2010 Q2 Korn/Ferry Confidence in Leadership Index Reverses Course, Shows Declining Confidence in Corporate Leaders
LOS ANGELES, Sept 07, 2010 /PRNewswire via COMTEX/ --
The Korn/Ferry Institute's Confidence in Leadership Index reveals a significant decline in the trust and confidence executives have for corporate leadership, as well as their leadership direction. Gauging perceptions of global leaders over the last five quarters, the survey shows that the recovery of confidence stalled during Q2, from a surge to all-time highs in Q1. In some cases, confidence in leaders reversed course as numbers dipped to 2009 levels mirroring several global economic indicators.
The relationship between leadership confidence and economic measures is substantiated by leading indicators such as the Dow Jones Industrial Average, Shanghai Stock Exchange, NIKKEI, Sao Paulo Stock Exchange, and the Global Dow all falling by from 10-23 percent in Q2. Furthermore, the Confidence in Leadership Index uncovered that the most significant decline in credibility was at the very top of the house. Corporate boards lost six points in the credibility of leadership score, and CEOs declined by five points during Q2.
"From the C-suite to the Board, the top of the house is typically the first to be credited with success in economic upswings, and scrutinized during fragile environments," said Ana Dutra, CEO, Korn/Ferry Leadership and Talent Consulting. "Our Index findings seem to indicate that confidence in leadership closely follows economic upward and downward trajectories. This suggests that, during times of economic instability, top leadership must take even more proactive steps to ensure stakeholders have confidence in their capabilities as leaders. Do they have the rights skills, credentials, integrity, and ability to drive the organization through the periods of volatility?"
The Confidence in Leadership Index measures four key factors of leadership:
- Characteristics of Leadership
- Credibility of Leadership
- Trust in Leadership
- Direction of Leadership
The Q2 data was collected by Korn/Ferry between May 24-June 30, 2010.
Confidence in Leadership Major Findings
- Overall, credibility of leadership globally is down four points from Q1 and tied for an all-time low at 74 points. The top of the house declined the most. Credibility of Boards fell by six points (67). Credibility of CEOs fell by five points (73).
- Trust in leadership fell to an all-time low on the Index at 77, with every single trust category losing ground in the quarter.
- European leadership trends pointed downward, possibly the result of Europe's credit market and sovereign debt crisis. Following marked improvement in most Confidence in Leadership Index categories in Q1, European leadership set an all-time low in Direction of leadership at 10 (on a -100 getting worse to +100 getting better scale) and saw significant drops in credibility and trust.
- Asia Pacific was the only region to improve in the trust-in-leadership category, setting an all-time high at 80. While this is inconsistent with Asian financial market performance during Q2, it may be due to Asia's general leadership in the global economic recovery.
- North America generally reverted back to Q2 2009 levels, dropping nine points on the direction of leadership scale, losing four in credibility of leadership and down three in trust in Leadership after reaching all-time highs in each category in Q1. Both the credibility and trust in leadership scores were all-time lows at 74 and 78 points respectively. The highly-publicized and watched Gulf region oil disaster was unresolved when the Index was measured, and may have had some influence on these results.
- Central/South America results were mixed. While the region tallied its fifth consecutive improvement in the direction of Leadership, it set all-time lows for both credibility and trust in leadership with 78 and 81 points respectively.
Snapshot of Confidence in Leadership Survey Results
Credibility of Leadership Scores:
- Overall credibility of leadership globally is down four points from Q1, and tied with Q2 2009 for an all-time low in the Index. The four-point swing was the largest quarter-over-quarter change ever for the credibility index.
Category Q1 Index Q2 Index Change Own Leadership Ability 88 88 0 Direct Reports' Leadership Ability 75 75 0 Boss's Leadership Ability 75 71 -4 Company Management's Leadership Ability 75 71 -4 CEO's Leadership Ability 78 73 -5 Board of Director's Leadership Ability 73 67 -6 Global Average for Credibility of Leadership 78 74 -4 ------------------------------ --- --- ---
Region Q1 Index Q2 Index Change North America 78 74 -4 Asia Pacific 77 76 -1 Central/South America 82 78 -4 Europe 76 71 -5 ------ --- --- ---
Trust in Leadership Scores:
- Trust in Leadership fell three points to an all-time low of 77 on the index, with every single category losing ground in the quarter. The previous low was 79 in Q3 2009 (the first time the Trust in Leadership questions were fielded).
Category Q1 Index Q2 Index Change Our business consistently adheres to the highest standards of business conduct 83 81 -2 The company operates with the highest set of ethical standards 84 81 -3 All employees understand and follow our code of conduct 81 78 -3 Our leaders are models of ethical business conduct 82 78 -4 Leaders are quick to admit mistakes and accept responsibility 70 68 -2
Category Q1 Index Q2 Index Change North America 81 78 -3 Asia Pacific 78 80 +2 Central/South America 84 81 -3 Europe 77 72 -5 Global Average for Trust in Leadership 80 77 -3
Direction of Leadership Scores:
- The direction of leadership - measured on a -100 (getting worse) to +100 (getting better) scale - declined by seven points (from 24 to 17), yet remained in positive territory globally. The Q2 index hovered just above the all-time low of 16 set in Q2 and Q3 2009.
Region Q1 Index Q2 Index Change North America 14 5 -9 Asia Pacific 36 32 -4 Central/South America 49 50 +1 Europe 22 10 -12 Global Average for Direction of Leadership 24 17 -7 -------------- --- --- ---
The margin of error within each wave is +/- 4.4%. For complete survey results, please visit www.kornferryinstitute.com.
About The Korn/Ferry Institute
The Korn/Ferry Institute was founded to serve as a premier global voice on a range of talent management and leadership issues. The Institute commissions, originates and publishes groundbreaking research utilizing Korn/Ferry's unparalleled expertise in executive recruitment and talent development combined with its preeminent behavioral research library. The Institute is dedicated to improving the state of global human capital for businesses of all sizes around the world.
About Korn/Ferry International
Korn/Ferry International (NYSE: KFY), with a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, is a premier global provider of talent management solutions. Based in Los Angeles, the firm delivers an array of solutions that help clients to attract, develop, retain and sustain their talent. Visit www.kornferry.com for more information on the Korn/Ferry International family of companies, and www.kornferryinstitute.com for thought leadership, intellectual property and research.
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