Companies must invest in leadership
Effective Leaders in organisations bring together people and
organisations to solve customer and organisational problems. But, there
is a difference between leaders and leadership.
Leaders refer to people who have unique abilities to guide the
behaviour of others to deliver outstanding results or resolve problems.
Leadership refers to an organisation’s capacity to build future leaders
and leadership bench strength. An individual leader matters, but an
organisation’s leadership matters more over time to shareholders and
Therefore, organisations must not only invest to help individual
leaders to be more effective through coaching, 360 feedback, and by
executing individual development plans, but also must invest to build
leadership depth by devoting sufficient time for leadership development.
Generally, there are a few key things that organisations can do to
improve the quality of leadership in a firm. The quality of leadership
will drive business performance inside and outside the organisation.
Organisations with leadership depth will have the capacity to respond
to changing business conditions, execute strategy, increase investor
confidence and anticipate and deliver customer needs.
Often leadership success remains inside the company. As a result
potential leaders learn from other leaders in the company who have
succeeded. The criteria of leadership should start with customers.
The owners in a firm must define the company’s intended brand and
then identify the leadership behaviour consistent with this external
When leaders inside the company behave in line with the expectations
of customers and other stakeholders outside the company, leadership
becomes more sustainable and effective. Defining internal leadership
through external expectations will set more relevant and impactful
Once leadership standards are set, leaders need to be assessed on how
well they meet the standards.
To get an external view, leadership 360s may be expanded to 720s
where customers, suppliers, communities, regulators or other external
stakeholders may be included in assessing targeted leaders.
The Board of Directors should also regularly assess the CEO’s
performance inside the company with his team, among his employees and
outside the company with key stakeholders. This type of assessment
offers a more complete view of leaders who have key roles to play with
Assessment also help to identify future leaders with high potential
by looking at the extent to which they have aspirations to lead, ability
to meet future challenges and agility to learn and grow. It is the
responsibility of the board to keep an eye on potential leaders’ ability
to serve customers and engage employees to give their best.
The traditional formula for leadership investment has been 70 – 20 –
10. The logic is that 70% of learning and development is on the job, 20%
from feedback and observation of role models and only 10% from training.
Prof Dave Ulrich, the author of the Leadership Code, has suggested
that this formula should shift to something like: 50% of learning from
job experience, including mirroring role models, 30% from updated
training and 20% from life experience.
Most leaders have learnt and learn from experiences outside of work,
in families, social settings, social networks, volunteer work, reading
When companies can encourage and access knowledge from life
experiences, leaders will broaden their repertoire.
For example, many companies now use CSR as development opportunities
for high potential leaders. The mix of leadership investments is the
foundation for a professional approach for development of leadership
throughout a firm.