Why you need to develop a system of leadership – moving beyond the individual

What leadership paradigm are you currently focused on?

Global research and executive surveys show that the ‘leadership gap’ is a critical concern for top executives, with an overwhelming majority of CEOs admitting they lack the leadership bench strength necessary to execute their business goals. According to research from Korn Ferry, only 14% of CEOs believe they have the leadership talent they need to execute their growth strategy. Conversely, this means 86% of CEOs recognise a distinct leadership gap preventing their organisation from scaling effectively.

With this reported leadership capability gap, the question arises: how much of this gap is individual leaders’ skills and competence versus collective leadership as a system? What do I mean by that? I was consulting to a company recently that is a supplier to the resources industry. Talking with the Executive Team, they were lamenting the lack of buy-in and sense of urgency from frontline leaders in embracing and driving new initiatives as part of their strategy. Words like ‘change resistant’, ‘not holding people accountable’, and ‘lacking capability to step up’ were used by Executives to describe these frontline leaders. When I had an opportunity to speak to the Frontline Leaders, they talked about ‘the goal posts keep changing’, ‘priorities are unclear’, ‘the organisation’s information and communication systems are ineffective’, ‘every month it seems like there is a different message about how we are expected to think and behave’ and ‘senior leaders don’t seem to care about how all this is impacting us and our people’.

So what’s really going on here? Is it just frontline leaders lacking the skills to lead change effectively? Maybe that’s a part of it. However, let’s say all the organisation does is put these leaders through a frontline leadership training course, and that’s all that happens. Is this organisation going to magically start to see behaviour change that will drive the execution of the strategy with speed and effectiveness? The answer is no. In this example there are many causal factors as to why frontline leaders are not getting the traction the Executive want them to have with improving performance (and culture for that matter). Any human being that works inside a system where there are unclear priorities, poor access to data, poor communication systems, mixed messages and a feeling the people above just don’t understand what it’s like for us (so how can we trust them), will result in at least inertia, or worse, decreased engagement, commitment and productivity.

To improve leadership in this organisation and others, it requires us to stop treating the leadership capability gap simply as a need to throw more leadership training programs at people. It requires us all to think of leadership as a collective system, not just skills gaps in individuals. It requires us to develop curiosity about the causal factors that are influencing the leadership system in our unique organisation and take a systemic approach to addressing them. Now, I run a consultancy company that offers leadership development programs as part of the work we do. Using an example of an organisation like this, I can’t in good conscience agree for us to deliver a frontline leadership program without saying to the organisation: unless you develop a plan to work on the whole leadership system, you are only going to get about 15–20% of the impact you want and need to increase leadership capability and improve performance.

The data supports this

According to data from McKinsey and the Josh Bersin Company, only 11% to 25% of organisations report that their leadership development programs significantly improve real business performance. CEOs don’t hate leadership development; they hate leadership development that feels like an academic exercise unrelated to their immediate strategic goals. They don’t want to develop generic leadership, they want the organisation’s strategy to be executed effectively and they want leadership capability built in a way that aligns with and supports this.

Evidence supports trends globally of CEOs wanting to cut back on development budgets because they are not seeing a link to real behaviour change and improved organisational performance. This is because organisations are not taking an approach to building leadership as a system.

Let’s talk more about leadership as a system

Leadership development programs can be a useful but nowhere near sufficient lever in developing leadership capability that is scalable and sustainable. The majority of organisations I talk to share their plan for building leadership capability as delivering ‘leadership programs’ for different leadership levels, falling into one or more of:

• Leadership skills development workshops
• Coaching
• Mentoring

Now, I have been a leadership and culture development consultant for 20 years, having designed and delivered a number of these initiatives. However, I have come to understand how limited and sometimes even detrimental they can be if the whole leadership system is not supportive of new ideas and learning. If I had a dollar for every leader that has gotten good learning out of a program I have run, but then over time become frustrated and disengaged because the system doesn’t support them taking a different approach, I’d have a number of very full piggy banks (or crypto wallets). This leaves employees frustrated, HR frustrated and CEOs frustrated. It’s lose-lose-lose. It results in CEOs then being less willing to invest in development. If organisations don’t start treating developing leadership capability as a system, they will get left behind.

So what does treating leadership as a system look like?

Organisations need to aim for scalability, sustainability, risk mitigation, and organisational capability when it comes to improving leadership. We can throw in the aim for improved individual competency as well, because it is important but often the only variable that gets a lot of attention. HR and L&D leaders have been trained for decades on ‘competency frameworks’—the idea that if we just teach every manager to listen better or give feedback, leadership improves. An evolving understanding of the levers that affect behaviour change and performance means this thinking is limited. Focusing only on behaviours is like trying to recharge a car battery while ignoring the fact that the battery is damaged.

Below is the difference between approaching leadership from an individual behavioural view versus a systemic leadership view.

“Individual training doesn’t stick in a broken system.”

We can send a manager to a world-class empathy workshop, but if our performance metrics only reward short-term numbers, the system will force them to drop that behaviour. Behaviours are a product of the environment. If we don’t fix the system (incentives, communication channels, decision rights), we are wasting our L&D budget.

