Indonesia Highlights
Global Leadership Forecast 2011Jazmine Boatman, Ph.D., Richard S. Wellins, Ph.D., and Rainier Turangan, M.Ed.
The Talent Management Expert
Revolutionize
leadership,
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Indonesia Highlights
Global Leadership Forecast 2011Jazmine Boatman, Ph.D., and Richard S. Wellins, Ph.D.
A WELCOME FROM DDI
© Development Dimensions International, Inc., MMXI. Pittsburgh, Pennsylvania. All rights reserved under U.S., International, and Universal Copyright Conventions.
Reproduction in whole or part without prior written permission from DDI is prohibited.
We are pleased to present this report outlining the
current state of leadership and its practices in the
Indonesian business community. This report is part
of a larger study, Global Leadership Forecast 2011,
the sixth in DDI’s research series on global leadership
issues and practices. The results presented here
contrast the responses from HR professionals and
leaders in Indonesian organizations with other
organizations around the globe.
We heard one overarching theme from thousands
of leaders while conducting this research: The only
thing constant is change itself. Today’s business
landscape continues to evolve at a blistering pace.
Competition is accelerating, and talent has become
a key competitive advantage for organizations.
The big question we wanted to answer is whether
today’s leaders are prepared for the rapid growth
and change that they will face. Are they keeping
up or falling behind? This report addresses several
issues related to today’s most valuable commodity:
• What is the overall quality of leadership in
Indonesian organizations today?
• Do Indonesian organizations have a sufficient
supply of capable leaders to meet tomorrow’s
unknown business challenges?
• What can we do to radically change how we
accelerate the development of our leaders?
• Is it time to radically innovate not only our
products and business models but also how we
manage them?
We are confident that this report will offer you new
insights into Indonesian leadership practices. We
hope it will stimulate your thinking about how you
can institute real change that will enhance the
capabilities of your leaders and your business.
Because we cannot include all the findings in this
report, please refer to the global report for more
information.
Since 2001, 3,366 people from 124 Indonesian
organizations have participated in DDI’s Global
Leadership Forecast studies. Please contact Daya
Dimensi Indonesia for copies of previous reports.
Rainier Turangan, M.Ed.
Director, Daya Dimensi Indonesia
ABOUT DDIFor more than 40 years, DDI has helped the most
successful companies around the world close the gap
between where their businesses need to go and the
talent required to take them there. Our areas of
expertise span every staffing level, from the executive
suite to individual contributors. We excel in:
• Competency and success profile management.
• Selection and assessment.
• Leadership and workforce development.
• Succession management.
• Performance management.
DDI’s comprehensive, practical approach to talent
management starts by ensuring a close connection
between solutions and business strategies, and ends
when you achieve the results you require. We are an
essential partner wherever you are on your journey to
building extraordinary talent.
Daya Dimensi Indonesia has been the authorized
representative of DDI in Indonesia since 1998. We are
proud to have gained the trust to conduct selection,
development, and talent management programs for
more than 400 organizations in Indonesia, including
PT Pertamina (Persero); Medco Energi; Newmont
Mining; PT PLN (Persero); PT Holcim Indonesia, Tbk;
PT Toyota Astra Motor; PT Toyota Motor Manufacturing
Indonesia; PT Telekomunikasi Indonesia, Tbk; PT XL
Axiata, Tbk; PT HM Sampoerna, Tbk; PT Indosat, Tbk;
PT Pfizer Indonesia; PT Heinz ABC Indonesia; Kompas
Gramedia Group; PT Bank Mandiri (Persero), Tbk;
Bank Indonesia; Bursa Efek Indonesia; Citibank N.A.
Indonesia; PT Bank CIMB Niaga, Tbk; PT Bank Central
Asia, Tbk; Universitas Indonesia; Institut Teknologi
Bandung; The National Development Planning Agency
(Badan Perencanaan Pembangunan
Nasional/BAPPENAS); and Corruption Eradication
Commission (Komisi Pemberantasan Korupsi/KPK).
Our vision of “Partner of Choice. People Solution.
Better Indonesia.” helps us prepare Indonesian
organizations to achieve global standards through
completely integrated HR solutions that address
business needs.
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TABLE OF CONTENTS4 STUDY PARTICIPANTS
6 STATE OF LEADERSHIP TODAY
9 LEADERSHIP DEVELOPMENT
10 Critical Skills: The Whats
13 Effective Development Methods: The Hows
15 TALENT MANAGEMENT
16 Selection Systems
17 Performance Management Systems
19 Succession Management Systems
21 MANAGEMENT CULTURE
24 CONCLUSION
26 APPENDIX
26 Demographics
27 About the Authors
27 Partners
STUDY PARTICIPANTSDDI’s Global Leadership Forecast 2011 is the largest global study of its kind.
