LEADERSHIP capability is acknowledged by corporations worldwide to be a key determinant of sustained business success. 91 per cent of Chief Executive Officers (CEOs) from organisations in North America, Europe and the Asia Pacific surveyed by the Conference Board rated leadership as being of highest importance for global growth.

Yet throughout the world, leadership capability is in extremely short supply. The leadership crisis is particularly acute in Asia where 79 per cent of employers face ‘strong to severe talent crunch’ for leadership skills. Changing demographics mean that the situation in Asia can only get worse in the future. Hewitt research shows that between 2000 and 2010, Asia will experience a 23 per cent decline in the numbers of those aged 40-49 – the traditional age group from which leaders have been drawn.

If natural leaders are going to be hard to come by, what about grooming promising talents to be the leaders of the future? Unfortunately, Hewitt research also shows that just one in three CEOs across Asia feels that their organisations are effective at developing leaders. Ironically, this dearth of leadership talent is coming at a time when the Asia Pacific is coming into its own as the region set to lead the world.

Research conducted by the Economist Intelligence Unit last year indicates that many Asian economies will remain among the fastest growing globally, with the average Asian GDP growth forecasted to be at 5 per cent between 2006 and 2020. At the same time, the EPU projects that some 67 per cent of new jobs created globally between 2006 and 2020 will be in Asia. In fact, economists expect China’s GDP to overtake the United Kingdom and Germany within the decade. By 2045, China’s GDP is forecasted to push past Japan and the United States.

The signs are there and they are crystal clear — in the future, Asia will lead the world. The question is: who will lead Asia?

Industry observers have identified several stumbling blocks that stand in the way of leadership development in Asia. In many Asian organisations, an over-emphasis on short-term operations and a lean workforce leave senior management too stretched to have the time, or in some cases, the inclination, to develop leaders. Then, there is the question of lack of internal talent and what is perceived as limited growth opportunities within the organisation. Lastly, the most fundamental reason companies cite for shying away from the task of building leaders is a basic lack of know-how and experience in developing leaders. Simply put, many organisations haven’t the faintest idea about how to go about developing leaders.

Not that they haven’t tried. Many corporations are more than willing to spend money on leadership development. In fact, some literally throw money at all manner of leadership development programmes only to step on the brakes when the Return on Investment leaves much to be desired.

The fact of the matter is that money alone will not buy leadership development. The experience of the Best Companies shows that successful leadership development can only take place when the Board and the CEO own and champion the cause, and are held accountable for producing concrete results. At these top companies, the Board and the CEO are committed wholeheartedly to making available every resource necessary for sustained leadership development.

The championing of leadership development by senior management is especially critical because it has been proven that internal leadership development is more effective than recruiting leaders externally. Data from The Bureau of International Information Programmes shows that companies that promoted CEOs from within performed 11.7 per cent better over the following three years than those whose CEOs were recruited from the outside.

The first step in the process of building a pipeline of leadership talent is to clearly identify what is required of the leader of the future. In so doing, we must be willing to break with the past and appreciate that the things that carried us to success as leaders in the past will become increasingly irrelevant in the future. For example, the balance between IQ and what we have come to know as EQ is now stacked in favour of EQ. The ingredients vital for tomorrow’s leader include outstanding inter-personal skills backed by deep self awareness and inner passion to achieve and self actualise.

As such, corporations need to focus squarely on the future and draw what they require of leaders very directly from the business of the future, guided by the vision and key strategies to fulfil that vision. Only then can they assess and identify those that offer the greatest potential as leaders.

Moving on, corporations must then adopt a holistic, integrated approach to the development of high potential talent in their midst. Thanks to research on learning organisations, we know now that we learn most effectively “on-the-job”. This suggests that we would do well to focus on action or experiential learning based on “live” case studies that are directly relevant to our particular workplace.

Consider for example how development programmes for high potential talents at the Best Companies comprise a wide range of experiential learning approaches. These approaches include developmental assignments, internal training and internal coaching and mentoring, among other things.

When it comes down to nurturing potential CEO candidates, the approach is to focus on aggressive leadership assignments and coaching. Potential leaders are placed in stretch assignments to strengthen their capabilities in key areas of operation. At the same time, these assignments are structured to extract maximum learning value from the CEO-to-be.

CEO candidate coaching typically involves behavioural coaching over a 12-18 month period as well as formal training such as public speaking and operations. To be truly effective, leadership development programmes have to be rigorously executed and monitored at the highest levels. At the top companies, not only are the specific developmental needs of CEO candidates carefully assessed, their progress is measured and closely scrutinised by the Board every quarter.

Throughout Asia, corporations pour good money into leadership development only to be disillusioned by poor or patchy returns. What we have to realise is that there is no shortcut to leadership development. To make good on their investment in their leaders, companies need to rigorously execute a three step programme: firstly, identify exactly what you require in your future leaders; secondly, assess the degree to which these capabilities are available in your organisation, and thirdly, take the time to develop leaders with these desired traits through integrated programmes that emphasise action oriented learning. Only then can your investment in leadership development yield positive returns where it matters most — business results.