Why Leadership Development Matters

Lost hope in creating a leadership pipeline? Or noticed some crucial leaks? Human Capital looks at the importance of succession planning and why a lack of investment in leadership development is coming back to haunt organisations Australia-wide. In 2006, when Bill Gates announced his retirement plans, the first question everyone asked was - who would be his successor? Fortunately, Gates had not one but two able men he could eventually transfer his responsibilities to. Few organisations can boast such a plan.

In fact, most organisations fail to invest in leadership altogether, perhaps lulled into a false sense of security provided by overseas examples where CEOs - especially founders - die in the saddle. Or perhaps it is simply a short-term ‘we’ll cross that bridge when we come to it’ philosophy.

A lack of investment in talent and a lack of skills required to be in a leadership position today has created what has been referred to as ‘the perfect storm’ - a combination of factors leading to gaps at the top end of business. It’s never been more4 critical to identify and groom successors. With organisations scrambling to recover from bad decision-making caused by unqualified candidates who have assumed leadership positions they were not equipped or trained to handle, the question must be asked: how do you develop leaders?

“Developing a leadership pipeline represents a challenge to organisations irrespective of shape and size,” says Sharyn McAlpin, GM of culture & career development at Pollak Learning Alliance. “The traditional succession model - where one individual is identified for their manager’s role - results in greater exposure to the shifting tenure trends and tight employment market. It’s also virtually unworkable for small organisations or highly specialised teams. The advantage with the traditional model is that it is a relatively cost-effective and simply approach to building a leadership pipeline.”

A strong alternative recommendation is a talent or leadership pool, which may be more complex in design, but allows greater organisational flexibility in resource planning.

“Rather than lining up successors for a handful of senior roles, it’s now important to nurture a pool of talented would-be’s”, says Penelope Cottrill, principal with The Nous Group’s people and culture practice. “This not only mitigates the risks associated with attrition, it develops the overall capability of the organisation and rewards the talented people with the development they crave.”

The key with both models is managing the expectations of potential successors or you run the risk that another employer will benefit from your L&D investment due to a ‘misunderstanding’ about promotion timing or likelihood.

There is a shift away from thinking of leaders strictly as head of a hierarchy. ‘Leading can and should happen at all levels of an organisation. Cottrill notes that identifying potential leaders “is about identifying and intersection of capacity - can do it - and energy - want to and will do it.”

It can be difficult to identify specific opportunities for more junior roles, but it is essential that high performers and those with leadership potential have a sense that their future is being considered and their longer-term needs will be accommodated. “This endorsement of their skills and contribution to the company is the highest form of recognition you can give younger managers and it’s something Gen X and Y crave,” says McAlpin.

A lot of time and money is spent trying to eliminate the inherent risk in the selection process for leadership programs by introducing sophisticated and complex criteria. As with promotions, there will always be an element of subjective doubt in terms of who participates. McAlpin believes the focus should be on getting a leadership program underway and supported by top management, then adjusting the selection criteria as you learn what works for your organisation. “It’s critical to take a long-term view of these programs and not expect to get it 100% right [on] day one,” McAlpin warns.

Firstly, it is important to remember that you are not trying to develop managers, but rather leaders. The two may share certain traits, but there is little difference. The perceived definition is that managing has more to do with operational focus - relying on systems and metrics to make the status quo more effective, more efficient and more productive.

Leadership takes a longer-range focus and is more strategic. Before being able to lead others, you must be able to lead yourself - hence the importance of self-awareness.

“Mobilising people around the important things is what good leaders do, at all levels of an organisation. It’s building this capability in leaders to mobilise others around the things most worth doing - which involves vision, strategy and the skills to mobilise others - the distinctive leadership that development achieves,” says Cottrill.

It is certainly possible to be both a manager and a leader, and people will possess skills to equip them to fulfil both roles well. However, there is a tendency towards doing one over the other.

The difficulty comes when businesses - not traditionally the best laboratories for leadership - focus too much on developing managers. “Often people are rewarded and promoted based on technical competence. Once promoted beyond their management competence, not only do individuals flounder, they can hurt others,” Cottrill says.

As illustrated in the two case studies accompanying this article, there are many ways to develop leaders. Coaching and mentoring have emerged as techniques to develop the self-knowledge crucial to leadership.

Again, some clarification of these terms is beneficial. “I always like to check the definition with whoever is using the term ‘mentoring’ - as it can mean different things to different people,” says Barbara Jones, head of coaching at Right Management. “Typically mentors are seen as folk who can support a person in learning things like how to work within the political frameworks effectively, as well as possibly helping them with the more technical parts of their role.”

With coaching, the focus is on empowering the individual to develop their own answers, to focus on solutions and then challenging that individual to be the best they can be. The coach is the guide for reaching goals and developing the potential of the student, and may be someone within the organisation, or perhaps a senior leader, or an external coaching expert. Coaching works at all levels of leadership - emerging, developing and strategic leaders - although with a variance in needs and application.

“A qualified coach will use the same approach whether in life or business coaching - in terms of bringing about sustainable behavioural change in an individual. There is a difference between the two. When coaching business clients there needs to be, where possible, a link back to the business. This is often done by identifying a mission-critical initiative in which the coaching client is involved, and aligning the behavioural changes back to that. This can provide ROI”, says Jones.

Right Management runs global ROI studies, and Jones notes that as long as the coaching intervention is tailored to an individual’s needs and then aligned to the needs of the business, it is possible to put dollar outcomes on the behaviour change, and therefore articulate its worth in commercial terms. “I believe these factors are some of the reasons for its popularity in the corporate arena,” she says.

Ideally, an organisation should factor the development of executives into its long-term business strategy, so that there’s a match between the business journey and learning journey. Executive support - via formal classroom courses, coaching or mentoring - can be delivered at appropriate intervals throughout that journey.

The organisations that have navigated the perfect storm of leadership crisis better than others have invested in their senior and high-potential talent both in good times and in bad. There are, however, some fundamental reasons for failure.

“The reason so few organisations can achieve a sustained leadership pipeline is because it’s a grindingly slow cultural shift, and it’s hard work,” says McAlpin.

“It requires a genuine, long-term commitment to identifying and developing future leaders, and that takes resources and energy that unfortunately many organisations feel should be directed elsewhere. The content and design of the program can be benchmark perfection; however, if the broader organisation does not reflect, nurture and reward the behaviour that the program advocates, then it’s money better spent elsewhere.”

What can you gain?

An ongoing supply of well-trained, broadly experienced, well-motivated people who are ready and able to step into key positions as needed.

A flow of capable people through various departments with the goals of educating them into the culture and processes of the company.

Alignment of the future needs of the company with the availability of appropriate resources within the company.

Positive goals for key personnel, which will retain them in the company.

Defined career paths, which will help the company recruit and retain better people.

 [Source: Human Capital, Issue 5.9]