CEO & president of The Tatham Group.
According to International Data Corp., Fortune 500 companies are losing a combined $31.5-billion annually through inefficient practices as employees needlessly waste time and energy in the search for relevant information needed to solve problems. If preserving this trouble-shooting knowledge – necessary to excel in productivity and innovation – was difficult before, it's tougher now given that the global work force is shifting away from full-time placements.
A recent study commissioned by Upwork and the Freelancer's Union predicts half of the global work force will be made up of freelance workers within 10 years – the so-called "gig" economy.
Some companies are investing in technology and talent-training programs to protect data from getting sucked into a black hole. But technology and training have never been successful in solving problems that arise from systemic issues. If the relevant data isn't being monitored, evaluated and documented for the right reasons, what you do to preserve institutional knowledge is a waste. We must get the right people in the right roles to preserve this essential corporate knowledge.
High-potential leaders (HiPos) can be uniquely positioned to close the knowledge gap and lead companies in the future. Unfortunately, we aren't recognizing or developing leaders properly, which is why corporate executives say their biggest challenges hinge on poor employee engagement and performance.
Nearly half of the HiPos identified and placed in leadership roles underperform or fail to drive high levels of employee engagement and performance within their teams.
How talent is deployed through organizations can slow the pace of growth, innovation and profitability for many companies. Businesses must rethink their talent strategy to secure the right leaders for the future and protect themselves from corporate amnesia.
Plan for the future, not the present
Today, HiPos are qualified based on how well they perform in their existing business environment. Most often, when they succeed, it's because they find a way to work around organizational bureaucracy, often leveraging informal relationships and rolling up their sleeves to get the job done when it matters most with short timelines.
Leaders must recognize that this behaviour represents their greatest pain point. Today's HiPos succeed not because they're working with the system, but because they are going around it to get things done. They force a broken system to work in order to have success. They grow accustomed to putting out fires rather than searching for root causes of systemic dysfunction. These behaviours may deliver results in the short term, but will hurt organizations seeking to form a growth mindset and culture that will enable everyone to problem-solve and innovate effectively.
"With how things are currently working, the best are following their own rules, so what works cannot be measured in relation to what is not working and why. Data and the practices that follow then prove to be unhelpful and draining," says Michael Tatham, chief executive officer of the Tatham Group.
Instead of only promoting current superstars, organizations must develop HiPos based on what is needed to support the corporate vision, such as a leader's ability to integrate into the company culture as well as integrate others, and a disposition toward being systematic, scientific and people-oriented.
This does not mean you dismiss the people succeeding within the existing system. Rather, give them the opportunity to recognize why they are doing so well and a chance to follow practices that will empower them to thrive in the future.
Refocus and prioritize the customer to develop high-potential leaders
When we think of HiPos, we think of someone with an exceptional ability to deliver results. They are often nurtured within their department but expected to lead across the organization. This is when they underperform, because they've never had experience beyond their silos to give them an end-to-end understanding of the business and customer journey.
If HiPos aren't performing as expected, it's because the existing corporate framework is causing them to fail.
For businesses to retain the right knowledge in the right manner to improve the pace of growth, we should be identifying talent with the potential to lead across the whole company. With this approach, we are nurturing employees to become more efficient through collaboration and building structural readiness into the corporate culture so change comes naturally in the pursuit of profit and innovation.
Build measurement against what it means to be a high-potential leader
The star performers of today will most likely not all be the leaders who will take the business forward tomorrow. Applying qualitative metrics – such as attention to detail and the ability to see the bigger picture – can help identify talent capable of thriving in a healthier business environment. This practice directly aligns the organization's talent strategy to its growth strategy and develops leaders for the future, not just the present.
Shift your thinking
Securing the intelligence needed to drive growth demands an effective system for utilizing talent throughout an organization. Having the right people in leadership roles provides organizations with the know-how needed to increase profitability as well as their capacity to innovate. This is how companies can lead into the future.
Co-written with Namrata Narayan, head of brand marketing, The Tatham Group.
Executives, employees, educators and human resources experts contribute to the ongoing Leadership Lab series.