The only thing worse than training employees and losing them is not training them and keeping them.

—ZIG ZIGLAR

Do conversations similar to this occur in your organization?

During this conversation, Janet shifted from a management to a leadership mindset to envision the workforce of the future. Steve is operating staunchly in a management mindset that focuses on meeting near-term deadlines. Neither of them knows his or her people well enough to accurately measure the risk of reassigning or promoting them, or which skills and additional people they need to sustain the company’s growth. Furthermore, they lack a reliable process for developing the relationships, skills, and mindsets that their people will need to succeed in future positions. The conversation continued:

The management mindset, of course, is essential to getting things done. Steve and Janet initially treated people like commodities to be allocated to the most urgent project; and when necessary, they just went out and bought more. In the short term, that approach worked, but performance eventually deteriorated because the people were not increasing their capabilities—they were just getting the job done. Acknowledging their problems, Steve and Janet’s conversation switched to a leadership mindset when they committed to develop their people to support the growth strategy.

Blending the management and leadership mindsets is also critical in making technology investments. Operating in a management mindset, many executives use technology as a tool to improve efficiency and reduce errors—they want to get more done with fewer people. When executives use a leadership mindset, technology is seen as a way to leverage people’s skills and develop their capabilities more rapidly. That approach consistently produces superior results because high potentials become vested in the company’s strategy and consider themselves to be key players in its growth. They willingly adopt new technologies instead of fearing them.

Build Versus Buy

Unfortunately, a common approach for handling high potentials is to promote them into key positions with the expectation that they already know what they need to know to succeed. Too often they receive minimal assistance to understand, let alone conquer, challenges of the new position. In short, conversations do not take place to develop a plan, set expectations, define metrics, and mentor the high potentials. If you do not invest in developing your high potentials, one of three things is likely to happen:

• They will succeed on their own (which may be how you did it).
• When results fall short, you will step in to fix the problem.
• Eventually the high potentials will leave, be demoted, or be fired.

It is more effective and easier on everybody to eliminate the fix-it-later pro­cess by having developmental conversations early and often with your high potentials.

Organizations that lack an effective leadership development program are forced to buy talent in the open market—a time-consuming, expensive, and risky approach. The issue is not merely that organizations do not grow the leadership, management, and technical skills of their people. The real problem is even more troubling: an organization underperforms when it does not develop its people. Yet few organizations view coaching, training, and developmental assignments for high potentials to be a vital part of their growth strategy. The problem starts at the top when CEOs neither mentor their CXOs nor insist that the CXOs mentor their direct reports.

Executives who consider a job to be a set of tasks miss the importance of developing people. Each leadership level involves new priorities, more complex skills, and a different blend of leadership and management mindsets than the previous one. The conversion of success at one level to success at higher levels requires you to mentor people rather than just assume that they will be able to do the new job. The need to mentor is even more urgent when you fill a leadership position with outside talent. Those who are also moving up a leadership level when they join your organization are particularly at risk. In addition to tackling new responsibilities, these executives must build new relationships, learn new processes and tools, adapt to a new culture, and deal with resentment from insiders who may have wanted the position. They will require more mentoring than an executive who is promoted from within.

Hiring exceptional employees makes sense, of course, when new viewpoints or new skills are needed, but it is not sustainable as the primary way to find leaders. Hiring leaders costs too much and is more prone to mistakes than promoting an employee who has institutional knowledge and established relationships. Furthermore, many high-priced business stars change organizations so frequently that they fail to master the skills required at one leadership level before moving up to the next. You might just be hiring someone else’s problem.

Start with the Right People

Building a staff stocked with high potentials starts with candidate interviews at every level, especially individual contributors.

“Paul, in evaluating you for your first job out of college, we want to understand your interest in and passion for future management and leadership positions as well as your fit with our culture and your ability to perform in this position.”

“I’m glad to hear that, because I see myself as a good fit for your company and that you are striving to do special things here. I want to work in an organization that has advancement potential and will develop my skills.”

“That’s great, Paul; let’s start by having you tell me a bit about yourself and what you want to accomplish over your career.”

Using resumes, references on the Internet, and social media as a base, interviews should confirm the candidate’s achievements, validate his or her skills against the position’s requirements, and—most important—ensure that the candidate fits your culture.

Great organizations have a culture that accelerates growth in people who embrace its values and that rejects those who do not. When we are asked, “How do I hire people who fit our culture?” we answer quickly: “Look for people who are attracted by your mission, goals, and values—and be sure that you retain those people.”

When evaluating candidates for promotion, avoid the trap of assuming that the best salesperson, engineer, or other individual contributor will be the best manager. Instead, promote the candidate who demonstrates the potential to manage and lead. “Jackson, you didn’t earn this promotion because you are one of the top salesmen. Your sales record is extraordinary, but you were promoted because you exhibit the mindset and behaviors that we believe will make you a great manager.”

