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Companies today live under the relentless glare of metrics. Quarterly earnings releases, sales projections, quality and compliance audits, even employee surveys are used to gauge the enterprise’s health. Nevertheless, few such measures directly answer a key question that is frequently on the minds of the senior team: Do we have enough leaders, and the right leaders, to run our business both today and in the future?
Many CEOs cite the lack of qualified leadership talent as the most significant constraint on growth. This is happening as the pool of potential leaders shrinks before our eyes; the number of 35-to 44-year-olds in the work force, the so-called “key leader age,” will drop by 15% over the next decade, according to the U.S. Bureau of Labor Statistics. Thus the pressure on company decision makers to rethink their leadership development strategies is greater than ever.
Human resources executives and corporate leaders across the globe find that it’s simply not enough to put a leadership-training program in place or hold an annual talent review. Instead, companies must be rigorous and focused in their assessment of leadership talent, aided by tools tailored to help achieve that end. They must hold leaders accountable for cultivating others, diagnosing gaps in execution and capability, and redirecting resources as business needs change. HR and business leaders also need insights into where they have succeeded in building leadership and critical talent pipelines and where there are potential risks. In short, companies need to bring a “measurement mind-set” to the often inexact process of developing the next generation of leaders.
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Because such a process, though vital, is not easy, companies often overrate their ability to measure the right things for the right reasons. For example, many generate piles of reports on senior management attrition instead of considering the actual flight risks of their critical talent; or they measure easy-to-track metrics, such as time to fill jobs or number of training hours, without regard to the quality of those placed into jobs or whether a development workshop produced any meaningful change. Others, at the opposite extreme, get bogged down in a search for the holy grail of leadership metrics — fruitlessly searching for some “perfect answer” and consequently making little progress.
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1. Hewitt initiated the Top Companies for Leaders research in 2001 to identify those factors that account for organizations’ ability to consistently produce great leaders. Subsequent undertakings in 2003 and 2005 further expanded our examination of successful leaders and their impacts on the organization and provided the foundation for our 2007 global study.
2. In the fictional town of Lake Wobegon, Minnesota, created by Garrison Keillor, “all the women are strong, all the men are good looking, and all the children are above average.”
3. This is the version of the nine-block framework used by many of the Top Companies for Leaders.
4. “Closing the Generational Divide,” IBM Institute for Business Value in association with the American Society for Training & Development, September 2006.