Over the past few years, the rapid pace of baby boomers retiring has threatened the transfer of organizational knowledge from one generation to the next. That’s forcing many companies to address the growing gap in their leadership pipeline.
“Leadership development has become an even more vital process for companies,” says Midge Streeter, director of talent management and culture at Sequent. “A leadership development strategy reduces turnover of high-potential leaders and transfers information from one generation to the next, allowing companies that do it well to be highly competitive.”
Smart Business spoke with Streeter about organizational leadership trends and how companies can prepare and retain its next generation of leaders.
What are the characteristics companies should look for in potential leaders?
Companies should map their business strategy to their hiring practices to ensure alignment with their succession plan so that new hires have the required competencies to drive the business forward. Those competencies vary depending on the business, its size and its needs, but there are commonalities. For instance, good leaders are socially and self-aware, can build strong relationships and can develop other individuals in an organization.
How can companies address leadership gaps as more baby boomers retire?
With a sense of how the brain drain will affect their business, companies should review their succession plan and look for weak spots. Determine who is retiring, when and what areas within the organization could be most vulnerable to the upcoming retirement. Do that while looking three to five years into the future. Identify, prioritize and engage potential retirees, even those who don’t have direct reports because they still have organizational knowledge. Ideally, these near-retirement baby boomers will become mentors to high-potential employees and then transfer knowledge.
A deep and unexpected recession caused boomers to stay in their jobs longer, which delayed the opportunity for Generation X to take ownership of additional responsibilities. Gen X is small compared to the other two generations, but companies should consider how to bring those employees along because they need to be ready to lead.
What are the signs that someone isn’t as capable of leadership as first believed?
Usually, those who struggle in leadership roles aren’t able to effectively communicate to their direct reports. The main challenge new leaders face is leaving their old role behind. They often think they have to get all the work done themselves as they did as an individual contributor. That makes it hard to delegate. Leaders need to focus on coaching and bringing their direct reports along so there’s a distribution of workflow across the whole team. Once that’s recognized, the leader can be coached and his or her skills can be improved.
How can companies retain those who they want for leadership positions?
Talented, high-potential leaders are leaving organizations after 18 to 24 months, which is frustrating for decision makers and expensive to the bottom line.
To stave off this trend, it’s important that millennials feel that their voices are heard and the company is providing development opportunities. They want to be coached and mentored and have a chance to show their capabilities. When that happens, they tend to stay. It’s all about bringing them along by offering stretch projects and giving them the leadership development opportunities they’re looking for. Conveniently, it’s reported that 75 percent of millennials want a mentor and 60 percent of boomers have been sought out by millennials for guidance. Companies could benefit by taking advantage of this tendency.
Millennials are aware that they’re a hot commodity, which is why many are leaving their employers so soon. The reason for the high turnover is not typically an inadequate salary, but a lack of development opportunities. Those organizations that develop the next generation of leaders are going to reduce their rate of turnover and compensate for the brain drain. It will also position them to recruit the best-of-the best and outperform the competition.
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