HIGH MANAGEMENT 31 insights into leadership 2005-2006 Leadership Forecast Study, conducted by consulting firm Development Di mensions

International (DDI), sought to examine how they are perceived in the wo rld the strengths and capabilities of leaders, which means being a leader, that development practices are being used, which different perceptions about leadersh ip and what the relationship between leadership and organizational performance will many experts are warning about the impending shortage of leaders in busines s, caused by the retirement of much of today's leaders. And they warn, though, t hat the loss of experienced leaders with a significant body of knowledge about t heir companies and their sectors of activity may represent a risk to growth. The Leadership Forecast 2005-2006 study attempts to map the business leadership of the planet. Differs from the previous sample to include a wider world, greater n umber of participants and raise new issues and topics. This study was 4559 leade rs from all levels and 944 human resource professionals (HR), from different com panies, 36 industries, located in 42 countries, including Brazil. Of the organiz ations studied, 63% employ over a thousand people. 31 discoveries were made, her e divided into six topics: effectiveness, leadership development, turnover, succ ession, pressures and motivations. J Effectiveness Discovery 1: Leaders believe that "the ability to achieve the goals" is what gen erates more respect for leadership. (See Figure 1, next page.) Compliance with f inancial and organizational goals is that more translates into greater recogniti on for the leaders and also the main priority of these professionals. Then, amon g the actions that further ensure greater respect for the leaders of the organiz ations analyzed, appear 'ability to take a stand and make tough decisions "and" ability to create a strategy or vision for success. " HR professionals, in turn, have listed first the "ability to mobilize and motivate the team." From his poi nt of view, leaders should focus on getting the commitment of their employees, s ince then the performance will come naturally. HSM Management julho 57-August 2006 HR professionals say their leadership training programs are of high quality Discovery 2: About a third of the leaders who emerge from within the organizatio n fails to deal with evil people and lack of interpersonal skills. What companie s meet the leaders did not seem the same that causes failures. HR professionals report that 65% of internally recruited leaders remain in office and are success ful. If the remaining 35% fail for lack of interpersonal skills, perhaps because , when selecting new leaders internally, take into account only the technical ex pertise and past performance. New leaders must be evaluated based on the require ments of the position they occupy. Discovery 3: In the last six years, the HR de partment has lost confidence in the leadership, while leaders have gained confid ence. Over time, HR professionals have relied less on leaders of the organizatio n, perhaps by recognizing the increasing demands placed on their shoulders. At t he same time, factors like the economic difficulties of the period between 2000 and 2003 may have given the departure of skilled business leaders. The best kept in their positions and are now stronger and better positioned for the challenge s ahead. Discovery 4: Three out of ten leaders do not have the essential qualiti es for effective leadership. Over the past 30 years, DDI has identified the qual ities that can be taken as indicators of potential and performance of a leader, divided into four categories (see box on page 54). Discovery 5: A firm leadershi p makes it more likely the successful execution of business strategy. Believe th at strong leadership can make the difference between success and failure organiz ation. To put this assumption to the test, the leaders divided into three groups -poor, on average, and strong, based on the qualities that we mentioned previous

