Home grown leadership

One of the many findings in Jason Jennings' book Think Big, Act Small: How America's Best Performing Companies Keep the Start-up Spirit Alive was that "The companies that do the best job of consistently growing revenues grow their own leaders.  Period!"  They do not hire their top people from outside the company but hire the people from within who have already proven themselves capable and who have bought into the company culture.  Such home-grown talent often results in long-term growth for the company.  Although such growth may be slow it is steady and certainly preferable to the hiring of someone outside the company who comes in with a magical formula that will produce quick results for a quarter or two but in the meantime destroys the culture of the business.  One of the things this means for owners and managers of small businesses is they must constantly be producing quality leaders within their organizations if they want their business to grow.

Jennings studied companies that had double-digit growth in revenues and profits between 1995 and 2005.  What was fascinating to me in reading the book was how each of these companies were doing pretty much the same things such as developing leaders within their organizations.  When someone in the corner office was ready to retire they already had people in the pipeline to replace them.  When the company was ready to expand and open new stores they had people ready to manage them.  There was little concern about whether or not this person would fit in with the company's culture because they had already been operating within that culture for a number of years.  There was also little doubt they could handle the position they were being offered because they had been groomed for that position and had already proven they were ready for it.

The book shares a number of ways a business can identify and develop future leaders, but we'll only address two of them in this post.  Once an individual has been identified as a potential future leader it is essential that this person is constantly evaluated and coached.  He or she must be given broad responsibilities and cross-trained in various aspects of the business followed by regular evaluations and coaching.  An annual performance review isn't enough.  It's also not enough to just evaluate performance.  Attitudes and behaviors must also be looked at.  A business committed to integrity will be just as focused on the values of the potential leader as it will on his or her results.

A second thing businesses must do if they want to successfully grow talent is to make people want to stay.  Many businesses talk about how they value their team members but actually treat them as commodities and not people.  It's very hard to raise talent from within a business if it has high employee turn-over.  If a business wants people to stay they must show by their actions how they value those individuals.  The business must help their team members become excited about the growth and long-term prospects of the company and be shown how they can benefit from that growth.  Jennings illustrates in his book how several of the companies he studied does that, and the actions these companies took are doable for most small businesses.

Few things a leader does is more important than identifying and developing future leaders for the business.  It takes a commitment of time and resources, but when it's done right it will pay huge benefits in the future.