More than 2,600 organizations provided perspectives on their current state of
leadership and their future talent-related needs. Participating in the study were
1,897 HR professionals and 12,423 leaders from 74 countries.
This report is based on survey responses from HR professionals and leaders
based in Indonesia. An HR professional completed a survey for each
organization or major business unit. The HR professionals then invited
representative samples of their organization’s leaders to complete leader
surveys. The Indonesian respondents are compared in this report to the total
group of HR professionals and leaders in the global sample (see Table 1). To
ensure that no individual organization dominated the results, we selected a
random sample from organizations with more than 100 leaders.
Indonesian organizations were smaller on average than those in the global
sample; that is, there were more small organizations (1,000 employees or less)
and fewer medium-sized and large organizations in Indonesia (see Figure 1).
Less than half (45 percent) of Indonesian organizations were multinationals
(i.e., owned, operated, or had affiliate offices in multiple countries); in the global
sample, 60 percent were multinationals.
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Indonesia Global
HR Professionals 45 1,897
Leaders 600 12,423
TOTAL 645 14,320
TABLE 1 SAMPLE SIZE
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5Indonesia Highlights
The Indonesian sample had fewer first-level and more mid-level leaders
compared to the global sample (see Figure 2). Additional information about
participating Indonesian organizations and leaders is in the Demographics
section of this report.
11%10,001
or more
53%1 to 1,000
36%1,001 to 10,000
23%10,001
or more
40%1 to 1,000
37%1,001 to 10,000
Indonesia Global
FIGURE 1 ORGANIZATION SIZE
32%Senior-Level
Leader
15%First-LevelLeader
29%First-LevelLeader
47%Mid-LevelLeader
Global
6%Executive-Level
Leader
9%Executive-Level
Leader
33%Mid-LevelLeader
29%Senior-Level
Leader
Indonesia
FIGURE 2 LEADERSHIP LEVELS
Today’s leaders are ill-equipped
to handle thechallenges
organizations facein the new business
environment.
STATE OF LEADERSHIP TODAYMost would agree that the past few years have been challenging ones for
businesses worldwide. The economic crisis forced organizations to make tough
decisions and left many suffering in a multitude of ways. However, as the world
economy starts to show signs of improvement, fear is beginning to be replaced
by optimism, and organizations are starting to look toward the future.
Despite this renewed hope, today’s leaders are ill-equipped to handle the
challenges organizations face in the new business environment. In the global
sample, only 26 percent of HR professionals and 38 percent of leaders
considered leadership quality in their organization to be very good or excellent
(see Figure 3). Leadership quality ratings by Indonesian leaders and HR
professionals were considerably lower: Only 17 percent of leaders and 7 percent
of HR professionals rated the quality of leadership among their organizations as
high. These ratings possibly reflect the still-emerging state of Indonesia’s
economy plus the highly competitive nature of employee recruitment as the
economic recovery progresses. As a result, organizations have focused more on
quantity than quality. In coming years Indonesian organizations must address
quality by increasing their investment in training so they can continue to succeed.
6Indonesia Highlights
0%
10%
20%
30%
40%
50%
7%
26%
HR
17%
38%
LDR
IndonesiaGlobal
Perc
ent o
f Res
pond
ents
Who
Rep
ort H
igh
Lead
ersh
ip Q
ualit
y at T
heir
Orga
niza
tion
FIGURE 3 LEADERSHIP QUALITY
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The quality of leadership can make or break an organization. In fact, this
research demonstrated that organizations with the highest quality leaders were
13 times more likely to outperform their competition in key bottom-line metrics
such as financial performance, quality of products and services, employee
engagement, and customer satisfaction (see Figure 4). As the figure illustrates,
when leaders reported their organization’s current leadership quality as poor,
only 6 percent were in organizations that outperformed their competition.
Compare that with those who rated their organization’s leadership quality as
excellent at the opposite side of the graph. There, more than three-quarters
(78 percent) of leaders are in organizations that are outperforming their
competition in those key bottom-line metrics.
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0%
20%
40%
60%
80%
100%
6%
Poor
9%
Fair
27%
Good
53%
Very Good
78%
Excellent
Perc
ent o
f Lea
ders
Rat
ing
Their
Org
aniza
tion’s
Over
all P
erfo
rman
ce B
ette
r Tha
n Co
mpe
titor
’s
Leadership Quality
FIGURE 4 LEADERSHIP QUALITY RELATED TO ORGANIZATIONAL PERFORMANCE
Leadership quality doesn’t just affect the bottom line; it also affects the retention
of the organization’s employees as well as its leaders’ engagement and passion.
Organizations with higher quality leadership retained more employees than their
competition, and they also had more engaged and passionate leaders (see the
global report for more details). Given the importance of leadership for ensuring
business success, this question needs to be answered: What can
organizations do to improve leadership quality?
