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The Changing Dynamics of Leadership Development

The following article originally appeared in the November newsletter to clients of FMI Corporation.  Reprinted with permission.

In this article, we revisit a familiar theme: leadership development. We recycle this basic topic for two reasons. First, there is more urgency; according to a recent FMI survey, 35% of CEOs and senior leaders in construction companies will retire in the next five years. Second, many of the next-generation leaders will be younger than usual. Many will be millennials, because the Generation X cohort is so small. Consequently, the traditional leadership development methods of education and job experience, primarily time-based, are being accelerated, supplemented and radically changed. This topic is now a senior leadership team priority in all the leading construction companies.

Our FMI colleague, Jake Appleman, has written widely and well on the topic of continuity mindset which generates conversations about the company’s “envisioned future,” its strategy, and the clarity about “strategic positions,” — those that will have the highest impact on the successful execution of that strategy. Some of these types of positions may not exist today, or if they do, they may require additional or different skill sets in the future. So, clarity about how the company will look and behave when these next-generation leaders take the reins is the real starting point for creating tailored leadership development programs.

Another key concept in structuring more tailored development plans for future leaders is “role competencies,” a bit more specific than “skill sets.” These competencies, executed well, produce the high-impact deliverables required from this strategic position. Many times, current incumbents of these senior positions grew into their roles as the company grew. Therefore, articulating the requisite competencies both for today and especially for tomorrow will take several focused discussions among the senior team members. This is not an easy task, by any means; few successful people can tell you what makes them so successful. But listing these competencies is an essential step in crafting an effective development program.

Once the company’s envisioned future, strategic positions and role competencies are clear, the high-potential employees can be assessed and evaluated for possible fit. Lots of assessment tools are available to support this critical exercise; they reduce time and increase effectiveness. And if every potential future leader is evaluated by the same criteria, a realistic leadership pipeline can be established, and custom-tailored development plans can be created.

Certainly, traditional development methods remain vitally important. Experience in a series of leadership roles, where the person’s actions and judgment can be observed and analyzed, is still the primary method. Does he or she exhibit the researched qualities of effective leaders as articulated by Jim Collins in Good to Great: personal humility and professional will? Does the individual stay anchored and is he or she persistent in getting results? Selective educational programs still work too, particularly those designed to give the person real, honest self-knowledge through assessment, feedback, and experiential learning. Having leaders who know their own strengths and weaknesses and who live the company’s value-based culture is a threshold structural element for continuity and prosperity.

Two supplemental methods are increasingly employed, especially to accelerate the “seasoning” of the millennials. The first is to give them real-world exposures, where they shadow a senior executive in settings they will face in the future, perhaps with clients, with industry peers, with political leaders. They sit silently and debrief later. The second is to assign them a mentor, often not in their chain of command; the role of the mentor is more of career guide than a coach for a specific set of activities. The mentor is a sounding board, counselor and cheerleader. Companies employing this method thoughtfully give enthusiastic endorsements.

The clock is running on baby boomers exiting. At the same time, the industry is being changed by technology, more rapidly each year. Consequently, leadership development mandates real focused executive time and deep thinking. Facilitated meetings are often the most productive and objective. The continuity mindset and the integration of strategy with tailored leadership development are the hallmarks of leading construction companies in these days of Volatility, Uncertainty, Confusion and Ambiguity, known these days as VUCA.