New Australian research will help with the task of retaining and developing employees and cultivating future leaders.

Many organisations face the challenge of determining which employees have the smarts and attitudes to make it as future leaders. Ageing workforces and widening talent gaps make the task more pressing.

There’s a tendency for HR departments to focus their efforts on recruitment and selection strategies rather than the development and retention of talent, according to a paper by Ashlea C. Troth and Christopher Gyetvey, published in the July 2014 edition of AHRI’s Asia Pacific Journal of Human Resources.

But there is increasing recognition that identifying leadership potential is vital for long-term organisational survival, writes Troth and Gyetvey.

Recognising that greater familiarity with the “complex expectations” involved in identifying leadership potential could help and guide manager conversations with staff about their future development, Troth and Gyetvey decided to investigate further.

In 2010, the authors surveyed 166 employees and 149 managers in an Australian government department with a geographically dispersed workforce of more than 20,000. Areas of work included finance, law, accounting, economics, program administration, management and corporate support. Forty-five per cent of the department was aged 45 years or over, with less than 15 per cent under 29 years, and the key leadership roles were heavily biased towards older workers.

In response to a potential shortfall in critical skill sets, the department’s corporate plan includes an aim to “build bench strength in critical capabilities for the future: deliver effective succession and career management and transition strategies”. That’s where this research fitted in, to help reveal employee capabilities that may indicate leadership potential.

The study is relevant to organisations experiencing an ageing workforce with older workers occupying key leadership positions – a common scenario in the Australian public sector.

Two primary actions to help achieve effective succession planning emerged from the data: establishing talent pools; and developing employees with broad, general competencies that fit a range of jobs rather than specialised roles.

Research takeaways

Why frank discussions between managers and staff are important…

The results (detected only by comparing perspectives in the survey) showed disagreement between managers and employees on leadership potential. Manager views about problem-solving ability, engagement and aspiration predicted their ratings of employee future leadership potential. But employee self-ratings, apart from aspiration, did not. That means it’s important for frank conversations between managers and their staff when discussing leadership potential and career goals. Otherwise there’s a risk employees will not accept the process and the resulting career development options.

Educating employees about the organisation’s view of leadership potential triggers constructive discussion and helps to shift employee perceptions and behaviours to align better with organisational expectations.

How managers can most effectively identify leadership potential…

Managers consider employee problem-solving, engagement, career aspiration and performance when making judgments about employees’ leadership potential. This suggests it would be worthwhile, via formal and informal conversations, to openly communicate to staff the skills, abilities, attitudes and behaviours managers consider important for future leadership development.

How employees can promote their leadership viability…

In addition to performing well in the job, employees need to convey their level of engagement and aspiration to management to be considered for leadership roles. This has important HR implications for employees not working in direct line of sight to their manager.

It also has implications for employees from minority backgrounds who may find it challenging to communicate their career aspirations upwards. The importance of educating managers about these barriers, and the perceptual bias they may use when determining an employee’s potential, is emphasised by the results.

Knowledge-sharing techniques that may help close talent gaps…

It’s worthwhile to leverage the experience of end-of-career leaders by pairing them with early-career employees who have leadership potential. In that way, younger staff can develop their competencies further. Also, in order to be seen as a leadership contender, it’s useful for aspiring leaders to develop multiple networks, cultivate peer-learning relationships and continually polish their ability to learn quickly on the job.

Why key jobs should be considered when developing a leadership potential strategy…

While this paper explores leadership potential from the employee perspective, it notes that it is also worth identifying key positions that may affect an organisation’s competitive advantage. In other words, as well as identifying a pool of employees with leadership potential, a good leadership potential strategy should involve systematic identification of key jobs that contribute to the organisation’s strategic outcomes.

This article is an edited version. The full article was first published in the November 2014 issue of HRMonthly magazine as ‘Taking the lead’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here.