Unlocking Potential Under Constraint

Unlocking Potential Under Constraint

by Mark A. Clauss and Ashley A. Willms | Talent Management

 

Doing more with less is the challenge talent management professionals at small to mid-sized organizations face daily, especially when developing future leaders. But flat organizational structures, limited development opportunities and tight budgets challenge an organization's leader cultivation.

 

In 2011, 598 global senior executives at mid-sized organizations cited staff bench strength as a top 10 risk in the Finance Leadership Exchange's "Risk Assessment Survey." Add to that the relatively small pool of potential leaders - only 15 percent of high performers are high potentials, according to the HR Leadership Council's 2010 study "The Disengaged Star" - and it's easy to see the problem on HR's hands: How to effectively develop the next generation of leaders cost-consciously.

 

But there's reason for optimism. More development strategies exist than many talent leaders realize. There are more than 450,000 techniques and activities talent managers can leverage to develop their leaders. But given limited resources, talent leaders must pair the needs of emerging leaders with the right combination of development tactics and channels - a potentially expensive logistical challenge. It is not about investing in more resources, but about investing resources in areas with the greatest return.

 

This is easier said than done. Corporate Executive Board's HR Leadership Council surveyed more than 130,000 junior, mid-career and senior employees from 2007 to 2010 at more than 55 cross-industry organizations worldwide to investigate the impact of more than 300 drivers of employee potential and high-potential engagement. Results indicated fewer than 80 of these drivers impact potential and engagement in a meaningful way. Given the vast number of options and limited resources, the best approach for smaller organizations is to narrow the focus of development efforts by redefining potential and spending time and resources on the right people and activities. These drivers of leadership potential cluster into three themes:

 

1. Leverage employee relationships.

2. Ensure credible organizational commitment.

3. Structure challenges within job experiences.

 

Redefine Potential

 

First, to help narrow the focus of development activities, redefine leadership potential. Corporate Executive Board's HR Leadership Council defines a person with leadership potential as someone with the ability, engagement and aspiration to rise to and succeed in more critical senior positions.

 

It's vital that a leadership candidate possess all three traits. If an employee lacks ability, his or her chance of leadership success is virtually zero unless the skill can be taught. If a candidate lacks engagement - if he or she does not see the organization as the path to personal success - talent managers are essentially promoting someone else's star. "The Disengaged Star" shows disengaged employees have only a 13 percent chance of success in leadership positions.

 

A candidate must truly aspire to lead. An employee may have the ability and engagement, but if lacking genuine leadership ambitions, his or her chance of success is only 44 percent, according to the study. Many organizations promote outstanding people without taking into account their lack of interest. Perhaps the employee wants to maintain work-life balance, or is averse to the additional responsibility. The organization is best served by focusing development opportunities on individuals who genuinely want to lead. Bear in mind that potential is not static. Organizations can positively influence leadership candidates' employment experiences by structuring effective working relationships.

 

Managers have significant, if not the greatest, impact on employee potential, so talent managers should strive to pair emerging leaders with strong managers. But an emerging leader's direct reports also exert surprising influence. The HR Leadership Council study discovered that committed, smart, high-effort direct reports with valuable perspectives positively impact managers' leadership potential by as much as 30 percent.

 

The study also shows it's not just the current manager who influences potential, but also previous managers, who have a nearly 15 percent impact. That means bad managers can do lasting harm to employees - especially those with the ability to become future leaders. It's the talent managers' job to pair emerging leaders with managers who provide exposure to senior leaders and development opportunities - impacting engagement by 35 percent - and recognition in the form of new opportunities, mentions during talent discussions and verbal or written recognitions or rewards - impacting engagement by 28 percent - since these relationships will unlock potential for years to come.

 

Ensure Credible Organizational Commitment

 

While organizations are looking for a genuine commitment from emerging leaders, emerging leaders are looking for the organization's effort to help them progress. The HR Leadership Council study results indicate a development plan that demonstrates the organization's commitment to development impacts employee potential by approximately 28 percent. HR should create quality development plans to signal a sincere, credible and realistic organizational commitment. Employees need concrete objectives, an understanding of the resources available and belief that they can accomplish stated goals, which can drive potential by 38 percent, according to the study.

