Looking for great leadership? Invest in new leaders

In a year already defined by tightening budgets and mass layoffs across a number of industries, companies may feel wary about directing their limited resources and energy into leadership development initiatives. However, investing in new leaders can position companies to fortify company culture, improve employee retention, identify new opportunities for growth and build financial resilience.

Every employee fills a gap in an organization, and by investing in new leaders from within, companies are equipping their workforce to expand their scope of understanding and responsibility, enhance their skill sets and embrace their role in moving the organization forward. 

Training new leaders from within is the right move, especially in times of financial instability. Investing in new leaders is a crucial strategy to achieve long-term growth and financial stability. Developing the skills of new and potential leaders within an organization is simply an extension of the investment a company has already made in hiring its employees.

In its top trends for 2023, Harvard Business Review predicted that companies will turn “quiet-quitting” on its head by “quiet-hiring” their employees through upskilling and internal promotion. Furthermore, the cost of training and developing existing employees is less than hiring someone new and bringing them up to speed — on average, external hires cost 18 percent more than internal promotions. 

Investing in leadership development not only allows employees to grow alongside their companies, it also strengthens the core skills and relationships that determine the day-to-day dynamics of a company ecosystem. Great leadership and being a great team member are not mutually exclusive. In fact, when developing new leaders from within an organization, it’s vital that employees gain the skills to lead and collaborate effectively. The best kind of leadership development approaches this by training potential leaders to be self-aware, courageously authentic, results-driven, relationship-oriented and holistically attuned to the functionality of an organization. Building these five characteristics in a future leader enables them to move from a reactive to creative mindset in both their leadership and their team collaboration. 

A key benefit of investing in and promoting new leaders from within is that companies inherently strengthen the connectivity and elasticity of their teams. An internal hire has a built-in understanding of the organization’s history and lived experience, which means they can better understand the specific nuances of their organization’s challenges and opportunities. This background knowledge is crucial — even though someone from outside the organization can add a new perspective, it may take weeks or months to bring an external hire up to speed. Further, that fresh perspective may already exist within a company’s ranks. By training and eventually elevating potential leaders from within, a company can profit from new insight contextualized by a historical understanding of the organization. Internal hires have already formed relationships with co-workers, company leaders and clients, and they can leverage these existing relationships across the company to rapidly collaborate, kickstarting new projects and solving company challenges.

Investing in new leaders can also tremendously improve a company’s diversity, equity, inclusion and belonging efforts. The most effective companies know leaders can and should come from myriad backgrounds and experiences. Leadership diversity helps companies bring a multitude of perspectives into their top-level strategy and develop a holistic outlook when approaching new opportunities and challenges. For a company to successfully retain talent and create a psychologically safe workplace culture, its leadership must include perspectives that reflect the diversity of the workforce. By investing in new leaders from within, companies can identify and develop standout employees early in their careers, as well as mid-career employees with sorely needed skill sets and qualities that may have previously gone unnoticed. 

This is especially true of age diversity in leadership suites. Employees from older generations have wisdom gained from decades of experience in their fields that is indispensable in a boardroom, while millennials and Gen Z employees have a native understanding of the digital world that is invaluable as the world continues to shift online. Proactive and intentional leadership development initiatives allow companies to recognize employees all along this spectrum for the skills they have while encouraging them to acquire new ones. Training and elevating new leaders from diverse backgrounds ensures a company can fully represent the ever-evolving dynamics of the market, take advantage of nascent opportunities and rapidly adapt to change. 

Leadership development isn’t just about identifying future executives, as it’s impossible for every employee at an organization to have a C-suite role. However, investing in leadership development at all levels proves invaluable because it equips every team member with essential skills that help them perform at a higher level as individuals and collaborators. Investing in new leaders helps companies strengthen the bonds between their co-workers and increases an employee’s sense of ownership over their work. 

When companies invest in the growth and success of all of their employees, it demonstrates that their leaders genuinely care, which can help earn the trust and loyalty of employees, improve employee retention and bolster employee engagement. The stats back this up: According to LinkedIn, companies that hire internally retain their employees for 41 percent longer than companies that don’t.

From the most junior employee to the most senior, leadership development empowers employees to truly embody leadership in their roles, collaborate with a fresh burst of enthusiasm and view the opportunities and challenges of their own responsibilities with a new sense of ambition.