Developing leadership talent is never easy, but it has always been possible.
Large companies like Merck, Edward Jones, PepsiCo, and Walmart have honed their brands, cultures, and bottom lines by becoming leadership talent factories. Lesser known companies like Fifth Third Bank, Gundersen Health, and KBR have similarly, but more quietly, built and sustained leadership development efforts from within to accumulate great leaders who are equipped to move forward as the business demands.
Organizations with strong talent bases have long been a minority, but in recent years, leadership factories have become even rarer. In 2011, 18 percent of organizations worldwide reported a strong talent base. Since then, like pinholes in a car tire, leadership capacity has slowly atrophied, and today, only 12 percent of organizations have a strong talent base.
Building a strong bench is no guarantee of maintaining it
Done right, succession management develops talent throughout the pipeline by accelerating growth and producing more leaders capable of taking on bigger roles. It's a long-term commitment. And like fitness, it's much easier to get out of shape than it is to get into shape.
HR leaders in these organizations are like good fitness trainers: they keep executives focused on the right behaviors and investments, and ensure leadership growth meets new demands. Keeping them motivated is a tough job.
As the speed of life robs humans of focus, more and more business leaders lose focus on the bench. Few have even had a glimpse of what the 12% know. Strong succession management pays off big time. Bench builders enjoy exponentially stronger leadership quality, improved talent retention, higher employee engagement, less burnout, and significantly increased bottom lines.
Unfortunately, most companies seem to have come to the conclusion (consciously or not) that developing leadership from within is slow and difficult. Programs to accelerate leadership development are falling out of favor at the very moment when their impact could be more transformative than ever.
Succession planning setbacks stem from several harmful perspectives that, if left unchallenged, can take root and paralyze succession planning efforts. On the surface, these perspectives all seem harmless and even productive. But they are insidious and often disruptive enough to stall succession planning efforts. Leadership development is deprioritized as a non-essential business function, and business leaders try to avoid a shortage of skilled successors through risky external hires, reorganization of functions, or simply placing unqualified leaders in mission-critical roles.
Harmful Perspective 1: “We're ready for development”
This label was used repeatedly during a day-long talent assessment at a well-known financial services firm: Dozens of talented leaders were discussed and judged to have great potential to take on larger tasks, but only after further development were they deemed fully ready.
But there was a problem: this wasn't their first talent assessment, and most of these leaders had been labeled “development ready” before—many had had that label for several years or more.
The CEO lost patience and stopped the meeting, declaring, “This process is broken.” He and his leadership team had signed off on a plan for a major business transformation just a few weeks earlier. But as leadership stalled, the plan's viability began to be called into question.
The phrase “ready to develop” is dangerous, even if it's true. If an organization has invested time and effort into a talent review, when the review is complete it feels like progress has been made. Leaders have been discussed and evaluated, and a deeper understanding of the current state of the talent emerges. But in reality, nothing has happened yet with leadership capabilities.
To be adequately prepared for higher-level roles, leaders may need project leadership assignments, P&L experience, multi-team leadership, broader product exposure, global market insight, stronger followership, and fewer arguments with partners.
These specifics are important because they drive action for both management and aspiring leaders. Without a focus on development actions, management will believe that leaders will progress from “development-ready” to “ready now” as a natural result of performing their current job duties. But that rarely happens.
Harmful Perspective #2: “I need to test my potential”
“At our company, management is unable to recognize the potential even when it's right in front of them.”
This statement by a director of executive succession is not uncommon and is often true: The definition of leadership potential is poorly understood.
Many organizations have abandoned their talent development efforts because they were bogged down by the challenge of addressing the notion of leadership potential fairly and accurately. Worse yet, many organizations conduct potential tests in ways that undermine cultural values and make employees feel they have lost ownership of their career growth.
To discover and unlock your leadership potential, several important distinctions are essential.
