2010-01-05

By Editor, CIR

A preoccupation with personnel change and structural reorganisation as a key to improving performance is undermining the investment made by European businesses in personnel development and exacerbating the challenge of retaining their best staff.

This insight features among the key findings of Executive Guidance for 2010, a new research report published by global consultancy Corporate Executive Board (CEB).

The limited impact of organisational changes as a route to improved effectiveness is reflected by the report's findings that only one in six (16 per cent) of surveyed organisations which made at least one senior level personnel change have succeeded in outperforming their key performance objectives (KPOs) during 2009. In contrast, 39 per cent of leaders in organisations which have resisted leadership team personnel changes have succeeded in outperforming their KPOs in same period.

However, additional CEB research reveals that among European companies, an estimated 40% of the barriers to effective leadership are linked to shortcomings imposed by their surrounding working environment and have little to with individuals' leadership ability.

Commenting on the findings Christoffer Ellehuus, managing director EMEA, Corporate Executive Board, said, "European companies are rightly reappraising their readiness for outstanding future performance as the global economy exits recession, but the collective focus needs to be on ensuring that the impact of structural changes upon the ability of individuals to do their jobs effectively is factored into the planning process."

Moreover, the spotlight is on training investment and why succession plans have not delivered all that they promised. Almost four out of five (84 per cent) of identified successors are not ready to step into the executive roles they have been nominated for.

Further, in a worrying development for European businesses, designated high potential employees are also found by the report to be unsettled. Whilst these individuals perform 21 per cent better than (non-high-potential) colleagues they are 10 per cent more likely to leave their organisations today than a year ago -- in fact one in four indicate that they plan to leave in the next 12 months.

The report confirms that despite the supposedly brighter economic outlook, more than four in five (82 per cent) senior decision makers in European businesses do not expect to exceed their key performance objectives during the first half of 2010.

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