Many organizations grapple with the question: “Should we build or buy our leadership talent?”

When an organization’s strategy is to build a robust leadership pipeline, it is not always a straightforward endeavor. Let’s take a look at some key considerations for laying the groundwork for a successful internal leader development program, and how to assess the impact of your leader development efforts.

The Needs Assessment

We must begin by addressing some critical questions, regardless of whether you build or buy. Here are a few to get started:

• • What is the gap between the skills and number of leaders and managers we have today and what we will need for business sustainability?
  • Why now (i.e., is there turnover that requires us to have new leaders in the queue)? Do we anticipate significant changes in our business (e.g., new markets and domestic/global market expansion)? Will we engage in mergers/acquisitions, etc.?
  • What is the timing? Do we need more leaders to be ready now or for anticipated business needs?
  • Are there abilities and knowledge unique to our organization that are difficult to find in the market?
  • Can we hire for strong leadership skills, then train for the specific technical (industry and products) knowledge?

Your needs assessment will inform your leadership program objectives, content and ultimately the measures, and these will apply whether you develop talent internally, with the help of a vendor, if you pursue external leadership hires or employ a combination of all of these.

Determine the Objectives of Your Program

Your objectives should emerge from your assessment. These become the basis for your impact indicators later in the program. For example, if increasing retention is an objective, then capture your baseline and track changes to retention over a specific timeframe. Another objective might be to reduce recruitment costs, which can easily be measured with baseline costs and savings by hiring and developing within. Although developing leadership talent can be expensive, other gains (such as retention and recruitment savings) could offset costs. Employee turnover can also result from bad hires as leaders have a profound impact on culture.

Develop Your Leaders

You can decide to create your leadership development internally (if you have the resources) or in partnership with an experienced reputable vendor. Even if you opt to hire leaders and not build, consider providing an onboarding development plan for new-hire leaders. It will save time and frustration for newcomers to learn company-requisite culture, processes, policies and other nuances — especially in large or complex organizations.

Select Participants

Determine who and how you will select your program participants. Will you have an application process? Will high-potential candidates be the primary audience? Generally, programs requiring copious resources should not be used as a fix for performance issues. Also, your budget might dictate the limitations to the number of participants.

From your assessment, determine what level managers or leaders will be invited to participate. Will you have mixed levels or homogenous peer groups? Will your strategy be open enrollment or a one- or two-year cohort? Ensure diverse participation: Heterogenous groups will afford rich learning by members of differing functional areas, backgrounds, experiences and geographies.

Individual Contributor to Early Career Manager

If you decide to source candidates from an internal pool, they can emerge from different levels in an organization (e.g., individual contributors, supervisors, managers and leaders). Here are five factors to consider when planning your leaders’ development:

• • Core management skills for new managers are still relevant, particularly for individual contributors transitioning to a people management role. They must learn to accomplish work through others. This transition can be a challenge for technically inclined employees who get promoted to manager as they might think, “It’s easier to do it myself,” in situations where delegating would be more appropriate.
  • If an individual is elevated to serve as manager over their former peers, the transition can be challenging, depending on how the newly appointed manager handles their relationships.
  • Individual contributors do not learn how to become managers simply by having the title. Careful consideration must be given as to why an individual is being selected for a manager role. Merely having strong technical expertise is not enough. An assessment of interactive skills (e.g., “power skills” or “soft skills”) and a development plan is key.
  • Provide resources to set up new managers for success, including adequate resources, such as development, budget, decision-making authority, mentoring, etc.
  • Managers should learn leadership skills as they develop into more experienced managers. This is taking the long view of preparing managers for future leadership positions in your organization.

Some organizations recruit external college graduates and develop them internally, like in leadership development programs (LDPs or GLDPs for the graduate level). These programs typically require high grade point averages, strong recommendations, solid applications and rigorous interviewing among other criteria in the selection process.

LDPs can be structured by tapping internal resources for various learning components, such as subject matter experts (SMEs) or functional leaders or external experts. At a minimum, LDPs still require dedicated resources like a program manager, budget, senior sponsorship and university relationships.

As a note of caution, SMEs are often promoted into manager roles without adequate preparation. Subject matter expertise does not equate to leadership skills. Many technically inclined managers fail as managers or leaders. A long view is important, as managers need both managerial and leadership skills for current and future roles.

Mid-Career Manager to Leader

Presumably, experienced managers within your company will have knowledge and expertise of your specific products and services. This can serve only as a foundation for future leaders and can be a potential strength over external candidates. However, this is not enough. Despite debate about the differences in definition between manager and leader, the need for strong soft skills is without question.

Furthermore, for executive-level leaders, we find that traditional programs are no longer adequate preparation for today’s and tomorrow’s challenges. As Mihnea Moldoveanu and Das Narayandas write in Harvard Business Review, “companies are seeking the communicative, interpretive, affective, and perceptual skills needed to lead coherent, proactive collaboration. But most executive education programs — designed as extensions of or substitutes for MBA programs ֫— focus on discipline-based skill sets.”

It falls to learning and development, then, to bridge the gap between what these traditional programs convey, and the broader interpersonal skills tomorrow’s leaders will need to be successful.

For mid-managers, a variety of competencies have emerged as critical for success in the ever-changing business climate.

Here are some core leadership necessities:

• • Visioning and strategic thinking.
  • Adaptive leadership and change.
  • Optimizing hybrid work.
  • Leading with empathy.
  • Engaging others.
  • Emotional intelligence.
  • Leading across boundaries.
  • Leading inclusive, employee-centered cultures.

Determine Your Program Impact

Having identified clear objectives enables you to determine the success of your program. If you have met your objectives, your program has had an impact on what is important to your organization.

Professional development should not be approached as a “quick fix” of generic workshops with the hope that new leaders will transition easily and have learned what they need to lead. In the Leadership Transition Report published in 2021 by DDI, 55% of leaders having a difficult transition said they got leadership training, and only 14% said the training they received was high quality. By comparison, 30% of leaders with smooth transitions considered their development high quality.

There are many points of impact that affect a leadership transition. A blended cohort learning experience including individual leader assessment, new content, feedback, coaching and applied learning for new and experienced leaders will afford rich diverse learning experiences.

Let’s revisit how to identify your program’s determinants of success when you write your program objectives. A structured program results or impact map is a good way to capture these measures. Here are questions to help you:

• What are the most critical outcomes to measure? Attempting to measure too many factors might create unnecessary extra work.
• Who cares? Identify your key stakeholders and what they deem most critical for leadership development and performance. Be wary of pressure to over-collect data and overanalyze.
• What can be measured? 360-degree feedback and focus groups can reveal behavioral changes. Action plans developed and implemented in the field throughout the program can serve as real-time measures of how participants employ what they learn. Whereas end-of-program surveys will measure participant opinions of the program but not necessarily behavior change. Post-program data can be invaluable in identifying opportunities for continuous program improvement.

Consider launching a full-length pilot program. A pilot can be invaluable for testing your design, development and impact before launching an ongoing initiative. Consider in advance how to scale the program and any changes required based on feedback. Gather pre- and post-program feedback. Feedback should be collected throughout the program, not just at the end. Collecting feedback during the program enables participants to yield information while their experiences are still fresh.

Wherever There are People, Competent Leaders Will be Needed

As the workplace changes and new technologies are introduced, there will always be a need for competent leaders.

Whether you decide to develop leadership talent, “buy” by hiring from outside the organization or employ a blend of both strategies, there is no single right answer except the one which is right for your organization, your circumstances and your objectives.