It is no secret that highly effective leaders are crucial for long-term success in any industry. Effective leaders build strong teams, inspire others to achieve goals, and engage team members to ensure continuous commitment to the organization and its overall objectives—which is linked to positive business performance.
However, many businesses struggle with their succession management strategy and do not have a pipeline of strong leadership talent. It’s common for people to be promoted based on factors that seem valuable or important at first, such as tenure or current performance, but are all too frequently insufficient indicators of future success. The consequences of having poor leaders can include low productivity, high turnover, low employee morale, and impaired collaboration between employees.
Assessing Performance vs Assessing Potential
The distinction between performance and potential is an important one. Assessing a candidate for a leadership role isn’t the same as evaluating how well they do their job. Rather, it’s about determining whether that candidate has the skills and characteristics needed to excel in another position.
Unfortunately, only about one in seven high performing employees has the potential to excel in a leadership role. Businesses need a reliable means of identifying high-potential leaders from those who would be less effective. This is where leadership assessment becomes important to ensuring an effective succession management process. Through these assessments, a business can identify its high-potential employees and develop plans to ensure these people will be ready to fill key roles when they become available.
Building a Talent Pipeline
Organizations can benefit greatly from establishing a clear succession strategy that identifies candidates capable of moving into key positions. Vacancies can be incredibly disruptive, creating additional work and stress for employees who must handle the essential responsibilities of the open position until a new person can be hired and trained. Productivity and efficiency often suffer, and if the selection process goes on for too long, frustration or even resentment can set in.
Creating a succession pipeline stocked with qualified candidates is the best way to keep these disruptions to a minimum. High-potential employees can receive the training and development they need before they’re forced to step into a more senior position. A good succession strategy should incorporate mentoring as well, allowing seasoned leaders to pass on their knowledge and experience to ensure a smooth transition when the time comes.
What Are Common Steps in Leadership Assessment?
Creating an effective leadership assessment is a multi-step process that requires a great deal of thought and consideration. By taking a thorough approach to building an assessment system, organizations can strengthen their talent pipelines significantly.
Step 1: Develop Success Profiles
What does “good” or “great” look like for a given leadership role in the organization? When developing a success profile, information is gathered from stakeholders and employees to create a comprehensive profile of the skills and behaviors that enable future success for a given role.
Step 2: Select Assessment Tools
To achieve a thorough, data-driven assessment of leadership potential, a robust array of assessment tools should be used, including:
- Leadership Questionnaires: These measure key characteristics, preferences, and motivations for leadership candidates. They also capture potential “red flags.”
- Behavioral Interviews: Effective interviews capture what and how people have done things and assess self-awareness.
- 360 Degree Feedback Surveys or Referencing: References are important to assess the perceptions others have of the leader’s strengths and weaknesses.
- Simulations: These assess the leader’s knowledge and behavior and may include roleplay sessions, group exercises, decision-making tools, presentations, and situational judgment tests.
Step 3: Provide Feedback to Key Stakeholders
This helps to inform organizational decisions regarding the leadership assessment process and the succession management process as a whole. In addition, aggregate results can be used to inform ongoing leadership development needs within the organization.
Step 4: Review Assessment Results with Participants
The results of the leadership assessment should be discussed with the participants to keep them informed and to help with future development planning.
Step 5: Monitor Metrics and Progress Over Time
Organizations should conduct progress checks and have a mechanism in place to ensure that the assessment process is working effectively. The end result of any succession system should provide a data-driven, comprehensive approach to identifying and developing high-potential leaders.
Why Does Leadership Assessment Matter?
A comprehensive leadership assessment is what top-performing businesses use to make sure that they’re putting the right people into the right roles to drive future success.
For example, AmeriGas, America’s largest propane company, began using leadership assessments as part of their succession management process for their Area Director position. Prior to using leadership assessments based on a “profile of success,” the company was having issues reliably finding future leaders to take on the Area Director role, which was causing productivity issues and high turnover for the position.
After implementing a comprehensive leadership assessment process as part of a larger succession management program, AmeriGas was able to turn around the Area Director role. They made what was once a hard-to-fill position into a highly successful role in the company that attracts top talents who are interested in furthering their careers.
Identifying future leaders is one of the most important tasks facing today’s organizations. By putting the right assessment strategies in place, they can begin to identify high-potential employees capable of stepping into leadership roles and fill their talent pipeline with qualified candidates. Focusing on these candidates early with targeted development programs can improve retention rates and minimize disruption to ensure long-term business success.