Role of HR in Building Business Leadership

Business organizations require leaders at every level to sustain their growth and win against competition. The constant, accelerating, unpredictable change in today’s competitive global environment demands more and better leadership. People at different organizational levels want to be inspired and get directions to face the uncertainty.

Without effective leadership at every level in private and public organizations, it is difficult to sustain profitability, productivity, quality and good services to the customers and society at large. A leader has to detach himself from day to day bottom line working and move above the organizational paradigm to have a macro view of the organization as a whole between the horizons. An organization with such leadership can achieve high degree of robustness and edge over competitors.

    Human resources play a pivotal role in building a strong channel of leadership within the organization. HR plays a critical role in ensuring business continuity and talent realization. In the changed global business landscape, HR has adopted a strategic role in managing employee or human capital cost. Innovating in business / HR processes, improving employee engagement, output and productivity, and building sustainable leadership are key objectives of the HR team in the current environment.

Identifying, generating and retaining Leadership Competency

    Leadership has traditionally been investigated at  the upper regions  of organizational  hierarchies. It has been investigated as a competency of management or senior management. “Leader” status has always been determined by an individual’s status as manager, CEO, or some senior organizational rank. The imprudence of using this limited categorization of leadership has been identified within the leadership literature. Consequently, it has been concluded by Hunt (1991), among others, that leadership is a process that occurs within organizations, and is not the characteristic of an organizational rank. Therefore, leadership is something that can be exhibited by anyone in an organization, irrespective of their rank or level. Individuals at various levels in the hierarchy may possess untapped leadership competencies. These competencies need to be duly identified and developed to build successful leaders for the future.

The competency model above is an example of how varied competency models can be designed to test individuals on possession of various leadership competencies. The pre-testing of leadership competencies involves use of various assessment tools for assessing potential leaders in an organization. For instance, since 2002, the U.S. Office of Personnel Management has had the OPM Leadership 360 for evaluating supervisors, managers and executives. This tool includes ratings for performance in 27 leadership competency areas. This type of tool provides a standard way to measure leaders across many agencies, and one of its strengths is a basis in research.

Empirical research has shown that transformational leadership can be taught and learned. Leadership that is able to transform the motivations, attitudes, and behaviors of followers to higher, less self-serving levels can be called transformational leadership.

Bass and Avolio (1994) have a two-stage Full Range Leadership Development course to generate transformational leadership competencies. This program involves:

  1. Pre-testing of leadership competence,
  2. A three-day activity-based intervention,
  3. A three-month implementation of a self-developmental program,
  4. A post-test of change in leadership competence, and
  5. Another activity-based three-day intervention.

The success of this program has been verified empirically by Avolio and Bass. It can be seen that the generation of leadership competency can be translated into a range of skills that can be acquired and retained. These HR functions offer the chance to breed a transformational leadership culture throughout the organization.


Role of HR in succession and talent planning

Not every leader is a born leader, leaders are nurtured. HR plays a very important role in building the leadership pipeline in any organization. Organizations usually have an option of either recruiting an employee for a senior position or promoting the internal talent. It is often considered that promoting internal talent is beneficial because the employee is already aware of the way the organization works, its culture and policies. If companies do not have a deep bench of internal leaders to move up, they have to look outside the company. Outside talent may not adapt quickly to the organization’s atmosphere and their sense of association with the existing organizational culture also takes time to develop. Similarly, employees readily accept an insider’s appointment in a leadership position owing to an existing comfort zone as opposed to an outsider’s appointment. Promoting internal talent by building a leadership pipeline wherein employees who are ready to take charge as emerging leaders, is an ideal solution. HR is essentially responsible for this succession planning in the organization. Managers and leaders have to identify potential successors, and they have to cooperate with HR in the leadership development programme. This pipeline is built by various effective processes like planned job assignments, formal development, coaching, mentoring, assessment and feedback. Many organizations send their employees for management development programmes which enable them to acquire required traits. According to a model given by Ram Charan, Stephen Drotter and James Noel, leaders progress through transition or passages in order to succeed. This can be successfully explained with the aid of the ‘Leadership Pipeline Model’

