In smaller and growing businesses every person contributes a larger percentage of the overall performance than is the case in larger companies. In small businesses it is more likely that employees and even the owners have more diverse responsibilities – specialization is a luxury that smaller businesses cannot afford. So it follows that the decisions for selecting quality people become more, not less, important in small business. Where do you find your future leaders?

From inside

It’s great when you can identify people in your current employee base with the potential to grow into the leaders of tomorrow. Employees feel motivated when they see that good performance can result in career (and income) growth. The situation of the peer who advances can create some interesting dynamics in the company during his or her transition into leadership. But the business owner generally knows what she is getting in this person – performance has been demonstrated. The owner already knows that the individual is in alignment with the company’s values. This does not mean that the employee can be moved upward successfully without training specific to his new role. Leadership skills are different from technical skills, so a superworker is not necessarily an automatic super-supervisor.

From outside

Sometimes what the business needs is some additional expertise, and that can’t always be found in-house. In other instances the business doesn’t have the reserve of leadership talent among its current staff. They are great in their current roles, but the employees’ career potential beyond that is in question. When you interview to bring someone in from the outside you need to ask questions that shed light onto how well they fit your business’s culture and values. This person can be perceived as a breath of fresh air, or as an unwelcome interloper. And you need to talk with them about the process of integrating into the company. For instance, it might be wise counsel for the outsider to wait a few weeks or months and observe before making wholesale changes in the company.

Performance vs. Potential

Performance is not always a predictor of potential, but when making hiring or promoting decisions performance should be a prerequisite. Potential is demonstrated later (or not), whereas performance is a track record that is already established. When you interview for a role your focus needs to be on the various requirements for the new role rather than on the prior accomplishments of the candidates. When this role is a leadership role, your interview questions need to get at the leadership or soft skills that can help the candidate be successful in his role, regardless of whether the candidate is coming from inside or outside the business.

If you think you have a high performing individual or individuals in your business that you think might have potential for larger roles, you can give them “stretch” projects to give them the opportunity to demonstrate their readiness for more responsibility. Senior leadership needs to be directly involved in mentoring the person through the projects and providing feedback so they can accurately assess the individual’s potential.

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