Nobody has ever claimed that leadership development is easy. But the extent to which UK companies are failing to discover and develop leadership potential among their staff is quite staggering.

According to a survey carried out last year by Saïd Business School at the University of Oxford, British businesses waste up to £75 million a year on leadership programmes that fail to meet company objectives. About 65 per cent of HR directors are unsatisfied with the way they develop their senior executives. More recently the HayGroup has estimated that only one business leader in five has confidence in their talent management process. And, in profiling more than 10,000 business leaders, Kaisen Consulting, a business psychology company, has found that many lack some of the most basic leadership skills.

So, why are we so bad at finding and developing leaders? “I wouldn’t want to tar everybody with the same brush,” says Chris Watkin, HayGroup’s talent management specialist. “Some organisations do develop leadership very well. But there are a number of areas where it’s very easy to come unstuck.”

The most common mistake is for a company to focus simply on performance. Most organisations, for obvious reasons, are keen to reward good performance and will use a system of targets and appraisals to do this. Employees who do well receive bonuses, pay rises and, eventually, promotion. They keep getting promoted until they stop doing well. But promoting everybody to their level of incompetence is hardly good for the organisation, and being good at your job doesn’t necessarily mean that you will make a good leader.

“While a record of achievement in a variety of roles would be a good marker of leadership potential, just because someone is a high performer today doesn’t mean they will be a good leader tomorrow,” Watkin says. “Identifying potential leaders is a much more complex process.”

Companies that succeed in developing leaders tend to look beyond performance and examine factors such as the candidate’s leadership style, ambitions, adaptability and ability to learn from experience. There are also career derailers that can mark out a high-flyer as a potentially bad choice for a senior management role.

“For instance, does their star outshine all those around them?” Watkin says. “That can be a big problem if they are unable to rein it in. If other people in the team feel that their contribution is being ignored it can be very demotivating and lead to a high attrition rate.”

Another trap that many organisations fall into is leadership cloning, where senior executives appoint new leaders in their own image.

“We very often find that people will identify leadership potential in people who are like themselves,” says Robert Myatt, a director at Kaisen Consulting. “It’s a case of ‘he (and it usually is a he) reminds me of how I was ten years ago’.” He says that even when organisations do successfully identify future leaders, they often go about developing them in the wrong way.

When Kaisen conducted a survey of 27 blue-chip companies they found that leadership development programmes focused far too much on the theory of leadership rather than the practice.

“There’s a lot of education, with flip charts and theoretical models, but very little on how to put those skills into practice. It’s like trying to learn to ski by watching videos instead of getting on to the slopes and practising with a proper instructor.”

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