ly. We measured the percentage of business strategies that were successfully imp lemented by these groups separately. We conclude that strong leaders can increas e the percentage of successful executions of at least 22 percentage points. Leadership development Discovery 6: Only half of the leaders are satisfied with the development opportu nities offered by their organizations. Unfortunately,€many companies are not of fering its leading development opportunities of high quality. Only 53% are satis fied in that aspect. And this percentage has changed little over the past two ye ars. 26 16 14 13 11 6 6 4 3 1 Figure 1 - Shares of leading that generate more respect Ability to achieve goals Ability to take a stand and make tough decisions Abilit y to create a strategy or vision for successful interpersonal skills Ability to mobilize and motivate the team ethic Integrity Creativity and innovation Other E xpertise Ability to work in other countries and cultures Percentage of leaders who selected the factor HSM Management julho 57-August 2006 Discovery 7: HR professionals see improvements in the quality of programs for de veloping leaders in the last four years. In greater quantities than in previous years, HR professionals tend to claim that their programs of leadership developm ent are high or very high quality. Still, one quarter of them believe that such programs are of poor or very poor quality. Most respondents (66%) believes it will be harder to find senior leaders in the future Discovery 8: The formal training is the most common practice in developing leade rs, but the delegation of tasks and special projects are most effective. Many fu ndamental learning experiences outside the control area of HR. This applies to t he simple observation of colleagues and through trial and error in the workplace . At the same time, only 51% of leaders said the participation in formal trainin g programs was an important component to their success. Discovery 9: Leaders hav e great benefits with the use of personal mentors and coaches. Leaders' ears, 51 % said they already have paid for a coach or a mentor. This specialized attentio n and personalized offers individualized diagnosis of their needs, feedback abun dant and constant review of the results. Discovery 10: Less than half of leaders has a development plan. The leadership development has greater impact when focu sing on specific strengths and weaknesses. We found that 59% of the leaders were committed to some kind of evaluation on its strengths and its needs, but only 4 2% had a concrete development plan. Discovery 11: Organizations with programs to develop high quality leaders and formal plans for managing the succession have superior performance. We found statistically significant relationships between t he quality of leadership development, the presence of management succession plan s and a series of performance indicators such as profit margin and return on cap ital. Turnover Discovery 12: In the last two years, the turnover of leaders fell almost a third . In part because of economic stability in many countries, organizations that pr eviously passed by ongoing processes of restructuring and downsizing have reduce d this tendency. But many leaders and companies still feel uneasy about the econ omy. Discovery 13: The current leaders are loyal and are more motivated than eve r. About 90% of ears leaders have a sense of loyalty to their organization, espe cially the seniors. Of survey participants, 54% said they were more motivated to day than two years ago. Discovery 14: One in four leaders thought about giving u

p his leadership position, because of the desire to pursue personal goals or car eer. Among the respondents, the more likely to resign are the leaders of the ini tial layers of management (35%), they face the transition from individual contri butor to the leadership role. Among his reasons stand out the desire to redirect his life, the difficulty in dealing with pressure and stress, dissatisfaction w ith the returns achieved and the feeling of not being qualified for the job. Figure 2 - We are too demanding with senior leaders? (Responses from leaders) Figure 3 - We are too demanding with senior leaders? (Responses from HR) Totally agree 10% disagree 10% Absolutely Under 30% Totally agree 8% disagree 11% Absolutely Disagree 45% Disagree 51% HSM Management julho 57-August 2006 Succession Discovery 15: Nearly half of succession plans can not support the development of future leaders. We ask that HR professionals rate the strength of different qua lities and characteristics of management succession in their organizations. Prac tices related to leadership development received some of the lowest grades.€Dis covery 16: The career promotions are more successful when the succession plans r ely on the support of the CEO, involving the line managers and collect objective data on candidates. We identified three characteristics that drive the success in selecting new leaders: involvement of the CEO or the upper echelons; involvem ent of line managers in identifying and / or development of candidates; collecti ng objective data on performance and potential of the employee. Figure 4 - Facto rs that lead to imbalance between work life and Discovery 17: In future, more qu antity of work that hard to fill leadership positions in 72 are expected me to a ccomplish senior. 67 Impulse internal realization Many experts agree that, as th e postwar generation chea nature of the business sector or 49 gar retirement age , organizations will live the loss of senior leaders and ambition to succeed or 49 climbing the career of midlevel. HR professionals My supervisor / manager alr eady seeing this trend: the majority hold on me 22 (66%) believes it will be har der enas people do not contribute 20 against senior leaders in the future. as th ey should Inefficiency or problems with the administration of the time 18 0 10 20 30 40 50 60 70 Percentage of leaders who selected the factor 80 Figure 5 - Motivation of leaders to get a promotion Desire to improve or expand their skills Desire to contribute more to the compan y remuneration status and recognition to improve position to aspire to other pos itions and other companies wish to acquire power and influence Other 5 13 31 20 51 72 70 Discovery 18: One-third of succession planning is ineffective and has undergone improvements over the last two years. HR professionals gave a 4.6 for the effect

