If you aren’t willing to invest where you have the greatest potential for robust ROI, namely in your human capital, it’s like raising a child with tons of potential and fantastic DNA, and then not sending them to school. The money saved on textbooks and tuition may have sounded like a good idea at the time. But as they grow up the parents realize that not investing in their kid’s education was a grave miscalculation.
Don’t treat your top talent and high-potential executive leaders that way. Otherwise the organization is built on a weak foundation of anemic corporate DNA. I’m always amazed when I ask some of today’s biggest companies how they invest in their high potentials and they say, “We spend time and effort identifying who they are so we can promote them when a position becomes vacant.”
Seriously? You don’t provide developmental workshops or give them an executive coach to invest in their future success? You pin your success on the hope they’ll figure it out on their own? That’s like applying for an MBA program with only a high school diploma to prepare you. That lack of planning makes you highly vulnerable to five dangerous risks:
Risk #1: Talent Attrition
Insightful leaders are experts at surveying the organization’s big picture Click To TweetThey immediately detect whether or not their own superiors are offering them additional skill development suitable to their roles and responsibilities. When they perceive that you don’t appreciate them enough to do that, they don’t send you a memo…they call a headhunter and leave. In my work I see it happen all the time.
Risk #2: Increased Costs
I also find that most assume that because someone is in the leadership pipeline they are on board forever. But your most capable people are the most marketable, so they are usually the first to leave. Replacing them typically costs as much as 200 to 300 percent of their current salary. Lose an executive making $75,000 a year and it can cost you $225,000 or more to replace them. But if you don’t fix the DNA issue that inspired them to quit in the first place, their replacement may wind up doing the same.
Risk #3: Productivity/Performance Suffers
Their direct superior usually has to do double duty, covering for the person who left while the replacement settles into the role. So when you lose talent by letting them slip through your fingers you pay a double cost. But the big expense hurts the bottom line when productivity and performance suffers and rank and file employees resent losing the team leader they knew and liked. Weakened morale can destroy healthy organizational DNA for generations.
Risk #4 Lack of Employee Engagement
When executives see the organization investing in things like new technology/systems, acquiring new companies, or building new offices…but don’t receive any support for their own development, they feel devalued. If you don’t invest in them, they don’t feel invested in you and have the enthusiasm that comes from feeling like a true company success stakeholder.
Risk #5 Total Organizational Stagnation
Companies voted the best places to work earn that reputation by investing internally, which makes them a top talent recruitment and retention magnet. They develop their number one resource to maximize that potential and take a diamond in the rough and polish it. That ensures cohesive successful DNA…which permeates the organization. Otherwise, your whole organization can stagnate due to a lack of capable, prepared leadership.
Data shows that companies who invest in their people are more innovative, engaged, productive, and profitable. Why? They are putting more money to work to grow the RIO on their most valuable asset.
How much is your company investing in its leadership future?