Should We Make or Buy Leaders?

When are you hitting the office again? I have some work for you to do. Go to the corner office and without spilling coffee on the carpet out of sheer nervousness, ask the occupant what he or she does for a living. The trick is to tell them upfront that "playing golf" is not one of the options they can choose. That sobers them into really thinking hard. Chances are that most of them will tell you that they are trying to make more moolah for the shareholder. Now you should step up, look at the dude straight in the eye and ask, "What are you doing to ensure that happens continuously long after you are gone?" At which point, you will probably get thrown out by the office security anyway and will never know what the correct answer should be.

The CEO's job is to ensure that there is a steady stream of ready talent at all levels of the enterprise. It is especially important for the Chief Executive to ensure that someone is ready to take over the top job should a truck cut short his own trip across the road. Whenever someone asks me whether or not to join a particular organization, I ask that person to research and look for data on how many of that company's top ten executives have been grown from within. If more than half of the top directors or functional leaders are have been nurtured through the joint efforts of the company's CEO and HR then it is a good place to go to. That is a good measure of how the company has instituted processes to grow and nurture top talent. Having said that, it makes great sense to have a healthy mix of external hires at all levels since they may bring in skills that may be needed for the future. A sixty forty ratio of in favor of internal hires helps to reassure employees that the talent pipeline has a track record of producing leaders that pass the acid test.

Like all other decisions of a firm, there is a make versus buy decision to be made not just for products and services but also for leadership talent. Growing as opposed to buying your own leadership pipeline requires deep commitment of time on part of the organization to ensure talent is identified early and then nurtured through a combination of challenging assignments, executive coaching and learning from attending the odd training program. Research done by Center for Creative Leadership tells us that approximately 70% of leadership development occurs on the job and in the context of challenging tasks, while 20% occurs interpersonally, particularly with coaches and mentors and only a measly 10% occurs in formal training classes. I believe classroom training can supplement Make sure that a person attends the training program only after they have been doing a job, that you are training them for, with reasonable rates of success.

Developing the leadership pipeline is a vital ask from the existing leaders of the organizations. Leading edge organizations have been using the Leaders Nurture Leaders approach to have leaders handpick the top managerial talent and then design programs where they devote anything from five to fifteen days in a year nurturing talent not only by giving them exposure to latest research in management or strategy, but to help them understand what it will take to be leading the organization. I have known of organizations where the CEO spends five days at an off-site with the future leaders of an organization sharing concepts, case studies and even ethical dilemmas with them.

While the lateral hires into the leadership ranks of an organization bring in a view from the outside, which is just as necessary, it is the home grown talent who serve to inspire the existing employees because that action speaks louder than words. There is a certain reassurance that comes from seeing your own colleagues take their place at the head of the table. At each level of the organization, the chosen leaders need to demonstrate that they are successful because they truly live by the values that the organization claims to have. Growing your own leaders is the same as growing your own garden. It requires the right soil, weeding and nurturing before you get to see the flowers bloom. Creating a bouquet from such flowers makes it a rewarding task even though it is infinitely faster to buy them from the local florist.