iveness of their management succession. Two years ago, this note was slightly hi gher: 4.8. Discovery 19: Half of the organizations have a succession plan, but t here is evidence of increasing use of these plans over the past two years. While succession management is a crucial activity, virtually no change in the percent age of organizations have succession plans since 2003. Discovery 20: Organizatio ns provide increased internal promotions to fill leadership positions. Just over a third of HR professionals (37%) provides increased 0 10 20 30 40 50 60 70 Percentage of leaders who selected the factor 80 HSM Management julho 57-August 2006 On average, leaders are working 51 hours per week. It is not surprising that the y feel overloaded number of leadership positions filled by internal candidates. Although not as st rong as in recent years, the trend remains. Discovery 21: Though the organizatio ns to focus on succession planning at the highest levels of leadership, one in f our also has plans for other hierarchical levels. We found that 28% of all leade rs in organizations (regardless of level) appear with the support of a managemen t plan for the succession. Pressures Discovery 22: Between one quarter and half of leaders at all levels think too mu ch is expected of senior leaders today. Both HR professionals (38%) as the leade rs themselves (45%) agree with the statement that is expected of other senior le aders today, in terms of personal qualities, skills and knowledge (see Figures 2 and 3 ). Discovery 23: The leaders in general are concerned primarily with cust omer relations, cost control, harnessing the talents and quality. These are the priorities. Senior leaders, specifically focusing on the growth and use of talen ts. Figure 6 - Sources of learning for leaders Observation of other Trial and error at work My current principal / supervisor R eadings Coworkers Formal Training Other directors / supervisors undertaking form al education (eg university) Formal training in the workplace Directors / superv isors from previous jobs Colleagues from other Participation in business associa tions or professional organizations formal help of a coach or mentor staff in pr evious jobs Colleagues and friends Family Internet and online resources 14 30 27 27 26 36 58 56 54 53 51 49 47 46 68 67 Discovery 24: Compared to six years ago, rose nearly 20% the number of leaders f ocused on talent management and cost control. The talent management cycle involv es the employee in the company: how selected, developed and exploited. Discovery 25: Three out of ten leaders have difficulty finding the balance between person al life and work. On average,€leaders working 51 hours per week. If you add to that the family pressures and other personal obligations, it is easy to see why they feel overwhelmed, especially the intermediate level. Discovery 26: The imba lance between work and personal life translates into high turnover and therefore higher costs. Organizations whose leaders can balance work and personal life ha ve lower turnover between one and five points in all levels of leadership. Disco very 27: Personal ambition and need for achievement are factors that lead to imb alance between personal life and work (see Figure 4). Leaders struggling to reac h that balance work six hours more per week.

0 10 20 30 40 50 60 70 Percentage of leaders who selected the factor 80 HSM Management julho 57-August 2006 Discovery 28: Although the balance between personal life and work to improve ret ention, only one of four organizations bother to promote it actively. Businesses that face this issue proactively present about 2% more than the retention of re active approach. Motivations Discovery 29: Three out of four leaders wish to be promoted, mainly because they want to apply their skills and contribute more to the company. When asked about their motivations to advance their careers, most participants mentioned the des ire to grow and contribute more to the company (See Figure 5). Only 39% can be e mbedded in the category "highly ambitious", while 8% have no desire to climb pos itions. Discovery 30: Most leaders arrived at his position in preparation for th is. A total of 64% said they had to develop the capacity to lead. Leaders can be divided into four groups: Born to lead. Always been viewed as leaders and leade rship is something natural. Rewarded by success. The leadership came as a reward or recognition indicators of leadership potential by experience and knowledge, sometimes for having taken risks. Promise of leadership preparations. Were ident ified early Motivation (propensity to lead) aspires to climb the career and acti vely pursues opportunities for leadership. and trained for leadership by mentors Authenticity: The promise is genuine and true. It is healthy, safe and inspires confidence. or special programs. Ability to obtain the best in people: It maxim izes the talent, inspiring performance, Self-made guide. They prepared themselve s for others toward common goals. the gradual climb. Tend to have deficiencies i n training and staff development rely much in the past. Agile Learning: Learn fr om mistakes, incorporates new information, it is curious. Receptivity to feedback: Seeks and uses the opinions and comments it receives, a ccepts criticism, is humble. Dexterity complexity Adaptability: Accepts change, adapt quickly, can balance th e many demands. Conceptual thinking: Has breadth of mind, believes many views an d link them know. Ability to surf the ambiguity: Simplifies complex situations, see halftones. Balance between cultural values and outcomes framework: It has st yle and personal qualities that fit the company culture. Passion for results: It 's director, overcomes the problems, refuses to give up. Discovery 31: Leaders learn mainly by watching others and by trial and error. De spite the many forms of learning used (see Figure 6), the two above are the most common. © DDI The study was prepared by Paul R. Bernthal and Richard S. Wellins, respectively director and senior vice president of global consulting firm Development Dimensi ons International (DDI). HSM Management julho 57-August 2006