Most of the literature and examples of "best practices" for developing a company's next generation of leaders cite the efforts of large companies, with GE being the most common example of excellent practice and results in growing their own leaders. These large companies have large leadership development staffs, impressive budgets, and often, a dedicated facility for leadership development activities, such as GE's famed Crotonville center.
However, few small to midsized companies (defined here as having fewer than 5,000 employees) have the resources, both financial and staff, to even think about replicating the approaches to leadership development used in these larger companies. In these smaller companies, leadership development is, at best, the responsibility of the HR group, among their many other responsibilities. At worst, nobody is thinking about leadership development except for an occasional discussion during the succession planning process, such as, "If we are thinking about promoting John or Sally to replace Joe when he retires, maybe we ought to send them to a leadership development program at a business school (or another public program from a leading training provider)."
For these smaller companies, the development of the next generation of leaders cannot be focused on a single leadership development program or experience. Leadership skills are necessary, but they are not in any way sufficient to create a new generation of leaders for the company. Along with leadership skills, this next generation must develop its business acumen, learn and practice execution skills, and broaden their knowledge and skills from their functional specialties to include a broader range of strategic thinking and strategic planning skills.
When I worked for a midsized (1,500 employees) software engineering company as director of organizational learning and employee development, I created a comprehensive approach to leadership development that worked very well for that company and that can work for many small and midsized companies. The leadership development program (LDP) model described in my new book, Feeding Your Leadership Pipeline: How to Develop the Next Generation of Leaders in Small and Mid-Sized Companies (ASTD and Berrett-Koehler, 2010), runs throughout a period of two years, and has four basic components:
- Quarterly education sessions on a wide variety of topics, ranging from leadership skills to business and financial acumen to strategic thinking to creativity and innovation.
- Action learning projects each directly tied to the topic of an education session. Some projects are assigned to teams, and others to individual participants in the program. The results of the projects are then presented to a panel of company executives at the start of the next quarterly education session.
- 360-degree assessments and individual development plans for each program participant to complement and supplement the contents of the LDP.
- Mentoring and coaching for each LDP participant. Mentors are chosen and assigned from the company's executive team and, as needed, coaches are assigned to individual participants to help them develop knowledge and skills that are not included in the LDP program, but that have been identified as an area needing development in the individual development plans.
The following is not an uncommon story, having been experienced by many companies, large and small:
A senior member of the company's executive team leaves suddenly. The CEO, in looking for a replacement, appoints Bob, a midlevel manager, who had just completed a very successful project for the company. "He's so bright, and he has done such a great job; let's give him the opportunity to take on this role."
From day 1, Bob is a disaster in the new job. Coming in knowing all the answers (without asking any questions), Bob starts making changes from the start, with no real knowledge of what has happened in the past. He alienates a number of key senior managers, several of whom leave the company.
The results are disastrous - the division Bob is now heading starts losing money for the first time, and, eventually, Bob is fired. A more thorough search is undertaken to find a successor, and even though the new person is a very good fit for the job, the division has lost a lot of money and even more momentum.
By involving company executives in the program, in a variety of roles, they will get to see their high-potential employees in action and, more importantly, will be able to test their leadership skills through action learning projects before promoting them. Experience has shown that executives who participate in the program feel that they get a much better line of sight into the company's talent than they otherwise would have had, and that they end up feeling more connected to the front lines of the business.
A common question is, "How much is this going to cost the company?" In the book, I discuss both higher- and lower-cost alternatives for the program. But whether you decide to go all out in developing and running the program or do it on a relatively modest budget, the answer to the question is that the entire program will cost much less than making a single poor promotional selection as in the case of Bob.
Here are some reasonable expectations for results from using this model to develop your company's next generation of leaders:
- LDP participants will develop the leadership, business acumen, and execution skills they will need for future leadership roles in your company.
- You will expand your company's pool of talent for use in succession planning.
- You will retain some top talent you might otherwise have lost (if you didn't include them in your LDP).
- Through action learning projects, you will solve some longstanding company challenges.
- You will make your top talent more visible to company executives.
- LDP participants will improve their performance in their current jobs.
- You will weed out some high potentials who fail to perform in the LDP (thus avoiding the "Bob" problem).
- You will help company executives feel more connected to many parts of the business.
Decades ago, Lawrence J. Peter wrote The Peter Principle, which stated: "In a hierarchy, every employee tends to rise to his level of incompetence." Without any efforts to develop your next generation of leaders, you are guaranteeing that the Peter Principle will hold true. Using this model to develop your next generation of leaders, you can better your company's odds of obviating the Peter Principle.