"Leadership can be thought of as a capacity to define oneself to others in a way that clarifies and expands a vision of the future." - Edwin H. Friedman
Over the last few years, organizations have increased their focus on employing senior leaders who are able to steer organizations through complex times. Key business issues, including economic growth, globalization, changing workforce demographics and diverse organizational contexts, contribute to the need for strong, dynamic leaders.
Most organizations invest in building their leadership "bench", utilizing a few key talent management programs, such as succession planning and career development. Given today’s dynamic business environment, however, organizations may not always possess "ready-now" talent to fit current and near-term strategic business needs. In this situation, the organization may be forced to shop for outside talent – not always a favorable proposition.
Indeed, several studies have shown that senior managers hired from the outside often experience culture fit issues and, more importantly, fail to meet job expectations. For example, a 2003 study by Booz Allen Hamilton, CEO Succession: The Perils of Good Governance, found that 85 percent of companies who replaced their CEOs with outside hires produced below-average shareholder returns. The selection process is often cited for these failures, but the process itself may not be to blame. Critical selection inputs, including a clearly defined business strategy and identified leadership criteria, must be established in order for the process to deliver the "right" candidates.
Defining the "right" leaderSo, how does an organization define the "right" leader? The process starts at the top, by identifying near- and long-term business strategy, goals and objectives. Understanding the strategic direction of the organization then determines the types of leadership capabilities required by the business in order to be successful. For example, if an organization plans to grow through acquisition over the next several years, individuals with experience in directing the acquisition and integration of companies is necessary.
Development of leadership competencies Once organizational goals and desired leadership capabilities have been identified, a common platform from which to identify, evaluate and select leaders can be developed. This platform is comprised of the knowledge, skills and abilities (KSAs) required for successful individual performance, and, consequently, the achievement of organizational goals and objectives. Collectively, these KSAs translate into behavioral statements that help to form leadership competencies.
Leadership competencies define the type of behavior individuals in senior-level positions must demonstrate in order to drive superior performance. While leadership competencies will vary based on the unique context of an organization, a few are consistently considered to be requirements for individual and business success:
- Results orientation
- Flexibility/adaptability
- Use of influence
- Team-building
- Strategic decision making
In addition to the competencies listed above, personal character (e.g., moral and ethical standards) is a factor when identifying and assessing leaders. In the wake of recent corporate scandals (think WorldCom, Enron), evaluating a person's character has received increasingly more attention.
Putting leadership competencies to workAll too often, organizations will allocate a large amount of resources - time, money, staff - to developing competencies, without a clear understanding of how to make them operational. The real return on this investment, of course, is realized when competencies are incorporated and integrated into all human capital programs. When hiring leadership talent from the outside, leadership competencies must be integrated into selection and assessment processes and tools.
Organizations typically evaluate leadership candidates using several assessment tools, including behavioral interviews, 360 degree evaluations and assessment centers. In a truly effective process, leadership competencies become the backbone of interview questions and assessment activities. For example, if an organization is trying to assess the competency "Strategic Decision Making", the candidate may be asked to describe a recent decision he/she made that backfired, and how he/she addressed the situation. The assessor then gains practical insight into how the candidate has performed on this competency in the past, which is a fairly reliable predictor of his/her future performance.
In closing... It has been said that an organization's last competitive advantage is its people - this is especially true at the leadership ranks. When hiring from the outside in today's market, it is imperative that an organization clearly defines leadership success criteria, and incorporates these leadership competencies into its assessment program. Doing so will enable an organization to successfully identify the "right" leadership talent to drive performance.