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Stretching the Limits

Tuesday, June 17, 2014
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After a period of neglect, it's comforting to see leadership development get some much-needed attention again.

Last month, Bersin > by Deloitte released a study that found U.S. organizations boosted their leadership-development spend, for the second consecutive year, by 14 percent. That translates to an estimated $15.5 billion in 2013, according to the talent-management consultancy.

As I write this, HRE is conducting its latest "What's Keeping HR Up at Night" survey, the results of which will appear in the July/August issue. In each of the previous studies, leadership development ended up near the top of the list of issues HR leaders worry about most. Last year, it was the second-most-cited issue.

Despite this, until recently anyway, a tough economy and tight budgets forced many companies to cut back on their leadership-development efforts.

In addition to dedicating more dollars to LD initiatives, the < Bersin > by Deloitte research also revealed that employers are beefing up their staffs in this area, with a 12 percent overall increase at U.S. organizations. It also found emerging leaders are getting a healthy dose of the funding, with 17 percent of the LD budgets going to high-potential professionals who aren't managers yet.

On a more somber note, the study revealed first-level managers were receiving the lowest per-person funding in leadership development. For example, within large organizations, these leaders each receive, on average, $2,600, or 34 percent less than emerging leaders, and half the amount of mid-level leaders. (Considering the impact this level can have on engagement and performance, it would be nice to see this group get a bigger slice of the LD pie.)

Companies are also falling short in their efforts to "prime the pump" as far as their leadership pipelines are concerned. The < Bersin > by Deloitte research finds employers have identified successors for just 10 percent of their first-level leaders and 19 percent of their mid-level leaders. At higher levels, the figures are equally discouraging, with successors identified for just 24 percent of senior-level positions and 36 percent of executive positions.

As I was busy digesting these findings, the June edition of the Harvard Business Review arrived on my desk, featuring Claudio Fernández-Aráoz' cover story, "How to Spot Talent -- Hint: Experience is Overrated." (The article was based on Fernández-Aráoz's just-published book, It's Not the How or the What but the Who: Succeed by Surrounding Yourself with the Best.)

Fernández-Aráoz, a senior adviser with executive-search firm Egon Zehnder, suggests in his article that 21st-century business is too volatile and complex these days -- and the top-talent market too tight -- for companies to rely on assessing candidates simply based on experience and competencies. Instead, he writes, the focus today needs to be on a candidate's potential.

In assessing candidates, Fernández-Aráoz' employer first looks for whether a person has the right kind of motivation and then assesses for things such as curiosity, insight, engagement and determination. The question that matters today, Fernández-Aráoz writes, isn't "whether a company's employees and leaders have the right skills; it's whether they have the potential to learn new ones."

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To that end, Fernández-Aráoz makes a compelling case for providing your high-potentials with "stretch assignments" that enable them to further develop in their careers.

"Pushing your high-potentials up a straight ladder toward bigger jobs, budgets and staffs will continue their growth," he writes, "but it won't accelerate it. Diverse, complex, challenging [and] uncomfortable roles will." (When Egon Zehnder asked 823 international executives to look back at their careers and identify what helped them unleash their potential, 71 percent of them cited "stretch assignments," followed by job rotations and personal mentors -- each at 49 percent).

I'm sure many of you already have high-potential programs in place that allow for these kinds of opportunities. Indeed, over the years, we've reported on more than a few of them in the pages of this magazine. But as I reflect on the < Bersin by Deloitte data and Fernández-Aráoz' HBR article, I have to wonder if companies are giving these efforts the attention they unarguably deserve.

No doubt any organization worth its salt today is working hard to identify its high-potentials. As Fernández-Aráoz contends, some employers may rely too heavily on experience and competencies, and not on the individual's inherent potential -- perhaps to their detriment.

And beyond just identifying them, we'd be remiss, as HR leaders, were we not to ask, "Are we paying the appropriate level of attention to providing these leaders with the right opportunities to develop their potential -- or simply going about it in the same old way we always have?"

In today's business environment, where holding onto top talent is as crucial as it is, I would think it's a question HR leaders need to regularly ask themselves.

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