Building a sustainable leadership pipeline depends on achieving balance between internal and external talent strategies. Balance is only effective in a transformative business environment.
By Dave Desouza
Sustainable organizations develop the ability to lead, manage, and successfully adapt to change. In the business environment that exists today, change is the constant, and old ways of managing talent is likely ineffective, especially when it comes to developing a sustainable leadership pipeline with people who are able to guide organizations through a transforming business environment that is more diverse, more global, more interconnected, and more agile.
Continuing traditional internal leadership development strategies is not enough. There must be a balance of internal and external talent strategies that find, develop, and promote people with the right skill sets and mix of perspectives that fit forward-looking organizations.
New Perspectives
One of the hallmarks of past leadership development is groupthink input, development and output. It perpetuated a lack of diversity in talent pipelines, and now for many firms it is creating an empty pipeline, leaving them wondering “why.”
Why are their organizations not innovative enough, and why are they unable to attract and retain the right people with leadership potential? In short, the most agile, talented, and diverse in terms of perspectives are not interested in working for companies that stymy creativity and reserve leadership positions for those who fit the groupthink mold.
The right leaders for today’s business environment are comfortable working in a global environment, understand how to balance risks and rewards, have functional expertise, think outside the groupthink box, learn from a variety of experiences that include successes and failures, and have cultural sensitivity and strong interpersonal skills.
While internal development and promotion are important, it is not enough to keep the leadership pipeline filled for the future. People are more mobile and less inclined to patiently wait for years for leadership opportunities.
Build AND Buy Leadership Potential for the Future
Oracle describes the building of a critical leadership pipeline as a question of “build or buy.” Build is the development of internal talent. Buy is the attraction and hiring of external emerging leaders.
To identify the internal talent with potential leadership skills, organizations can make use of data-driven talent profiles on a talent management technology platform that provide performance data and visibility into needed skills. Understanding internal talent skills, strengths, weaknesses, and competencies gives the talent intelligence needed to decide who should be developed internally and who should be recruited as future leaders on the outside.
The data provides information on what constitutes a “success profile,” which is then used to hone external emerging leader recruitment. Psychometrics is the science of objective psychological measurements of a person’s knowledge, abilities, personality traits and attitudes. This type of data can identify hidden leadership abilities, while also eliminating subconscious bias at the assessment stage.
Linking the internal and external leadership strategies is a 21st Century approach for pipeline sustainability. In fact, Oracle proposes that the process of hiring external leaders can be quite similar to the process of identifying and promoting internal candidates.
For example, data indicates an increase in innovation linked to the diversity of perspectives associated with a workforce that has a mix of people with different genders, races and ethnicities. That information is used to drive external leader recruitment.
All About Balance
The key point is balance. Developing employees from within who have leadership potential is balanced with hiring from the outside. This gives internal talent opportunities to rise to leadership positions while keeping an influx of qualified emerging leaders entering the organization and eventually the leader pipeline.
According to the American Management Association, statistics send a clear signal that relying on one or the other – internal versus external – can make it difficult to create a sustainable pipeline. Organizations that have 25 percent of their middle management positions filled with external hires have double the turnover rate compared to those organizations that have rigorous internal promotion strategies. It takes both strategies designed to find the right balance for the particular organization.
Per Marshall Goldsmith, a recognized business thought leader, one of the important principles of a successful process is considering future leadership needs based on the organization’s strategic needs. Assessing the current talent pool from this perspective is another step toward linking internal and external strategies.
Look at the current talent pool in terms of skills and competencies within the framework of strategic, not current, needs at all levels of the organization. Organizations are not managed solely by the C-Suite. The daily decisions made on the front lines determine long-term success. The future leadership potential of internal employees and new hires is critical to the sustainable organization.
There are many ways to identify and recruit internal and external potential leaders. Assessments are one, but technology offers people opportunities to display hidden potential.
For example, Employee Resource Groups that link people across business units and functions can ferret out the natural leaders. The people who bubble to the top are identified as those who can be coached, mentored or sponsored, if performance data supports the effort.
Externally, a similar process occurs via social media. Many organizations today have a social media site that anyone can access. Potential talent is recognized when people make suggestions for solutions to problems or actively join discussions concerning products and services. Organizations use technology to mine a variety of social media and websites, looking for people with leadership potential and who have the right skills fit.
Potential internal leaders, identified through enterprise social media and other data, are prime candidates for moving into a variety of positions across functions in order to develop the depth and breadth of knowledge that leaders need.
Other strategies for finding leadership potential include networking with suppliers, thus expanding the outreach to new networks of connections. Diversity and inclusion strategies determine the ability of the company to successfully attract and promote diverse people with leadership potential, broadening the organization’s ability to compete for talent in a global market.
Developing a sustainable leadership pipeline is more complicated today. An effective leadership model makes leadership planning an ongoing practice. Too many organizations continue to fill vacant positions as they occur rather than proactively recruiting and developing internal and external emerging leaders for the future.
Should you build or buy leaders to develop a sustainable leadership pipeline? The answer is to do both in a balanced manner.