The top 5 challenges for leaders in the workplace and how to overcome them

The demands on leaders in the workplace are stacking up. If climate change, war, and global economic volatility weren’t enough, add the ever-changing nature of work, targets for diversity and sustainability, alongside digital upskilling, artificial intelligence, and the unicorn hunt for people who can manage all of the above… and have soft skills.

Here are the top 5 challenges leaders face, and the solutions.

1: Agility in constant change

Agility boosts business. A lot. A 2022 report from the Agile Business Consortium estimated a 237% increase in commercial performance for organisations whose leaders understand and build in agility.

The consortium defines an agile organisation as one that can adapt quickly to market changes, internally and externally, and lead change in a productive and cost-effective way — without compromising on quality.

It’s unsurprising that it leads our top 5. Despite the recognition of its importance, 48% of organisations see it as their biggest challenge. 

Solution: Agility must infuse the entire workplace culture from the top down. A successful CEO will be energetic and forward-thinking — and open to new ways of working. Our own research shows that 89% of leaders considering agility in change to be a challenge but transmitting this agility — from the C-Suite to the interns — is crucial.

2: Adapting to business reorganisations 

The Great Restructure is a troubling buzz phrase for 2023. There were 2,552 company insolvencies in England and Wales in May 2023 — up 40% on the previous May, according to the Insolvency Service, while US corporate bankruptcy hit a 12 year high at the start of 2023.

Leaders handling restructuring must navigate many risks: the inevitable plummet in employee morale on the inside and brand damage on the outside, as well as the complexities of downsizing or merging.

Solution: For 89% of leaders, adapting to reorganisation is a major challenge. But the strategic redeployment of talent is key to survival and supporting HR in healing and re-bonding teams will be paramount. Alongside this, empathetic outplacement can lessen the negative brand impact — of exiting employees publicly sharing their bitterness at a bad parting of the ways and boost the morale of those who remain.

3: Recruitment and retention 

Talent is scarce and employees aren’t staying for long — 2 years 3 months is the average tenure for Gen Z and 2 years 9 months for Millennials. 

Solution: Recruiting from within is a logical route — with the right processes in place, redeploying or promoting staff can help capitalise on talent that you have been systematically upskilling. Workers who have had quality training, mentoring, and career progression are more likely to commit (see point 5).

It may not be always possible to recruit from within.

Solution: A transparent workplace culture as well as the obvious inducements of salary and benefits, and a great workplace culture attracts quality applications. This can encompass everything from well-signaled diversity and inclusion and sustainability commitments to flexible working.

Transparency connects a workplace culture to potential candidates and is, in itself, a draw. A Slack survey in 2018 reported 87% of workers were seeking greater transparency in their next employer. And this was before the shocks of the pandemic, global economic crisis, and the Great Resignation.

A wise CEO understands it’s no longer them and us. It’s just us.

4: Employee motivation

Keeping workers happily on task is alchemy. Gallup survey results showed a drop in engagement among US workers from 36% in 2020 to 32% in 2022. Among the respondents, 18% stated they were actively disengaged.

Solution: Alchemy isn’t easy — but refer to the importance of workplace culture (above) with its key ingredients of inclusivity, diversity, flexibility, and transparency — and add alignment to purpose. The sharing of values and goals has never been more important at work, whether it’s about leadership teams agreeing direction or individuals feeling a sense of ownership in their company’s success.

Good communication is essential to all of this, and the CEO needs to lead the way.

5: Adequately assessing talent 

In a recruitment drought it would be folly to miss undiscovered talent. Junior employees with great potential may slip through HR’s fingers if they aren’t soon spotted and tagged for future greatness. And given the short average tenure of Gen Z and Millennials? There isn’t much time to unearth the treasure.

Solution: Our research shows 76% of leaders recognise that leadership development programs will be increasingly important when it comes to reskilling employees and over 79% see their importance growing for recruitment and retention.

At least 75% of all respondents agreed such programs will become more important in rapport building and psychological safety.

An ongoing skills assessment framework, alongside a well-designed system of career progression, is the kind of groundwork that pays dividends.

It should begin as soon as the onboarding is over — and be part of a structure of career progression that can stretch all the way to the C-Suite.

Are your leaders coming up against these 5 challenges? LHH’s Leadership Development programme can help you, help them.