achieve superior performance outcomes.
Many Australian leaders are not well-trained for the job.
Formal qualifications are not everything, but formal training provides a foundation for the diverse skills associated with leadership – from technical skills to solving problems and managing change. One in four senior leaders in private sector organisations has no formal training beyond secondary school. The same goes for majority Australian-owned, and small or medium-sized organisations.
Too many Australian organisations underinvest in leadership development, especially at the frontline.
SAL shows that investing in leadership development is positively associated with leader capabilities and self-efficacy, which in turn significantly betters workplace performance and innovation. Yet the findings reveal that many workplaces do not invest in leadership development at all, or invest very little. Those that do invest in leadership development often spend in the wrong places. SAL shows that investing in workplace and frontline leaders can be effective in improving performance through better employee outcomes and driving innovation. But recent evidence for the Asia-Pacific region (including Australia) shows that for every $10 spent on senior leaders, only $1 is spent on frontline leaders.
Leadership in Australian organisations does not reflect wider social diversity.
Diversity can be good for business performance. It can lead to greater creativity and innovation, improvements in productivity, as well as higher employee commitment and engagement at work. Yet senior leadership in Australian organisations is dominated by older men from English-speaking backgrounds. Women, younger leaders, and leaders from non-English speaking backgrounds are under-represented when compared to their numbers in the broader population.
Many senior leaders do not draw on strategic advice in making decisions about the future.
Senior leaders play a critical role in scanning the external environment and making sense of how external challenges are likely to influence the organisation. Leaders cannot do this in isolation; they require multiple sources of advice and information. Yet, the evidence presented in this report shows that few senior leaders seek advice from external sources, such as associations, consultants, experts, or other senior leaders in their industry or elsewhere. This leaves their organisations vulnerable to poor strategic insight and decision-making, especially in the current environment marked by disruption and uncertainty.
When asked to identify the future challenges facing their organisation over the next five years, Australia’s senior leaders said:
- Market and competitive pressures
- Operational challenges
- Government and regulation
- Human resource challenges
- Technological disruption
- Economic volatility and uncertainty
Different workplaces demonstrate more radical and incremental innovation than others.
Radical innovation relates to creating products and services that go beyond what is expected by existing customers and includes experimentation and a focus on new opportunities, new markets or new ways of bringing products and services to the market.
Incremental innovation relates to refining and improving existing products and services. The focus of development is often on improving efficiency, increasing economies of scale (i.e. reducing costs) and expanding existing markets.
Different workplaces offer different kinds of leadership development from formal qualifications through to mentoring. Some workplaces offer none at all.
Different industries are better management practices than others. The Electricity, Gas, Water and Waste Services industry is at the top of the list. The Information Media and Telecommunications industry is at the bottom of the list.
Management practices that were measured include setting and monitoring KPIs and the visibility and awareness off KPIs and targets across the workplace.
This chart shows the proportion of workplaces that are successful in meeting their various performance targets.
The "Average" Leader
This demographic data paints a picture of the typical leader in Australia, depending on their leadership role in the organisation.
Key national figures share their thoughts and reflections on leadership in light of findings from the Study of Australian Leadership.
Kleo Cruse - Ipsos
Frontline leaders need more training.
Dom Price - Atlassian
Hon. Patricia Forsythe - Sydney Business Chamber
A profile of senior leaders in Australian organisations.
Jennifer Conley - Australian Advanced Manufacturing Council
Leading people, the diffusion of high performance workplaces.
Danielle Fraillon - PwC
Why leadership at work is important.
Campbell Rose - VicTrack
Siginificant challenges facing orginations over the next five years.
Dr. Jesse E. Olsen - Centre for Workplace Leadership
Effective leadership requires mastery of management fundamentals.
Jenny Lambert - Australian Chamber of Commerce and Industry
Investing in leadership development pays off.
Mike Hirst - Bendigo and Adelaide Bank
How Australian workplaces are performing.
Peter Gahan - Centre for Workplace Leadership
Survey of Australian business reveals failure in leadership.