The Global Leadership Forecast 2011 uncovered three key drivers of leadership
quality (see Figure 5):
1) Leadership development
2) Talent management systems and practices
3) Management culture
To achieve high-quality leadership, organizations need effective leadership
development and talent management systems in the areas of selection,
performance management, and succession management. Also, for leaders to
fulfill their potential to drive the business, management needs to ensure that the
organization’s culture gives people the freedom and opportunities they need to
be effective. These three key drivers provide the structure for the remainder of
this report.
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LeadershipDevelopment
Talent Systems& Practices
ManagementCulture
High-Quality
Leadership
EnhancedPeople
Outcomes(e.g., retention,engagement)
EnhancedBusinessImpact
(e.g., financialperformance,
customersatisfaction)
FIGURE 5 DRIVING BUSINESS THROUGH LEADERSHIP PRACTICES
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LEADERSHIP DEVELOPMENTAccording to the leaders who participated in the global study, leadership
development programs were the primary determinant of leadership quality in
organizations. Based on the global sample, leaders in organizations with more
effective leadership development programs were eight times more likely to rate
the quality of their leaders as very good or excellent. What, then, is happening
now with organizations’ leadership development efforts?
Perhaps in response to the low quality of leadership, far more organizations in
Indonesia increased their leadership development budgets in 2011 compared to
other organizations around the world. Also, more Indonesian organizations plan
to ramp up spending in this area in the coming year (see Figure 6). In 2009
many organizations, especially multinational ones, restrained their development
budgets as the global economic crisis unfolded. With the crisis easing in 2010,
these organizations have refocused on employee development.
9Indonesia Highlights
0% 20% 40% 60% 80% 100%
Indonesia
Global
Increase by more than 10%
3%4%
2% 7%
38% 26% 29%
13% 29% 49%
Stay the same
Increase by less than 10%
Decrease by more than 10%
Decrease by less than 10%
Expe
cted
2012
Indonesia
Global13% 6% 42% 17% 23%
2%2% 20% 33% 42%
Actu
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FIGURE 6 2011 AND 2012 LEADERSHIP DEVELOPMENT BUDGET CHANGES
LEADERSHIPDEVELOPMENT
Talent Systems& Practices
ManagementCulture
High-Quality
Leadership
EnhancedPeople
Outcomes(e.g., retention,engagement)
EnhancedBusinessImpact
(e.g., financialperformance,
customersatisfaction)
Only one in fourleaders in
Indonesia ratedtheir organization’s
leadershipdevelopment effortsas highly effective.
With millions spent on leadership development initiatives each year, it is
unfortunate that only one in four leaders in Indonesia rated their organization’s
leadership development efforts as highly effective, despite Indonesian HR
professionals’ more optimistic opinion (see Figure 7). Without effective
leadership development, Indonesian organizations are leaving their leaders
unprepared to manage in a constantly changing business landscape. They
need to ensure that the resources they put toward leadership development are
having the intended impact.
CRITICAL SKILLS: THE WHATSTo make the most of leadership development efforts, organizations must answer
two questions: (1) Are we investing in developing the right skills, and (2) Are we
developing the right skills for today and for tomorrow? To begin to answer those
questions, leaders were asked to identify the most critical leadership skills
needed in the past three years and those needed for the next three years.
Those in Indonesia identified the following as the most critical skills for
leadership in the past:
1) Improving employee engagement
2) Coaching and developing others
3) Driving and managing change
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0%
20%
40%
60%
80%
100%
Indonesia
13%
38%
49%
Global
25%
40%
35%
Indonesia
26%
49%
25%
Global
19%
44%
37%
Very low or low
High or very high
Moderate
HR LDR
FIGURE 7 LEADERSHIP DEVELOPMENT EFFECTIVENESS
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These priorities indicate that Indonesian organizations focused in the recent
past on talent. When asked about future needs, Indonesian leaders changed
their focus somewhat (see Figure 8). The skills Indonesia’s leaders identified
as the most critical for success in the next three years are more progressive.
Their top three skills were:
1) Driving and managing change
2) Fostering creativity and innovation
3) Identifying and developing future talent
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0% 10% 20% 30% 40% 50% 60%
Indonesia
30%5. Executing organizational strategy
32%
16%6. Building customer satisfaction and loyalty
26%
26%4. Coaching and developing others
32%
39%3. Fostering creativity and innovation
35%
32%2. Identifying and developing future talent
36%
40%1. Driving and managing change
48%
27%7. Improving employee engagement
24%
22%8. Making difficult decisions
23%
GlobalPercent of Leaders Who Report the Skill as Most Critical
(order based on the global findings)
FIGURE 8 CRITICAL SKILLS NEEDED IN THE NEXT THREE YEARS
But this question remains to be answered: Are leaders ready to take on the
challenges of the future? Leaders were asked to rate their own effectiveness in
the leadership skills (see Figure 9). Unfortunately, fewer leaders in Indonesia
rated their skills as effective compared to their global counterparts. Only about
a third of Indonesian leaders claim to be effective in the skills, including the
three most critical for the future (driving change, fostering innovation, and
identifying talent). They are best at building customer loyalty. To improve their
leadership quality and effectiveness, development efforts should focus on the
most critical skills that are less effective—where the pain for failing to improve
will be felt the most in the coming years.
