Study shows it pays to be a digital leader

LAS VEGAS — Only one in five business executives is a Digital Leader*, a new study conducted by Oxford Economics and sponsored by SAP SE (NYSE: SAP) shows.

A new class of leaders is emerging that embraces a digital mind-set and reports stronger business outcomes as a result. This announcement was made at SuccessConnect, taking place August 29–31 in Las Vegas.

Digital Leaders Drive Stronger Financial Performance and Employee Engagement Through Strategy, Speed and Inclusiveness

The Leaders 2020 study is based on survey results from more than 4,000 executives and employees in 21 countries. The research identifies the characteristics of organizations that are succeeding in the digital economy. The majority of organizations could benefit from adopting the digital leadership practices identified in the research.

Here’s why it pays to be a Digital Leader:

Stronger financial performance: Seventy-six percent of executives characterized in the study as Digital Leaders report strong revenue and profit growth, compared to 55 percent of all other executives surveyed.

Satisfied and engaged employees: Digital Leaders have employees who are more likely to be satisfied (87 percent) at their work, compared to 63 percent of all other respondents.

An inclusive culture and strong leadership pipeline: Digital Leaders have employees who are more likely to stay in the job even if given the chance to leave, 21 percentage points higher than all other respondents.

“It’s clear that a different kind of leadership is required to succeed in the digital economy,” said Mike Ettling, president of SAP SuccessFactors**. “People, particularly millennials and the generations behind them, expect more inclusive and social leaders, more diversity at the leadership level, and less hierarchy. Technology plays a role in giving us, as leaders, access to insights needed to make decisions quickly, and to attract and develop the next set of leaders.”

According to the study, today’s Digital Leaders:

Simplify decision making: Four out of five (80 percent) Digital Leaders make decisions that are data-driven, and nearly two out of three (63 percent) report that their organizations are capable of making decisions in real time, compared to only 55 percent and 46 percent respectively of others surveyed. Digital Leaders are more likely to be transparent and to distribute decision making throughout the organization.

Prioritize diversity and inclusion: Organizations leading in the digital economy are more likely to see more diversity in the workforce at midlevel management, and have a higher proportion of female employees than other companies. These companies are also more likely to have diversity programs (46 percent versus 38 percent of all companies), recognize diversity’s positive impact on culture (66 percent versus 37 percent) and equate increased diversity to financial performance (37 percent versus 29 percent).

Despite some organizations outperforming their peers in this category, the study found room for improvement among all levels of leadership. Only 39 percent of employees believed their company has effective diversity programs in place, while less than half (49 percent) of executives believe that leadership recognizes the importance of diversity, and has taken steps to develop it.

Listen to younger executives: The study found that millennials are quickly occupying corporate leadership positions, as 17 percent of the senior executives in the study are classified as millennials. Millennial leaders are more pessimistic than other executives about their organization’s digital readiness. These younger executives ranked their organization’s leadership skills between 15 and 23 percentage points lower than nonmillennial executives across a variety of attributes, including facilitating collaboration, managing diversity, providing feedback and discouraging bureaucracy. Millennials will soon make up 50 percent of the workforce, so they will have a powerful voice to shift corporate culture. What they say really matters. And they are saying: Time for change.

“These findings should serve as a wake-up call for business leaders,” said Edward Cone, deputy director of Thought Leadership at Oxford Economics, who oversaw the research program. “Your employees, your younger executives and your financial results are all sending you a clear message about the importance of updating and upgrading leadership skills for the digital age. It’s time to listen and lead — or get out of the way.”

Learn more about the study and see how to become a Digital Leader here.

About the Study

Oxford Economic surveyed more than 2,050 executives and 2,050 nonexecutive employees in 21 countries and across multiple industries during the second quarter of 2016. The executives surveyed included both C-levels and their direct reports. Roughly 48 percent of the sample is from the C suite. Employee roles range from entry-level to line-of-business management.

About Oxford Economics

Oxford Economics is the world leader in global forecasting and quantitative analysis for business and government, and the most trusted resource for decision makers seeking independent thinking and evidence-based research. Headquartered in Oxford, England, with offices in London, New York and Singapore, and elsewhere around the globe, the firm employs more than 150 professional economists, industry experts and business editors — one of the largest teams of macroeconomists and thought leadership specialists.