The demand for leadership talent greatly exceeds supply. If
economic growth continues at a modest 2 percent for the next 15 years, there
would be a need for one-third more senior leaders than there are today.
Baby Boomers have already started to retire. Most large
companies will have to scramble to meet gaps in senior leadership talent.
The global and more dynamic economy of the 21st
century requires executive talent with a more complex skill set:
- Greater technological literacy
- A sophisticated understanding of global marketplaces
- Multicultural fluency
- Relationship savvy, with extensive networks of alliances and stakeholders
- Leadership skills over a disaggregated and virtual organization
In response to these challenges, organizations have a
renewed interest in succession planning systems. While these systems functioned
merely as replacement charts in the past and were HR executives’ function,
there are two critical differences today, emphasizing:
- Leadership development at all levels (not just senior executives)
- Responsibility and involvement for leadership development within the work group, with the person’s manager and team members (and no longer an HR function)
Internal training, mentoring and other developmental
programs aren’t keeping the talent pool adequately full. What’s needed is an
approach that develops people at all levels. Organizations must promote people
from within the organization to successive levels of leadership responsibility.
Distinct Leadership Levels
Most development models fail to consider leadership
requirements at all levels. As a person is promoted from line manager to
business manager to functional manager, skills and requirements change.
Companies mistakenly focus on leadership traits, styles and
technical competence. They commit a major error when promoting successful
individuals without acknowledging required skill sets.
The Leadership Pipeline
Hiring gifted people makes sense as a tactic, but not a
strategy. Companies need to build leaders, not buy them. Research and
experience demonstrate that potential is not fixed.
Potential is the kind of work someone can perform in the
future, and it’s a dynamic concept. Future work potential is based on
accumulated skills and experience, as evidenced by past achievement, ability to
learn new skills and willingness to tackle bigger, more complex or
higher-quality assignments.
The more people achieve, the more they learn. Their
willingness to tackle new challenges increases. To capitalize on potential,
companies must define the true work requirements at each key leadership level.
Succession planning systems must spell out what’s needed to make a successful
transition from one layer of leadership responsibility to the next.