Great Companies Develop Future Leaders

Earlier this year I was in Germany working with a group of “high potentials” – employees who had been selected by their managers as outstanding candidates for the next generation of leaders. My client (an international organization in the high-tech industry) is investing substantially in training, coaching, and mentoring opportunities for this talented group of professionals.The company’s commitment to leadership development is in direct contrast to what I’ve seen in many other organizations. Definitive, purposeful succession planning is rare, even at the very highest corporate levels. Too often the “bench strength” in leadership is so poor that careers stall because no one else has been groomed as a management successor. Companies that don’t address this issue now are going to be at a serious disadvantage in the very near future.

By the year 2011, the leading edge of the Baby Boom workforce will be 65 years old – eligible for full retirement. And that generation’s collective wisdom will leave with them unless it has been transferred to younger employees. Which in turn makes succession planning and knowledge sharing increasing important to an organization’s financial strategy.

Effective leadership is a crucial source of competitive advantage, and corporations can’t just wait for leaders to arrive, fully developed. Organizations must actively seek out people with leadership potential and find ways to nurture and develop that potential. It takes a serious commitment of both time and resources to do it right. But that is the key to what separates great companies from good companies. Great companies make developing leaders a priority.

Here’s how . . .

The process begins with the early identification of leadership talent, and the realization that under certain circumstances, leadership potential is easy to spot. In an area of complex problems or in times of crisis, there are people who organically rise to the top. They are proactive, reliable, thoughtful, and they automatically take control. These natural leaders speak up – and other people listen to them because they’re providing solutions, not just stating problems.

Joseph Pieroni, president of Sankyo Pharma, notes the emergence of informal leadership in his organization: “Every time we are in a tough situation, people point to the same two or three individuals because we feel confident these ‘leaders’ will go well beyond their area of responsibility – and do whatever is needed.”

Identifying new leaders is something that all current leaders should be responsible for – and that policy is most effective if it starts at the top. CEOs and presidents need to spend time focused on this issue, assessing leadership strengths as well as current and future organizational requirements. And leadership development should start early. Ten or fifteen years before a person is expected to be at their full potential, current management should be discussing how to develop this individual. The most valuable conversation will center on how people use their time: How can their skills be leveraged in new ways?  Who needs to know these people?  Who should be working with them, coaching and mentoring them? What experiences would be the most advantageous?

Spotting potential leaders is also a smart move for managers who want to advance their own careers. As one savvy leader told me, “The minute I begin a new assignment, I start looking for people who can be groomed as my successor. I know that I won’t be able to take the next step until someone else can take over my current job.”

At Federal Express, employees identify themselves as candidates for leadership positions, and CEO Fred Smith discovered early on that not everyone has the unique traits that leaders need to succeed in the FedEx environment. His observation: “Our Leadership Evaluation and Awareness Program explains the demands of management as well as the personal characteristics and traits needed for successful leadership. I find it interesting that, once they know the demands and requirements, some 70 percent of the participants drop out of the program.”However future leaders are identified, the next step is to find ways to nurture their potential. Along with formal educational opportunities, mentoring relationships, and personal coaches, leading-edge companies make sure that key candidates receive the kind of assignments that help them grow and develop.

The head of Ketchum’s brand practice, also the associate director of their New York office, was offered the director position in Atlanta as a way of rounding out her expertise. That was a decision made to advance her career, and looked at from the standpoint of what would add the most value for her. Another example from Ketchum is a director from the San Francisco office who was moved to a leadership role in London so that he could gain international experience.

But leadership development isn’t only about acquiring business skills. It’s also about effective mental preparation. According to Bob Dilenschneider, CEO of The Dilenschneider Group, the key is learning to keep a sense of perspective: “Keeping your balance at all times can be extremely difficult. Since leaders play the game at the highest and lowest levels, they experience the glory of the victories as well as the disappointment of setbacks and failures. The trick is not to let the glory go to your head nor let the disappointments devastate you.”

I agree with Bob. Giving people the freedom to succeed and fail – and the guidance to help them deal with both – may be the best leadership development strategy of all.