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Leadership Development: What It Is and 7 Signs You Need to Invest in Leadership Team Development

Ever had an “oh crap” moment where you needed a leader to fill a role but had no one ready to jump in? Most of us have, and boy, is that rough. It’s a common problem because, let’s face it, business leaders are crazy busy. Often too busy to create a leadership development program. Too busy to learn how to develop leaders. Or even too busy to see the signs it’s time to build their leadership bench.

But no matter how inconvenient or uncomfortable it feels, leadership development is mission critical for your business’s growth. As leadership expert John Maxwell put it, “Everything rises and falls on leadership.” And the only way to scale your business is to invest in leadership team development.

So, how exactly do you know when leader development is a must for your business? In just a minute we’ll go through the signs you need to develop new leaders. But first, let’s look at what leadership development is and why it’s so important to your business.

What Is Leadership Development?

Leadership development is the process of helping team members build their character, discipline and skills to influence and guide others. Leaders are built, not born. So when you see leadership potential in your team members, it’s up to you to prepare them for bigger opportunities.

Ultimately, your rising leaders have to roll up their sleeves and practice the leadership skills you’re teaching them. But your job (and privilege) is to create a culture that continually challenges team members to raise their influence—and rewards them in the form of projects and people they get to lead.

Why Does Leadership Development Matter?

Leadership team development is a big deal! When you invest in rock-star leaders who serve with unity and integrity, your whole company benefits. The proof is in the numbers:

  • Team members with high leadership trust are four times as likely to be engaged at work.
  • Team members who believe their leaders communicate effectively to everyone in their organization are 73% less likely to burn out.
  • Team members whose leaders help them see why changes are being made for a better future are seven and a half times as likely to feel connected to their company culture.1

That’s not all. When you make leadership development a top priority:

  • You motivate top-performing team members to advance.
  • You give your customers a higher level of care.
  • You gain margin to innovate, tackle big challenges, and enjoy life beyond work.

On the flip side, here’s what happens when leader development is a low priority and new leaders aren’t established:

  • Business operations stink.
  • Teams are led poorly—if at all.
  • Turnover is high.
  • Customers aren’t served.
  • The well of new ideas runs dry.

The bottom line is this: If you want to create a thriving culture and accelerate business growth, develop leaders!

Signs It’s Time to Focus on the Process of Leadership Development

Even if you’re the “I Heart Leadership Development” poster child, the truth is, knowing that leadership development is important is different than knowing it’s time to move it to the top of your to-do list. Keep first things first as you build your business.

What do we mean? In our 20-plus years of experience coaching and training businesses, we’ve identified five stages every business goes through. And each stage comes with its own list of skills to build and challenges to solve before you’re ready to move on to the next stage. First is the Treadmill Operator stage, where you learn to hire and delegate. Next, in the Pathfinder stage, you clarify the roles in your business and align your team so they’re working in the same direction.

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Once your business is at the Trailblazer stage or beyond, leadership development becomes essential for your business to continue taking ground. If that’s you, awesome! If you’re not sure, start by checking out these unmistakable signs it’s time to build your leadership bench.

1. Your sales are growing.

If demand for your product or service is up—congratulations! That’s every business leader’s dream. But without a solid leadership structure, you won’t be able to keep up with demand. That could force you to cut corners or turn customers away. You don’t want that. Expand your leadership layers now to handle the fast-approaching need for greater inventory management, customer care, and other business operations. Then a positive brand reputation will grow along with your business.

2. Your business is capped.

Sometimes businesses can’t push beyond a certain level of revenue or number of customers despite amazing potential. That’s what happened to McDonald’s Barbecue Restaurant. The McDonald brothers knew how to build a few burger franchises. They were even geniuses at delivering a good product with speedy service at low prices. But their success was limited by their vision and capacity. Only when Ray Kroc took over with an aggressive growth plan and put leaders in place to work the plan did McDonald’s restaurants grow into a global brand.

Companies like Kodak, Blockbuster and Myspace weren’t so lucky. Those businesses tanked because they got comfortable being capped and thought they could coast on previous success. The moral of the story is this: If you’re not growing, you’re dying. So if you’re experiencing a cap, develop leaders to help you blow past it.

Related article: Vision Casting: 7 Reasons Why It Matters

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3. You have too many direct reports.

When you’re stretched thin, eventually you become a bottleneck—with a long trail of delayed feedback, approvals and decisions blocking progress (plus burnout coming for you). So even if you’ve got a rock-solid team and are keeping all the important balls in the air with your direct reports, know your limits and invest in key leaders who can take some responsibilities off your plate. That will help make your company more efficient—and free you up to work on your business instead of in it.

Related article: Employee Empowerment: Why It Matters and 12 Ways to Empower Your Team

4. You’re struggling with decision fatigue.

If you’re making most of the decisions for your business alone, you’re about to meet two major enemies: crash and burn. Making decisions alone is exhausting, and eventually it will paralyze your business. Proverbs 24:6 (NLT) warns, “Victory depends on having many advisers.” And according to Proverbs 15:22 (NIV), “Plans fail for lack of counsel, but with many advisers they succeed.” In other words, wise leaders surround themselves with other wise leaders. Develop people in your business who you trust to weigh in and even make decisions so everything doesn’t fall on you.

Related article: How to Improve Your Decision-Making Skills

5. You’re doing things you’re not good at (and it’s crushing you).

Leadership expert John Maxwell coined the term “leadership lid” to explain that an organization’s effectiveness can’t exceed the ability of its leader. He summed it up this way: “Your leadership ability—for better or for worse—always determines your effectiveness and the potential impact on your business."2

Apple cofounder Steve Jobs was a brilliant innovator and businessman. But he wasn’t at all interested in handling supply chain and operations issues. So in 1998 he hired Tim Cook to do both. Tim grew under Steve’s leadership, helped him pull Apple out of a business slump, and eventually took the helm as Apple’s CEO. For you, maybe accounting makes you crazy. Or maybe managing people drains you while creating marketing strategies is energizing. When you shift work to leaders who are better at those tasks—and actually enjoy them more than you do—you’re all happier and can get more stuff done.

Related articleHow to Delegate to Your Team

6. Your team members are stressed and strained.

A definite sign it’s time to focus on the process of leadership development is when your team members feel constantly strained and frustrated because of conflicting direction, disorganization, and long waits for answers and feedback. They need a clear strategy and engaged leadership to succeed and to feel valued and supported. When you build a trusted leadership team to share that load, your team will feel the difference.

7. Your team members want and need the opportunity to grow.

People want the opportunity to grow—especially talented team members who are so on fire for your business they’d charge hell with a water pistol with you to help it grow. Those are the future leaders you want to develop. If you don’t give them a growth path, you risk losing them to a company ready to challenge and reward their talent and drive.

Pro tip: Even if you don’t have all the details lined up to promote a rock-star team member, put them over a project, occasionally let them shadow you, and let them know you see their potential. Then, as soon as you can carve out a growth path, do it!

What’s Next: Blaze New Trails

Imagine your business with unstoppable momentum. That’s what you’re aiming for as you round the corner to the Trailblazer stage and deepen your leadership bench.

Not sure which stage of business you’re in? EntreLeadership offers a free Stages of Business Assessment to help you see where your business stands so you know what to focus on next.

Take the free assessment now.

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Ramsey Solutions

About the author

Ramsey

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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