Why Career Development Is the Key to Your Leadership Pipeline

Ever have a leadership role open up at your company, but there just wasn’t a qualified internal candidate to fill the role?

Hiring a leader outside the company isn’t the end of the world. But it takes time, energy, and money. Not to mention the effort of onboarding them into your culture, product, and user base.

Ok, so let me give you some good news.

It is possible to skip the headache that comes from hiring a leader externally. It’s possible to form a consistent batch of talented, loyal employees who are itching to step into a leadership role when it opens up. 

I’m Cara, and I’ve worked in HR for 20 years, including as a VP of HR. And I’ve coached hundreds of execs, so I’ve learned exactly how to find quality leaders for your company.

And the best strategy you can implement to find leaders is to create them. And you do that by setting up a culture that invests in your employees’ career development. 

Recruiting Leaders Externally Isn’t Ideal

So here’s the challenge I want to help you with: when senior positions open up and you have no strong internal candidate ready to step in.

This isn’t an uncommon situation. 56% of organizations don’t have a succession plan in place. Only 21% have a formal plan.

External recruitment for leaders works, but it comes at a steep cost.

Replacing an exec can cost up to 213% of their annual salary once you factor in recruitment, onboarding, and lost productivity.

But the cost is more than just financial. External execs will take longer to understand your culture. It’ll take time for them to get the ins and outs of how your business works, the intricacies of your product/service, and what your customer base cares about.

Plus, internally hired leaders are successful at their jobs 65% of the time, while externally hired leaders are successful only 52% of the time, according to the companies’ HR teams.

Not to mention, internal CEOs have a 20% longer tenure than external CEOs.

Ok, so I think I drove the point home. If possible, it’s better to hire your leaders internally.

But how do you do that?

Cultivate Internal Leaders by Doubling Down on Employee Development

Fortunately, there is a sustainable way to cultivate leadership in your company. But it can’t be an afterthought—it has to be built into your culture.

And here’s the key: invest in your employees at every stage of their development.

Build a company culture that transforms people. So that after someone has worked for you for a few years, they are more empowered, more skilled, and a better leader.

This type of culture will make your company stand out, given that only 21% of employees feel like their employer fully supports their well-being. 

But if you become the rare company that truly invests in your employees’ success, they’ll truly invest in yours.

Why investing in employee career development opportunities should be a no-brainer

This approach has a few benefits:

Benefit 1: Employees (and top performers) will stick around longer. Investing in professional development opportunities causes retention to jump significantly. Studies also suggest it’ll attract more top talent to your company, and that high performers will work for you for longer.

Benefit 2: Employees will become better workers. If you instill coaching values into your culture, your employees will be more motivated, more productive, procrastinate less, and fill in their skill gaps.

Benefit 3: Leaders will blossom. If you build a leader-making culture, then all your employees will learn to make better decisions and take initiative. And over time, you’ll develop a bench of highly capable leaders ready to take on more responsibility. 

The formula for cultivating internal leadership through employee development

So the “formula,” if there were one, looks something like this:

1. Build a culture where you heavily invest in your employees’ growth.|
   

2. Employees become better at their job and more loyal to your company.
   

3. As they rise the ranks, you’ve trained your employees into exceptional leaders.
   

4. When a leadership role opens up and you need to hire, you have candidates in the company who are great leaders and know the company culture.

Simple as that.

This approach creates an environment where people who work for your company become not just better workers, but better people. Employees feel motivated to learn, seek out feedback, and take on tough challenges. And they chart their long-term career progressions within your organization, instead of looking elsewhere. 

Then, when leadership transitions do inevitably happen, you have a pool of loyal, leadership-ready candidates to draw from.

But this raises the question: how exactly should you invest in developing your employees?

The 5 Best Career Development Activities to Build Leadership Skills

There’s a famous quote that says, "Leaders don't create followers, they create more leaders.” 

So carry that attitude into your training program. An employee is never too young or inexperienced to start cultivating leadership qualities.

We all have a capacity for leadership, and the sooner you draw that out of your employees, the more masterful leaders they’ll be when it’s time for them to step into the role.

Here are some ideas for activities to build those leadership skills

1. Mentorship programs

Here’s a stat you should pay attention to:

84% of Fortune 500 companies have a mentorship program. 90% of Fortune 250 companies have a mentorship program. 96% of Fortune 100 companies have a mentorship program.

Want to guess what percent of Fortune 50 companies have a mentorship program?

100%.

Mentorship creates excellence.

It gives junior employees real-time role models of leadership behaviors and the encouragement to take on their career goals. 

Plus, putting someone in a mentor position forces them to sharpen their coaching, develop effective communication skills, and learn 1-on-1 leadership.