 

Although development plans can influence performance significantly, their impact on engagement is even higher. Achievable development plans not only instill emotional commitment to the organization, they also provide a powerful incentive for employees to stay.

 

When it comes to development plans, quality is paramount. Quality development plans:

 

1. Account for employee aspiration.

 

2. Offer customized development activities based on performance assessment, job function and level.

 

3. Balance business goals and leadership development needs.

 

4. Ensure the right level of stretch.

 

5. Address skill gaps.

 

Often, organizations must get creative to develop new leaders due to tight budgets and flat organizational structures. Many small to mid-sized companies have large jumps to move from middle manager to senior leader. There are rarely clear interim steps to move from senior director to vice president. Any high-quality, high-impact development opportunity integrates personal challenges, such as identifying new ways to work or handling a work crisis, and core skills into on-the-job experiences. Examples from "The Disengaged Star" include managing change, with 15 percent impact on employee potential; creatively solving problems, with 14 percent impact; or persuading senior management to take difficult action, with 11 percent impact - which all develop valuable skills.

 

Without manager buy-in, development opportunities may stall. Often managers are more willing to back development opportunities that are scalable and aligned with business objectives. Talent managers should be clear about expectations and objectives with all participants early in the process to ensure emerging leaders receive adequate support.

 

It's also imperative to schedule interim check-ins across a development experience to give the leader time to reflect and change course if necessary. According to a 2009 CLC Learning and Development study, "Unlocking the Value of On-the-Job Learning," deliberate reflection during and after a development experience increases a leader's ability to apply lessons learned by 30 percent.

 

After the development opportunity ends, consider conducting a post-mortem discussion on skills gained and lessons learned; this will help the leader apply the knowledge during future assignments. Many times, leaders do not realize the skills they gained or the lessons learned until forced to articulate them. Regular and formal check-ins also signal to leaders that their development is an investment the organization values.

 

Structure Challenges Within Job Experiences

 

Small to mid-sized organizations often find the high cost associated with formal programs prohibitive. Further, the lack of available positions to move people into creates a leadership vacuum. Thus, many turn to on-the-job learning and low-cost development opportunities to build leadership capabilities within the workforce. Ensure on-the-job development activities fulfill two key criteria:

 

a) There must be a team for the leader to lead.

 

b) The projects must help implement a long-term strategic change such as brand enhancement, sector or service line development.

 

Successful, low cost development ideas include:

 

1. Job rotation programs:

Provide cross-functional development experience without a formal promotion. Encourage leaders to think about what they want to learn from the experience prior to commencement. The HR Leadership Council study shows that employees actively thinking about what they want to learn can increase the impact of the rotational experience by up to 13 percent. Ensure development goals are specific and attainable for each rotation.

 

2. Internal expert training:

Identify employees with clear areas of expertise and have them deliver training modules instead of paying for third-party training. It is often more cost effective to send one employee to formal external training and have that employee come back and instruct others. Two benefits emerge from this tactic: Those receiving the training develop at a low cost, and the training may be a development opportunity for the person delivering it.

 

3. Coaching:

Train managers to improve day-to-day coaching. Managers who are effective at developing their employees have direct reports who outperform their peers by as much as 25 percent. Consider implementing formal coaching or mentoring relationships between senior staff and future leaders to increase engagement and development of this key group.

 

4. Crucible roles:

Create crucible roles, positions in the company that have the right mix of business impact and complexity, to serve as a stepping stone into senior leadership. To identify these roles, interview senior leaders to find out what they viewed as their most valuable learning role. Many mid-sized organizations have two to six of these positions available. Plan future leaders' moves in and out of those roles two years in advance to ensure maximum success for the individual and the role.

 

5. Executive shadow cabinet:

Establish an executive shadow cabinet - a team that will design, in parallel with strategy development sessions, its own business strategies to present to senior leadership. These strategies give the cabinet members great insight and experience while also helping bring new ideas that influence the direction of the organization.

 

By understanding what activities drive employee potential as well as the key components of a high-quality development plan, small to mid-sized organizations can do more with less.

 

 

[About the Authors: Mark A. Clauss is managing director and Ashley A. Willms is director of the HR Leadership Council at the Corporate Executive Board.]