Identifying future leaders starts with a leadership capability framework

by Hudson

Nothing is more important to an organisation’s long-term health and success than choosing the right people to lead it. But without a reliable way to gauge leadership potential, too much is left to chance. Assessing for the leadership capabilities
your organisation most needs – using methods that are proven to predict performance outcomes – takes away much of the uncertainty. But too often companies fall short on the follow-through.

Last week Simon Moylan
Hudson’s Executive General Manager for Talent Management in the Asia Pacific – shared Hudson research showing only half of surveyed Australian and New Zealand companies had a leadership strategy, and the strategies of those who did have one were lacking some important
elements. One particular facet was having a capability framework that defines good leadership.

Put simply, a leadership capability framework describes what ‘good’ leadership looks like in your organisation. It articulates what capabilities the organisation needs in order to deliver on its key priorities. Assessing against a widely understood
leadership framework also provides a consistent approach for evaluating talent – for selection, promotion and development.

When you have a capability framework you create a common ‘language’ for leadership. Everyone understands what is expected of them and there is definition around the specific behaviours they should demonstrate at different levels. It also helps
you build and maintain the culture you need within the business; the type of culture that supports you to achieve your strategic objectives.

The opposite is true for organisations that don’t have a leadership capability framework. A lack of clarity around what kinds of leadership behaviours are expected can lead to an uncertain environment, and uncertainty impacts performance. Organisations
that don’t have an agreed capability framework also tend not to have a strong leadership culture and common values that drive their approach, leading to differences across teams and regions. This makes it harder for businesses to deliver on
their common goals and grow.

Another significant issue that I’ve seen from my consulting work over the years is that sometimes creating a leadership capability framework can be a ‘once in time exercise’. Once it’s completed it is left to gather dust, rather
than evolving as the needs or the direction of the business change.

Once you have created your leadership capability framework it should be a valuable tool for identifying and promoting talent, and for guiding what kinds of development programs are needed. Interestingly we asked HR leaders about their processes to assess
leadership capability and some were encouraging.

63% have procceses in place to assess capability of current leaders

Where the sophistication dropped was around the processes in place to proactively identify (and groom) potential leaders before a need arises, with only half using their capability framework for this purpose.

Assessing leadership capability and potential – why it’s critical

Without objective assessment based on a common set of leadership capabilities, promotions are typically made based on past performance in technical roles. But superstar individual contributors aren’t always cut out to be great people managers. Without
assessing for leadership potential before a promotion, you risk putting the wrong people in these critical roles. Their under performance has a ripple effect on all of their direct reports and other stakeholders.

Assessments also provide important objective feedback to current and future leaders to help them develop. This is especially important because as leaders climb the ranks, good feedback becomes increasingly scarce as many are reluctant to criticise their
superiors. This can ultimately contribute to a leader’s downfall.

Feedback leads to better self-awareness, which is critical to good leaders. Leaders who have a smaller gap between how they view themselves and how they are viewed by their stakeholders are more effective – and assessment can be invaluable in uncovering
their blind spots.

Key components of a good leadership assessment

Step one: Define your leadership capability model – you need to know what you are assessing for. What are the leadership capabilities we require to deliver our business priorities?

Tip: Organisations often want to rush through this process but it deserves a lot of time because every leadership decision will be based on it. A contextual mapping exercise can help here, which gets organisational leaders thinking about the environment
they are operating in; the structure, culture and strategic imperatives of their company; and how important different leadership styles are to achieving these objectives.

Step two: Utilise a range of assessment methodologies to give the fullest picture of leaders (potential, current and new hires) possible. These can include personality and motivational questionnaires, cognitive ability tests, interviews, 360 feedback
and simulation exercises. Be sure to balance online and face-to-face assessment. Online is cheaper and simpler but face-to-face exercises give a richer insight into an individual and better incorporate the views of other stakeholders.

Tip: The assessment methodologies should provide evidence-based guidance and genuinely predict performance outcomes. Cognitive tests, for example, are very strong predictors of performance and learning speed. Someone who scores high on a cognitive
test can be expected to get up to speed faster in a new role.

Step three: Have repeated measurements so you’re tracking changes over time. This allows your people to see how they’re going against development plans. For example you might want to do a 360 feedback every year. If leaders have been
working on developing particular facets of their leadership style, this will reveal how that is going and what changes are being observed by the people around them.

One final word of caution

The way an assessment process is experienced by its candidates is equally important to the methodology. Some personality tests ask strange questions that vex the candidate. I recall one that asked, “Do you look at your tongue in the morning?”
There is, in fact, evidence that this is a predictor of neuroticism or emotional stability, but questions like these draw negative reactions and can lead candidates to doubt the validity of the results. There are other workplace-specific ways to assess
for these things.

Assessing reliably against a rigorous leadership capability framework ensures those who are hired or promoted genuinely have what it takes to bring the best out of your people. It’s a fundamental building block for a strong and cohesive company
culture and, ultimately, a stronger bottom line.

Looking to assess and develop your organisation’s leadership potential? Speak with one of our Talent Management consultants about how we can meet your leadership challenges and bring tangible results to your business.