Balancing human resources sensibly within a company is surely one of the most significant tasks for its successful performance. In the scope of this task, it is of highest importance for the company to have a dedicated and experienced leader, whose guidance is a key factor in the company cadres’ performance. Such company leader, in turn, has to possess a number of qualities and virtues, such as objectiveness, knowledge of the business’s field, critical thinking, progressive view, communication skills, etc.
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Obviously, balancing among all the needs of the company and its workers and performing all the above mentioned qualities at the same time is a tough challenge for anyone. Thus, a question appears: can an unprepared person cope with such a multifaceted task? The self-evident “no” reply can be supplemented by a statement that a born leader is an extremely rare case, while a raised leader is an achievable goal. In other words, to reach the maximum result, the leader has to be formed for a particular company by the company itself.
This paper attempts to critically analyze all the advantages and limitations related to developing internal leaders. The main sources of information for this paper are its author’s knowledge and three related articles, chosen because of their educational value and the authority of their authors. For instance, A. G. Lafley in his article with N. M. Tichy shares his experience of growing leaders for the world’s leading company of consumer products, Procter & Gamble, which makes this source rather valuable, taking into consideration the author’s position and experience.
Another author, J. R. Bower, is a professor of Harvard Business School, who devoted his scientific career to the theme of leadership. The other two authors are J. A. Conger, Chair of H. R. Kravis Research at a college in California, author of a multitude of articles and books related to leadership, and R. M. Fulmer, Duke Corporate Education’s academic director, who has both scientific and practical experience in the field, meaning that he has worked not only as a teacher but also as a big company director.
When an organization faces a need to choose a new CEO instantly, it usually has to make a choice between two possible options: either hiring a professional leader from outside of the company, or scanning the workers of the company team in search for talented ones. In both cases, many benefits will possibly appear, as well as some limitations. Each one of the options going to be analyzed separately in order to define which of them is more effective for a business.
Hiring an external leader is an option that many modern companies have practiced. The undeniable benefit of this choice is an objective and unbiased attitude of the new leader towards the company, its team and functioning. An external leader, or a so-called “outsider”, can analyze the company’s functioning from a new angle; hence, this person is capable of defining whether a need for radical changes exists in the organization (Bower, 2007).
Another possible advantage of an outsider is that such person in most cases has had an experience of dealing with big companies’ management, and thus is familiar with the schemes and methods of improving the business’s performance. In case the external leader has previously worked in another field, he or she supposedly has a broad outlook and a critical perception of the modern world of businesses competition. This will also allow the person to help the business keep up with the fast developing world of numerous companies and take into consideration the existing tendencies.
However, there are certain limitations to hiring an external leader, and their significance is often more considerable than that of the benefits. For instance, the fresh look at the company team has another side: the outsider lacks knowledge of the personalities and special talents of the organization’s workers. Therefore, they would be unable to quickly distribute tasks between various workers effectively, as it takes years to learn about personal skills of the team.
In a condition when a serious change in the policy of a company needs to be introduced, this lack of knowledge can be fatal for the business. Another challenge for an external leader is lack of knowledge of a particular industry sector within which the business functions (Bower, 2007). Without this knowledge, any attempt of the outside leader to change the company policy, like cutting costs is performed in limbo, and thus is rather hazardous for the business’ success (Bower, 2007).
In general, one has to realize that any company lives, breathes and functions like a living organism, and intruding in its life can be very harmful. The statistical data says that appealing to a “white knight from the outside” is disastrous for businesses in the long run (Bower, 2007, p.93). A perfect CEO has to control the plots of both the short-term and the long-term development of the company, while outsiders mainly focus on the short-term results (Bower, 2007).
Similarly to external leaders, the internal ones also have a range of limitations. For instance, contrasting to the outside leaders’ flexibility, insiders most likely will think narrowly while dealing with the company policy and, as they have got accustomed to the organization’s traditional ways, they are often unable to admit a necessity of implementing certain changes (Bower, 2007). This means that internal leaders are often not ready to change considerably the terms of the company’s work.