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0% 10% 20% 30% 40% 50% 60% 70% 80%
Indonesia
39%5. Executing organizational strategy
60%
44%6. Building customer satisfaction and loyalty
65%
35%4. Coaching and developing others
57%
34%3. Fostering creativity and innovation
50%
33%2. Identifying and developing future talent
57%
35%1. Driving and managing change
57%
36%7. Improving employee engagement
56%
33%8. Making difficult decisions
55%
GlobalPercent of Leaders Who Are Effective
FIGURE 9 LEADER EFFECTIVENESS IN SKILLS
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EFFECTIVE DEVELOPMENT METHODS: THE HOWSWhile it’s essential that development addresses the most critical skills, ensuring
that the most effective methods are being used to develop those skills is also
important. The most used methods related to the quality of leadership
development were formal workshops and coaching from managers. Also,
organizations with more effective leadership development programs used formal
workshops and coaching more effectively.
HR professionals reported how frequently each method was used in their
organization (see Figure 10), and the leaders reported on the effectiveness of
each method (see Figure 11). HR professionals around the world, including in
Indonesia, reported using formal workshops, manager coaching, and special
projects most often to develop their leaders. Compared to other organizations,
Indonesian organizations used virtual classroom much less often and moved
leaders into different positions for development more often.
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Indonesia
9%Virtual classroom
27%
32%Coaching with external coaches
27%
42%Coaching with internal coaches (other than your manager)
39%
32%Web-based learning (online, self-study courses)
43%
64%Movement to a different position to develop targeted skills
47%
65%Special projects or assignments
68%
80%Coaching from managers
68%
91%Formal workshops, courses, seminars
81%
GlobalPercent of HR Professionals Reporting Method is Used Moderately or Extensively
FIGURE 10 FREQUENCY OF USE OF DEVELOPMENT METHODS
Leaders around the world tended to find the methods most used (formal
workshops, special projects, and manager coaching) also were the most
effective for development (Figure 11). This suggests that the methods
organizations support and promote have had positive results. However,
Indonesian leaders rated the effectiveness of web-based learning and virtual
classroom training lower than their global counterparts. In general, there is still
room for improvement: Only four methods had over half of Indonesian leaders
reporting that they were effective for development. When creating a
comprehensive leader development program, it’s important to remember that
leaders need multiple ways to develop their skills and that a blended approach,
with a strategic mix of skills and methods, will yield the best results. See the
global report for additional information on creating more effective leadership
development programs.
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Indonesia
16%Virtual classroom
28%
40%Coaching with external coaches
37%
24%
Coaching with internal coaches (other than your manager)
44%
47%
Web-based learning (online, self-study courses)
45%
56%Movement to a different position to develop targeted skills
47%
65%
Special projects or assignments
63%
62%
Coaching from managers
66%
70%Formal workshops, courses, seminars
73%
GlobalPercent of Leaders Reporting Method is Effective
FIGURE 11 EFFECTIVENESS OF DEVELOPMENT METHODS
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TALENT MANAGEMENTDevelopment alone cannot ensure that organizations have a ready supply of
capable leaders; it’s just one of the critical components of an end-to-end talent
management process. DDI defines talent management as a mission-critical
process that ensures organizations have the quantity and quality of people in
place to meet current and future business priorities. The process covers all key
aspects of an employee’s life cycle, starting when the organization selects the
right leaders and then continuing as the person’s performance is aligned with an
effective performance management system. It’s fueled with effective
development and leadership succession efforts. Improving the quality of
leadership involves doing all of these things well.
HR professionals around the world were asked to rate the importance of their
talent systems in terms of their impact on organizational success over the next
three years. Although the majority said that development was important, more
HR professionals cited other systems (performance management, selection,
and succession management) as having a more critical impact on organizational
performance. On the whole, these systems, which constitute talent
management, appeared to be clear drivers of organizational success.
Unfortunately, HR professionals worldwide rated the current effectiveness of
most of these systems as dismal (see Figure 12).
For all organizations, including those in Indonesia, performance management
systems were rated as being more effective than other talent systems.
