By Harrison Monarth
Despite studies showing that succession is an essential part of strategic planning, many companies ignore leadership development to focus on more immediate challenges. But your organization’s future success depends on identifying and developing the next generation of its leaders.
According to a 2014 survey from Deloitte, 86% of business leaders know that their organizations’ future depends on the effectiveness of their leadership pipelines — but a survey of 2,200 global HR leaders found that only 13% are confident in their succession plans, with 54% reporting damage to their businesses due to talent shortages. To improve your leadership development strategy, look at the criteria you’re using to identify potential leaders, what you’re doing to assist with their development, and how you’re measuring their success.
Establish a set of clear and defined leadership competencies, so HR and other stakeholders know whom to fast track for leadership. Too often, companies demand a laundry list of vague qualities, such as creativity and innovation, which fail to align with organizational needs. Or they rely on subjective metrics, such as likability, loyalty, whether someone is “due for promotion,” etc. This puts you at risk of missing out on true top talent and promoting the wrong people. And it confuses young, promising managers about what skills and behaviors they need to develop to advance their careers.
A McKinsey & Company report also said, “Too many training initiatives we come across rest on the assumption that one size fits all and that the same group of skills or style of leadership is appropriate regardless of strategy, organizational culture or CEO mandate.”
Senior leaders must determine the specific leadership skills and behaviors needed to successfully execute the company’s strategy. Whether your organization is planning a merger, entering new global markets, ramping up sales operations, or creating a flatter corporate structure, it’s important to first think about what skills are needed to successfully execute the initiative. For example, when a U.S. company promoted someone to head its product and content development unit in India, it assessed what skills would enable him to succeed: cultural sensitivity, an ability to build multicultural teams, a flexible communication style, and a high tolerance for uncertainty. With executive coaching and targeted leadership development, the executive was able to transition with the necessary competencies.
Aside from the skills needed to execute on specific strategy initiatives, research has noted that high-potential leadership talent generally demonstrates a drive to excel, a “catalytic learning capability,” and an enterprising spirit, coupled with the ability to sense real risk. Focus your leadership development program on strengthening employees’ ability to deliver strong and credible results, to master new types of expertise, and to uphold behavioral standards that reflect the company culture and values. Credibility is especially important, as building trust and confidence among colleagues leads to an ability to influence a wide array of stakeholders.
Consider how leadership talent is fast-tracked within your organization. Studies have shown that leadership development is most effective when high-potential employees are formally identified as such. Organizations must be clear about whom they’re eyeing for leadership and how much they’re investing in them. This investment can take the form of enhanced development opportunities, such as special assignments or training, rewards and incentives, greater authority, additional resources, and increased feedback.
Pair potential leaders with mentors and executive coaches to aid in their development. Give challenging job-specific assignments that tie in to the overall business strategy, and then provide more frequent feedback so adjustments can be made in real time. The key for these interventions is to keep the momentum going. These aren’t one-off initiatives or stand-alone workshops without follow-up. You want to sustain and expand your development program to address business challenges in real time.
Create a process for measuring overall performance and growth. Once the necessary leadership competencies have been determined, targeted assessments at various stages of a development program can help keep future leaders on track. There are numerous assessments that measure everything from problem-solving and decision-making styles to emotional intelligence to identifying one’s approach to innovation. Using 360-degree assessments throughout the program can show you whether employees are learning the desired leadership competencies or whether adjustments need to be made.
Some companies have proven themselves to be models of effective leadership development. Look at P&G, IBM and GE — the top three companies for leaders, according to a ranking by Chief Executive. P&G and IBM both make developing leaders from within a priority and invest heavily in training, and IBM has a standardized leadership track. GE has shifted its leadership development focus under new CEO Jeff Immelt, putting greater emphasis on drawing innovation and new ideas out of its high potentials.
Organizations that fail to develop strong future leaders will inevitably see that high-potential talent — already in short supply — head elsewhere. By then, expensive executive searches may need to be repeated, there may be a loss of strategic momentum and investor confidence, and the company may flounder with a CEO who is out of step. It’s time to protect your company from inadequate leaders, who, at best, hurt a company’s bottom line, and at worst, threaten its legacy.