Selecting great leaders through predicting their future
Selecting great leaders through predicting their future
What is going wrong with succession planning when four in ten [1] of the internal job moves made by ‘high potential’ people ends in failure? Do we promote people to leadership roles using the wrong criteria? Daniel Mannheimer, Senior Consultant and Chartered Occupational Psychologist at Alumni explores the reasoning on which we base promotions, how the idea of good leadership is shifting and how we can start turn things around to build organisational resilience for the future.
The battle to find potential
In a study by PWC, 58 per cent of organisations reported a significant shortage of leaders for key positions. And fewer than 1 in 4 companies believed they had a “ready now” talent pipeline.[2] Several studies have shown similar trends and today it is estimated that some 65 per cent1 of organisations lack confidence in their ability to fill mission-critical leadership roles; a concerning statistic indeed.
Why are we not getting it right? Why are organisations risking their future success by failing to retain and develop their people in a way that ensures and accurately pinpoints their leadership potential? Companies must find a way of aligning their future strategic business goals with a people strategy that provides them with the leaders that can get them there.
This means improving their definition of leadership potential and putting the criteria used to identify the people with the ability to succeed in mission-critical roles into a laser focus. Only by doing this within the context of their strategic goals and unique company culture and aligning these thoughts throughout the organisation can they hope to succeed at succession planning.
Top performance doesn’t always indicate high-potential
In their pursuit of potential, most organisations will traditionally first look within their cohort of high performers and in doing so they could be wasting the bulk of their talent investments. Admittedly, organisations are not likely to find leadership potential in their underachievers. However, it is foolish to assume that all high achievers have matching levels of potential. Research[3] shows that more than 70 per cent of today’s top performers lack the necessary attributes essential to their success in future roles. Take an extreme example: a top performing athlete has great technical skills and strong self-discipline, but do they have the skills needed to be a fantastic coach? Coaches will likely need less ego, and a broader and more collaborative mindset to progress their teams up the competitive ranks.
We see evidence of a shift in the mindset of what future leaders should be like and what good leadership is; not least in the work we do with Private Equity owned companies and their due diligence in preparing for acquisitions and mergers. No longer is a safe investment purely based on financials alone. Leadership and human capital is increasingly seen as a risk factor and used to help determine potential and level of investment. There is a more nuanced dialogue around how people allowed to be their best will consequently do their best, and help their businesses thrive.
Business-critical consequences
Research from Harvard[4] shows that 40 per cent of individuals who are in high potential programmes may not actually belong there. What are the implications of organisations failing to identify the people who are most likely to lead their teams in the future? Gaps in leadership will inevitably result in missed goals and missed opportunities that generate business-critical consequences. This applies not only to executive level positions but effects a much broader range of skilled experts within the broader organisation. Globally the majority of CEOs cite an inadequate talent pipeline as a business threat. Add in the pressure of a business landscape increasingly focused on short-term results and global megatrends such as digitisation, market volatility and uncertainty. Add to this current generational shifts, new ways of working, and unpredictable consumer behaviours and the situation starts to look perilous.
“Taking what little we know about the future and how unpredictable it is, we can instead look at identifying leadership qualities that are more likely to successfully tackle and adapt to changes in future circumstances.”
There are many things to consider when identifying a company’s future leadership and it is dependent on the company’s goals, legacy and culture. Sometimes a company will need leaders that drive great results, sometimes it will need leaders that are better at bringing people together and developing others. Other times a company may need leaders who can connect and innovate and evolve the entire business model. But there are also many external factors that complicate what type of leadership is needed, particularly when companies face having to swiftly pivot their entire business model to simply survive; a reality for many during the pandemic.
Taking what little we know about the future and how unpredictable it is, we can instead look at identifying leadership qualities that are more likely to successfully tackle and adapt to changes in future circumstances. What we see is that the leaders of the future should have these common features:
a growth mindset
ability to manage complexity
capacity to adapt quickly to continuous change
agility
an innovative approach
have a high ability to collaborate with others
So how do we get it right?
Companies need to look forward and not back, focus on where they are headed rather than where they have been and, most importantly seek out leaders that can take them there. How do we define those with genuine high potential for great leadership when the attributes that have made someone successful in the past are not a guarantee of success in the future?
“The right choice might not always be to promote a high-flyer to a leadership role. Retaining talent might be solved by having more flexible career paths within your organisation and personalised development and reward plans and not simply pushing high-achievers up the rungs of the leadership ladder.”
