8 Tips to Identify Leadership Potential in Your Team

Having strong leaders in your company can be the difference between employee retention and an employee exodus to your competition. That’s why it’s important to learn how to identify leadership potential in your team and company.

Unfortunately, recent data shows a decline in ‘good leaders’ resulting in a decline in employee trust and engagement. 

Roughly 69% of millennials believe leadership development is lacking in many companies.

While identifying potential leaders is important, it’s equally essential to back your potential leaders with leadership development programs and training.

In this article, we’ll discuss the importance of leadership and how to identify leadership potential in your employees.

Why do you need leaders in your company?

When employees see a leader, a good leader, they feel inspired and confident. Trust in their company rises, so does their morale and satisfaction about their work and role. 

Here are a few reasons to consider identifying leaders in your team:

1. 1)Higher team morale

Having strong leaders in your company can improve employee and team morale, resulting in an increase in individual and team productivity. 

This can translate to better results for competitive teams and overall improvement in engagement and trust.

Research by The Ken Blanchard Companies found “better leadership can generate a 3%-4% improvement in customer satisfaction scores.”

1. 2)Higher employee confidence 

Leadership can improve employee confidence in both your team and the company’s overall leadership and decisions. 

This can reduce employee turnover, especially if identifying leaders involves offering internal promotions. 

1. 3)Improved management 

Leaders don’t just manage. They lead. Many leaders are managers, some can be middle managers or senior executives. Either way, this can mean improvement in managerial practices in your company.

1. 4)Higher retention and satisfaction

If your employees are satisfied with their jobs, they feel confident, they’re productive, then they’re more likely to work for a longer period in your company. 

Leaders play a role in increasing employee retention, which means better results when calculating the cost of employee turnover.

1. 5)Revenue boost 

Finally, and in addition to the above, one of the top reasons for identifying leadership in a company is the financial benefit. 

Companies with powerful leaders can see an increase in revenues and profits. 

The same Blanchard report indicates the total annual cost of delaying leadership development is 7% of a company’s total sales. 

Leadership vs management 

Before identifying potential leaders in your team or company as a whole, let’s explore the differences between leadership and management. 

While there are overlapping responsibilities like working with several people, achieving goals, motivating others, and driving the success of a team and the organization.

In his book, The 7 Habits of Highly Effective People, Steven Covey differentiates between leadership and management, saying: “Effective leadership is putting things first. Effective management is discipline, carrying it out.” 

The top areas where leaders differ from managers are vision, organization and alignment, and position. 

It’s worth mentioning that you don’t hire a person to be a leader. But you hire a person to be a manager and they can become a leader or they may have leadership skills that complement their role. 

How to identify leadership potential 

The following points are all signs of a good or even great leader. However, it’s essential you put potential leaders to the test. 

Do they succeed in that test? Or do they falter? 

A person may be a great communicator, but they may also lack confidence or act negatively towards others. The negative aspects make them an inefficient leader.

So, if you’re looking to identify leaders in your team, here are a few things to do.

• Observe their work ethic 

Ethics are important in the workplace. Determine the work ethics and qualities you expect in a good leader and observe them in your team or employees. 

For example, if leadership is about driving results, look at team members who are results-driven or data-oriented. However, consider how they work with others because that’s part of their work ethic. 

If they can only work alone, they may not be a good leader. Or they may just need some leadership development training to take them to the next level.

• Consider their communication skills

Strong communication is a sign of a good leader. Do you find someone who takes on the role of communicator or coordinator between team members or other teams? 

Determine what ‘strong communication’ means for you and what level of communication you’re looking for in a potential leader.

• Put them in a leadership role

Give potential leaders the opportunity to lead and show their abilities. You can have them act as a deputy or mentor to a newcomer. 

Consider whether they have a growth mindset, are open to offering and getting feedback, and if they care about self-development for work or personal growth.

• Conduct a 360-degree appraisal 

While your feedback as a manager of a certain employee is important, it’s also vital you see how others view this person and what they think of them. 

Conduct a 360-degree performance appraisal for this person. If you conduct this type of review, make sure you know the types of questions and how to give 360-degree feedback.

Other types of performance reviews you can consider is the peer review, which looks at viewpoints from people in your team. 

• Ask others about their opinions 

Besides internal feedback, ask other members from other teams about their experience working or collaborating with this person you think has leadership potential. Confer with other managers and teams. 

• Use psychometric assessments 

One way to identify potential leaders is using psychometric assessments. These tests help managers and team members identify hidden skills and traits. They also indicate areas of strength and weakness in employees.

There are many types of psychometric tests, some used for specific roles like sales, while others are generic. 

• See if they show initiative 

A good leader embraces change, shows initiative, and possesses a strong sense of observation. 

They are proactive, adaptable, and capable of navigating challenges. By understanding the evolving landscape, they can anticipate problems and find innovative solutions.

• Consider their emotional intelligence 

Emotional intelligence, the ability to understand and manage emotions, is essential for effective leadership. 

Emotionally intelligent leaders are self-aware, empathetic, and skilled at navigating complex interpersonal situations. They embrace change, make sound decisions, and inspire their teams to achieve success.

They are also motivated to do what they think is right for others. People who score well on emotional intelligence can be good at conflict resolution and people management.