A lack of leadership development may be costly for companies. A study of the 2,500 biggest public companies worldwide found that those who struggle to replace a departing CEO lose an average of $1.8 billion in shareholder value. Another study suggests that the longer the time to install a new CEO, the worse the performance relative to industry peers.

You don’t have to be a multinational giant or a publicly traded company to treat succession planning as a strategic priority. The performance, growth and sustenance of your firm is dependent on the capabilities of the leader(s) of the team. In an environment of collaborative leadership, you can nurture a team of growth-enablers across functions and lead your organization successfully into the future.

Five focus areas of leadership development

  1. Get recruitment right

Before you can prepare high-potential employees for leadership roles, you must first hire skilled and dynamic employees. A solid recruitment process outsourcing (RPO) strategy can go a long way in capturing top talent that will suit your company. This is half the battle won.

Manager and C-suite vacancies can be filled by external hires, particularly when the board deems a necessity for fresh perspectives. Here too, a recruitment firm’s assistance can be invaluable in hiring the right people into important positions.

  1. Challenge and support employees to keep them motivated

Identify potential future leaders and start giving them more autonomy over key decisions. Alternatively, you can delegate authority to direct peers and see who performs their job with the greatest sense of ownership and responsibility. Reward employee performance to keep motivation levels high and incentivize new leadership duties. Create a culture that encourages candid communication and risk-taking with an emphasis on learning from and never repeating mistakes.

  1. Develop a structured leadership education and development program

A leadership program focuses on developing the individual characteristics of future leaders in the organization. After assigning leadership responsibilities to high-potential employees, focus training on your organization’s strategic goals and envisioned results. Assess the total capabilities of employees and current leaders, and focus your education and development programs on any gaps/weaknesses.

According to this executive coach, leaders in the digital age need three key capabilities: handling cognitive complexity, collaborating across different teams and staying resilient in the face of constant change. Your leadership education program must include these new skill-sets to nurture a future-ready leader.

  1. Involve future leaders in top-level objectives

A lack of leadership prevents half of the formulated strategies from being implemented. Get high-potential employees involved in top-level objectives and deliver feedback continuously so that they improve, refine their leadership style and understand how to lead effectively through conflict and change. Your current leaders’ supervision and mentorship will be imperative in enabling this process.

  1. Ensure an effective job handover

When an employee is stepping into a leadership role, a proper handover from the individual who previously held that position is necessary. The departing leader should help the recruit gain a broader understanding of the organization and its people. He or she should also be willing to be contacted if there are additional questions.