It’s no surprise that leaders have a critical impact on the success and evolution of a business or organization. Given today’s economy and hyper competitive global markets, executive selection and development are more important than ever. The cost of leadership failure can often mean the success or failure of the entire organization.
Whether hiring new leaders or developing and promoting high potential employees, every executive or leadership personnel choice is a high stakes decision for organizations, their shareholders, and their associates, so it’s extremely important to have accurate information available when making these decisions. Keeping a pulse on how the leaders of your organization are doing can be done in various ways, including developing leaders and using executive assessments.
Here are 4 ways executive selection can impact your bottom line:
1. The financial costs of not getting the right talent in the door can be outrageous.
These costs not only include lost business, but also turnover costs. Estimates of executive turnover costs range from $300,000 - $1,000,000 depending on the size of the company and can increase dramatically the longer they stay with the organization. Accurate information on a candidate’s assets and limitations, as well as promotion potential, can help to make a more informed hiring decision.
2. Everyone loses when a new leader fails.
Goals aren’t met, opportunities are missed, and relationships may be irreparably damaged. When a leader derails, he or she is not reaching his or her full potential as determined by previous, excellent work history. A primary cause is that the skills and competencies needed across leadership roles and levels may differ. Assessing leaders for these competencies will indicate whether they’ll be present across different roles and levels.
Employee morale can also be negatively affected. These “soft” costs of derailment can be incalculable. In this case, the negative consequences of a bad hire or placement can continue long after the individual has been terminated.
3. The right people for the right job.
Getting a clear picture of the strengths and liabilities of your entire leadership team can help ensure the right people are placed in the right roles. This can also help to defray the direct and indirect costs of derailment. If the right leadership assessment tool is implemented, you will be able to identify the strengths and weaknesses in your leadership teams. Using data collection, you can identify trends and correlations and then make decisions and changes based on your findings. The decisions should be driven by a solid, organized, and objective process. The outcomes may include major or minor decisions made in the areas of developmental efforts, training programs, Independent Development Plans, hiring needs, and succession planning needs.
4. Develop your internal leaders.
Grooming internal candidates for the most senior positions is often the best succession plan. An individual who understands the organization’s culture and business goals can accomplish more in a shorter time than an outsider.
It can be difficult to determine who has potential and who does not. One tip is to figure out the indicators of potential so that you can identify people early using executive assessments and get them on the correct developmental path. Before you begin the process of identification, it’s important to take a step back and ask, potential for what? Consider your organizational goals when defining potential.
You can also help to develop your leaders by making sure that they're investing the time for themselves to develop. Leaders are busy. With this in mind, we launched a weekly leadership tips free email subscription. Each week, leaders will receive two to three quick, actionable leadership tips.
Even small, incremental improvements in selecting and developing your leadership talent now can result in big gains over time. The bottom line is, a good executive assessment process will increase an organization’s competitive advantage.