Companies must commit to developing new leaders

Leaders place their organizations at great risk when they do not apply the same level of discipline to leadership and employee development as they do to the planning and development of their products and services.

Applying this discipline to leadership and employee development requires assessing the existing capabilities of your workforce and developing a talent strategy for growing or acquiring the capabilities needed to deliver a future business strategy.

Having the right people – in the right roles at the right time – is a growing concern for most businesses. Bersin Research reports that 70 percent of organizations cite “employee capability gaps” as one of their top five challenges in the next year.

Leadership and employee development is time-driven; in 24-48 months, you will begin to see the fruits of your labors.

Because of the time it takes to develop internal talent, companies often ask whether it is better to hire externally for key leaders rather than develop internal talent. The answer is not typically, and the reason is two-fold.

First, you want to have a motivated, committed workforce. A workforce that sees advancement going to externally hired employees will learn one of two things. Either the only way to advance is to leave and then come back as an external candidate or to recognize that there is no future for young talent in your organization, leaving as soon as a better opportunity presents itself.

Either way, morale on the front line is likely to be low, and you will retain those employees with limited options or those who only want a paycheck.

Second, research shows that internal workers who were promoted perform significantly better for the first two years than external workers hired into similar jobs.

Nonetheless, external hires have higher levels of experience and education and are initially paid around 18 percent more than internally promoted workers. It also takes about seven years for the salary of the externally hired employee to achieve parity with internal workers in similar jobs.

For companies to engage and retain top employees, it must provide lifetime learning and development opportunities.