Forcing up-and-coming leaders to sink or swim in the pool of real experience is one way to develop future executive team members. It’s also a sure-fire method to drown some managers who have real potential. There are far better ways to develop managers than by foisting a big and unfamiliar organizational problem on them. One of those ways is investing in executive education taught by top-tier professors. That was the lesson that John De Santis learned early in his career, one that has given him crucial skills for leading a cloud software security firm (HyTrust Inc.) to double its revenue every year since 2013.
But let’s be honest: CEOs of many midsized companies admire smart young managers who are eager to learn the hard way. How couldn’t they be awed by the stereotypical whiz who is handed a seemingly impossible task and solves it through endless Google searches, late-night calls with old college friends, and other brute-force learning techniques. We admire people who are willing to struggle, even mightily, to solve problems with which they have no familiarity.
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But smarts and stamina are never substitutes for experience and structured education. As people rise in their careers, experience is crucial in making the right judgment calls. Without the benefit of experience, they often solve problems in a way that causes new problems. Sometimes they are too directive with their team when they need to take a coaching approach or they re-invent planning systems rather than taking one off the shelf that has worked for years in thousands of other companies.
That’s what De Santis discovered many years ago as a young manager at a rapidly growing company in the then nascent IT technology sector in the mid-80s.
Early in his career, he was a product manager at Data Switch Corporation, excelling at spurring action on new products and market opportunities by reaching across functional lines using his force of personality, understanding of the marketplace and ability to persuade. All great qualities in a leader. The problem was that he didn’t understand enough about business fundamentals and was persuading his peers to take actions that resulted in unanticipated nasty side effects. Actions like pricing inappropriately, running sales promotions without measuring outcomes or rapidly changing out supply chain partners, thus wasting inventory that had just been purchased.
Forcing up-and-coming leaders to wade through problems without professional development is especially costly in midsized companies. There aren’t legions of executives and specialists to review and approve decisions. Even the CEO may not have formal business or leadership training—particularly if they were an entrepreneur or a professional who rose through the ranks. And in our experience as advisors to the leaders of midsized companies, they rarely budget for professional development the way big companies do.
Because the costs of a sink-or-swim approach are hard to measure, many companies just tread water—at subpar growth rates and with subpar profits.
Others promote their best leaders too quickly, then dismiss them when they falter, believing they “Peter principled” them, then replace them from the outside. (The Peter Principle is a concept formulated by Laurence J. Peter in which a manager is promoted to the level of their incompetence.) While I’m a big proponent of hiring outside leaders with fresh ideas and deep experience into any management team, it is expensive and risky.
Other midsized companies narrow the responsibilities of the hardworking but inexperienced executive in hopes that they’ll be more capable of “keeping up,” or ask their boss to manage them more closely (perhaps micro-manage them). Both of these choices waste the potential of the aspiring leader and are likely to result in leadership turnover.
Just as we upgrade our facilities and our computer servers, we must invest in upgrading selected high potential leaders by handing down know-how and experience through educational experiences like leadership training programs, peer groups, formal education, mentoring and more.
Years before De Santis took the CEO seat, his boss chose not to try to control or limit De Santis’ high energy and initiative, but instead to educate him, and sent him to an intensive course on the management of high tech companies held at Stanford University. De Santis says, “I came back a new man—a business man—with redoubled energy plus a host of frameworks for making better decisions. I still use many of those frameworks today. I am forever grateful to Bob Gilbertson, the CEO of Data Switch, and Richard Greene, the Chairman, who invested in me and changed the course of my career. I stayed there for another eight years and my work paid back their investment many fold.”
Leaders should plan the professional development programs for their leadership team systematically, thoughtfully and proactively. Here are some considerations about who to select for such investments and how to invest in upgrading your leadership team:
1. Start small. Pick just a few candidates if your headcount is under 150. Don’t try to start with a big “program.” It’s good to reap some benefits before you ratchet up the investment.
2. Choose candidates carefully. Candidates need to be eager to learn, and are most likely already learning on their own. If it feels like you’re “pushing training” to employees who would rather be at home, stop. You’ve picked the wrong candidates. They should be grateful, and know that the investment in their leadership development is a benefit and an honor.
3. Identify (in writing) the specific shortfall stemming from each candidate’s lack of know-how. Being clear on what the candidates must learn is crucial. While I’m not against paying for general education, to get a faster return, focus on problem solving.
4. Define ROI. The investment in a high-potential leader should have a clear ROI in the short term. For example, you might reason: This will make the candidate a better manager/leader so she can “increase efficiency of her team” or “reduce management turnover” or “bridge between two corporate silos.”
5. Plan a budget and timeline for the development activity, including detailing the start date, end date, and formal review periods. Does this sound like project management? Indeed.
6. Make no promises of promotion or rewards for completion. If candidates are “subjecting themselves” to this program in order to “get a bigger title and pay check,” then the attitude is wrong. The right reasons: The program will make them more effective in the business world. They’ll advance in their careers—at your company (if you treat them fairly) or at someone else’s. That’s the reward.
Having been the beneficiary of some employer-paid education, De Santis fosters leadership development within HyTrust, the firm he leads today. Since 2013, HyTrust has doubled in size each year, and the engineering function has had to add processes and oversight at much higher levels. As the engineering team grew dramatically larger, one high-performing engineering leader began facing management challenges. Sensing both eagerness and aptitude for professional development on the part of this engineering leader, De Santis retained a very experienced technical executive as a year-long mentor. The engineering leader was delighted, thankful, and actively collaborates with the mentor, and De Santis has seen remarkable results. The engineering foundation for continued scaling has leapt forward. Obstacles are anticipated and avoided, no longer merely reacted to. The planning horizon has lengthened, allowing for more efficient project execution and a stronger talent pool.
Employers often worry about not reaping the benefits of their investment: “What if the employee quits after the we’ve spent time and energy developing them?” That’s always a risk. But savvy employers work hard to align a career path at their firm with the desires of their employees. If this is done well, there should be little reason for employees to jump to another company.
Midsized companies have smaller pocketbooks, and often hesitate when they see the price tag involved in professional development programs. But at the increased scale of a midsized company, the cost of bad leadership and poor management adds up very quickly. In a tight labor market, replacing leaders who can’t step up is even more expensive.
Nothing drives corporate growth like great leadership. Yet we often leave our up-and-coming leaders to sink or swim, denying them the mentoring, training, education and guidance that would allow them to glide through the waves of the business world with confidence. CEOs must invest in their greatest assets: their high performing leaders.