Potential is not performance. Performance is about how well you perform relative to the expectations of your subordinates. the current This is best measured by a strong performance management system that includes clear goal setting, ongoing feedback and dialogue, and development plans to ensure continued growth.
Potential is not preparation. Readiness is the degree to which an individual is prepared to meet a particular challenge. future Roles (or role categories, e.g. Frontline Leaders or ExecutiveBecause the focus is on the future, current performance is of little use in assessing readiness. To provide a more predictive assessment of readiness, simulations, behavioral interviews, and even validated inventories of job-related characteristics are needed.
Potential is a possibility, not a trait. Leadership potential is the likelihood that an individual will develop the competencies required for higher-level leadership roles. The acquisition of new capabilities is enabled by foundational traits such as curiosity, openness to feedback, and a desire to learn. And because these traits are measurable, many organizations have adopted potential testing as a scalable means of determining whether someone has high or low potential.
While potential tests may superficially increase efficiency and objectivity, they can be overemphasized and lead to inaccuracy, less inclusion, and damaged culture. This occurs when leadership potential tests are deployed as a substitute for management judgment.
A much more powerful organizational lever is to foster management's understanding of potential as something to be nurtured and promoted, rather than simply assessed and reported to management like a report card or health check.
Outsourcing the assessment of potential to testing gives management a blind belief that potential cannot be influenced. But it can be influenced. Unlocking potential is not just about understanding an individual's characteristics; it's also about understanding how those characteristics intersect with an individual's context and when to take action to activate potential.
Harmful Perspective #3: “Everyone is responsible for their own growth”
A simple yet devastating myth commonly heard in the hallways and Zoom calls of organizations around the world is that talent thrives when individuals are responsible for their own development. This is false.
To be clear, learning and development is important for all individuals and businesses, and organizations benefit when individuals take the initiative in learning and development. But applying that value to succession wellness is another matter entirely, and doing so can undermine efforts to prepare leadership for the future.
Decades ago, organizations operating in less dynamic environments would assess their personnel inventory by examining the corporate organizational chart: Critical positions were highlighted and potential successors were listed under each box, often ranked by how long it would take them to be ready for promotion.
Over time, these succession charts became obsolete as hierarchical organizations became fundamentally dynamic, with fewer levels on the chart, larger skill gaps between levels, more frequent restructuring, and placing ever-changing demands on leaders.
Rather than waiting for leaders to become ready, the talent development challenge shifted to finding more proactive ways to accelerate their growth beyond the scope of their regular jobs. Special assignments, job rotations, and accelerated development programs were built to speed up the pace at which leaders would face challenges they would not normally encounter. Only with executive intervention could leaders access the challenges and experiences that would prepare them for a future that was coming faster than ever before.
From this perspective, it is clear why the principle that “everyone is responsible for their own growth” is insufficient for empowering talent today. Individual leaders (or non-leaders) cannot appoint themselves to significant new projects, teams, or challenges. Executives must take responsibility for delivering growth experiences, and some companies have institutionalized these mechanisms.
The organizations profiled above are just a few of those that have shifted from “watching” their talent processes to regular conversations aimed at increasing engagement on the organization's most complex and critical issues. Leaders are measured against standards and expectations many levels above their current roles, facilitating feedback and development plans, and over time, transforming leadership teams into ones that proactively prepare for the future.
Conclusion
What organizations that avoid the ill effects of talent shortages have in common is a commitment to developing leadership for an uncertain future. Senior executives recognize the connection between talent shortages and organizational performance, and they extend that connection to their own responsibilities to ensure they provide powerful development experiences for emerging leaders. To confront harmful mindsets and make this mindset a reality, executives must seek the expertise and influence of HR leaders. These talent pros move executives out of a reactive mindset and into energized, engaged catalyst teams that establish leadership growth as a cultural and business asset. They build talent factories: the few organizations that continue to differentiate their culture and bottom line with a bench of leaders ready to step up.
