The Institute of Personnel and Development's Angela Baron on how to spot and nurture stars of the future.
The hunt for good leadership skills is something like the quest for the Holy Grail for many organisations. Even organisational psychologists cannot identify the personality type that makes a good leader. The best they can do is point to the combination of charisma, management skills and entrepreneurial style that many of our most notable business leaders seem to have.

To complicate matters, enormous changes in organisational life mean that leaders need a whole new set of skills, and that the traditional routes into leadership positions have been disrupted by reorganisation and rationalisation. When they were busy downsizing in the early 1990s, too many organisations forgot that they were also shrinking their pool of potential leaders for the 21st century.

So, how can organisations identify their future leaders?

The initial challenge is finding leaders in the first place, and here firms are faced with a dilemma. Should they plan to attract people they can shape over the years, or should they seek to attract leaders on the open market when they are needed?

Leaders developed in-house are likely to be imbued with the spirit and values of the company and have a great deal of inside knowledge. On the other hand, they may have been shaped in the style of past leaders – an approach that may not do for the future. A successful internal promotion system also depends on recruiters who can spot potential – a rare skill – and a development programme that nurtures that potential.

Is recruiting on the open market a better idea?

It certainly is a good idea, because it allows firms to recruit people with a proven track record. But suitable leaders may have advantageous positions with substantial salaries and benefits, and recruitment is likely to be expensive and time-consuming.

When they were busy downsizing, too many firms forgot that they were also shrinking their pool of potential leaders

On the other hand, new staff will contribute new ideas and ways of doing things that may be necessary to force change. They may also find it easier to make tough decisions because they have less history with the organisation.

What skills does a firm need to develop in its leader?

The increasing emphasis on the contribution of people to the success of a business means that people skills are becoming more important. Leaders who can inspire and motivate people are now much more valuable than those who rely on outdated, fear-inspired tactics.

Does that mean so-called “feminine” traits such as empathy and listening skills are becoming more important?

It would appear so. Shere Hite’s new book Sex and Business confirms that women are getting more recognition for their performance and commitment to the organisation. They are admired for their command of skills such as communication and networking, their innovative thinking and their indifference to status and office politics. What we are seeing now is a shift in organisational life that makes the feminine style much more valuable in a variety of situations.

How can an organisation hold on to its leaders long enough for them to contribute to business success?