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How to build leadership capacity at your company

Why does building leadership capacity matter? Because the war for talent is raging, and your ability to develop your employees can help you attract and retain top talent. (According to the 2020 State of Talent Optimization Report, 47% of high-performing employees left their company last year.)

Employee retention depends heavily on employee engagement. While engagement as a whole is a large subject, there’s little debate that mastery helps drive engagement. Feeling like you’re getting better at something—it feels good, right? It makes you want to continue pushing forward, even when it’s difficult.

Contrary to popular belief, leadership is a skill. It’s something you can learn. And, in the process of learning it, you start to feel fulfillment: ‘I’m better today than I was yesterday.’

How to build leadership capacity across an organization The Predictive Index

This building of leadership skills should be a more valuable, outsized focus—for both businesses and employees—because business rewards leadership more than other skills. While they’re harder to develop and more intangible to define, building them up has disproportionate rewards for employees. Businesses need leadership in spades in today’s environment.

Since the modern economy demands leadership at all levels for companies to remain competitive, it’s no surprise that increasing employees’ mastery of leadership will create a more engaged workforce.

The core competencies of leadership

When I think about leadership, I think about four core competencies. While leadership competencies will vary depending on the organization, these are generic building blocks leaders should be working with.

1. Leaders are self-aware.

Our People Management Study showed that a common characteristic among good managers is self-awareness. When I think about self-awareness, it comes down to locus of control. Is somebody not just self-aware but do they take ownership of their awareness?

2. Leaders show a true appreciation for others.

Good leaders genuinely care about the people around them. This is different than creating followership. This care is more about genuine interactions and caring about the relationships, not just what the relationships will ultimately enable them to do.

3. Leaders inspire followership.

Followership asks the question: Is this person capable of getting people to put resources and energy toward whatever goal that leader has appointed?

4. Leaders are highly competent.

Complementary to the skill of inspiring followership is competency at what they’re asking people to do. Have they mastered something, are they capable of mastering something, or are they in the process of mastering something that would allow them to effectively lead others?

Those last two attributes really depend on each other, because a leader who inspires followership but lacks competency isn’t leading people anywhere good. A leader who’s competent but doesn’t inspire followership isn’t actually leading anyone.

leadership capacity quote

How to build leadership capacity at different levels

Leadership competencies don’t necessarily change at each level, although the expectation differs.

For example, an independent contributor might start developing self-awareness around what’s in their locus of control—themselves. This might be as simple as saying “um” less or identifying when they become paralyzed by overanalyzing a situation. As these independent contributors grow, that awareness will expand to include the impact those actions have. (Ex: “When I get in the grip, this is how it prevents me from making better decisions, which, in turn, prevents others from wanting to follow me.”)

Mastery needs to go up substantially as you grow in business. If you have a gaping hole in one of these areas, you won’t be successful as you grow and climb the ladder.

The good news is that practicing these self-correcting mechanisms becomes easier as you grow in leadership capacity. The process itself becomes more efficient as you go. In the beginning, it can be all-consuming to practice this kind of self-awareness and reflection, but as you grow in seniority, you’ll be able to reflect more quickly.

The leadership myth most of us buy into

Many of us have assumptions about the kind of personality that works—or don’t work—when it comes to leadership. The reality is that while some behavioral patterns may be naturally more inclined toward leadership positions, you can make any behavioral profile work. It really depends on the environment.

First, you’ll want to take a look at your specific organization’s business needs. Do you need leaders who are more aggressive or collaborative? Do you need leaders who are innovative or wired to comply with rules? Understanding what your business needs from its leadership is half the battle in building leadership capacity within your organization.

The Predictive Index is a fast-growing tech company. We have ambitious goals for the year that require people who are agile, innovative, and creative. For this reason, many of our leaders have behavioral patterns that are geared toward innovation and agility. My Reference Profile is a Venturer. While my behavioral pattern works great for my role as president here at PI, a fast-growing tech company, I may not be a great fit in another environment that requires no errors and really thoughtful execution.

Daniel Muzquiz placard

Common mistakes in building leadership capacity

It’s okay to make mistakes. We all do it. But there are two mistakes I see potential leaders make time and again that just don’t serve them in building their capacity for leadership.

1. They use behavioral preferences as an excuse to not adapt to leadership demands.

We’re all wired differently. The key is to not use our natural inclinations as excuses for not embodying true leadership. For example, leaders who are less extraverted may use that as a rationale for never speaking up in a meeting—a critical skill for leaders to develop.

2. They aren’t direct with feedback.

To a large extent, leadership is learnable. Unfortunately, teaching leadership is hard. The biggest mistake by far is not being direct with giving feedback. Some employees really want to be a leader, but can’t get a clear answer about what everyone else knows they need to work on because there isn’t the courage to be honest with the person. Our People Management Study found that the average employee would rather receive more feedback than less—so give your people the feedback they need to grow.

Measuring leadership capacity

When it comes to measuring leadership capacity, there’s no clear cut way to approach it. It’s often easier to say “This person doesn’t have it” than “This person has it” in the interview process.

Here’s what I’m looking for when trying to determine the leadership capacity of a staff member:

Ability to reflect on better ways to problem solve

A good leader looks at what they’ve done before and what they could do better. If someone’s illustrating a narrative, they’re explaining what happened—not why something worked or didn’t work. When looking for future leaders, I look at, “Can this person use heuristics? That is, can they deduce about how a problem should be solved, even if they don’t know the exact solution? Or are they good at solving discrete problems, and that’s it?”

Cognitive ability

As a general rule, being able to manage more people comes with more complex metrics, systems, and controls. In order to think further out, you also need to be able to manage more complex systems. These attributes are highly correlated with cognitive ability. Cognitive scores are our best bet at measuring the likelihood that someone will be able to handle the increasing complexities of growing in a leadership capacity.

How they perceive problems

There’s a saying, “When you’re a hammer, everything looks like a nail.” If someone tends to apply the same approach to every problem, that may be a sign they’re not ready to progress as a leader. While history does repeat itself, not every business problem is the same, so being able to look critically at a problem is a key leadership skill.

Implementing leadership development programs helps build leadership capacity within the organization—improving both the employee experience and providing better career pathing.

Read more on common questions and concerns about implementing leadership development programs in our follow-up blog.

Transformational leadership inspires your team to action.

Become a transformational leader.


Daniel is the president at PI. He's had fun life experiences—from witch doctors to angry gorillas—in 55 countries!

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