Are Your Leaders Prepared for Growth?

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As investors or principals in the fast-growing middle market, do you believe your leadership is prepared for change? Will there be organizational constraints holding your company back? Organization development tends to be low on the strategic agenda for many midsize companies due to a greater focus on short-term returns, limited resources or the belief that talent-related investments are only for big corporations. As a result, many investors and boards are continuously stumped by leadership questions such as:

  • When the company founder moves on, is our No. 2 ready to lead the business?
  • As a high-flying, growth-oriented company, are we too dependent on one or two key leaders or entrepreneurs?
  • Are our superstars equipped with the skills to scale a business and someday lead a larger organization?
  • Can the startup CEO grow the business if she has never led an organization before? We know she has the IQ but what about the EQ, or emotional intelligence?
  • Is our leadership team strong enough to drive our strategy?
  • If we are selecting a new leader to take this promising business to the next level, how do we know he has the exact competencies required?

Leadership challenges are pervasive in the middle market, as short-term expectations and lack of focus create obstacles to a more strategic approach. Perennially successful large-cap companies such as General Electric, IBM and P&G are just as focused on immediate financial returns (annually, quarterly and even weekly!) as middle-market companies, yet they understand that leadership and talent are integral for great results. As a middle-market decision-maker, you cannot dismiss planning and preparing your leadership.

How Do We Improve Leadership Readiness?

At their core, middle-market companies tend to focus on addressing near-term organizational needs and unlocking value from important talent decisions regarding their top executives. Leadership development must be more immediate, less programmatic and not require long-term resource commitment. As powerful stakeholders in your company, investors, boards and CEOs can address leadership requirements in several ways:

  • Improve Assessment of Leadership
    Never subject your leadership decisions to chance, as the talent pool will never be as deep as those of the big corporations. Accuracy in selection is critical. There are plenty of tools to evaluate EQ, IQ, personality, critical competencies and culture fit; be sure to incorporate them into your recruitment process.
  • Ensure Effective Leadership Transition Planning
    According to Fortune magazine, more than 40 percent of executives moving into new roles fail within the first 18 months. Most failures are due to poor cultural and role assimilation. Once someone is identified to succeed in an important leadership role, there must be careful planning and specific steps to ensure readiness before, during and after the change.
  • Integrate Executive Coaching
    In today’s business world, any leadership development investments should yield quick returns. Seminars, interesting reading and workshop cohorts often have limited retentive value and the true impact can take years to see. One-on-one coaching is focused, real-time and data-driven. It is not a fad or reserved for failing executives—research demonstrates it can be extremely effective for promising executives.
  • Have the Courage to Upgrade
    Keeping a clearly struggling leader in a role is more inhumane than letting him go. Most leaders are competent and can contribute some value, but context is everything. A turnaround guru may not be right for a growth business or vice versa. When you have the wrong person in the role, be objective and professional, pay him well and move quickly. It can take years for a business to recover from the impact of retaining a poorly performing CEO.

Practical action does not require never-ending investments and can build necessary leadership capabilities to face the business challenges ahead. This also places more accountability on leaders to raise their game —organizational development is no longer a Fortune 500 luxury. The time is right for midsize companies to address their leadership needs as their growth plans (and a third of the U.S. economy) are at stake!

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