The fundamentals of building a leadership pipeline.
By Brenda Wilson, Head of Human Capital Advisory Services, Hong Kong and Workforce Strategies leader, Greater China, Mercer Human Resource Consulting.
Asian business leaders are faced with a fast-growing business landscape—one in which commercial opportunities seem limitless, but where demands are immense. In this environment, successful companies must establish a solid infrastructure to accommodate growth, anticipate and react to global competitive forces, and stay flexible to take advantage of emerging opportunities.
Companies understand that business success depends on their ability to develop a workforce that is capable of taking advantage of these opportunities. This requires a workforce which is committed to achieving company goals, who strive for and can sustain profitable growth, and most importantly, who have the skills and knowledge to deliver results.
For this to occur, however, businesses must consider what needs to be done to develop leaders at all levels who can not only manage the business, but who have the capability to build a sustainable operation through developing people. Multinationals managed by expatriates have the added challenge of ‘localising’ their management teams and building future leaders from within the home country.
The leadership pipeline, or the lack thereof, is one of the single most talked about human resource issues since the ‘war for talent’ in the West in the late ‘90s. In China, specifically, the issue is the primary topic of many conversations from the boardroom to the manufacturing floor. This comes as no surprise given that the staggering increase in demand for labour has outstripped supply.
The leadership imperative
In a recent global survey of 223 senior executives from large multinational organisations conducted by MercerDelta Consulting and the Economist Intelligence Unit, findings conclude that while the leadership shortage is a significant issue in China, it is an important issue shared throughout the world.
The study found that a majority of business executives believe their companies face leadership shortages to meet the future global business risks that are threatening their corporate performance.
More than 75% say these business risks uncover weaknesses in their organisation’s leadership pipeline.
Approximately 30% acknowledge they do not have a good understanding of the leadership capabilities required to meet their strategic business challenges, and have not developed leadership methods to ensure their executives can meet their most pressing business issues.
72% say their companies are planning to take action to close these leadership gaps, yet only half of the companies have made sufficient investments to do so. Of those organisations that report having successfully groomed capable leaders, business results were stronger than those who where less successful.
Organisations with effective processes for assessing individual leadership development needs were significantly more likely to have recorded an increase in sales and net income between 2003 and 2004.
The study also revealed that organisations which have effective processes for aligning leadership development with business challenges typically realise stronger performance than those that do not have such processes.
Building a leadership pipeline:
where to start.
As organisations begin to consider their leadership development needs, there are five fundamental steps that will help build a leadership pipeline.
- Aligning and defining your leadership strategy.
- Defining your unique leadership success profile.
- Assessing the current and future pipeline leadership talent.
- Building and implementing a systematic development process.
- Measuring progress along the way.
1. Aligning and defining your leadership strategy:
Determine the roadmap
Organisations should start with defining and clarifying their leadership strategy. This will be drawn from the business requirements and future direction of the organisation. Aligning the leadership strategy to the business strategy will help ensure that efforts are both congruent and future focused.
A leadership strategy should include the organisation’s philosophy and tactics around the definition of required leadership competencies, the process for identifying future leaders, assessment methods, and development strategies. Among many questions businesses need to answer the following fundamental questions in the process of building a leadership development strategy:
What capabilities, behaviours and attitudes does the business need from its leaders to be successful in the future?
What’s the appropriate balance between ‘building’ our own versus ‘buying’ leadership capability from the market? If we buy, what is the availability in the market? Can we attract and retain leaders from the labour market?
Is our business strategy such that ‘home-grown’ leaders will provide a competitive advantage?
What are the key activities and positions which provide the type of experiences our leaders will need to acquire the desired skills and knowledge?
What processes and systems need to be implemented to support the development of leaders?
What are the key measures of success and what is our time horizon?
2. Defining your unique leadership success profile:
Determine what you need
Understanding and forecasting the necessary leadership requirements to deliver against the business strategy is a key step. In developing a success profile, consider what unique leadership attributes are compulsory within the context of the vision and strategic plan. To ensure it meets the business needs in the future, the profile should balance both aspiration and current behavioural and knowledge requirements.
Competency indicators: Knows the business: experience, understanding, and comfort with our business and general industry in particular; familiarity with the technical, financial, manufacturing, and management aspects of the industry.
Executive level impact and presence: demonstrates credible impact and influence; represents the organisation in community and business activities; can tell our “story” to the financial community and general public; dynamic in front of a group.
Intellectual agility balanced by common sense: has the analytical and conceptual ability to deal with complex problems; learns rapidly; demonstrates flexibility when working on several issues simultaneously; strives for practical and workable solutions.
Interpersonal skills: sincerely interested in people; respects and values others; communicates and listens well; demonstrates concern for others; interacts effectively with all stakeholders; gets along with people; can either work through others or work on own.
Insight into self and others: understands own strengths and weaknesses; open to others’ ideas and opinions; understands the differences between people and how to work effectively with them; takes action to improve self and others.
Emotional stability: emotionally solid and stable; resilient under pressure; even-keeled temperament which doesn’t over react and under react; self-confident; doesn’t take things personally; energetic.
