This article is the second in a ten-part series by professional services firm Deloitte which will explore the new world of work, the top talent challenges, and how leaders can begin to address them.

Organisations around the world are struggling to strengthen their leadership pipelines, yet over the past year businesses fell further behind, particularly in their ability to develop Millennial leaders.

For the third year in a row, leadership soared to become one of the most pressing talent challenges faced by global organisations. Nearly nine out of 10 global HR and business leaders (86 per cent) cited leadership as a top issue. Fully 50 per cent of respondents in our survey rated their leadership shortfalls as “very important.” Yet only 6 per cent of organisations believe their leadership pipeline is “very ready” — pointing to a staggering capability gap.

If nearly every company recognises leadership as a critical talent problem, why are so few companies making any progress in addressing it?

The short answer is that many companies treat leadership sporadically, confining development to a select few employees, failing to make long-term investments in leadership, and neglecting to build a robust leadership pipeline at all levels.

For all the talk about leadership as a CEO-level priority, too many companies do not consistently invest in this area. Issues that hold back effective leadership development include:

• Leadership for the few, not the many.

At the top of the corporate pyramid, fewer than 50 per cent of C-suite executives feel they are receiving any development at all. Meanwhile, lower down in the organisation, just 6 per cent of survey respondents report they have “excellent” programmes in place to develop Millennials. This is despite the fact that 53 per cent of Millennials aspire to become the leader or senior executive of their own organisation.

• Lack of consistent investment.

Many organisations view leadership as a short term training programme or series of episodic events that are funded one year but not the next. Companies that “get it” (GE, for example) invest in developing leaders during good times and bad rather than treating it as a luxury they can only afford in strong years. In fact, research shows that high-performing companies spend 1½ to two times more on leadership than other companies, and reap results that are triple or quadruple the levels of their competitors

• A weak leadership pipeline.

Unless developing leadership is treated as an ongoing, strategic initiative by HR and the business, leadership pipelines will be weak and potentially impact the ability of the business to deliver on its strategy.

Faced with these challenges, organisations often believe they can simply “buy” a solution to develop leaders. Off-the-shelf leadership development solutions are fragmented and of inconsistent quality. With so many models and approaches — from large firms to business schools to boutiques — it is hard for many companies to architect the tailored yet integrated experiences they need.

Despite these challenges, new data-driven tools offer innovative approaches to help accelerate leadership by better assessing leadership qualities, understanding career patterns of successful leaders, and learning what development works best.

For example, companies can now look at talent movement data and use people analytics to see which job experiences and backgrounds produce the best leaders. They can then target training that best prepares leaders to learn from this experience, and use assessment tools to measure capability uplift and readiness for the next level.

As the global economy gathers momentum, companies need to seize this opportunity to transform their leadership development programmes from a perennial question mark to a source of strategic strength.

Where companies can start

• Start with commitment to leadership development from the top.

Without CEO ownership, leadership development will likely never be a long-term commitment. Engage top executives to maintain a continuous investment in leadership development.

• Answer the question: Leadership for what?

Begin a conversation about your top business priorities. Then, build a capability framework for selection, assessment, development, and succession that defines the leadership you need for today and tomorrow. Keep the model simple — it should be your “language for leadership” across the enterprise.

• Develop inclusive leaders at all levels.

While many executives worry about top leadership, mid-level and first-level leaders actually operate the company and are the future strategic leaders of the organisation. They also interact with customers every day. Capable and engaging managers and supervisors can drive performance, foster engagement, and increase retention. This requires focusing on growing segments of leaders such as Millennials, global leaders, and women — and tailoring development to their unique needs and preferences.

• Make talent development and succession a priority.

Reward leaders for developing successors and sharing talent. Without a process to seed and feed the pipeline with the best, most diverse talent, your leadership investments will not deliver value.

Bottom line

In today’s competitive business environment and rapidly evolving world of work, organisations must continuously develop a robust portfolio of leaders who are ready to engage employees, push forward growth strategies, drive innovation, and work directly with customers. Companies that fail to invest continuously in the leaders of tomorrow may find themselves falling behind their competitors.

For more information about Human Capital Services at Deloitte, contact Jessica Mello, Director of Consulting at Deloitte, on 295-1500 or at jessica.mello@deloitte.bm

Deloitte’s 2015 Global Human Capital Trends Dashboard is available at www.deloitte.com/hcdashboard.