The Leadership Drain: Why Companies Are Losing Their Best People (and What to Do About It)
- Tim Weisheyer
- Mar 27
- 3 min read
Organizations today face a pressing challenge: a leadership exodus. A recent study highlighted in Forbes reports that the turnover rate for corporate leaders has surged to 18%—a significant increase from the 14% peak during the COVID-19 pandemic. This is more than a fluctuation; it's a pattern that could have serious consequences for businesses of all sizes.
At Strategic Advantage Consulting, we work with organizations to not only navigate this challenge but turn it into an opportunity. By strengthening internal leadership pipelines and enhancing leadership development strategies, companies retain top talent and drive long-term success.
The Internal vs. External Hire Dilemma
The HR Leadership Insights Report, cited in Forbes, highlights a crucial insight: internal promotions outperform external hires. Leaders promoted from within succeed 65% of the time, compared to just 52% for those hired externally—a notable 25% advantage for internal candidates.
Why does this happen?
Internal candidates already understand company culture, processes, and team dynamics. Their track record is well known, and they’ve demonstrated potential firsthand. External hires, on the other hand, often require significant time to adapt. Investing in internal leadership development isn't just a best practice—it’s a competitive advantage.
The Ripple Effect of Internal Success
When companies focus on developing leaders from within, the impact goes beyond individual success. Organizations with strong internal promotion strategies are 4.7 times more likely to have high overall leadership quality. A culture that prioritizes leadership growth fosters loyalty, engagement, and peak performance—key elements of a thriving organization.
Leadership Development: A Strategic
Investment, Not a Cost
The solution to the leadership drain? Intentional investment in leadership development. According to the study, 55% of HR professionals recognize leadership development as a top priority. Companies that allocate above-average resources to high-potential leaders see an 18% increase in leadership quality compared to those that underinvest. On average, companies spend $3,594 per high-potential leader—a strategic investment that pays dividends in retention and organizational strength.
Key Strategies for Retaining and Developing Leaders
At Strategic Advantage Consulting, we help organizations implement key strategies to develop and retain leaders effectively, rooted in our core values of servant-based leadership, collaboration, and setting up incoming leaders for success:
Knowledge Transfer: Encouraging leaders to delegate and empower their teams ensures continuity. Organizations that prioritize knowledge sharing are twice as likely to capture critical information before it's lost. By fostering a culture of mentorship and shared expertise, we help companies build sustainable leadership pipelines.
Connectivity and Loyalty: Strong leadership relationships are essential, particularly in hybrid and remote environments. Effective leaders cultivate trust and collaboration by engaging their teams with clear communication and a shared vision. We guide organizations in developing leadership approaches that foster inclusivity, support, and engagement.
Leveraging Technology: Streamlining workflows through technology enhances efficiency and alleviates burdens on employees during leadership transitions. Our strategies ensure that organizations utilize the right tools to support leadership effectiveness and seamless succession planning.
Companies that excel in these areas are three times more likely to have a strong bench of potential successors.
The Bottom Line
The leadership drain is real—but preventable. Organizations can secure their future success by prioritizing internal leadership development, strengthening knowledge transfer, and leveraging technology. Strategic Advantage Consulting specializes in equipping businesses with the strategies and solutions they need to build resilient, high-performing leadership teams.
Are you ready to future-proof your leadership pipeline?
Let’s talk about how we can support your organization’s leadership development goals.
Citation: Segal, Edward. "Companies Are Bleeding Leadership Talent As Turnover Rate Increases." Forbes, October 25, 2021. Available at: https://www.forbes.com/sites/edwardsegal/2021/10/25/companies-are-bleeding-leadership-talent-as-turnover-rate-increases/?sh=58b5067f4974
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