Indonesian organizations also had more organizations with effective frontline
leadership development programs compared to those globally. Leadership
selection and succession were the least effective talent systems in Indonesian
organizations, with only about one in four HR professionals rating them as
effective. The following section discusses each of the talent systems in more
detail, with the exception of leadership development, which was covered in the
previous section.
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LeadershipDevelopment
TALENT SYSTEMS& PRACTICES
ManagementCulture
High-Quality
Leadership
EnhancedPeople
Outcomes(e.g., retention,engagement)
EnhancedBusinessImpact
(e.g., financialperformance,
customersatisfaction)
SELECTION SYSTEMSSelection is arguably the most critical step in talent management because no
amount of development or performance management will make up for a poor
hiring decision. In fact, in our study, effective selection was the talent management
system with the strongest relationship to leaders’ ratings of organizational
performance. According to Indonesian organizations surveyed, 58 percent are
using proven, validated tools for making critical leadership selection and promotion
decisions, nearly double the global finding (see Figure 13).
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0% 10% 20% 30% 40% 50% 60% 70%
Indonesia
22%Leadership succession
22%
42%Performance management
42%
34%Development programs and learning opportunities for senior leaders
33%
36%Development programs and learning opportunities for mid-level leaders
30%
44%Development programs and learning opportunities for frontline leaders
31%
25%Leadership selection
31%
GlobalPercent of HR Professionals Reporting System is Effective
FIGURE 12 EFFECTIVENESS OF TALENT MANAGEMENT SYSTEMS
0% 20% 40% 60% 80%
Indonesia
58%
Validated tests and simulations are used for making leadership selection and promotion decisions.
32%
GlobalPercent Agree or Strongly Agree
FIGURE 13 PERCENT OF ORGANIZATIONS USING VALIDATED TOOLS FOR LEADERSHIP SELECTION DECISIONS
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In Indonesia,82%
of leaders reportedthat their individual
performanceexpectations were tied to corporate
goals and strategies.
Still, 42 percent of organizations are not using validated selection tools. It’s not
surprising, then, that up to 34 percent of leadership hires are considered
failures, according to Indonesian HR professionals (see Figure 14). Regardless
of internal or external hiring, using selection tools that have been proven to work
is important for gathering objective data to make the right hiring decisions.
Otherwise, organizations are leaving these critical decisions up to chance.
PERFORMANCE MANAGEMENT SYSTEMSIt’s critical that organizations effectively manage leader performance because
accomplishing organizational objectives is so closely linked to and dependent
on leaders achieving their objectives. In our study, leaders were asked to rate
specific aspects of their performance management systems (see Figure 15).
In Indonesia, 82 percent of leaders reported that their individual performance
expectations were tied to corporate goals and strategies. Also, 71 percent
reported that their performance management systems accounted for objectives
(the whats) as well as the behaviors (the hows) that help achieve those
objectives. Both of these components are critical to effective performance
management because leaders who achieve their objectives without regard for
others are not effective. (Note: Indonesian organizations should be cautioned
that work plan activities, as opposed to competencies, are not considered part
of the hows).
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66%Indonesia 34%
63%Global 37%
77%Indonesia 23%
72%Global 28%
Success Failure
Exte
rnal
Hire
sIn
tern
alHi
res
FIGURE 14 LEADERSHIP HIRING SUCCESSES AND FAILURES
Organizations around the world were not as successful when ensuring that
performance review discussions provided leaders with clear direction for
enhancing their performance. This indicates that most organizations are using
performance management as more of a way to monitor performance instead of
using the opportunity to improve future performance. Indonesian leaders
mirrored this finding, though 63 percent reported that their performance review
discussions provided them with clear direction.
Performance management should not be a once-a-year event. It should be a
process that monitors, inspires, and improves performance over time.
Managers of leaders need to drive this process by ensuring that performance
discussions provide leaders with clear accountabilities, timely feedback about
their performance, and guidance for helping them capitalize on their strengths
and take advantage of developmental opportunities.
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0% 20% 40% 60% 80% 100%
Indonesia
82%
My performance expectations are tied tobusiness unit and/or corporate goals/strategies.
81%
71%
My performance appraisal is balancedbetween whats (objectives) and hows(behaviors used to achieve objectives).
69%
63%
My performance review discussions provideme with clear direction about how to enhancemy performance.
56%
GlobalPercent of Leaders Who Agree or Strongly Agree
FIGURE 15 ASPECTS OF PERFORMANCE MANAGEMENT SYSTEMS
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SUCCESSION MANAGEMENT SYSTEMSSuccession management tended to be the least effective talent system in
organizations around the world. Succession management is future oriented;
it is about ensuring that organizations have the right quantity and quality of
leaders—at all levels—to meet unpredictable future business needs. Since the
onset of the global economic crisis, organizations have refocused on the role
succession management plays in talent management. Most organizations
suffered greatly from a lack of focus on the future and succession planning.
