We are experiencing a leadership crisis that research shows that will likely only increase in the future as baby boomers retire from the workforce.

According to the report “What Do We Know About Developing Leadership Potential?” published in OD Practitioner, approximately 50% of managers and senior leaders are unsuccessful in their work efforts, and half of that number will be fired. After researching leadership in over 40 countries and in over 300 organizations, my current manuscript, “Stories of Bad Leaders and How Not to Be One,” is all too full of examples of failed leadership efforts that could have been prevented. The crux of the issue is that we do a poor job of determining leadership potential.

So, how can learning leaders effectively assess leadership potential and combat the leadership crisis once and for all? And what’s the business case for doing so? Let’s dive in.

Research Findings

There were six significant findings in my research. The first is that there is tremendous variation in how leaders define leadership potential. The problem with this dynamic is that there is not a single source of truth on what leadership potential is, so there is no strong foundation from which to assess and build it in others.

The study found broad agreement among participants as to the leaders’ role within their organization, which consists of identifying and assessing talent, talent development and performance management. Notably, 70% of participants agreed that talent identification and assessment was a priority for effective leadership, and all chief executive officers in the companies surveyed said their role involved talent identification and assessment.

Third, participants reported observation, interaction and interviewing as the top three ways to determine leadership potential. (However, it is important to note that while these are the top three responses, they only account for 15%, 7% and 7% of the total responses, respectively.) Another important finding is related to leadership challenges, with participants reporting that a lack of assessment, a lack of motivation and a lack of self-awareness as top challenges for leaders today.

The final two findings are the most significant: From the 177 responses, there were six recurring themes for effective leadership, including performance, management skills, emotional intelligence (EQ), interpersonal effectiveness, historical accomplishments and communications. Lastly, when using a widely-recognized conceptual framework, participants mentioned intelligence, personality, learning agility and motivation — essential components for leadership potential — less than 25% of the time. However, when asked specifically whether they use intelligence, personality, learning agility and motivation on the job, the response was yes almost all of the time for all four criteria.

How to Apply Them

The findings above offer significant insight into what it takes to be a modern leader. As a learning leader, you can apply these findings to better recognize and develop leadership potential in your organization.

As practitioners, if we raise our competence in assessing leadership potential, we can facilitate the sea change needed to promote the right people into leadership roles in the first place. To get started, follow the recommendations below:

Make it a Priority

Enable leaders, especially at the top of the house, to spend a significant portion of their time on talent identification and development. After all, developing the next wave of leadership talent is a critical component to long-term organizational success. It should be non-negotiable. Build your business case for leadership development and link it to your organization’s strategic plan.

Determine Your Criteria

Create clarity and establish widespread agreement on what leadership potential looks like in your organization. Establishing these criteria will offer insight into how others view leadership potential at your company. Too often, there is a variation of criteria used in determining leadership potential, which ultimately results in variation in the leadership pipeline that can lead to operational disconnect.

A reliable, consistent approach will help you — and your peers — better identify and develop high-potential leaders.

Build Your Talent Assessment Skills

My research identified lack of assessment as leaders’ biggest challenge in determining leadership potential. It was also identified as the area in which leaders wanted the most help. As a learning leader, you play a key role in developing leaders’ ability to assess talent with proven measurement and assessment tools. Doing so will improve leaders’ competence in knowing what to look for and how to assess their team members’ leadership potential. However, be careful with falling back on observation as a way to assess talent. Without proper training on what to look for, leaders may miss a great deal of a team members’ true skills and talents as they are applied on the job.

Performance Paradox. Performance is often one of the most commonly cited and least productive criteria for determining leadership potential (Church & Conger, 2018), referred to as the performance-potential paradox. It should be noted that performance is not viewed as a strong predictor of potential but should be used only as a gatekeeper.

Emotional Intelligence (EI or EQ). EQ has grown in popularity as a criterion, as demonstrated by being one of the top six criteria (Finklestein, Costanza & Goodman, 2018). EQ consists of four components – self-awareness, self-regulation, trust and empathy. Lacking these are derailers for leaders. They are learnable.

Incent. While it is wonderful if leaders altruistically recognize the importance of this work, it is also vital to the success of the organization to leave it to chance. Incent leaders by tying compensation incentives to the success of leadership selection as there is a minimal direct impact on leaders who do a poor job of identifying high potential. Also, look to what is dis-incenting people to invest significant time and energy in this area and work to remove those barriers.

Leadership Blueprint. The biggest recommendation is to use the Leadership Blueprint as your conceptual framework as key determinants of leadership potential. The Leadership Blueprint is the culmination of analyzing and synthesizing 50 years of work on high potentials. The Leadership Blueprint has three dimensions, including the Foundational aspects of personality and cognitive skills – elements you are born with; the Growth elements of learning ability and motivation – elements largely fixed, but that people have influence over; and the Career elements of leadership skills and functional capabilities – teachable elements.

Think about poor leaders you know. It is likely the issue can be traced back to one of these four fundamental requirements in the Leadership Blueprint. For example, a smart deeply knowledgeable nursing leader is a nightmare for people because of how negative she is and the drama she manufactures (personality). Someone who worked for me was committed, hardworking, kind and much more, but didn’t have the intellectual capability to ascend to be a successor (intelligence). A brilliant woman who was at the top of her class, top of her sport ended up waitressing after several management positions because she was basically lazy (motivation). An incredibly brilliant but extremely negative industry analyst expert had the shot at a C-suite role and failed miserably (personality and motivation). A CEO was recently removed from his position because he continued to try to apply the same solutions to situations, strategies that had worked in the past because he wasn’t willing to learn and try new approaches (learning agility).

The Business Case

The cost of poor leadership is significant, impacting everything from employee productivity and engagement to turnover. Thankfully, more and more companies are recognizing the importance of selecting and developing successful leaders: After 20 years of research, a PwC study found that 77% of CEOs surveyed rated assessing leadership potential as a top priority.

As learning and development (L&D) professionals, we must resist the urge of the latest tool or trend and do the fundamental work required in determining leadership potential. This requires making sure leaders prioritize high-potential talent identification and development for more successful business outcomes.

In the end, identifying leadership potential isn’t an annual exercise of filling out templates. It’s about about viscerally committing to becoming a deep expert in talent assessment and improvement, and it begins with raising our own self-awareness and business acumen — and helping others do the same.

By transforming our approach to leadership identification and development, we can transform leaders, our organizations and perhaps even the world.

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