Business Day

It is CEO's job to nurture leaders

SA's CEs must take responsibility for the severe shortage of future leaders. The average SA organisation badly needs them. In many cases the shortfall can be as high as 25%.

By Alan Bird

Published on July 02, 2002
min read


SA's CEs must take responsibility for the severe shortage of future leaders. The average SA organisation badly needs them. In many cases the shortfall can be as high as 25%. Equally, little progress is being made towards meaningful empowerment. While CEOs are aware of the situation, few know just how dire the consequences are for their organisations. Those who do simply do not know what to do about it. A leadership shortfall of 25% could cost a business as much as 10% return on the cost of capital employed. A major problem arises when CEOs delegate responsibility for training and development of future leaders to the human resources team. While they may rise to the challenge admirably, identifying and implementing global best practice in talent management, career planning, recruitment, remuneration and training and development processes, their emphasis is on process, and not value. It is the CEOs themselves who must take responsibility for driving value from investments in future leaders. First, they must determine the demand for leaders necessary to deliver against their strategic goals. The focus needs to be on those leadership roles truly critical to the success of the firm. Then they need to determine the available supply of leaders to satisfy this demand. This is not easy. It requires sophisticated modelling of the pipeline of future leaders. It requires robust, objective data regarding individual performances, possible career paths, available development opportunities, and likely attrition rates. Such a process will help quantify the leadership and black empowerment shortfall, and provide the focus for planned investments in leaders. The goal is to assure the future supply of leaders by accelerating the development of exceptional talent and recruiting fresh blood where necessary. Initially, following this strategy will prove challenging for many SA companies because of a lack of objective data. Without it, one cannot model the desired outcomes. Equally, one cannot determine the right investments in leaders and the leadership process without knowing the outcomes required. Companies should accept that there is a shortage of data, use the available information to determine the right general direction, and then take action. The key is to invest differentially in talented individuals. Pay your potential stars 30% more than your average performers, and invest at least 40% more in their development. Too often, training is skewed towards those who are easiest to release from their day-to-day responsibilities in effect, the poor performers. As the programme becomes more mature, better quality data will become available. Bird is vice-president of international management consulting firm Bain & Company.

SA's CEs must take responsibility for the severe shortage of future leaders. The average SA organisation badly needs them. In many cases the shortfall can be as high as 25%.

Equally, little progress is being made towards meaningful empowerment. While CEOs are aware of the situation, few know just how dire the consequences are for their organisations. Those who do simply do not know what to do about it. A leadership shortfall of 25% could cost a business as much as 10% return on the cost of capital employed.

A major problem arises when CEOs delegate responsibility for training and development of future leaders to the human resources team. While they may rise to the challenge admirably, identifying and implementing global best practice in talent management, career planning, recruitment, remuneration and training and development processes, their emphasis is on process, and not value.

It is the CEOs themselves who must take responsibility for driving value from investments in future leaders.

First, they must determine the demand for leaders necessary to deliver against their strategic goals. The focus needs to be on those leadership roles truly critical to the success of the firm. Then they need to determine the available supply of leaders to satisfy this demand. This is not easy. It requires sophisticated modelling of the pipeline of future leaders. It requires robust, objective data regarding individual performances, possible career paths, available development opportunities, and likely attrition rates. Such a process will help quantify the leadership and black empowerment shortfall, and provide the focus for planned investments in leaders.

The goal is to assure the future supply of leaders by accelerating the development of exceptional talent and recruiting fresh blood where necessary.

Initially, following this strategy will prove challenging for many SA companies because of a lack of objective data. Without it, one cannot model the desired outcomes. Equally, one cannot determine the right investments in leaders and the leadership process without knowing the outcomes required.

Companies should accept that there is a shortage of data, use the available information to determine the right general direction, and then take action. The key is to invest differentially in talented individuals. Pay your potential stars 30% more than your average performers, and invest at least 40% more in their development. Too often, training is skewed towards those who are easiest to release from their day-to-day responsibilities in effect, the poor performers.

As the programme becomes more mature, better quality data will become available.

Bird is vice-president of international management consulting firm Bain & Company.