Leadership pipeline, to say the least, maybe the most defining factor for the longevity of success for an organisation. Every organisation is en route a journey of evolution in the context of offerings, value to customers, customer base, price points, competition, positioning, vision, top line and bottom line, market share etc. It’s a dynamic interplay of multiple factors. The degree of dynamism may vary from organisation to organisation, depending on the nature of business and the internal thrust by the shareholders.
The output of the external and internal factors is a resultant strategic direction that an organisation must take. And it is this strategic direction that must outline its leadership talent need for the organisation.
It’s the business strategy–talent alignment that has emerged as a game changer. India Inc has witnessed some shifts, which have either gone very right or gone very wrong.
Within the strategy–talent spectrum lie two options – either to build the talent internally or buy from the market. Before the organisation decides to build or buy, there is a pre-requisite that they need to factor in.
Power Maturity quotient
The power maturity quotient is a measure of how justly and fairly is power shared between the leadership stakeholders (otwners/promoters and the top leadership team). Maturity would refer to the maturity of the system to ensure equitable power distribution. If the organisation has a lopsided PMQ© - the system is not mature enough to fairly distribute power, it often results in a divide between the owners/promoters and the leadership of the organisation. This can be experienced in any of the following - a family run business, a complex maze of shared ownership in a PSU or a well-established legacy corporate organisation. This could mean:
a) You have extremely talented professionals who have no choice but to praise the Owners’ (Emperors’) new clothes every day, Or
b) A set of talented professionals who have earned credibility and visibility enough to make the owners/promoters insecure and thus are targeted until they leave.
Both ways, what it reflects is the immaturity of an organisation to share power and ensures the breakdown of the leadership pipeline. Even more dangerous is the selection of an unfit pipeline, due to the skewed PMQ. When the PMQ of an organisation is lopsided, the question is not to Build or Buy but the action step is to first fix the PMQ.
Once the PMQ of an organisation is balanced, there are two critical filters an organisation must sieve their Talent strategy through:-
The degree of the strategic shift would determine the capability gap to be bridged. Let’s think of a traditional business model like that of a hotel chain compelled to compete in a landscape disrupted by technology. The critical capability in a scenario like this would be an ability to leverage on technology. It could be lying dormant within the organisation, which means a Build case or could be a first-time-required capability that needs to be sourced from outside – a buy case.
The capability differential could be defined as ‘how ready is the current set or potential set of leadership to maneuver the change. It would be prudent on the part of the organisation to carefully outline the elements of change, identify the leadership competencies and then search for a suitable match. A build case has multiple benefits for the organisation – rewarding loyalty, leveraging on dormant capability, enhanced motivation, optimizing resources, etc. A buy case could serve as a strong communication internally and should be a carefully weighed choice.
The next filter that springs up is time elasticity. If time is on the right side, the organisation can create a framework and mechanism that builds a leadership pipeline that is ready to assume responsibilities at the right time or the only choice is to buy. However, what comes into risk zone, as a result of the buy decision, is the motivation and loyalty of the tenured employees and the credibility and vision of the Leaders, as they can be perceived as leaders unable to see the change coming and were caught off-guard.
Whatever the outcome, build or buy, finally what matters is the leader’s cadence of accountability. How ready are the people in power to consciously and willingly create a succession pipeline and pass on authority, purely on the basis of merit and not to personal and professional clones. This question takes us back to the power maturity quotient of an organisation which assumes the role of the most critical factor when it comes to creating the leadership pipeline – by building or buying.
(The writer is Business Head, Lee Hecht Harrison)
Updated Date: Feb 21, 2018 15:06 PM