High potentials are defined as much by how they think as by the skills they have. Specifically, they

• Have a passion for the work they do. They pursue the organization’s goals with diligence and intensity.
• Collaborate with others. They share information, are open and honest, and volunteer to help others. When things go right, they share credit; when things go wrong, they do not blame someone or something else.
• Are curious learners. They are willing to take calculated risks, learn from the results, and adapt to a fast-changing environment.
• Do what they say they will do. Because they consider their word to be their bond, they are careful about what they promise and rarely overcommit.

These criteria are uncomfortable for executives who are accustomed to making hiring and promotion decisions based on the best technical skills or as a reward for past performance. It is more effective to evaluate individual contributors in terms of their aptitude to become a first-line manager; evaluate first-line managers in terms of their executive potential; and so forth. When you understand that you are not just filling an open position but are building the organization’s leadership inventory, the hiring and promotion process takes on greater importance.

Your Responsibility to Develop Others

Next to making strategic decisions, a leader’s most important responsibility is to develop her people. Why? Mistakes in hiring and promoting have near-term negative effects on results. Most promotion mistakes happen because the leadership bench strength is shallow and leadership conversations are either trivial or nonexistent. The most effective leadership development programs are constructed to produce a stream of great candidates that flows steadily from the bottom to the top of the organization.

Most executives acknowledge their responsibility to develop people. Yet few know how to do so—and even fewer make it a priority in their daily agenda. Today’s business imperatives tend to trump tomorrow’s strategic priorities. Yet with a bit of planning, you can meet short-term objectives and grow your people concurrently. Start by asking why some of your best strategies produced mediocre results, why crucial deadlines were missed, and comparing your turnover to industry standards. Because these are all people issues, assume that you will need to mentor your people to resolve them. As a high-potential executive, you have felt the pressure of preparing plans, working with limited resources, meeting tight deadlines, and achieving stretch goals. Share your stories with your people in everyday conversations to explain how you conquered those challenges. Encourage them to have the same conversations with their people.

We asked a friend who was appointed to a CXO position in a public company, “How did you get where you are?” He replied, “I’m here today because I always did what I love. But just as important, I’m here today because people along the way recognized my potential, mentored me, pushed me to grow, and insisted that I develop my people.”

This CXO learned that developing others unlocks one’s own potential. High potentials by definition have most of what is required to succeed—your job is to help them develop the rest. That entails guiding first-line managers from an individual contributor mindset to a management mindset, and managers of managers toward the leadership mindset, as shown in Figure 11.1. Model and teach leadership behaviors so that your direct reports will recognize the value in teaching their people. That approach deepens leadership bench strength and provides a stream of succession candidates.

FIGURE 11.1. Cultivating a New Mindset.

Help first-line managers develop their management mindset and managers of managers develop their leadership mindset.

How Deep Should Succession Planning Go?

Organizations of all sizes stumble when an executive leaves and a replacement is not ready to step up. Especially at the CEO level, the new executive is frequently an outsider, because no internal candidate has been developed who meets leadership standards set by the board. Typically, the outsider does not have relationships with members of the company’s management team, who are instinctively nervous about the new CEO’s agenda. Or the board may select the insider with the best CXO performance record, even though he may lack the vision needed to lead the company as CEO. Organizations that have trouble filling CEO vacancies usually have equal difficulty in filling lower-level positions. They urgently need a bottom-to-top leadership development strategy that supports continuity of operations.

Succession planning is often equated with replacement planning, particularly in large organizations. Key executives officially designate multiple candidates as their potential replacements, and those candidates are put through rigorous training and evaluations. However, those programs are flawed if they are based on the premise that tomorrow’s leadership requirements will be the same as yesterday’s. Leaders must adapt to changing technologies, markets, alliances, and demographics. In addition, globalization, mobile communications, outsourcing, and mergers have eliminated positions while also creating positions with new leadership challenges. Replacement planning is inadequate in this scenario. Instead, positions should be defined flexibly in terms of the evolving needs of the organization and its stakeholders. That approach develops loyalty and builds a pool of leaders who can direct new strategic initiatives or replace departing leaders.

Too much emphasis is placed on succession planning for CEO and CXO positions and not enough on other leadership positions. Evaluate your organization’s leadership development program in terms of the steady flow of talent it does (or does not) produce for open leadership positions. Effective programs start by hiring individual contributors who have the desire and aptitude to become managers. Each successive leadership level is built primarily by promoting high potentials from lower levels. Predictable changes occur in each promotion from individual contributor through corner-office positions.