Bench strength was weaker than they anticipated, and Indonesia was no
exception, with only 16 percent of HR professionals rating their bench strength
as strong or very strong (see Figure 16). For organizations in Indonesia to
continue to grow, grooming future successors will be an important talent
strategy.
Weak orVery Weak Mixed Strong or Very Strong
11% 73% 16%
Weak or Very Weak Mixed Strong or Very Strong25% 57% 18%
Indonesia
Global
FIGURE 16 BENCH STRENGTH TO MEET FUTURE NEEDS
58% of HRprofessionals in Indonesia
have a formalprocess for early
identification of high-potential
talent.
This study focused on three of the many practices required for effective
succession management: identifying and growing high potentials and
transitioning leaders up the pipeline. The good news is that 58 percent of HR
professionals in Indonesia have a formal process for early identification of high-
potential talent, a larger percentage than organizations around the world (see
Figure 17). Furthermore, 60 percent of Indonesian organizations have formal
processes for early growth of high-potential talent. Despite the relatively higher
ratings, there is still room for improvement in this area as evidenced by the low
ratings of bench strength (Figure 16).
The lack of formal processes leaves much to chance when filling the leadership
pipeline and building bench strength. When HR professionals were asked to
explain low ratings of their organization’s bench strength, they pointed
repeatedly to lack of focus, strategy, and formality of succession planning as the
reasons for not having enough leaders who are prepared to move into more
responsible positions.
Another important aspect of succession management is leader promotion. With
74 percent of Indonesian leaders in this research making a leadership change in
the past five years, it’s unfortunate that only about one in three organizations
have programs to ensure that employees make smooth leadership transitions.
This likely explains why the majority of leaders in our study reported that their
leadership transitions were largely difficult. Effective formal succession
programs will help Indonesian organizations successfully manage their future.
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0% 20% 40% 60% 80% 100%
Indonesia
58%
We have a formal process for earlyidentification of high-potential talent.
44%
60%
We have a formal process for earlygrowth of high-potential talent.
37%
36%
We have effective programs to ensuresmooth leadership transitions at all levels.
25%
GlobalPercent of HR Professionals Who Agree or Strongly Agree
FIGURE 17 ASPECTS OF LEADERSHIP SUCCESSION MANAGEMENT SYSTEMS
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MANAGEMENT CULTURETo this point, we have established leadership development and strategic talent
management as major drivers for building leadership capability in organizations.
But talent doesn’t work in a vacuum. An organization’s culture plays a large role
in creating an environment that allows all leaders and employees to live up to
their fullest potential. Even the most capable people cannot thrive in a culture
that does not allow them to make decisions, influence others, and do their jobs
effectively.
We partnered with influential business thinker and professor Gary Hamel, author
of The Future of Management, and his Management Lab to identify the key
factors that either facilitate or hinder how the work of management is carried
out. The factors that impede leaders from being effective include, but are not
limited to, the bureaucracy of processes in organizations, leaders’ level of
influence, and the extent to which values are shared throughout the
organization. These factors affect an organization’s culture and can serve to
either allow leaders to thrive or thwart them.
Leaders around the world were asked to rate their organization’s management
culture by choosing one of two statements. For example, they were asked to
choose which statement best describes their organization: “Organizational
structure is fluid, flexible, and nimble” or “Organizational structure is siloed, rigid,
and hierarchical.” (see Table 2 for a complete list of statements and factors).
Only the more effective of the two statements is presented in Figure 18.
21Indonesia Highlights
LeadershipDevelopment
Talent Systems& Practices
MANAGEMENTCULTURE
High-Quality
Leadership
EnhancedPeople
Outcomes(e.g., retention,engagement)
EnhancedBusinessImpact
(e.g., financialperformance,
customersatisfaction)
22Indonesia Highlights
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Indonesia
53%We have open, vigorous, and uncensored discussionsaround strategy and key business decisions
39%
46%Organizational structure is fluid, flexible, and nimble
46%
55%Our management processes (e.g. strategic planning) are a source of major competitive advantage
56%
61%Employees/Leaders have the opportunity to innovate/create
57%
72%We balance our focus on growth with a commitment tosustainability and socially significant goals
59%
60%Power and influence are held by those who value innovation and change
62%
77%Status and influence are based on ability to lead, contributions,and performance
63%
68%Our company has shared values and aspirations that aremeaningful to our employees
68%
GlobalPercent of Leaders Who Agree with Statement
FIGURE 18 EFFECTIVE MANAGEMENT CULTURE
Ineffective Management Culture Effective Management Culture
STRUCTURE Organizational structure is siloed, rigid, and hierarchical. Organizational structure is fluid, flexible, and nimble.
