Importance of Human Resource Management in Leadership Development

Leadership Development in Successful Companies

Human resource management function is an essential and vital component of the organizational support functions for ensuring better economic performance. Among many components of people management, HRM function does play an important role in leadership development.

Researching HRM practices of successful companies have shown that those companies significantly performed better compared to their competitors in terms of profitability by following the leadership development practices. Successful companies mean those companies which are in the Fortune 100 list and managed to retain their position in the list over a decade. 

The Components of Leadership Development

Leadership development programs in fortune 100 companies follow the philosophy of preparing them in values, the expected contributions from the leaders are clearly defined, and the organizational culture is inspired by leaders. Coming to the performance management system it is linked with the company’s business strategy and which includes talent development activities and leadership objectives that are articulated clearly and concisely. To put it in a different perspective, promotions are based on individual performance as well as people development activities and these in turn are tied to the business strategy and objectives.

These companies develop a leadership pipeline, which showcases that leadership development is placed in their strategic workforce planning which is complete, and longer term oriented. They segregate their workforce into job families and the potential candidates are picked and groomed for higher roles and responsibilities. Most of those companies have a list of potential leaders known as high potentials who are ready for fast track career progression based on the skills and capabilities of organizational leaders. To add further, the recruitment and training of new employees is based on longer-term analysis of demand and supply patterns, which ensures newer generations of leaders are hired to replace those who have taken the company to higher levels.

HRM Function and Senior Management collaboration

The HRM functions work based on a collaborative model with their potential leaders in these companies, which means that the role of people development is not left alone to the HRM function or the leaders alone. Potential leaders are picked and then their performance is tied with enabling and empowering others to move up the chain. In other ways, efforts are kept by both HRM function and the senior management to identify leaders for the future.

Research into these successful companies has proven that the people management is best in class and the attributing factor that differentiates these companies from their competitors is the “HRM function” which plays a vital role throughout the employee lifecycle and not just during recruitment and training phase. Another factor is that the leaders are expected to adapt to the challenges of the 21st century work culture by matching skill sets. Lastly, these companies groom their own leaders of the future from the middle level management itself.

Concluding Thoughts

To sum up, leadership is a mix of inbuilt abilities and the organizational nurturing of the employees with those skills. Hence, this interaction between nature and nurture is what defines the success of the HRM function and the senior management efforts to develop leadership in such companies.

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