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Cultivating Internal Leadership

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"The real thing leaders do is create environments that drive performance. Leaders engage and enable people," said Mary Fontaine of Hay Group, a global strategic consulting firm, in an article in Businessweek. There is no doubt that leadership within any organization is important, and to make a company exceptional it's not simply about having capable leaders at the helm of a group but effective ones. The problem that many companies run into is finding that leadership -- the kind that works with a given company culture but is forward-thinking enough to move the company in a positive direction.

Many HR managers and company executives agree that growing that type of talent from within a company is fruitful. Many companies put a lot of money and resources toward cultivating that talent in different ways. Whether that's through programs that fund education for employees, such as those at General Electric and United Technologies Corporation, or providing accelerator-type experiences to foster growth, such as at Proctor & Gamble, or creating an intricate employee experience like at Zappos, the focus is on providing the type of environment that will increase employee retention and be engaging enough to cultivate leadership.

The calculations make this type of investment worthwhile. Josh Bersin, a principal at Deloitte, outlines in an article the costs of high employee turnover, including the hard costs of finding replacements and training them, and the soft costs of cultural impact and overall reduced morale that results from high turnover. He further notes that employees are appreciating assets to any organization: "The longer we stay with an organization the more productive we get -- we learn the systems, we learn the products, and we learn how to work together," he writes. That results in more value added for the organization and a higher sense of being valued for the employee.

The concept of being appreciated and adding value through one's work is very important to employees. Beth Carvin, CEO of Nobscot Corporation, a human resources consulting firm that specializes in employee retention, noted in a phone interview that mobility within a company and a sense of being appreciated is very important, especially for younger employees. She added that most employees become frustrated when they don't have an understanding of a career path at their organization.

"It's interesting, " she said, "because some companies have a lot of opportunity but it hasn't been communicated to employees." She went on to add, "If employees don't feel valued, it might, in combination with other things, drive people out the door." That's why investment in employees is important. And it's not simply an investment at higher levels of the management chain, but at all levels to cultivate the energy and loyalty that excellent leadership requires. Gap, Inc.'s recent move to increase the minimum wage wasn't a moral decision but a strategic one: Gap's management saw this as one way of investing in employees that would result in higher morale and productivity.

However, identifying leaders from within and providing them with the tools and training needed to be successful is easier said than done. David Roth wrote about his experience in trying to cultivate internal leadership at his start-up. He talks about the importance of clear communication and understanding his employees' perspectives as crucial to moving the process forward. Of course, the environment within a startup is much different from an already established company, and Roth subsequently wrote about not only cultivating leaders internally but also finding the right people from the outside to join in.

Ultimately, it's about identifying those who understand what the company is about and where it wants to go, and who fit well within the organization. Once those people are part of the organization, the task then becomes one of investing in them so they can help make the company successful. Take a listen to the clip above on the importance of cultivating internal leadership, which includes Melissa Daimler, head of organizational effectiveness and learning at Twitter; Todd Carlisle, director of staffing at Google; and Rowan Trollope, senior vice president and general manager of the Collaboration Technology Group at Cisco Systems. They spoke at the Commonwealth Club about attracting and retaining top talent.

How do you think companies can invest in employees? Share your thoughts below.