What is the true test of leadership development? Answer one question: When a senior position becomes available, do you promote from within or hire from the outside?
If you promote from within at least 50 percent of the time, then you might have good leadership development and mentoring.
If you hire from the outside over 50 percent of the time, you might have a poor to mediocre leadership development and mentoring program and process.
In my opinion, the first percentage should be higher for larger companies. I also know that entrepreneurial companies will need to hire more from the outside as they grow. However, in all cases, a company not promoting from within in a meaningful way is not developing and mentoring leaders in an effective way. Meaningful promotion from within is the true test of leadership and leadership development.
A Collegiate Example
Earlier this week, the headline said it all – “Lawrence Bacow, former Tufts president, will be new Harvard University president.” The fact that a university needs to hire their next president from the outside struck me odd. If learning institutions cannot develop good leaders to step into vacancies, how can a business do this?
On the Harvard hire, another headline expressed a valid concern – “Harvard’s Next President: Another ‘White Male Economist Named Larry’.” Diversity lags.
A Deloitte (2017) study found that “nearly two-thirds of [university] presidents surveyed said they had coaches or mentors to help them prepare for the role, only one-third indicated that they still receive coaching to succeed in the job.” The study also found that being a university president has changed over the years, and many universities did not have succession plans. Academic deans move into the presidency more often today than the usual standard of being a provost first.
Another trend is hiring directly from the business world. Hiring from another industry creates other challenges. In a 2012 survey, 20 percent of university presidents come from fields outside of academia. CEOs are being tapped to run universities, and this trend is growing. Leading a university is very different than leading a business. Students are not customers, and professors have influence. Innovation prevails. The culture is different as are the dynamics.
I have graduated from two universities, and both have recently hired a new leader. In Augustana University’s case, they hired a former politician. In the Texas McCombs School of Business case, they hired from within.
We need to do better at developing leaders from within, and universities need to step up to the true test of leadership development and set a better example.
The Business Example
Are businesses doing better in promoting from within? A research study conducted through the Stanford School of Business (PDF) found that 33 percent of CEOs were hire externally in the 2000s as compared to 15 percent in the 1970s. The study also found that struggling companies were more likely to hire a new CEO from the outside. Situations vary. However, when things go bad, the first reaction is to hire someone with an external track record or new way of thinking. Although this works in some cases, it does not always work. As a Wall Street Journal article points out, “The CEO so talented that he or she can step into any company and turn it around, or push profit to new heights, is so rare as to be nonexistent.”
Knowing the company culture and challenges at the start helps a new CEO make changes and gain better traction with new initiatives and achieve better results. When Microsoft needed a new CEO, they chose this path by selecting Satya Nadella. Chief Executive magazine makes a key point, “Investing in the development of internal CEO pipeline candidates usually yields a much better ROI.”
Leadership Development
I believe most organizations know the importance of leadership and leadership development. However, many are not innovating or implementing leadership development programs that work.
I believe that many organizations intuitively know the value of mentoring, yet few take the time to develop an effective and sustainable mentoring program.
Getting leadership development right converts to bench strength. Bench strength provides the backbone for any organization to navigate leadership, market, strategy, and competitive changes.
TweetBoth leadership development and mentoring take investments. Neither can afford to become stale, and many do.
Unlike hiring leaders from the outside, utilizing outside training opportunities is a good practice. Using conferences and university programs are a starting point. Gaining another perspective and broadening experiences help. Within an organization, providing opportunities to lead in unexpected ways is also beneficial. New initiatives and open-field opportunities provide a platform to test skills, learn lessons, and develop character.
Getting leadership development right converts to bench strength. Bench strength provides the backbone for any organization to navigate leadership, market, strategy, and competitive changes.
Universities can deliver a better example. Businesses can deliver a better example. Collaboration between the two can deliver insight and educational opportunities for better leadership development.
Are you ready to hire from within when the next senior vacancy happens? Are you ready to pass the true test of leadership?
The True Test of Leadership Development: Hiring or Promoting?