Friday, November 14, 2014

Want Your Company To Survive for the Long Term? Develop Leaders from Within

In previous posts I have mentioned the emphasis 100-year-old companies place on employee retention. They believe long term employees bring a wealth of "institutional memory" to address issues and opportunities that arise. After years with the company, employees identify very closely with the firm's goals and develop an ownership attitude - it's their company. This is a powerful advantage for a business. But it also makes it very difficult for executives brought in from outside the company to be successful. At best, employees take a "wait and see" attitude: Will this new leader take the time to learn the company patterns of behavior or come in with the attitude that s/he has a better way? It can take a very long time for an old company to accept an outsider who comes in at an executive position. It takes a special executive to be willing to pay the dues necessary to be successful as an "outsider." As a result, most old companies only bring in an outsider to fill an executive position as a last resort.

One of the distinguishing characteristics of the 100-year-old companies is how much time and effort they spend developing leaders from within. One CEO expressed that identification and development of his successor was his most important task - and he wasn't anywhere close to retirement age at the time he made this statement. Most old companies reported having a systematic process for leadership succession: they like future leaders to first have experience in other companies, but they must then work from the ground up, including hands-on experience in company operations. After leadership candidates understand the business inside and out and have built their own personal networks, then they are expected to think for themselves rather than blindly following tradition.

The majority of 100-year-old companies report that they have already identified who their next leader will be and are working very deliberately to develop him or her (along with other upper level managers). Can your firm say the same? This appears to be one of the key differentiating factors in sustaining a business for the long term: these companies are concerned not just about reaping the crop for today's harvest, they are cultivating the ground for the future and this factor is especially apparent in the area of leadership development.

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