The harsh competition for skilled leadership often leads to recruiting managers using promotion to leadership level as a retention tactic for their high achievers. This is a detrimental approach unless there is true potential within the individual. Almost a quarter of HR leaders believe that they are ineffective in developing the next wave of leadership[5] therefore it is surely better to set clear expectations about what a leadership role at each level entails. This benefits not only recruiting managers but also the people identified as critical within the organisation and their ability to make informed decision about their likelihood of success in a new role. The right choice might not always be to promote a high-flyer to a leadership role. Retaining talent might be solved by having more flexible career paths within your organisation and personalised development and reward plans and not simply pushing high-achievers up the rungs of the leadership ladder.
Once you have identified what leadership you need and what good leadership is to your company, it needs to be aligned within your organisation and to company strategy. We see many companies who have policies in place but wrestle with executing them. For instance, we often hear from HR Directors in our network about the challenge for hiring managers around keeping their eye on the greater good and looking for people that may not tick all the boxes in terms of expertise but do have potential. In many ways this a more strategic, long-term approach and it’s easier to look to the here and now, especially when needing a quick hire to fill a gap and make sure operations run smoothly.
How we predict the future
Most organisations expect more than 40 per cent of leadership roles to be significantly different within the next five years[6]. The potential for an individual to be successful always needs organisational context and can more easily be evaluated if assessed in connection to a specific role or responsibility. So, what components should we identify? When Alumni work with clients to assess candidates as part of a recruitment or a second opinion for instance, we look at performance as something:
which is demonstrated by consistent delivery of results over time.
that reasonably predicts success in similar kinds of jobs and then only if the person was primarily responsible for past successes.
where a person has a proven track-record of in their previous roles.
We look at potential as:
a person’s career aspirations to intentionally grow a career.
demonstrated by superior performance under first-time or different conditions.
demonstrated by the ability to respond quickly to diverse, intense, varied and adverse assignments.
Our methods and tools help us determine characteristics in an individual including leadership traits. For instance, how persistent are they and what is their tolerance for ambiguity? We look at assertiveness and levels of optimism. We also analyse how well an individual collaborates with others, and how they manage change. Mental aptitude and capacity are also a part of this assessment. Other personality traits are also investigated to give an indication of a person’s stability, for example if they have a tendency of micro-managing or being overly controlling. In some cases, a degree of some seemingly negative traits can actually prove useful within a given role, so it is important that a candidate is assessed ‘in the round’ and within a specific role context.
Update your recipe for success
“ In recent years we notice a positive shift in the dialogues we have with HR executives and senior recruiting managers. There is more openness to look beyond the pure technical skills and daring to push the boundaries of what is actually required in a candidate profile to do the job well. ”
As recruiters we are often engaged as a type of insurance to guard our clients from making a costly and wrong hire. In recent years we notice a positive shift in the dialogues we have with HR executives and senior recruiting managers. There is more openness to look beyond the pure technical skills and daring to push the boundaries of what is actually required in a candidate profile to do the job well.
Our experience of the industry tells us that there is a small percentage of people in the world that always land on their feet, who forge their own luck, who always manage to push forward and can somehow manage to drive through new ideas and navigate the most complex problems. These are certainly people with potential and they are rare. These are the people you should hire for purely for their attitude and approach; you can easily train them for additional skills. By gradually exposing them to challenges and risk, supporting them in building their emotional courage, they can grow into great leaders.
To drive your business in a sustainable way, view your human capital as a scarce resource, not something easily replaceable. If you don’t, you risk missing out on business-critical opportunities. To get you started consider the following questions:
Have you analysed the type of leadership you need going forward?
How do you define potential and what criteria to you use to identify those people who could take on the mission-critical roles in the future?
How can you work to ensure that all managers in your organisation, responsible for promoting and recruiting employees, understand your future strategy to and enable them to make decision in-line with your future needs?
Have you made plans to support your existing leaders in transitioning into the desired leadership you aim for?
Can you help in building on their experiences, developing desirable traits and drivers that you deem necessary for success?
Do you have a process in place to constantly review your human capital and map this against future needs?
These are questions we support numerous clients navigate and find solutions to. Regardless of whether they are on your payroll or within our extensive networks, we hope you would consider reaching out to us for help to identify your leaders of the future and develop their existing potential.
Daniel Mannheimer is one of Alumni’s Organisational Development Consultants and a Chartered Psychologists. He holds many accreditations in personality and analytical testing. To discuss how Alumni can help you identify the potential in your talent pool – please get in touch.
References
[1] Source: Harvard Business Review & UNC Kenan-Flagler Business School Study
[2] Source: PWC, 16th annual Global CEO survey
[3] Source: Harvard Business Review, 2010, How to keep your top talent
[4]Source: Harvard Business Review 2017, Zenger & Folkman, Companies are bad at identifying High Potential Employees
[5] Source: Gartner, Top 5 HR Trends and Priorities for 2022
[6]Source: Gartner, How to Build Leadership Bench Strength
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