The Leadership Pipeline Model

The Leadership Pipeline Model is an effective tool in managing and developing internal leadership within the company. It comprises of the following transitional stages



In the first transition stage, i.e., managing self to Managing others, these leaders need to share information, given autonomy, be aware of people’s needs, and provide direction. Effective HR feedback can help the emerging leader to get a clear vision. A 360 degree feedback mechanism is very helpful in this case in providing a complete picture and helps the leader in understanding the view of all the stakeholders. While coaching new managers, constant monitoring by HR is required, to help them navigate their processes successfully. In the second transition stage, viz, Managing Others to Managing Managers, coaching and mentoring Level One managers and effective team building are of essence, so HR must ensure that stage two managers are aware of existing training resources and their efficient and effective utilization for training purposes. In the third transition stage, i.e., Managing Managers to Functional Managers, it is essential to align the company’s functional strategies with long term goals to achieve success. HR needs to ensure that functional managers develop strategic thinking. In the fourth stage, viz, Functional Manager to Business Manager, the role of HR is to enable effective communication between functional and business managers by organizing strategic meetings and trips. In the fifth and sixth stages, leaders already carry a skill set. However, it is of utmost importance to provide them with knowledge regarding various decision making techniques, to allow smooth decision making under tremendous pressure. Thus, at every transitional stage, HR plays a crucial role in building and sustaining internal leadership.


Internal as well as external methods of training enable an individual to take on new responsibilities and challenges. Internal training methods include on-the-job training, coaching, mentoring, conferences, brown bag lunches, i.e. informal learning sessions, etc. External training methods include formal training sessions. Executive Leadership Training Programmes are designed for leaders in the making. These include skill development exercises, to build and enhance requisite skills, and courses to energize leadership performance. These exercises involve participation in executive leadership training, development and coaching programmes, reading and studying business leadership books and stories about effective leaders and updating leadership skills with ad hoc, shorter-term, topical training courses.

Helping CEOs execute for business success:

The HR function is not limited to identifying and building business leadership. It also involves aiding business leaders in making key decisions, in order to achieve business success, which is the ultimate goal of any organization. According to research, up to 40% of the world’s top global CEOs have been removed from their posts because they were unable to make a connection between their companies’ goals and how their companies actually operate in the market place. Many of these were removed because of their failure to ‘execute’. CEOs spend an inordinate amount of resources on strategy and on the alignment of operations to strategy, but good ‘execution’ depends on the interrelationship between strategy, people and operations. However, CEOs encounter difficulties in attempting to align the processes that involve people, with strategy. There are various strategies that HR professionals can undertake to help CEOs execute business processes better. These include focusing on effectiveness strategies rather than numbers i.e. implementing HR strategies that improve business effectiveness, making CEOs aware of the inherent link between knowledge and human capital, enabling business alignment i.e. aligning people, their values and behavior towards business performance through dynamic performance management and feedback systems, challenging key business processes and decisions by organizing and maintaining knowledge forums and capturing intellectual capital, etc. Thus HR acts as a connecting link communicating the demands and expectations, and building suitable responses throughout the business hierarchy.

    Today business executives consider HR as ‘associate business partners’ because the HR make real, strategic, high-valued contributions to help business attain fast paced growth and market-leadership.


    As quoted by Brian Tracy, “The potential of the average person is like a huge ocean unsailed, a new continent unexplored, a world of possibilities waiting to be released and channeled toward some great good.” Every business function works towards a unified goal of achieving business success, but follows a different path. HR as a business function plays a role of paramount importance in harnessing the dormant potential of the workforce, and cultivating and developing human potential to achieve business success. By identifying and empowering leaders at every level, HR ensures overall business leadership development in an organization. Good leadership requires good followership. Barbara Kellerman has rightly said that, “Followers are more important to leaders, than leaders are to followers”. For businesses to function smoothly, understanding the importance of Human Capital is a must. HR is the fuel that propels both leaders and followers in the same direction, motivating them and creating a sense of understanding among them, to work in a unified manner towards achieving business success.

This article has been written by Neha Dabur and Mona Aiyar, studying in Welingkar Institute of Management, Mumbai