Is Your Company Prepared for the Leadership Drought?

By Ron Price

The business community will see a significant change in the leadership landscape over the next five years -- and it’s a shift that has already started. Each day, 10,000 baby boomers reach retirement age. These are the leaders who are currently leading major companies and holding senior leadership positions at almost every level, and they’re exiting the workforce at an alarming rate.

The problem is that there are not enough leaders poised and ready to replace them — not in sheer number or in ability.

U.S. Department of Labor statistics indicate that by 2020 the number of boomers in the workplace will be cut in half, from 40 percent to approximately 20 percent. In the meantime, Millennials will grow from 20 percent to over 40 percent of the workforce, while the generation in between (the Xers) is not sufficient in number to fill the leadership gaps about to appear.

In addition to a drought of potential leaders, we’re also facing a substantial gap in the quality of leadership. Throughout generations, people have commonly learned leadership attributes from agriculture, the military, and sports. However, Gen X and the Millennials were the first generations to see a drop in participation in these organizations. The result: We will see a substantial deficiency in the quality of leadership in the coming years.

The solution to preparing for the drought is leadership development, but traditional MBA programs can fall short in practical, real-world application. If you want to develop leaders that are tailored to your culture, you need to train them efficiently and effectively within your company. According to the Center for Creative Leadership, classroom learning only contributes 10 percent to effective leadership skills, with 20 percent coming from mentoring relationships and 70 percent attributed to on-the-job learning. Company-sponsored leadership training in a real-life setting — at all management levels — is the answer.

To evaluate your company’s preparedness, ask yourself these three questions:

1. What kind of leaders will we need in the future? In order for your company to survive the leadership drought, you must be able to identify company needs, today and down the road. You’ll need to pinpoint the traits, motivations and competencies that will increase your probability of continued growth and success.

2. How do we recognize future potential for leadership? A key component of success in leadership development is identifying and developing candidates from within. You need a company standard of identifying potential leaders and encouraging their potential early. Discover how to align your emerging leaders’ work assignments and talent with your leadership development to create a pathway that will keep top performers loyal and build success for your company as well.

3. How are we training our current leaders? Companies need a clear understanding of the gap between the abilities of emerging and current leaders, and who those leaders can become. Your organization should also be able to define the key results that reflect superior performance in each leadership position. Pinpointing exactly what results in superior performance will make it easier to hire or promote for success in the position.

Although the leadership drought is unavoidable, it can be beneficial if a company develops a proprietary leadership development solution ahead of its competitors. The organizations that recognize the significance of the leadership drought and build intentional, insightful strategies to grow their future leaders and better recognize high-performing candidates will stand the greatest chance of building championship performance.