BUREAUCRACY Our management processes (e.g., budgeting, Our management processes (e.g., budgeting, strategic planning, risk management, business review) strategic planning, risk management, business review) are highly bureaucratic and often a nuisance. are a source of major competitive advantage.
POWER Power and influence are held by those who value the Power and influence are held by those who value innovation status quo. and change.
INFLUENCE Status and influence are based on a person’s formal Status and influence are based on ability to lead, position and accumulated power. contributions, and performance.
DECISIONS Strategic and key business decisions are made mostly We have open, vigorous, and uncensored discussions by those in positions of power, with very few opportunities around strategy and key business decisions. for open discussion.
INNOVATION Senior leaders are the primary visionaries and creators. Employees/Leaders have the opportunity to innovate/create.
VALUES Our company has a set of values and aspirations, but they Our company has shared values and aspirations that are hold little meaning to most employees. meaningful to our employees.
GOALS We almost exclusively focus on top/bottom-line growth. We balance our focus on growth with a commitment to sustainability and socially significant goals.
TABLE 2 MANAGEMENT CULTURE STATEMENTS BY FACTOR
GLOB
AL LE
ADER
SHIP
FOR
ECAS
T 20
11
Indonesian leaders agree that their organizations outperform others in two areas:
status and influence are based on ability to lead, and they balance a focus on
growth with a commitment to sustainability and socially significant goals. However,
major pain points for Indonesian organizations as well as other organizations
around the world were having more uncensored discussions about key strategic
decisions (53 percent of Indonesian leaders agreed with that statement) and
creating a nimble, fluid organizational structure (only 46 percent agreed).
Organizations were split into three groups based on their leaders’ ratings of
management culture. Leader scores for management culture statements were
aggregated by organization, and organizations were labeled as low (leaders
choosing the more effective statement 0–2 times), medium (3–5 times), or high
(6–8 times) in terms of management culture effectiveness. Figure 19 illustrates
that there is still a lot of work to do in this area: Only two in five Indonesian
organizations have a highly effective management culture. This is unfortunate
because, in the global sample, organizations with a highly effective management
culture were three times more likely to outperform their competition in terms of
bottom-line metrics such as financial performance, productivity, quality of
products or services, and customer satisfaction. This finding demonstrates that
instituting more effective management practices can have a profound impact on
organizational success.
23Indonesia Highlights
0%
20%
40%
60%
80%
100%
Indonesia
25%
32%
42%
Global
27%
36%
37%
Low Effectiveness(Score of 0–2)
High Effectiveness(Score of 6–8)
Medium Effectiveness(Score of 3–5)
FIGURE 19 CURRENT STATE OF MANAGEMENT CULTURE
CONCLUSIONTimes have changed. Business processes are evolving at a rapid pace, and
given its importance to organizational success, leadership cannot afford to be
left behind. Unfortunately, the state of leadership today calls for drastic
measures (see Table 3). The majority of leaders in Indonesia as well as the
rest of the world don’t have the skills they need to be effective in this new
landscape. Talent strategies have been neglected: Only one-fourth of the
leaders in Indonesia reported that their organization’s leadership development
programs were effective. Indonesian organizations need to improve the
effectiveness of most of their development methods, but a special focus on
improving web-based and virtual classroom training seems evident because
their effectiveness lagged behind the global norm.
This lack of effective talent strategies has affected current leadership quality;
it also has implications for the future, as evidenced by the fact that only
16 percent of HR professionals in Indonesia rated their bench strength highly.
Talent systems that support leaders throughout their careers can be improved
too. Although Indonesian organizations seem to be focusing on developing their
frontline leaders, the vast majority have ineffective selection and succession
management systems. As they continue to grow, Indonesian organizations
need to prioritize how they can manage talent effectively throughout the life
cycle of their employees to ensure their future viability.
24Indonesia Highlights
Effectiveness of Current Quality of Bench Strength Development (LDR) Leadership (LDR) (HR)
Global 37% 38% 18%
Indonesia 25% 17% 16%
Note: Figures reflect percent of leaders (LDR) or HR professionals rating the factor highly.
TABLE 3 STATE OF LEADERSHIP TODAY
GLOB
AL LE
ADER
SHIP
FOR
ECAS
T 20
11
Indonesianorganizations shouldfocus on opening upthe decision-makingprocess and creating
a more flexibleorganizational
structure that canadjust with thechanging times.
How organizations manage people also should not be overlooked. With only
42 percent of organizations in Indonesia having a highly effective culture, talent
management efforts alone cannot be expected to bridge the current gap in
leadership quality. An organization’s management culture has a tremendous
bearing on whether leadership capabilities can be leveraged to their fullest
potential. Indonesian organizations, like those in the rest of the world, should
focus on opening up the decision-making process and creating a more flexible
organizational structure that can adjust with the changing times.
