Unlocking Potential Under Constraint

Mark A. Clauss and Ashley A. Willms


Doing more with less is the challenge talent management professionals at small to mid-sized organizations face daily, especially when developing future leaders. But flat organizational structures, limited development opportunities and tight budgets challenge an organization's leader cultivation.

In 2011, 598 global senior executives at mid-sized organizations cited staff bench strength as a top 10 risk in the Finance Leadership Exchange's "Risk Assessment Survey." Add to that the relatively small pool of potential leaders - only 15 percent of high performers are high potentials, according to the HR Leadership Council's 2010 study "The Disengaged Star" - and it's easy to see the problem on HR's hands: How to effectively develop the next generation of leaders cost-consciously.

But there's reason for optimism. More development strategies exist than many talent leaders realize. There are more than 450,000 techniques and activities talent managers can leverage to develop their leaders. But given limited resources, talent leaders must pair the needs of emerging leaders with the right combination of development tactics and channels - a potentially expensive logistical challenge. It is not about investing in more resources, but about investing resources in areas with the greatest return.

This is easier said than done. Corporate Executive Board's HR Leadership Council surveyed more than 130,000 junior, mid-career and senior employees from 2007 to 2010 at more than 55 cross-industry organizations worldwide to investigate the impact of more than 300 drivers of employee potential and high-potential engagement. Results indicated fewer than 80 of these drivers impact potential and engagement in a meaningful way. Given the vast number of options and limited resources, the best approach for smaller organizations is to narrow the focus of development efforts by redefining potential and spending time and resources on the right people and activities. These drivers of leadership potential cluster into three themes:

1. Leverage employee relationships.
2. Ensure credible organizational commitment.
3. Structure challenges within job experiences.

Redefine Potential

First, to help narrow the focus of development activities, redefine leadership potential. Corporate Executive Board's HR Leadership Council defines a person with leadership potential as someone with the ability, engagement and aspiration to rise to and succeed in more critical senior positions.

It's vital that a leadership candidate possess all three traits. If an employee lacks ability, his or her chance of leadership success is virtually zero unless the skill can be taught. If a candidate lacks engagement - if he or she does not see the organization as the path to personal success - talent managers are essentially promoting someone else's star. "The Disengaged Star" shows disengaged employees have only a 13 percent chance of success in leadership positions.

A candidate must truly aspire to lead. An employee may have the ability and engagement, but if lacking genuine leadership ambitions, his or her chance of success is only 44 percent, according to the study. Many organizations promote outstanding people without taking into account their lack of interest. Perhaps the employee wants to maintain work-life balance, or is averse to the additional responsibility. The organization is best served by focusing development opportunities on individuals who genuinely want to lead. Bear in mind that potential is not static. Organizations can positively influence leadership candidates' employment experiences by structuring effective working relationships.

Managers have significant, if not the greatest, impact on employee potential, so talent managers should strive to pair emerging leaders with strong managers. But an emerging leader's direct reports also exert surprising influence. The HR Leadership Council study discovered that committed, smart, high-effort direct reports with valuable perspectives positively impact managers' leadership potential by as much as 30 percent.

Doing more with less is the challenge talent management professionals at small to mid-sized organizations face daily, especially when developing future leaders. But flat organizational structures, limited development opportunities and tight budgets challenge an organization's leader cultivation.

In 2011, 598 global senior executives at mid-sized organizations cited staff bench strength as a top 10 risk in the Finance Leadership Exchange's "Risk Assessment Survey." Add to that the relatively small pool of potential leaders - only 15 percent of high performers are high potentials, according to the HR Leadership Council's 2010 study "The Disengaged Star" - and it's easy to see the problem on HR's hands: How to effectively develop the next generation of leaders cost-consciously.

But there's reason for optimism. More development strategies exist than many talent leaders realize. There are more than 450,000 techniques and activities talent managers can leverage to develop their leaders. But given limited resources, talent leaders must pair the needs of emerging leaders with the right combination of development tactics and channels - a potentially expensive logistical challenge. It is not about investing in more resources, but about investing resources in areas with the greatest return.

This is easier said than done. Corporate Executive Board's HR Leadership Council surveyed more than 130,000 junior, mid-career and senior employees from 2007 to 2010 at more than 55 cross-industry organizations worldwide to investigate the impact of more than 300 drivers of employee potential and high-potential engagement. Results indicated fewer than 80 of these drivers impact potential and engagement in a meaningful way. Given the vast number of options and limited resources, the best approach for smaller organizations is to narrow the focus of development efforts by redefining potential and spending time and resources on the right people and activities. These drivers of leadership potential cluster into three themes:

1. Leverage employee relationships.
2. Ensure credible organizational commitment.
3. Structure challenges within job experiences.

Redefine Potential

First, to help narrow the focus of development activities, redefine leadership potential. Corporate Executive Board's HR Leadership Council defines a person with leadership potential as someone with the ability, engagement and aspiration to rise to and succeed in more critical senior positions.

It's vital that a leadership candidate possess all three traits. If an employee lacks ability, his or her chance of leadership success is virtually zero unless the skill can be taught. If a candidate lacks engagement - if he or she does not see the organization as the path to personal success - talent managers are essentially promoting someone else's star. "The Disengaged Star" shows disengaged employees have only a 13 percent chance of success in leadership positions.

A candidate must truly aspire to lead. An employee may have the ability and engagement, but if lacking genuine leadership ambitions, his or her chance of success is only 44 percent, according to the study. Many organizations promote outstanding people without taking into account their lack of interest. Perhaps the employee wants to maintain work-life balance, or is averse to the additional responsibility. The organization is best served by focusing development opportunities on individuals who genuinely want to lead. Bear in mind that potential is not static. Organizations can positively influence leadership candidates' employment experiences by structuring effective working relationships.

Managers have significant, if not the greatest, impact on employee potential, so talent managers should strive to pair emerging leaders with strong managers. But an emerging leader's direct reports also exert surprising influence. The HR Leadership Council study discovered that committed, smart, high-effort direct reports with valuable perspectives positively impact managers' leadership potential by as much as 30 percent.

Authors: Mark A. Clauss is managing director and Ashley A. Willms is director of the HR Leadership