Businesses may be confident they have strong management teams in place today, but will they be ready for the changing realities of tomorrow? An effective enterprise’s response to this question will reflect its core organizational priorities, its strategic perspective and its capacity for effective corporate governance.
A significant fraction of today’s crop of business leaders is drawn from the baby boomer generation, born between 1946 and 1964, and many will reach retirement age over the next three to seven years.
Companies that anticipate and address in advance the challenge this exodus presents will facilitate their new leaders’ ability to sustain organizational progress. In the process, they will achieve clear strategic advantages over their less far-sighted competitors.
Many organizations that are vulnerable to the disruption inherent in corporate-level turnover have not implemented succession initiatives. More disturbing, they do not even have such critically important plans on their drawing boards.
In general, organizations are aware of the negative implications of baby boomers aging and the resulting executive turnover. But many are unwilling to commit corporate resources to resolving the issue.
Developing well-trained corporate leaders is a continuing challenge for every organization. It requires a best-practices approach that goes beyond one-dimensional replacement plans that simply exchange one executive for another in the shortest possible time.
Instead, organizations should design and implement systematic, long-range leadership-development solutions that:
- Identify high-potential people
- Diagnose developmental opportunities
- Create individual development plans
- Monitor individual progress toward the desired end result
In addition, organizations must look at themselves and how they can improve their approaches to leadership and succession. Three organizational characteristics are key to an effective leadership-development strategy.
- Strategic alignment. The organization’s approach to leadership and succession must be consistent with its long-term business plan and aligned with its strategic objectives, mission and vision. The enterprise must make an ongoing, across-the-organization commitment to leadership development, and allocate the time, talent and dollars necessary to sustain it.
- Executive ownership. Leadership development and succession management must be key priorities at the organization’s executive level. Present-generation leaders should be actively engaged in the company’s leadership initiative, providing effective mentoring, review and assignment management to high-potential individuals.
- Cultural commitment. The organizational culture should promote continuous feedback, assessment, selection and development of high-potential candidates. People across the company should seek opportunities to promote and develop leadership at every level. As a function of its culture, the company must be committed to identifying and preparing next-generation leaders from within.
A best-practices approach to leadership development results in a process that promotes these organizational characteristics and integrates them into an organization’s development and succession process. The model above illustrates the sequence and flow of the process’s implementation.
Effective leadership development demands sustained effort and a continuing organizational commitment. The return on this investment is well worth the outlay, because organizations that proactively manage the development and succession of their leaders take effective control of their own futures. Conversely, companies that choose a hope-for-the-best approach run the risk of having their futures controlled for them.
Clearly then, the only real decision is the decision to act.
Patrick J. Cole, SPHR, can be reached at (616) 752.4248 or firstname.lastname@example.org.