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Bench Strength: How to Develop the Next Generation of Leaders

Steven E. Staugaitis, CPA, CVA
Steven E. Staugaitis, CPA, CVA Director, Audit & Accounting, Small Business Advisory Services Group Leader, Family-Owned Businesses Group Co-Leader

This article originally appeared in the April 2019 issue of Smart Business Philadelphia magazine.

It’s unfortunately very common that many businesses do not have any sort of leadership development program in place. Typically, that’s because most owners are too involved in the business to work on the business, so strategic initiatives like leadership development are an afterthought.

However, businesses that do have leadership development programs tend to also have formal governance and a more sophisticated management team. These factors often translate into companies with higher employee retention rates and better financial performance.

Smart Business spoke with Steven E. Staugaitis, director of Audit & Accounting at Kreischer Miller, about how to set up a leadership development program.

What are the most critical aspects of a leadership development program?

A central piece of it is identifying the right candidates, which requires flexibility. How leadership is aligned today — its skills and knowledge — may not be what the business environment demands in the future. Running a business is so dynamic that what a company thinks it needs today could be very different than what it actually needs five to 10 years from now.

Family businesses that are intentional about their family legacy tend to have good leadership development plans. They’ll identify family members who have certain qualifications and help support their growth through a variety of activities. For example, companies might rotate their leadership candidate through different roles and departments in the company, assist them to obtain advanced degrees or send them to specific training. Mentoring relationships with people inside or outside the company
is also a common practice.

How should companies choose candidates for leadership development?

It’s the tendency of companies to choose leadership candidates based on strong technical competencies. But when looking for a future leader, it is also critically important that they have the right leadership skills. As the leader of any organization, you are expected to motivate and encourage people, and hold them accountable for their performance. Leadership is more about managing people and driving a strategic vision rather than being a good technician.

What do companies tend to get wrong when it comes to leadership development?

The most common problem is that companies don’t do anything or wait too long to start. Leadership is not a switch that gets flipped just because someone’s title has changed. It takes years to develop internal candidates — a five-to-seven-year runway should be expected when grooming an internal candidate for a leadership position. And for those companies that don’t have internal candidates, it can take the better part of a year or more to hire an outside candidate for a key position.

In any transition, there is always risk in the process. When companies invest in people to make them better, they also need to empower these candidates along the
way and give them a chance to implement some of their ideas. If not, there’s a good chance that they will take their skills and go somewhere else.

What are the differences between developing leaders and hiring them from the outside?

Often an internal candidate is perceived as less threatening to the rest of the organization than bringing in an outsider since they are known within the organization and also by their clients and customers. Promoting someone from within sends the message that there are similar opportunities for other people in the company.

Interviewing outside candidates for leadership positions can be a little like dating. Candidates and companies are on their best behavior. It’s not until someone
is hired that their nuances and true personalities are revealed. Taking your time to thoroughly vet outside candidates for critical positions is a good idea.

Regardless of whether a leadership position is filled by an internal or external candidate, the process can’t begin early enough. It may seem overwhelming at times, but at least starting with something, even if it’s something small, is a far better alternative than do nothing at all. ●

Steven E. Staugaitis can be reached at Email or 215.441.4600.

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Contact the Author

Steven E. Staugaitis, CPA, CVA

Steven E. Staugaitis, CPA, CVA

Director, Audit & Accounting, Small Business Advisory Services Group Leader, Family-Owned Businesses Group Co-Leader

Family-Owned Businesses Specialist, Small Business Advisory Specialist, Business Valuation Specialist, Transition/Exit Planning Specialist

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