3. Assessing the current and future pipeline:
Determine what you’ve got
Using the leadership success profile as a foundation, identifying and conducting multi-source leadership assessments is the next step in executing against the leadership strategy. Because assessment is a judgment of a leader’s capability and/or potential, a formal, structured, and data-based approach is the best method. Multiple and/or combined approaches provide better quality of information for decision making and customising the assessment approach to an organisation’s unique context yields the highest precision and quality of information. If not thoughtfully undertaken, leadership assessment can deliver unintended results. Identifying and planning for these potential issues helps to increase success and reduce the likelihood of problems that may arise. Issues can include:
- Not grounding assessment in the business and social context of your organisation.
- Not defining the leadership success criteria.
- Using unqualified assessors or assessment instruments.
- Not providing timely feedback to participants.
- Not anticipating the significant questions raised by leadership assessment:
Why are we doing this?
How will this affect me?
If I don’t do well, will I lose my job?
Who has access to and controls the data? What information is confidential and what is not?
Will I receive feedback? By whom? How will feedback be delivered?
Leadership assessment is a major organisation ‘change’ intervention and needs to be managed as such. This includes appropriate communication, control of the process and the data, and providing training to those who are involved in giving and receiving feedback. Tying assessment results to development planning is also a key step in the change process.
4. Building and implementing a systematic development process:
Determine how to close the gap
If rigorous assessment does not occur for every leader, have current and future leaders undertake a self-assessment against the new leadership profile to help determine where the gaps in capability may exist. Creating an individual development plan underpins an effective leadership development process.
In their article entitled, The Power of a Development Plan, authors Drs Cheloha and Stringer, conclude that, “To be powerful, [development plans have] to be built around a development model grounded in real-world experience. It has to be carefully crafted to fit the needs of the person being developed. It has to include job assignments that build leadership skills. And it has to be supported by the organisation and integrated into a development philosophy that views planning documents as the beginning of the development journey, not the end.” The authors go on to say that development is focused on not only skills (I want to change and grow), but also focuses on awareness (knowing self) and having the motivation to persevere (I care about my development).
Research shows that a combination of learning experiences with a predominant focus on “on-the-job” learning is the most effective method for developing current and future leaders. Creating an individualised leadership development plan for each current and future leader will act as a learning roadmap. In a recent study conducted by Mercer HR Consulting of talent management practices at eleven leading multinationals in China, findings indicate that only half the organisations create individual development plans for high potential employees. In addition, while all organisations undertake some form of assessment, only six of the eleven organisations linked results to development planning. The implication is that necessary skills gaps are not being proactively addressed and that development planning is not consistently applied—even for the highest potential staff. Key activities for organisations to execute on a systematic development approach include:
- identifying and providing challenging development opportunities
- providing “break through coaching”
- delivering action learning programmes
- defining career paths and ensuring rotational experiences
- delivering classroom experiences
- Providing continuous feedback to current and future leaders on progress also helps to reduce potential “derailment”.
- Building leadership capability one passage at a time
The Leadership Pipeline (Charan, Drotter and Noel, 2001) describes six major transitions individuals face during their careers as leaders. Rather than being seen as a vertical ladder, this pipeline is bent in six places.
Each ‘bend’ or ‘passage’ represents a significant change in job requirements and complexity. At each point, a turn is made demanding new capabilities, new time perspectives, and new values about what is important. Successful development at one passage increases the probability of success at the next. In the same way, skipping a passage or not developing fully at one level hinders success at the next. The result is a leadership pipeline that becomes clogged, and the flow of talent becomes blocked.
To help organisations in Asia build their capability at each turn in the pipeline, Mercer Human Resource Consulting has launched a new leadership development programme to help build and nurture an organisation’s next generation of leaders on an intensive four-day classroom programme.
5. Measuring progress along the way:
Create alignment and owners
Experience shows that leadership development programmes are most successful when they have complete CEO and ‘C-Suite’ sponsorship. Business leaders need to jointly own and drive the process for growing bench strength if the organisation is serious about closing the leadership gap
Identifying key metrics for measuring progress and widely communicating effectiveness along the way will help keep leadership development on the business agenda.
Conclusion
If organisations are going to achieve long-term sustainability, staffed with the right workforce who are committed to the organisation, focusing on managers and leaders who can help deliver these results is a necessary place to start.
Building your next generation of leaders starts with defining and executing against the fundamentals: aligning and defining your leadership strategy; defining your unique leadership success profile; undertaking rigorous assessment and providing feedback; and delivering an action-oriented development process that supplements “on-the-job” learning with other results-oriented activities. And throughout all of this, ask how success will be measured, develop appropriate metrics and milestones, and actively measure and discuss results with top management on a frequent basis. Building a leadership pipeline is a competitive necessity for all organisations. Executed successfully, it will create competitive advantage.
Defining leadership requirements:
Three common traps
Success in defining leadership requirements should not prove difficult for the committed organisation. Nevertheless, some organisations fall into three common traps: too much design, not enough implementation; ‘borrowing’ other organisations’ profile of leadership (if it is good enough for Microsoft, it must be good enough for us!); or not bothering to define their leadership requirements at all basing assessment and development on unclear and inconsistently defined and applied criteria.
Successful organisations balance the need for speed with the requirement to articulate their own unique profile of leadership.
Defining leadership requirements (capabilities, behaviours, attitudes, and values) is the cornerstone to ensuring that the other elements of a leadership strategy are aligned to and can deliver business outcomes. Adding the desired knowledge and metrics of success will also help clarify what is expected of leaders.
Paul Arkwright
Publisher
