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2010 Q2 Korn/Ferry Confidence in Leadership Index Reverses Course, Shows Declining Confidence in Corporate Leaders

September 7, 2010
Research Shows Highest Concerns are for CEO and Board of Directors' Leadership Ability

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.

SOURCE Korn/Ferry International

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