In addition, insiders often lack objectiveness, both towards the business’ field and its team. Another drawback of a potential insider is that such person has been working in a certain environment, at a certain department for years, and this may point to their inability to orientate in the world’s existing situation and see their company in the scope of progress and competition. Besides, without a mentor or a senior worker who can share their experiences and give advice, it is extremely hard for an insider to make big decisions (Conger & Fulmer, 2003).
The advantages of finding a leader within the company are also numerous. The most considerable one is that an internal leader knows the company and its functioning well enough to make predictions and planning adequate strategies for its work, which implies considering such factors as global economical situation, technological advances, clients, competitors, and others (Lafley &Tichy, 2011).
Besides, having been a part of the team for many years, an internal leader is more likely to enhance the workers’ performance by distributing the workload among the departments properly and considering the qualities of certain individuals. The psychological aspect of such position also matters, as the insiders are already a part of a company and have contributed a lot to its work and therefore will do their best to keep it afloat.
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However, while the critical comparison of the two kinds of leaders is rather controversial, there is one argument that leaves the doubts aside. In case of an outsider, a deeper knowledge of the company’s nature and functioning is needed; in case of an insider, the key necessity is a broader outlook and a mentor who would, in fact, teach the upcoming leader how to lead.
We can now see that both cases demand a long period of learning, a period of years and sometimes even a period of a decade (Lafley &Tichy, 2011). However, in the moment of crisis or a need for the new leader it is impossible to spend years on training the person. Judging from this point of view, it can be stated that the most effective and convenient way to solve the problem, which sooner or later will occur in any company, is to foster a leader beforehand, for years even.
The abovementioned statement corresponds to a point of view that succession is “a process, not an event” (Bower, 2007, p.92) and that the only way to control that process is to foster a leader from inside of the company. In other words, leadership development must be a part of the succession planning of a business (Conger & Fulmer, 2003).
It has to be admitted that developing internal leadership is a promising project, although Bower (2007) suggests that the hybrid leaders, combining the knowledge of insiders and broad outlook of outsiders, are the best option for businesses. According to the author, the main advantage of such hybrids is that they present insiders who are “blessed with an outside view”, meaning that they are able to see the big picture and critically analyze the situation in general (Bower, 2007, p.94).
Now that it is clear that internal leaders are worth developing, the main question remaining is: how to choose a proper candidate for the future CEO? In an attempt to find the right person among the company’s workers, the board often perceives the members of the team as people who “don’t seem to have the stature and vision to lead” (Bower, 2007, p.93).
However, in any team there are talented professionals who, when guided properly, can perform excellently as leaders. A reliable tool for defining such people is assessment criteria for the candidates (Lafley &Tichy, 2011). For different companies the list of such criteria is, and should be, different, as it has to reflect on the special needs and goals of a particular business. However, it is possible to make a generalized summary of common features of a future leader which any company would accept, and this list would most probably include such qualities as self-motivation, communication skills, empathy, experience, practice, critical thinking, etc (Lafley &Tichy, 2011).
As an example, in the list of qualities expected from a senior manager compiled by P&G’s CEO, A. G. Lafley, there are such qualities as coolness, readiness for change, compassion, strategic vision, courage, integrity, and others (Lafley &Tichy, 2011). As soon as the board has designed an image of the leader they would like to see as a head of the company in the future, they can try to assess the company workers according to the criteria defined.
In case when a big international company is considered, there are more chances to find a perfect inside-outsider, as the people who are aside from the mainstream of the company, meaning its board and central unit, are most likely to preserve authentic thinking and objective views, which is the greatest advantage of the hybrid leaders (Bower, 2007). At the same time, it can prove to be a challenge for the board to define all the leaders possible from various departments of such a company, especially in the company has its offices in different countries.
