and developing future leaders for less than three years. The most frequently endorsed response was “1 to 3 years,” with 31 percent of companies endorsing this response.
Company size seems to matter (see figure 1.4). Companies with over $1 billion in revenues have, on average, been developing future leaders longer than smaller companies. For example, of the twenty-two companies that have been identifying and developing future leaders for seven years or longer, 64 percent were companies with over $1 billion in revenue.
Figure 1.4. Longevity of Formal Development Programs for Future Leaders
Senior management commitment to future leaders. The commitment of the senior executive team is particularly crucial when building sustainable talent development programs. Identifying and developing high potential talent is by its nature a long-term proposition that is unlikely to reach fruition without the firm endorsement and support of senior management. In addition, future leaders are by definition company resources that the senior team needs to understand in order to make wise decisions in terms of future assignments. And at some point the development needs of future leaders will aggregate around broader and higher-level abilities like strategic thinking and planning and managing cross-functional teams from a distance, and senior leaders will be needed to coach and mentor future leaders in these key areas.
When asked what roles the senior team plays in the identification and development of future leaders (see exhibit 1.2), by far the most frequently endorsed activity (91 percent) was the identification of individuals with high potential. (In comparison, the second most endorsed activity, at 69 percent, was defining the leadership abilities needed in future leaders based on the business strategy.) Since, in many companies, future leaders may be positioned several levels below the senior team, the question emerges of how well the senior managers actually know their future leaders. In some companies, the senior team devotes a great deal of time to talent roundtables where potential future leaders are discussed regularly and in detail. In other firms, senior leaders are regularly assigned as mentors to younger managers with high potential. However, it is unlikely that these practices are utilized by 90 percent of companies (since, for example, only 67 percent of respondents said that their senior leaders coach and mentor future leaders). If many senior leaders do not have direct exposure to their high potentials, the question becomes this: How else are executives gathering reliable and credible data about future leaders? This is a topic that will be covered in more detail in Phase 2 of the research program. Preliminary results from the interviews point to two additional areas: some companies develop future leaders using action-learning projects (Marquardt, 2004) that involve senior leaders as advisors or sponsors; other companies invite future leaders to off-site meetings or other events carefully designed so that senior leaders can get to know them in a social setting.
We found that senior leaders generally are playing an active role early in the development process. In addition to identifying high potentials, 65 percent of companies said their senior leaders allocate resources for future-leader development, and 63 percent make future-leader development a strategic priority. However, only 46 percent of respondents reported that their senior managers hold others accountable for talent development. This result suggests that while many companies are increasing their focus on talent development, far fewer have figured out how to weave the practice into their cultural fabric as a way of doing business. This result may be due largely to the fact that growing future leaders is a fairly recent priority. In companies that have been identifying and developing future leaders longer, senior leaders are more involved in growing their future leaders, as evidenced by the positive correlation between longevity of formal programs with the endorsement of a greater total number of development activities performed by senior management (Spearman’s rho = .358, p < .01).
Exhibit 1.2. The Senior Team’s Role in Future-Leader Development
Q: What roles do you and your senior team play in the identification and development of your company’s future leaders?
(Percentage of companies that endorsed each activity, N = 115)
| • Identify individuals with high potential | 91% |
| • Define leadership abilities based on strategy | 69% |
| • One-on-one coaching or mentoring | 67% |
| • Allocate resources for leadership development | 65% |
| • Make development of talent a strategic priority | 63% |
| • Hold others accountable for talent development | 46% |
| • Select external leadership development partners | 39% |
| • Uncover stretch roles | 38% |
| • Other | 6% |
In the future, as future-leader development practices mature, it is likely that senior leaders will be more involved with growing the next generation. Companies that report greater involvement by senior management in developing future leaders also report a higher level of confidence in their ability to meet future growth needs by drawing on high potential talent (Spearman’s rho = .221, p < .05). Thus, it seems clear that the active involvement and commitment by senior management is pivotal to building a deep pool of talent.
Practices in Identifying and Developing Future Leaders
Commonly sought characteristics. The overall picture of what companies are looking for in their future leaders suggests a melding of traditional individual strengths—like courage to make the right decisions (75 percent of companies endorsed) and decisiveness (60 percent endorsed)—with a more nimble, relational style. When asked what characteristics they look for when identifying and developing future leaders, the number one response was the ability to build strong relationships internally and externally (86 percent), closely followed by openness to change and growth (81 percent).4 In contrast, only 57 percent emphasized the ability to identify and develop talent, reinforcing the idea presented earlier that talent development is not necessarily a core value or a strategic priority, even in companies that are seeking to improve their ability to grow future leaders. Only 45 percent of respondents emphasized superior intellectual abilities in their future leaders, an interesting and somewhat puzzling result given the increasing complexity of the global business environment. This result will be explored in more detail in Phase 2 of the research.
Exhibit 1.3. What Companies Look for in Their Future Leaders
(Percentage of companies that endorsed each ability, N = 111)
| • Ability to build strong relationships internally and externally | 86% |
| • Openness to change and growth | 81% |
| • Courage to make the right decisions | 75% |
| • Ability to motivate and inspire others | 75% |
| • Level of self-confidence | 70% |
| • Awareness of one’s own strengths and limitations | 68% |
| • Personal desire to succeed | 68% |
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• Commitment to the
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