“Systemic leadership solves the ‘single point of failure’ risk.”

Relying on heroic individual leaders makes the organisation fragile. When a great leader leaves, the team crumbles. A systemic approach ensures that leadership capability is embedded in our processes, rituals, and culture—meaning the organisation excels regardless of any single individual’s departure.

“It shifts HR from ‘fixing people’ to ‘designing capability’.”

Instead of playing whack-a-mole with underperforming managers, a systemic view lets HR act as organisational architects. They focus on how information flows, how decisions are made, and how teams collaborate. This elevates HR from a reactive training function to a proactive business driver.

Imagine a city with terrible traffic congestion. The behavioural approach says, ‘Let’s send every driver to advanced driving school so they are more aware and skilled.’ But the systemic approach realises the issue isn’t the drivers—it’s that we have two highway lanes merging into one with no traffic light. No amount of driver training fixes a poorly designed intersection. In our organisations, we need to fix the intersections.

Instead of asking: “What training does John or Jane need to be a better leader?”

Ask: “What is preventing leadership from happening effectively between their team and marketing, or finance, or IT?”

What are the key levers for developing a leadership system (and not just running leadership development programs)?

To transition from running isolated training programs to building a functioning leadership system, HR leaders need to look at the organisation through an architectural lens. A leadership system is created when an organisation aligns its operational environment to naturally foster, support, and scale leadership capability.

The core levers an organisation must address to build a whole leadership system can be categorised into four foundational pillars:

1. Governance & structural levers

These levers dictate who has the authority to make decisions and how work is structured. If the structure is overly bureaucratic, even the most capable leaders will be paralysed.

• Decision rights & delegation frameworks: Clearly define who owns which decisions (e.g. using frameworks like RACI). A system breaks down when leaders are forced to escalate minor decisions due to rigid hierarchies.
• Organisational design & spans of control: Ensure managers have reasonable spans of control. If a leader has 25 direct reports, no amount of behavioural capability will allow them to lead effectively; the system itself has set them up to fail.
• Meeting & ritual architecture: Establish formal organisational cadences (e.g. cross-functional steering committees, weekly alignment rituals) that force collaborative leadership to happen by design, rather than relying on individuals to proactively schedule them.

2. Process & integration levers

These are the operational mechanisms that connect different parts of the business. Leadership fails when processes create silos.

• Cross-functional communication channels: Create formal channels and shared platforms where data, context, and strategic updates flow transparently. Systemic leadership relies on leaders having access to the same ‘single source of truth’.
• Integrated talent pipelines: Connect leadership development directly to succession planning, recruitment, and onboarding. The system should automatically identify high-potential talent based on systemic contributions, not just individual visibility.
• Conflict resolution & escalation paths: Standardise how disagreements between departments or leaders are mediated. A healthy system expects friction and provides a clear, objective path to resolve it without destroying relationships.

3. Reinforcement & alignment levers

People do what they are measured and rewarded for. These levers ensure that the organisation’s formal incentives match the desired leadership culture.

• Systemic performance metrics (KPIs): Shift from purely individual or siloed metrics to shared, overlapping KPIs. For example, rewarding a Sales Leader not just on sales volume, but on cross-functional alignment with Product and Customer Success.
• Incentive & recognition systems: Ensure that promotions, bonuses, and public recognition are tied to how outcomes were achieved (e.g. building team capability, fostering psychological safety) rather than just the raw output.
• Continuous feedback architecture: Move away from the annual 360-review process toward pulse surveys, continuous upward feedback loops, and peer-review mechanisms embedded into regular workflows.

4. Cultural & environmental levers

This is the ‘invisible infrastructure’ of the system—the psychological environment that dictates how leaders behave when no one is watching.

• Psychological safety mechanisms: Put guardrails in place that protect leaders and teams when they take calculated risks, voice dissenting opinions, or admit failures. If the culture punishes mistakes, the system will default to risk-aversion.
• Shared leadership language & principles: Establish a unified, organisation-wide definition of what ‘good leadership’ looks like in practice. This goes beyond a list of values on a wall; it means defining common frameworks for coaching, giving feedback, and solving problems across the entire company.
• Build connection, trust and two-way dialogue between organisation levels: Often there is a disconnect between organisation levels in terms of clarity of the work of each level, and the expectations of what each level needs from the one above or below for everyone to function effectively. In a vacuum, mistrust will start to form if it is not proactively worked on. Regular culture and leadership summits and townhalls can be helpful here, and a demonstration of authenticity and vulnerability from senior leaders is key.

In summary

If you really want to take an effective approach to improving leadership capability in your organisation, begin by mapping out the leadership system in your organisation and the driving factors that are shaping it. Then take a systemic approach that may include training but that incorporates a range of objectives, initiatives and solutions to truly achieve sustainable leadership improvement and, ultimately, better organisational performance.

For more insights on where to start, feel free to contact me – scott.erskine@modal.com.au

Sources

• PwC 2024 Trust Survey, March 2024
• ‘Leverage The Science Of Behaviours To Improve Leadership Development’, by James Glover, for Forbes Human Resources Council, 21 July 2025