Leadership Development in Successful Companies
The previous articles have discussed how the HRM function is now seen
as a critical and crucial component of the organizational support
functions. In particular, we have analyzed how effective people
management goes a long way in ensuring better economic performance.
Among the components of people, management that the HRM function does is
the aspect related to leadership development. Research into the HRM
practices of successful companies has shown that these companies
significantly outperform their peers in terms of economic profitability
by following the leadership development practices discussed in this
article. By successful companies, we mean those companies in the Fortune
100 list that have managed to retain their position in the firms over a
decade. To put this in perspective, it needs to be remembered that many
companies that were in the Fortune 100 list for a few years failed to
retain their positions in subsequent years and hence, the fact that
these companies have managed to stay in the hunt means that they have
outperformed their peers and competitors.
The Components of Leadership Development
The leadership development programs in these companies follow the
philosophy of grounding them in value, the expected contributions from
the leaders are defined, and the organizational culture geared towards
inspiring leaders. Next, the performance management system in these
companies is tied to the company’s business strategy and it includes
talent development activities and leadership objectives that are
articulated clearly and succinctly. In other words, promotions are based
on individual performance as well as people development activities and
these in turn are linked to the business strategy and objectives. These
companies also have a leadership pipeline, which means that the
leadership development is embedded in their strategic workforce planning
which is comprehensive, and longer term oriented. These companies also
ensure that they divide their workforce into job families and the
potential leaders are identified and groomed for higher roles and
responsibilities. In many of these companies, it is common to find lists
of potential leaders known as high potentials who are earmarked for
fast track career progression based on the organizational assessment of
the skills and capabilities of these leaders. Further, the recruitment
and training of new employees is based on longer-term analysis of demand
and supply patterns, which ensure that newer generation of leaders, are
hired into the company to replace those who have made it to the higher
levels.
Collaboration between the HRM Function and Senior Management
The HRM functions in these companies work on a collaborative model
with their potential leaders which means that the job of people
development is not left to the HRM function or the leaders alone.
Instead, the potential leaders are identified and then their performance
is linked to the enabling and empowerment of others to move up the
chain. In other words, the ability to spot talent and identify leaders
for the future is done by both the HRM function and the senior
management who work in tandem in this effort. Research into these
successful companies has shown that the people management in these
companies is world class and the contributing factor that differentiates
these companies from others is that the HRM function plays a critical
role throughout the employee lifecycle and not at the recruitment and
training phase alone. The other factor is that the leaders in these
companies are expected to have skill sets that match the need for
adapting to the challenges of the 21st century business landscape. In
other words, these companies groom the leaders of the future right from
the middle management level.
Closing Thoughts
Finally, leadership is a combination of natural abilities and the
organizational nurturing of the employees with those skills. Hence, this
interplay between nature and nurture is what determines the success or
otherwise of the HRM function and the senior management efforts to
develop leadership in these companies.
