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Companies Have Been Neglecting Their Leadership, and What to Do About It


Leadership is the backbone of any successful organization, yet in recent decades, many companies have failed to dedicate sufficient time, resources, and emphasis to cultivating strong leaders. As the business landscape grows increasingly complex, organizations must prioritize elevating their leadership for sustainable growth and performance.


Today we will explore how inadequate leadership development has hindered company progress and negatively impacted culture. In addition, practical steps will be offered for refocusing on leadership through intentional training, support, and succession planning.


Lack of Investments in Leadership as a Barrier to Success


It has been shown that companies which dedicate focused efforts to building leaders reap substantial rewards. A 2019 McKinsey study found organizations in the top quartile for leadership quality significantly outperformed their peers in terms of profitability and shareholder returns over a 10-year period. However, many businesses have undervalued leadership's importance to overall success. Three ways inadequate investments in leadership have held companies back include:


  • Insufficient Training and Development: Far too often, high-potential employees are promoted into leadership roles with little preparation for managing people. Without proper training on core skills like communication, decision-making, conflict resolution and performance management, new managers flounder. This negatively impacts employee engagement, productivity and retention. It also breeds a culture where strong leadership is not expected or nurtured.

  • Unclear Leadership Pipelines and Succession Planning: When companies do not have transparent leadership pipelines or robust succession plans, they leave themselves vulnerable if key leaders depart. Without a process for identifying and grooming internal candidates, replacement choices are limited in times of need. Talented employees also lack visibility into career growth opportunities. This stifles motivation and increases the risk of losing top talent.

  • Reactive vs. Proactive Leadership Approach: In the absence of strategic leadership development practices, companies tend to operate from a solely reactive stance. Leaders are chosen based on short-term needs rather than a long-term vision. This "putting out fires" mentality breeds instability and prevents organizations from maximizing leaders' full potential. It also signals to employees that strong leadership is not a priority.


By failing to view leadership as a company-wide responsibility and continuous investment area, many businesses have handicapped their own success. The following sections explore specific steps all organizations can take to refocus on cultivating excellent leadership.


Establishing a Leadership Culture Through Training


The first step towards building a company culture with leadership at its core is implementing a robust training program. Rather than ad hoc on-the-job learning, leadership training should be intentionally planned, resourced and tracked. Some elements to include are:


  • New manager training focused on foundational leadership skills within the first 90 days of a promotion.

  • Ongoing skills workshops covering topics like change management, strategic planning, motivational techniques.

  • Mentorship programs pairing new and experienced leaders for support and knowledge sharing.

  • External leadership conferences/courses to gain fresh perspectives and network with peers.

  • Assessment tools such as 360 reviews to gather feedback and track development areas.


For example, healthcare insurance giant Cigna credits comprehensive leadership training with cementing a culture of growth and excellence. All new managers undergo a rigorous initial training program focused on people management best practices. Ongoing workshops, resources and mentorship are also provided. As a result, Cigna consistently maintains high employee engagement and customer satisfaction scores.


Creating Transparent Leadership Pipelines


Clear pathways for career progression boost motivation and retention. Companies must articulate the leadership pipeline and ensure all employees understand expected competencies for advancement. Regular discussions between managers and direct reports can provide clarity. Formal processes like:


  • Leadership competency models outlining traits and capabilities required for specific levels.

  • Individual development plans created annually to map out learning goals and timelines.

  • Rotation/project opportunities for applying and showcasing new leadership skills.

  • Sponsorship from senior leaders helping high-potentials network and gain visibility.


For example, manufacturing company 3M uses transparent career frameworks and individual development plans to foster intentional leadership development. Managers clearly outline the leadership competencies, experiences and timeline an employee needs to progress to the next level. This structured approach yields high employee retention rates and a steady pipeline of internal candidates ready to fill critical roles.


Implementing Robust Succession Planning


Succession planning is crucial for continuity but often overlooked. Companies that prioritize this practice experience 30% fewer disruptions during CEO transitions and considerably outperform industry peers. Robust succession planning entails:

  • Identifying mission-critical roles warranting succession focus.

  • Assessing internal candidates' readiness level using tools such as assessment centers.

  • Creating development plans to close any experience/skill gaps.

  • Conducting "mock interviews" to evaluate candidates' preparedness.

  • Engaging backup succession options in case primary candidates are not ready.


For example, diversified manufacturer Danaher begins identifying and tracking leaders with CEO potential within their first five years. They undergo intensive assessment and receive candid mentorship from executives. This ensures multiple high-caliber internal candidates are prepared to step into any leadership role, preventing business disruption.


Emphasizing Proactive, Strategic Leadership


Finally, companies must broaden their view of leadership from a reactive role to a proactive, strategic one. This involves:


  • Integrating leadership responsibilities into overall company planning initiatives.

  • Holding leaders accountable for not just short-term production but long-term talent/succession management.

  • Tying leadership accomplishments such as high employee engagement to performance metrics and compensation.

  • Conducting leadership reviews/audits to ensure strategies remain constantly optimized.


For instance, professional services firm Ernst & Young conducts semi-annual leadership assessments to re-evaluate strategies based on evolving business needs.[9] Leaders have standing agenda items regarding culture, talent pipelines, knowledge transfer and change management. This proactive approach enables continuous refinement of leadership practices for maximum impact.


Conclusion


In today's ever-changing business landscape, strong leadership provides the backbone organizations need to navigate challenges and seize new opportunities. Yet many companies have neglected dedicating sufficient focus and resources towards cultivating excellent leaders over the long run. As this paper has shown, a lack of robust training programs, clear career pathways, succession planning and strategic leadership emphasis creates barriers to success. Those who invest in building an authentic culture of leadership experience substantial dividends in the form of employee motivation, talent retention, stable change management and superior financial performance. By implementing the practical recommendations discussed - from comprehensive leadership training to transparent succession processes - businesses across industries can immediately begin refocusing on this vital aspect for driving sustainable competitive advantage.


References


 

Jonathan H. Westover, PhD is Chief Academic & Learning Officer (HCI Academy); Chair/Professor, Organizational Leadership (UVU); OD Consultant (Human Capital Innovations). Read Jonathan Westover's executive profile here.




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