Many family businesses think that leadership development is just for the large corporations of the world. Leadership development is a necessity for any size company. In our current economic climate, it makes sense to equip your key people with the skills they need to get along with others, problem-solve responsibly, and generate new ideas.
When we invest, whether it be in our business or personal lives, the purpose is to gain returns on that investment. Building equity, saving for our children’s college education, or wanting to grow and expand the company means we need a return on our resources, time, and energy investment, not a loss.
The Benefits of Investing In Leadership Development
Preparing a future leader for the role demonstrates to the employee the company will support and provide resources for the individual to be successful in their future role. The opportunity to learn and experience how the existing leadership runs the company, be involved in developing organizational systems and processes, and participate in building client relationships are invaluable.
Dr. Greg Barnett of Predictive Index discusses the growing trends, statistics and benefits of leadership training programs. He identifies how leadership programs improve job performance, organizational outcomes, and subordinate effectiveness.
Additional benefits of investing in leadership development include
- Improved employee engagement
- Increased leadership effectiveness from cultural engagement, job shadowing and mentorship with existing leadership
- Increased confidence in outgoing leadership that their successor is prepared to fill the role
- Transitioning to new leadership can be done in planned stages, rather than all at once
- Reduced stress and prevention of burnout in successors as they are prepared for the role, not thrown in the deep end, overwhelmed.
The Hidden Costs of Not Investing In Leadership Development
Unprepared successors cost the company in lost revenue, decision-making errors, inefficiencies, and unproductive operational expenses.
Here are a few scenarios to consider
- A new leader under stress and strain, unprepared for the role is more apt to leave the company than stay. In the process of hiring a new leader, the time, attention and affected morale of employees incur human resource costs and lost productivity on the job. Further, this type of leader may also alienate direct reports resulting in key people leaving the organization too.
- Hiring a leader externally with an existing skillset incurs costs in onboarding, training, learning the company culture, and building relationships with employees. This can take a year or more of company time and resources to see an ROI, compared to developing leaders from within the organization.
- Unprepared employees and family members who move into leadership positions can also incur costs. These include making business decision mistakes, not recognizing market opportunities and when to pursue them, or losing talented key personnel who get frustrated and leave the company.
What Every Company Needs To Know About Investing In Leadership Development
If you want your company to be more than a paycheck to your employees, you have to treat each person as a valued member of the company’s family.
Invest in the learning and development of your people. Let them know that they matter. Set them up to succeed by instilling the skills and support to navigate whatever your company faces in the future.
Leadership Is A Skill
Charisma does help to inspire allegiance, but a strong, focused, trained and experienced leader will win over employees and family members far quicker than throwing a new leader into the deep end. Imagine a fire department arriving at an emergency scene where the new fire captain doesn’t know how to lead or how to perform their role efficiently. Charisma isn’t going to matter in that scenario.
Assess Company Leadership Needs
Identify leadership skill gaps, company culture development, business strategy implementation, innovation, and market change adaptability of the company.
A Leadership Program On Paper Is Not Enough To See Returns On Investment
Program design needs to be relevant, in context, and implemented and evaluated to have benefit. Adopting a cookie-cutter training plan without adapting it to your organization’s needs will not be effective and you will not see a marked ROI.
“Organizations are systems of interacting elements: Roles, responsibilities, and relationships are defined by organizational structure, processes, leadership styles, people’s professional and cultural backgrounds, and HR policies and practices.” (Beer, Finnstrom & Shrader, 2016)
These elements are interdependent and will affect the ability of the new leader to implement change and support the organization to grow.
Use A Data-Enabled Talent Management System
Using data-enabled talent-management systems or otherwise known as people analytics greatly improves the accuracy and value of tracking the effectiveness of leadership development programs.
I use Predictive Index, a talent optimization software that informs my clients and me about the metrics specific to their organizations and shows what is working, what is not, and where there are opportunities to improve the HR capability of their company.
Collect data at the beginning of your leadership development program – this will help determine the ROI of initiatives in future evaluations and you can adapt the program as needed.
How to Ensure Your Leadership Development Program is Successful
- Don’t overcomplicate the program – keep it simple
- Bring in a consultant or coach to facilitate conversations, address conflict, and provide a trained, objective perspective
- Keep the program culture-centric to your organization – defined by a psychologically safe brand-aligned environment
- Create a succession plan – long-term for who, when, and how leadership will change.
- Address communication and soft skill development – leadership is not just about systems and processes and revenues, it is about leading people
- Teach resilience – how to balance workload and personal well-being.
- Have a support system in place for new leaders as they learn and transition. This could include the Board, leadership stepping down, mentors, management, and administration.
- Make training actionable & have current leaders train their successors
Developing leadership skills takes time, it is not a bandaid solution after the fact. Investment in leadership development strengthens a company and helps it grow and succeed by nourishing innovative, aware, experienced, and skilled leadership at the helm of the family business. Change is constant, and resilience and preparedness will allow your organization to grow and succeed.
Hawreluk, J. (2021). LinkedIn. How Small and Midsize Businesses Benefit from Leadership Training.
Take ACTION TODAY and click the button below for a Discovery Call. I can assist you with you a customized, highly valuable leadership development plan for your family business.
Lunch & Learn – join me for my online October Lunch and Learn Tues, Oct 25 @ 12pm ET. We will be discussing strategies for wise investment in leadership development.