2. Leadership labs

Leadership, like any skillset, requires training.

Think about a professional tennis player. They don’t just get better from matches. They spend countless hours with a coach practicing their strokes, tweaking their serve, and reviewing film from their previous matches.

Use the same principle for leadership development. Create regular workshop-style leadership training sessions to fine-tune employees’ leadership skills.

This might involve:

• Getting real feedback on a current leadership challenge they’re facing. Or doing a post-mortem on a recent leadership experience.
  

• Participants learning about their leadership style by taking a leadership assessment or receiving feedback.
  

• Working through a test crisis as part of a team in a simulated business situation.
  

• Practicing public speaking with confidence and authority to capture a room’s attention. And getting feedback on what they’re doing well and what could improve.
  

• Helping more junior employees reflect on times they have taken leadership, even if they’ve never had a leadership role. Ask questions like “Have you ever volunteered for a challenging task that no one else wanted?” or “Have you ever provided guidance and support to a newer employee?” 

3. Stretch assignments

When an employee gets a stretch assignment, they’re forced to make harder decisions, think about risk, and lead teams. 

Give employees responsibility beyond their job description. It could be managing a cross-functional project, leading a small team, or solving a thorny organizational problem.

After all, one of the most effective ways to grow as a leader is to navigate the pressures of a real situation.

4. Cross-department exposure

Create a program where emerging leaders shadow established leaders in other parts of the business.

This can help them understand the organization as a multi-dimensional ecosystem, which will foster the systems thinking needed to make executive decisions.   

5. Internal coaching programs

Instilling a coaching mindset in your company can do wonders. 

If your managers know how to coach, then they can draw the full potential out of their team. It’ll also help employees feel more supported and empowered in their professional growth and career paths.

Alternatively, you could hire in-house coaches for employees, high-potentials, and execs alike. 1-on-1 coaching is a huge accelerator for decision-making skills. That’s exactly why executive coaching tends to have such a huge ROI—when you’re on top, even making marginally better decisions has a massive ripple effect. 

3 Common Pitfalls that Can Sabotage Leadership Development

If you follow the steps listed above, you’ll be on pace to set up a potent growth-minded culture that fosters leaders.

But there are several pitfalls that I’ve seen so many companies fall into when trying to establish a leadership culture. Watch out for these.

Pitfall 1: Short-term thinking

You can’t build a culture that forges leaders if you only think about development when you need to fill an executive role.

Professional development has to be a long-term strategy, and one that’s embedded into the depths of your culture.

Ideally, you craft a culture where it’s absolutely normal to upskill, reskill, and receive mentorship. 

When your business runs on a personal growth mindset, then you’ll be cultivating an entire organization of leaders. So by the time someone climbs the ranks of your company and is ready to step into an executive role, they’ll already be a terrific leader who is invested in your company.

Pitfall 2: Neglecting soft skills

There are plenty of companies that do invest in skill development, but they only focus on hard skills.  

The problem is, great leadership is ultimately a set of soft skills. A strong leader knows how to set an inspiring vision, handle tense conversations, bring the best out of others, make skillful decisions, use emotional intelligence, and trust their gut.

If you don’t cultivate a workforce that excels in leadership soft skills, then you may develop a team that is highly competent in technical skills. But they won’t be leaders.

Pitfall 3: Only developing “high potentials”

It’s an easy trap to focus all your leadership development efforts on a select few rising stars. And don’t get me wrong, it’s useful to recognize and encourage your standouts. But ultimately, this approach can backfire. 

It sends the message that leadership is reserved for a chosen few, which can create rifts in the culture and cause the rest of your team to check out. 

This is bad because: 1) you want a company where everyone becomes their best, and morale is high. 2) You may miss out on unexpected leaders with hidden potential. Plus, some high potentials are phenomenal at their role, but it doesn’t translate into leadership abilities.

Coaching Could Be Your Secret Sauce

If you want to build a culture steeped in career growth and leadership development, you might consider bringing coaching into your organization.

Coaching is a mindset and skillset that creates a hungry, motivated workforce living out their fullest potential.

There are two great ways to cultivate a coaching culture:

• Train all your managers in coaching skills. This won’t just make your managers better leaders, but it equips them with the essential skills to evoke the full potential out of everyone they manage. 
  

• Hire in-house coaches where all of your employees have access to coaching services that can help them become the leaders they were meant to be.
  

If you think any of those options might benefit your company, check out the International Association of Career Coaches. We offer top-of-the-line coaching training for managers and in-house coaching options. 

You can schedule a free 30-minute call with me, and I’ll help you discern if coaching might be a fit for your team.