In this case, an example of Lafley can come in handy; while looking for his company’s next leaders, the P&G’s CEO used a number of techniques to assess the workers’ performance. One of the ways to do that, according to the author, is to regularly gather feedbacks from the team about functioning of a certain department (Lafley &Tichy, 2011). In addition, the man as a leader asked the heads of the departments and presidents to report on their current work and future plans monthly; the man spent much time analyzing these reports and giving feedbacks.
In addition to this, Lafley appealed to dialogues with the members of his team, as the face-to-face conversation allowed him to see the potential of each of them. Moreover, every of the six meetings of the board during the year included a discussion of the management team and their potential (Lafley &Tichy, 2011).
In order to gain a deeper knowledge about how well the candidate is orientated in the company functioning, Tichy offers a questionnaire that embraces the candidate’s judgments about such spheres of business as the organization, team and its members, personal judgments, and predictions about stakeholders (Lafley &Tichy, 2011). This tool helps to see the real critical thinking and progressive views of the future leaders, comparing them to the position of the board. Such questionnaire is indeed very helpful as even the face-to-face conversation is unable to provide such a deep analysis of the employee’s position and views.
Such “sorting out” of the candidates does not mean that the board has to decide on one concrete successor; in fact, Lafley states that “more candidates mean you have more choices” (Lafley &Tichy, 2011, p.73). Indeed, in a certain respect it is useful to make a competition, as the big number of candidates means they will perform better and do their best to show what they are capable of handling.
However, the current CEO should avoid giving preferences to certain people in the company; they need to avoid being guided by their own benefits or interests, as “it’s about the company and it’s future”, not about the person of CEO (Lafley &Tichy, 2011, p.73). Ideally, the company CEO has to evaluate the situation in the organization critically and be able to speak openly about both the workers with highest performance and the least promising ones (Conger & Fulmer, 2003). In other words, the point is not to make the company or its team perfect, but to be able to reach the maximum performance in the conditions of the resources available.
Once the board or the current CEO has selected candidates for the succession leadership, it is time to combine two teaching paradigms: developing their leadership skills and teaching them how to operate the company and solve the problems in it. Lafley suggests letting the candidates practice first in small businesses and projects, and then gradually lead the young professional through tougher and tougher challenges and more considerable projects (Lafley &Tichy, 2011).
The board may be hesitant to give serious tasks to someone who is inexperienced; this fear is natural and understandable, but the only way of making the successors fully prepared to working as company CEOs is giving them a chance to operate the whole organization, and this should be done as early as possible (Bower, 2007). The goal of the mentor is to give the potential leaders “increasingly complex assignments”, and evaluation and feedbacks are critical on this stage (Bower, 2007, p.94).
The mentor’s intrusion is crucial at this stage, as the fresh ideas of the young professionals (often perceived as strange or unacceptable) need to be given a chance to be implemented, and an old-timer from the company needs to give the internal leaders time and opportunity to try their plans out (Bower, 2007). The young professionals need to be given a chance to take risk and work with real-time challenges rather than with artificial assignments (Conger & Fulmer, 2003).
Obviously, the flexibility and readiness to accept the progressive and different views of the young leaders is a quality that a good mentor needs to possess. In addition, the person who guides the future leaders needs to pay the worker’s attention to four main processes and their interrelation, namely, financing, planning, performance assessment, and compensation (Bower, 2007). Working with these four aspects allows training the young leaders and teaching them how to operate with concrete problems within certain company, which is exactly what succession planning implies.
Once the stage of the candidates’ selection is through, the main point is to make sure that the chosen people move in the right direction and that the results of their work are beneficial for the business (Conger & Fulmer, 2003). In order to do this, the board needs to measure the performance of the candidates regularly. However, it should be noted that the aspect prioritized in this case is how much and how well the candidate has learned something, which means the qualitative result of their work, as contrasted to the traditional quantitative one (Bower, 2007).
