The statistics are clear. As reported by Natasha Tiku in
Inc. magazine, "Over the next two decades, 78 million Baby
Boomers will turn 65, the traditional retirement age. That's going
to create a talent shortage, particularly in industries such as
healthcare, education, engineering, and financial services. In
2005, workers over 55 represented 16 percent of the workforce; by
2020 that number will rise to almost 25 percent."
Small to mid-sized companies (defined as companies with fewer than
5,000 employees) are struggling with the pending retirement of many
of their leaders during the next five to 10 years and trying to
determine from where their next generation of leaders will come. At
one mid-sized utility company, the general manager of power
generation (the largest group within the company) said that nine of
the 11 top people in his business unit were eligible to retire in
the next five years, and he had no idea where to find their
replacements. When asked what the company had done to develop
replacements for these key people, he replied: "I sent one guy to a
week-long program at [a well-known training vendor]. It cost a
small fortune, and it didn't change a thing!"
Many large companies have built substantial leadership development
organizations, usually as part of their HR groups, to develop
leaders at all levels of the company. Perhaps the most respected
company in this category is General Electric, which has a long
tradition of leadership development, consistently promoting new
CEOs from within, and supplying both themselves and many other
Fortune 500 companies with generations of chief executives and
other top-level officers.
In much of the business literature on developing future leaders
within a business, General Electric's approach to leadership
development is cited as a best practice. But few small to mid-sized
companies have the resources to build a facility like GE's
Crotonville, and most companies do not have large staffs dedicated
to developing their companies' next leaders. So for them, this best
practice is irrelevant, but developing their next generation of
leaders is not.
Has your company identified high potentials to groom as the next
generation of leaders? What are the key leadership competencies
that future leaders will need to succeed? It is crucial that you
have a program that identifies and cultivates future leaders so
that they will be ready to lead.
The basic question is not, "Should the company invest in a
leadership development program?" but rather, "Can the company
afford not to invest in developing the next generation of its
This is an excerpt from Feeding Your Leadership Pipeline: How
to Develop the Next Generation of Leaders in Small to Mid-Sized
Companies. You can purchase the book here.