With unemployment low, you need to enrich and empower your company's existing leaders so they'll stick around. Here's how. To read the full article, visit Entrepreneur.
Unemployment is at its lowest point since 1969, thanks to the job gains we’ve seen during the past eight years, as described in this article in the New York Times. Now, however, it’s up to companies to compete over the best talent. Employees can be more selective than ever, resulting in a race to provide the best perks. But instead of pushing more and more money into benefits, perhaps it's time that businesses consider a different strategy: investing in leaders.
Companies will invest in a $250,000 machine and set aside thousands of dollars each year to ensure it can be updated and serviced. But when it comes to management, we expect our executives to be fully equipped with anything they need. Unfortunately, that doesn't always happen.
Leadership training, on the other hand, has been shown to improve leaders’ confidence, abilities and emotional intelligence. Investing in your leadership team’s development will also help you reduce turnover, enrich your company culture and create a better foundation for your business. Plus, investing at the top will allow skills to cascade down the organization to other employees.
And if those benefits aren’t enough, a Gallup report found that the way leaders manage workers has a significant effect on employee engagement levels, which affect organizations’ bottom lines. Better to increase engagement and revenue through better leadership, right?
Whose development should you invest in, anyway?
I ran an international company with 250 employees, and, looking back, my biggest regret is that we didn’t invest more in our leaders. We eventually had to hire new ones outside the company because we outgrew our team and didn’t train those who were already working for us.
Hiring external leaders can cost a pretty penny, though. Between recruiter fees, compensation for a brand new employee and the potential to lose key people who haven't been promoted, hundreds of thousands of dollars can fly out the door. That's what happened at my company: At one point, we had to hire three people to replace one IT specialist because his knowledge of our company had been so vast -- and those three still didn't cover everything he could. It would have been a lot cheaper to invest $10,000 or $15,000 to train that IT specialist for a senior leadership position.
The lesson learned? You can’t afford to spend what we spent on three people just because you didn’t know whom to invest in and to promote internally.
So, whom, exactly, should you empower with more opportunities? Here are three strategies for figuring that out:
1. Advance people who are already volunteering.
It’s crucial to manage promotions correctly because companies whose stock returns exceed the market average typically see lower turnover and consistently outperform competitors when it comes to innovation, productivity and growth, according research from Great Place to Work executives published in the Harvard Business Review. But not everyone believes promotions are managed correctly, even at top companies.
To to manage your promotions successfully, start by choosing people who volunteer.
Rather than trying to identify interested employees yourself, give your company's leaders a chance to volunteer for new projects or promotions. You can't force participation or improvement on employees who aren't dedicated to it.
The lesson learned is that when an employee doesn't volunteer for more educational or professional opportunities, that should tell you how well suited he or she is for a management role.
2. Encourage employees to use some of their own funds.
Ask your employees to cover 20 to 25 percent of their education. Match every dollar they invest for this purpose with $3 to $4 more. In other words, let them know that you’ll happily give them a promotion and a higher salary if they’re personally willing to cover some of their educational opportunities.
People invest their own money into getting MBAs all the time because they know they’ll have more opportunities as a result. The Harvard Business Review recently reported that one-third of the most successful CEOs in the world have MBAs.
The lesson here is that the time and financial commitment for an MBA is much higher than the investment for continuous education when that education is being matched by company funds.
3. Invest in people who invest in themselves outside of work.
Seek employees who are already leading on their own or taking advantage of education opportunities when they aren’t in the office. To do this, set the expectation that you can't invest in everyone. Inform your team that you can provide opportunities for only the top 10 or 20 percent of team members who have differentiated themselves.
For example, Satya Nadella’s first few years at Microsoft were spent commuting from Redmond, Wash., to the University of Chicago’s Booth School of Business to finish his MBA. Nadella set himself apart from his co-workers by making it a point to learn as much as he could, which eventually led him to his current role as Microsoft CEO.
The lesson here is that not everyone can commute 2,000 miles to get an education, of course, but you should pay close attention to those employees who do go the extra mile to learn something beneficial for their jobs.
Still unsure about the benefits of investing in your leaders? Machinery company Barry-Wehmiller launched an internal leadership training program, Barry-Wehmiller University, to help find the leaders within its own company. The program wound up being so successful that the company launched the Barry-Wehmiller Leadership Institute for other companies to use.
While you might not have the resources to do the same, it’s important to find time to develop your own employees into the leaders you know they can be. If you don’t, you might miss out on higher productivity, a great company culture and -- most importantly -- some wonderful people.