Leadership continuity decidedly deficient

With as much talk as there is about corporate success or failure being directly tied to leadership, one would think that executive development would be a priority at all firms.

As it turns out, few companies are focused on succession planning, even though some are expected to lose up to half their executive benches in the next five to six years to retirements, according to a new study by RHR International, a Chicago-based management psychology firm.

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In a survey of 115 companies, RHR found that many are unprepared and unsophisticated when it comes to grooming future leaders, despite warnings of talent shortages over the next several years.

About 75 percent of respondents said they were not confident about their ability to meet their future leadership needs. Most had been focused on developing their executive bench for three years or less, the study found.

"When you think of the skills and leadership behaviors that go into creating the successful leader of tomorrow, three years is nothing," said Guy Beaudin, managing director of RHR in Toronto. "Organizations are not paying attention."

Those that fail to identify and develop star performers create their own talent drain, as high-performing employees feel unchallenged, get fed up and leave.

"What we found is that organizations who are doing more to develop their talent do have a higher retention rate," Beaudin said. "This lack of loyalty has been precipitated by the lack of attention that companies have given to giving them stretch assignments and moving them through the ranks."

The economy has certainly had an impact on succession planning, which got pushed to the bottom of the "to-do list" as senior-level executives were focused on staying afloat and meeting the challenges of an ever-changing marketplace in an atmosphere of increased scrutiny of corporate executives.

"There’s a very strong short-term focus in organizations today. The progress and growth on developing your leadership pipeline is measured in years, not months or quarters," he said.

But as the economy slowly improves, companies are starting to refocus on leadership development, although it might be too late to hang onto top people who have felt ignored or overlooked.

Those firms will have to go outside looking for talent, which is great for bringing in fresh ideas but is not the most effective way to build their executive bench, Beaudin said.

"You have a higher success rate bringing people up from within rather than hiring from the outside," said Beaudin, adding the study found that companies that were more able to rely on internal talent for their future leadership needs were more confident about being able to meet those challenges. "It’s more difficult to integrate talent from the outside and hit the ground running."

Developing top talent not only increases the chance these folks will stick around, but it also gives managers time to assess their skills. Today, companies are looking for softer skills, such as the ability to build strong relationships, openness to change and the ability to motivate and inspire others, in their senior leaders.

"At that level, there’s an assumption people will have the intellectual ability and knowledge of the business," said Beaudin, adding softer skills are harder to measure, which also makes the case for internal development. "It’s more difficult to assess that from someone coming in from the outside."


Hear T. Shawn Taylor on WBBM-AM 780 at 6:21 p.m. and 10:22 p.m. Tuesdays and 7:52 p.m. Saturdays and Sundays. E-mail [email protected].

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