Aligning development programs with company strategy is the start, but it’s far from the end.
By Judy Sweeney
Developing effective leadership can return significant business value. To attract, fill, and retain corporate leadership talent, companies need leadership development programs focused on hiring strategies, employee development, and career and succession planning.
Companies face two major challenges in finding and developing leaders:
The first challenge is identifying qualified candidates to fill current and future leadership roles.
The second is fulfilling the need for tools and techniques to develop a comprehensive program to cultivate and develop the leaders of tomorrow.
In the past, leadership development was only focused on a few individuals in the organization. First generation systems to assist with leadership development existed in silos, were hard to use, and lacked adoption. Now technology can be deployed to extend these practices across the enterprise and down into all levels of the workforce.
Leadership Challenges in Business
Leadership scandals in recent years have caused an erosion of confidence and a loss of faith in leadership of companies around the globe. According to a Harvard Business Review poll, 51 percent of those surveyed said they had recently lost confidence in business leaders at non-U.S. companies; 76 percent reported less confidence in U.S. business leaders. In addition, building and retaining good leadership has been cited as a major area of concern. According to the 2008 IBM Global Human Capital Study, more than 75 percent of respondents identified building leadership talent as their most significant capabilities challenge.
Successful organizations need both leaders and managers, but fundamental differences separate those two functions. While leaders influence, inspire, and drive people to a common goal, the role of a manager is to keep the day-to-day operations of an organization running smoothly. Employee development must reflect these differences and provide development of both sets of skills.
Major talent management functions all play a part in a comprehensive leadership development program, and they can be well supported by a unified talent management platform. A successful leadership development program begins with the alignment of leadership development with company strategy, but it also requires an understanding of the type of leadership style needed to execute that strategy.
Determine the Best Leadership Style for Your Organization
Many techniques can help determine the right leadership styles for an organization. The Situational Leadership® theory, for example, argues that the best type of leadership is determined by situational variables, and no one style of leadership pertains to all given workplace situations. Whatever style is best suited for the CEO of an organization, a variety of leadership styles might be required to lead different groups such as manufacturing, operations, marketing, and finance.
One of the main reasons for the high failure rate of new CEOs—more than half never make it past the four-year mark—is poor organizational fit. Ability can only take leaders so far if they are not compatible with the company culture.
Identify Current and Potential Leaders Within the Company
Leaders can be found both internally or externally. Companies must weigh the cost and timing to develop internal leadership against the cost and availability of hiring from the outside.
One of the key advantages of developing leaders internally is that they achieve productivity almost 50 percent faster than external candidates. This is particularly true for organizations in which knowledge of the internal politics and structures are required to get the job done.
When leadership positions cannot be filled from within the company and the company employs a strategy of creating a pipeline of future leaders, then recruitment should use the same measurements to test the existing competencies or future potential of candidates that it used to assess internal candidates.
One way to ensure a consistent flow of leadership talent into a company is to recruit the right people in the first place. Assessment tools can help ensure that the appopriate candidates have been included on the short list.
Online pre-assessments can also be used to accelerate the filtering process by eliminating from consideration those candidates who do not pass a minimum threshold score in the pre-assessment screen. Unqualified candidates are automatically filtered out not on the basis of their resumes, but on the basis of a self-administered online test.
The advantage of using assessments is to eliminate wasted time during the filtering process. This is particularly important, inasmuch as 80 percent of recruiting time typically is spent getting to a short list. That leaves only 20 percent of time to invest with higher quality candidates. Automated pre-screening provides up to a 42 percent increase in recruiter efficiency.
Identify Leadership Gaps
The identification of leadership gaps is both an assessment of the individuals and the readiness of the organization. To help fully determine leadership gaps, companies should:
1. Determine current and future leadership requirements.
2. Compare those requirements to the current leadership team.
3. Identify current leaders who might be at risk.
4. Identify succession plans for those at risk or planning to leave.
5. Look at the leadership development pipeline.
6. Identify gaps in skills and time required to fill those gaps.
7. Develop succession plans for critical roles.
Creating a succession plan for critical roles, however, should not be confined to executives. As part of the leadership program, companies should evaluate critical leadership roles throughout the organization. A Bersin & Associates study found that “enduring organizations”—those that survive and prosper over long periods of time—execute succession management practices across all levels of the organization.
Driving Leadership Development Into the Organization
The apprentice model in grooming leadership has recently enjoyed a resurgence. Coaching and mentoring have been gaining favor as elements of succession planning programs.
A 2008 AMA study surveyed more than 1,000 business leaders around the world and found nearly 60 percent of North American companies use coaching for high potentials and about 42 percent use coaching of executives. These percentages were higher in the international sample AMA study.
For greatest efficacy, succession planning should be supported by technology systems that provide the ability to execute key tasks:
• Create backfill strategies using data captured in the recruiting and performance review processes, coupled with individual career plans.
• Add multiple candidates to a succession short list, and view all the best options—without necessarily adding them to the plan.
• Display multiple talent profiles side-by-side—from C-level executives to individual contributors—to quickly identify the best fit.
• Track candidate readiness based on skills, competencies and performance. Promote top candidates based on relative ranking and composite feedback scores.
Develop Career Planning Goals for Potential Leaders
Research shows companies that support career planning for their employees gain in retention, engagement, and protecting the leadership pipeline. A 2008 Taleo Research study found that 61 percent of college graduates left their first employer because no career advancement opportunities existed.
Even if employees are not actively looking for a job, one survey found that one in three employees had recently been approached by another organization hoping to lure them away, and 77 percent of workers aged 36 to 40—right in the pipeline for leadership—last for fewer than five years in new jobs.
If companies do not provide employees with career planning and advancement opportunities, their competitors will. Self-service career planning will help motivate and retain talent by empowering them to view and generate a career plan within the company.
By combining employee development with career planning employees can not only explore potential career paths, but also monitor and progress through the development activities necessary to attain them. Competencies can then be tied to relevant development activities, thereby incorporating development planning right into the performance review process, which supports career development and succession planning.
Develop Skills Roadmap for Future Leaders
Once the high potential employees have been identified, a skills roadmap should be developed for the future leaders. Because people learn and develop new skills both inside and outside the classroom, a development program needs to support both traditional and non-traditional learning.
To support less formal learning, activities such as coaching, rotational assignments, job shadowing, mentor relationships, and project leadership should also be part of an employee’s development plan. At the core, the very definition of learning should reflect today’s non-traditional learning and incorporate social networking tools into the development proce.
Develop Retention Programs for Current and Future Leaders
Both monetary and non-monetary rewards can be used to improve retention for any employee, but particular attention needs to be paid to high performers and future leaders. A Taleo Research survey polled working adults over the age of 18 to test some monetary versus non-monetary reward systems. Clearly, salary and bonuses ranked as the top rewards for doing a good job, but promotions and work life balance were also important.
Linking pay to performance can be a motivator for an employee, but goal alignment helps potential leaders stay focused on what is important to the company. Recognize excellent performance and base the upside of bonus potential on the success of both the employee and the company.
Other ways to retain and motivate future leaders are to involve them in the decision- making process. This teaches them the stated mission, values, and goals of the organization, as well as how they contribute to the success of the business. As the Taleo Research study shows, acknowledgement of a job well done is more important than stock options.
Leadership retention is critically important for all organizations for two main reasons:
1. Turnover is expensive.
2. Top performers drive optimum business performance.
All organizations need strong leaders to be successful. Talent management practices implemented with robust technology applications can effectively identify and develop—from all levels of the workforce—the leaders who will best drive business performance.
Judy Sweeney is vice president and head of Taleo research.
