How can an organisation ensure consistently strong leadership?
The rate at which company chiefs jump from firm to firm is escalating. In some cases, this is, of course, involuntary and results from investors' impatience with performance. But much of the job-hopping can be attributed to executives wanting varied experiences to add to their skill set, because higher salaries come with each new job - particularly thanks to the deepening talent crunch.
While outside hires certainly bring a fresh perspective and a new network, they may not have the in-depth understanding of the company to be highly effective. An insider can bring the latter and a fresh perspective if you find, and develop, the right individuals.
Abridged leadership development programs = Lower return on investment
Many organisations do have programs to identify and develop those employees with high potential for leadership (HIPOs), including the CEO spot, and they create succession plans. But these programs do not always offer much in the way of return on investment.
The most common challenge, is that many of these programs are only partially implemented. For example, many companies are interested in understanding their talent landscape and spend valuable time finding the next generation of leaders.
Granted, this is an important step, but often these companies run out of time or resources or simply just get distracted when it comes to taking that information and turning it into something actionable.
Often development programs are focused only on top performers. And many times, entrance to development programs is based on subjective criteria. While this system is more direct, it can cause management to miss:
- Employees who have latent potential - For example, Mary may seem like a medium performer in a technical role, but have high potential for functional leadership or general management. A formal assessment would un-earth that.
- The chance to develop other types of potential - For example, Mark, who works in an accounting firm, is excellent at his work, but does not have sales ability and won't therefore become a partner. But he can be an important technical contributor and mentor others, to pass along his technical expertise.
The characteristics of highly effective leadership development programs
Leadership development programs that bring the highest return on investment are those that:
- Employ a systematic approach - This involves an integrated system, starting with an assessment based on a common set of defined high performance competencies. The results of this assessment can then flow into a talent review, in which leadership looks at a snapshot of the organisation's talent and creates a multi-layered succession plan - not only for the CEO, but for the leadership team and several levels down.
Next, the identified talent creates an actionable development plan based on their individual needs. This plan gives guidance on the formal training, work experiences and coaching required for the employee to get to their career destination by competency.
- Are open to more employees - The goal of this type of program is to provide a roadmap for employees to reach their individual potential in the organisation. Once the program is in place, it can be rolled down to other levels. Programs that are not integrated (and require more expert input into each person's assessment and development plan) are harder, by their very nature, to expand.
The benefits
There are numerous benefits to this integrated leadership development approach.
- It requires fewer resources, because the employee leads the process - The common competencies, assessment approach, approach to development planning and technology and other tools, make this leadership development method more efficient. Once the program is developed, all the information is there, and it is self-driven. There is no longer a need for experts in employee development to design and consult on each development plan.
- The development of the successors will happen faster - In many programs, HIPOs are identified, which can help motivate and retain them, but they are not always given the tools to reach the level they have been told they are destined for. This can result in frustration. When the tools are available, employees are motivated to utilise them in order to move up the ladder and contribute more to the company along the way.
- Retention will increase - In traditional programs, HIPOs are identified, but action is long in coming. In addition, individuals who are not yet performing at an optimal level don't get what they need to be successful. When individuals feel that they are held back, or are not able to get what they need to grow, they go elsewhere.
A comprehensive leadership develop program truly leads to the creation of highly capable leaders as well as increased productivity across the board. Typically, people move "up the ladder" from doing a single job, to managing a team, to managing a function. But this does not necessarily develop employees for a general management or leadership role.
In fact, some would argue that the image of the corporate ladder is outmoded. Cross-functional assignments, and even cross-regional assignments, are needed in order to develop a CEO, or any member of senior management, from within. The ideal leadership development program helps each individual determine the steps they need to take to reach their potential, whether it includes a seemingly lateral assignment in India or, for that matter, a move from operations to finance.
So, instead of a ladder, maybe a decision tree is a more apt visual to describe a better way to develop senior leaders. Each limb can symbolise the next steps employees are empowered to take, to move their careers forward in the ways most suited to the organisation's needs and the individual's skills, interests and ambitions.