Companies have to operate and thrive under constant pressures from the competition, regulations and globalization. For public companies, there is also investor scrutiny of quarterly earnings releases and profit projections. Although employee surveys and performance audits are routinely conducted, these measures do not directly answer whether a company has enough leaders and the right leaders. Therefore, develop an internal process and use one or more tools to measure leadership.
Start the process right away. Do not wait to design the perfect measurement tool or collect all the data because -- according to Hewitt Associates management consultants Robert Grandossy and Robin Guarnieri in the publication “Can You Measure Leadership?” on Urgence Leadership’s website -- chief executives often cite the lack of qualified leadership talent as the most significant constraint on growth.
Track key leadership metrics because leadership training programs and annual evaluations might not be enough. Grandossy and Guarnieri cite several examples where metrics are used to measure leadership. For example, consulting firm McKinsey conducts a biweekly "team barometer" survey to assess project directors' leadership abilities; and heavy equipment manufacturer Caterpillar measures senior leaders on how well they deliver results and on their commitment to the company.
Focus on measuring a few key leadership characteristics. For example, if your company's core business is building construction, measure your leaders’ project management and financial budgeting skills.
Evaluate gaps in your talent pool. Assess when the potential talent -- existing managers -- might be ready to move on to higher leadership roles. Make changes in the human resource planning process to fill the gaps -- for example, implement training programs to prepare the next generation of leaders to take over for the retiring baby boomers.
Encourage employees to participate and provide honest and thoughtful feedback on the strengths and weaknesses of their leaders.
Measure leadership using the Leadership Practices Inventory (LPI) tool. Developed by Santa Clara University professors James Kouzes and Barry Posner, the LPI uses a series of statements and questions to measure leadership effectiveness. It also defines five key practices of exemplary leaders: challenging the process and searching for opportunities to change the status quo; inspiring a shared vision of an "ideal and unique image" of the organization's future; enabling others to act through mutual respect and trust; modeling the way by establishing principles on how to treat people; and by encouraging the heart -- celebrating accomplishments and making people feel like heroes.
Assess a leader’s ability to apply critical management skills to identify and solve key organizational problems. You can use the online tool developed by Northwestern University professor Brian Uzzi, based on the book "Developing Management Skills" by Brigham Young University professor David Whetten and University of Michigan professor Kim Cameron.
Use the Department of Justice leadership competency assessment tool. It ranks several leadership competencies, including communications and team-building skills, supervisory skills, technology management skills, and executive management skills -- vision, political savvy and strategic thinking.