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Companies with top-tier leadership teams outperform others by nearly 19 percent, according to CEB.

Unfortunately, as OnPoint has discovered through our own research, many HR professionals lack confidence in their company’s ability to identify the right employees and effectively develop them to become future leaders. Many do not have a robust, structured process for succession management.

As a result, they invest significant time, effort and dollars on employees who turn out to be the wrong fit.

In fact, today’s employees change jobs approximately every 5 years, making companies more hesitant to invest in them. For Millennials (those born in 1980 or later), that number is even lower—on average, they stay at a job for just 3.2 years before pursuing another position, according to 2012 data from the Bureau of Labor Statistics. However, without feeling their company is willing to invest in them, employees are more inclined to move on. This is a no-win position for both companies and hardworking employees.

So what can companies do to retain their top talent and identify and develop future leaders? Here are some best practices.

Use a Robust Approach to Identify High-Potential Employees

Assessments can help identify high-potential employees and weed out those who are a poor fit from the start. One mistake we commonly see is companies identifying employees who are top performers but may not aspire to move into leadership roles or they lack the potential to advance over time. Start by determining what success looks like for the position or level in question and aligning characteristics to those success factors, a process known as “competency mapping.” These skills should be aspirational and future-focused to ensure leaders can execute the strategy moving forward.

In addition to being relevant to the job, an effective assessment will thoroughly examine an employee’s past experiences and behaviors, how the employee behaves on the job, why they behave this way and when and where the employee is most likely to behave in a similar fashion.

Assessment tools often include 360s, leadership questionnaires, behavioral interviews and simulations that are based on common scenarios a leader at your company would face.

Tailor Training to Specific Development Needs

After completing a series of assessments and reviewing results, your company should have a much better understanding of your potential leaders’ strengths and areas where growth is needed. Developing these candidates into future leaders should be an ongoing process that includes training tailored to their specific needs.

The key is to offer a variety of engaging learning experiences such as action learning teams, leadership development, webinars, cases, articles, and cross-training.

Evaluate the Impact

Leadership development is an investment, and it’s important to measure the impact. Work with your high-potential employees to set specific goals, and provide them with regular feedback about their progress in these areas. Have they shown improvement and applied what they’ve learned to demonstrate they would be a competent leader?

What do their supervisors, peers and direct reports have to say? Conducting a follow-up 360o feedback survey can provide insights that help enhance self-awareness over time.

In addition to measuring individual growth, maintain data on the overall success of your program. Some key factors to monitor:

  • How many employees complete the program compared to how many started
  • The percentage of employees who are promoted after completing the program
  • The number of times the organization hires externally instead of from within the high potential population
  • The percentage of overall improvement in leadership assessment results six months and one year after the program

Identifying high-potential employees and developing them into future leaders is crucial to ensuring the health of your organization.

A strong succession management process that includes leadership assessment will help avoid investing in and promoting the wrong employees. This ultimately reduces the high costs of employee turnover and results in increased employee engagement. Leadership assessment and development is especially important among your youngest employees, who are quickly becoming a larger percentage of your potential leadership pool. The Millennial generation comes with specific needs and requires a different approach to development.

For more on how to make the most of their unique characteristics and bridge the skills gaps, download this eBook, “Developing Future Leaders: Preparing Millennials for 21st Century Challenges.”

 

Read more: Why Best Practices Aren’t a Best Practice