This means that what matters in the process of internal leaders preparation is their ability to make conclusions and analyze, rather than the benefit they bring to the company during their training. The focus is hence more on the long-term outcomes than on the instant results of one’s work. However, development of leadership as a quality that allows getting the best performance of the company workers should be practiced constantly and should be a part of the organization’s policy, not only for the candidates for the next CEO, but also for majority of the workers. Leadership development activities include such practices as training in real life conditions, job rotation, group assignments, etc (Conger & Fulmer, 2003).
Moreover, besides the board’s efforts towards developing leadership in the company workers, the employees too have to be engaged in the process. Self-motivated or motivated by the stuff, they have to strive to show their potential and perform best; this intrinsic factor is the most powerful engine that runs the business and guarantees company’s success. The self-evaluation system offered by Bower (2008) presents a list of questions related to recruitment, professional development and community life which, while used by the worker towards himself, will allow him or her to view the situation from aside, evaluate every aspect of one’s professional life and to pay attention to the possible improvements.
Besides that, it is important to let the employees know what in the business functioning should be taken into consideration in the first place; namely, the board of the company has to define two main spheres where the professional development must be considered in the first place, including (a) the major partners and departments in the scope of a particular business’ specialties, and (b) the needs of the customers (Conger & Fulmer, 2003). The employees, in turn, have to show flexibility and be ready to react to the changes in market and consider the spheres of the utmost importance for the organization.
One of the tricky aspects of developing leadership as a part of the company’s succession plan is the motivation of every worker in the company. While fostering a leader means selecting a group of “the chosen ones”, others may feel left out of the competition and thus lose motivation to do their best and try as hard as they can. In order to avoid this, some experts suggest making the leadership fostering project confidential because “the horse race doesn’t have to be public” (Lafley &Tichy, 2011, p.73).
Indeed, keeping the process out of the public can be an effective measure against early give ups; however, it can also enhance the feeling of uncertainty and some hidden game, which can affect the trusting relationships between the board and the team of managers. Due to this fact, a controversial suggestion states that “people will contribute more if they know what rung they’re on” (Conger & Fulmer, 2003, p.81).
Thus, it is advised for the board to make the competition among potential leaders an open and clear process, showing the employees their real career prospects. Besides, the leadership competition allows defining the leading positions on all the levels of the company, such as presidents, chief executives, heads of departments, and so on (Lafley &Tichy, 2011). This makes the process more meaningful both for the organization board and the employees, and involves the workers of different levels and departments in the competition.
Nevertheless, despite the fact that most successful companies are currently make their succession plans transparent, such strategy cannot be suitable for any kind of organization; this method can only work in organizations where the value of honesty is higher than the value of politeness, and the CEO has to be careful in order not to destroy the team spirit (Conger & Fulmer, 2003). In any case, it is worth mentioning that the ultimate priority of any worker of the organization has to be doing their job qualitatively and on time, and though the competition for leadership can play a motivating role, this competition should in no case distract the management team from work (Lafley &Tichy, 2011).
All in all, growing an internal leader for an organization is a long process, which has to be consecutive and well-planned and demands patience and efforts from the board and the CEO. This process means paying just as much attention to the human resources management as to the company production and business development, which is a tough task for the stuff members.
Nevertheless, all these efforts will definitely pay back in the future, as far as the experience of the biggest and most successful companies in the world suggests that fostering leaders in the scope of planning and strategy development are vital for the success of any business. Without a doubt, the number of virtues expected from the ideal future CEO is endless, and there always are certain restrictions to the abilities of the candidates, but the fresh view combined with experience and mentor’s help make it possible for a young professionals to excel as company leaders.
Bower, J. R. (2007). Solve the succession crisis by growing inside-outside leaders. Harvard Business Review, 90-96.
Conger, J.A., & Fulmer, R.M. (2003). Developing your leadership pipeline. Harvard Business Review, 76-84.
Lafley, A. G., &Tichy, N. M. (2011). The art and science of finding the right CEO: Lessons from P&G’s obsession with succession. Harvard Business Review, 67-74.