Considering the state of leadership and business today in Indonesia, it’s time for
organizations to reevaluate which talent and management strategies they
should take with them into the future. Global Leadership Forecast 2011 reveals
how focusing on leadership development, talent management, and
management culture will have a marked impact on the quality of leadership.
This research shows a direct relationship between the quality of leadership and
people and business outcomes. Organizations that transform their talent
management and management culture will have major payoffs. If leaders will
be executing and creating organizational priorities for years to come, shouldn’t
their organizations ensure that they are prepared to do that?
25Indonesia Highlights
APPENDIXDEMOGRAPHICS
2% 1–10
0% 11–50
3% 51–100
4% 101–200
20% 201–500
24% 501–1,000
24% 1,001–5,000
11% 5,001–10,000
4% 10,001–20,000
7% 20,001–50,000
0% 50,001 or more
NUMBER OF EMPLOYEES
55% National
45% Multinational (own, operate, or have affiliate offices outside own country)
PRESENCE IN GLOBAL MARKET
15% First-level (supervisor, team leader, foreman, etc.)
47% Mid-level (leader of first-level leaders)
32% Senior-level (leader/manager of mid-level leaders)
6% Executive-level (leader in a policy-making position)
MANAGEMENT LEVEL
2% Less than 6 months
3% 6–11 months
6% 1–2 years
12% 3–5 years
20% 6–10 years
23% 11–15 years
33% More than 15 years
ORGANIZATIONAL TENURE
0% 25 and under
13% 26–35
52% 36–45
31% 46–55
3% 56–60
1% Over 60
AGE
80% Male
20% Female
GENDER
NOTE: Numbers may not add up to 100 percent because
of rounding.
45 Number in sample
ORGANIZATIONS
600 Number in sample
LEADERS
Indonesia Highlights26
ABOUT THE AUTHORSJazmine Boatman, Ph.D., manages DDI’s Center for
Applied Behavioral Research (CABER), DDI’s hub for
research to support evidence-based management.
Jazmine directs research that measures the impact of
selection and development programs on organizational
performance and uncovers new knowledge and
information about global workplace practices and issues.
With special expertise in measurement and evaluation,
Jazmine has consulted with organizations in a wide
variety of industries.
Richard S. Wellins, Ph.D., is senior vice president at
DDI. Rich is responsible for leading DDI’s global research
programs, launching new solutions, and executing DDI’s
brand and marketing strategies. During his tenure at DDI,
Rich has authored five books on leadership and teams
and written for more than 20 publications on global talent
management. Rich has helped organizations around the
world develop their senior leaders. He also serves as a
judge for CNBC’s ABLA, interviewing dozens of Asia’s top
CEOs each year.
Rainier Turangan, M.Ed., is a director at Daya Dimensi
Indonesia. He focuses on leadership development and
has designed learning programs and provided executive
coaching services to Bank Indonesia (Indonesia’s Central
Bank), Toyota, Bayer, Heinz ABC, Indonesia Stock
Exchange, Holcim, Nestlé, and Shell, among others. He is
also a master trainer for DDI’s learning modules. Rainier
has been involved in managing the local implementation of
DDI’s Global Leadership Forecast since 2001.
PARTNERSThis study was a true global effort, and the authors would
like to acknowledge the invaluable contributions of the
following people:
Management Innovation Research Advisors
Gary Hamel and the Management
Innovation Lab
DDI Project Team
Project Management: Jennifer Pesci-Kelly, Aviel
Selkovits
Participant Recruitment: Malu Arredondo, Amit Arte,
Noemi Barbosa de Luna, Monica Chen, Jesie Dieu, Nikki
Dy-Liacco, Tania Fernandes-Klerx, Ramon Fontaine,
Priscilla Giglio, Lisa Han, Kumiko Hashimoto, Julie
Hogan, Marta Janiak, Arati Karve, Emily Kershaw,
Patrycja Korczynska, Cathy Lavoie, Ellen Lee, Maggie
Liu, Dorothy Lo, Victor L. Magdaraog, Yvonne McGowan,
Simon Mitchell, Marisa Molnar, Stephanie Nam, See Yi
Ngiam, Panmanee Ong-art, Joyce Qi, Julie Rautenbach,
Myra Rehman, Katrina Jane L. Roxas, Retianna C.
Shakina, Arunima Shrivastava, Neil Suchman, Lily Sun,
Charna van der Merwe, Julie Vedrinne, Christien Winter
Research: Michael Kemp, Stephanie Neal
Editorial: Mike Crawmer, Shawn Garry
Graphic Design: Susan Ryan, Janet Wiard
Web: Mark Hamilton
Indonesia Highlights27
APPE
NDIX
To start your leadership revolution
and learn more about DDI’s
Global Leadership Forecast 2011,
please visit
www.ddiworld.com/glf2011
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