An engineering contractor wins larger projects every year and keeps promoting its best engineers into project manager roles. Some thrive. Others struggle with the shift from doing the technical work to leading people, negotiating with clients and managing money, and a few leave within a year. When a senior project manager resigns, nobody is ready to take over the biggest client. The business has invested in leadership: it pays for courses and certifications. What it does not have is a system for growing leaders before it needs them.
Most businesses develop leaders by accident: a promotion when someone capable is available, a course when the budget allows, and the hope that experience will do the rest. That approach produces some good leaders and leaves a lot to luck. A leadership pipeline treats leadership capability as something the business builds deliberately, through a combination of experience, relationships, feedback and formal learning, linked to the roles the business will need to fill.
This article explains the difference between developing individual leaders and developing leadership as a collective capability, how people actually learn to lead, the main development practices and how to use them, how to design a pipeline and prepare successors for critical roles, and how to tell whether development is working. It is general information for owners, managers and people responsible for capability in growing businesses.
Two targets: leaders and leadership
The researcher David Day drew a useful distinction between two things that are often confused:
- Leader development builds the individual: self-awareness, judgement, skills and the ability to manage oneself in a leadership role. Its target is human capital, the knowledge and abilities a person carries.
- Leadership development builds the collective: the relationships, trust, shared understanding and networks that allow people across the business to lead together. Its target is social capital, the value held in relationships.
Businesses tend to invest in the first and neglect the second. They send promising people on courses, then find that projects stall not because one leader lacks a skill but because teams do not trust each other, functions do not coordinate and nobody shares a view of what matters. Both are needed. Individual development without relationships produces capable managers who cannot build coalitions. Relationships without individual capability place people in commitments they cannot meet.
How people learn to lead
A widely cited rule of thumb suggests that most leadership capability comes from challenging experience on the job, a substantial share from relationships such as bosses, mentors, coaches and peers, and a smaller share from formal training: often expressed as 70, 20 and 10 percent. Treat the numbers as an orientation, not a budget rule. Formal learning still matters, especially for knowledge such as finance, contracts and project methods. But experience dominates, and experience develops people best when it is chosen deliberately and reflected on.
A practical way to think about development is that people grow when three things are present together:
- Assessment: honest information about where they are now, their strengths and their gaps.
- Challenge: experiences that stretch them beyond their current capability.
- Support: help to make sense of the experience, encouragement and a safety net while they learn.
Most development activities provide one or two of these. The most effective combinations provide all three.
Six practices, from formal to embedded
| Practice | What it mainly develops | Provides |
|---|---|---|
| 360-degree feedback | Self-awareness | Assessment |
| Coaching | Individual behaviour change toward specific goals | Assessment, challenge and support |
| Mentoring | Judgement, organisational understanding, career direction | Support and some challenge |
| Networking | Relationships across the business and beyond | Support and social capital |
| Developmental assignments | Capability in new and harder situations | Challenge |
| Action learning | Individual and collective capability through real problems | Challenge and support, with assessment through reflection |
360-degree feedback
In a 360-degree feedback process, a person receives structured feedback from their manager, peers, direct reports and sometimes clients, alongside their own self-assessment. The value lies in the differences: where others see things the person does not.
Feedback can backfire. A well-known 1996 review of feedback research by Kluger and DeNisi found that in roughly a third of cases, feedback interventions actually reduced performance. Feedback works best when it is used for development rather than pay or promotion decisions, when raters are chosen for their knowledge of the person’s work, when confidentiality is protected, when the person receives help to interpret it and when it leads to a specific plan with follow-up. Feedback delivered without support often produces defensiveness rather than change. The measuring employee performance fairly article covers feedback methods in performance measurement more broadly.
Coaching
Coaching is a one-to-one relationship focused on helping a person achieve specific goals, usually behavioural. A good coaching process sets the context, uses assessment such as 360-degree feedback, agrees a development plan in a three-way conversation with the person’s manager and then works through real situations as they arise. Coaches can be external professionals or trained internal managers. Coaching is most valuable at transitions, such as a first leadership role or a significant step up.
Mentoring
A mentor is usually a more experienced person, often outside the mentee’s line of reporting, who shares judgement, explains how the organisation works and helps with career direction. Mentoring works best with a clear purpose, regular contact, an agreed time frame and a good match. Formal programmes can help, but some of the most valuable mentoring relationships form informally and should be encouraged.
Networking
Leaders need relationships across functions, with clients and suppliers and in their industry. Deliberately building those networks, through cross-functional projects, forums for people in similar roles, industry associations and introductions by senior people, builds the social capital that collective leadership depends on.
Developmental assignments
Stretch assignments, such as leading a difficult project, turning around an underperforming area, starting something new or working in an unfamiliar function, are the most powerful source of leadership growth when they are chosen deliberately and supported. The developing people through real assignments article covers how to choose assignments the business can safely carry.
Action learning
Action learning brings a small group of people together to work on real business problems, with a structured process of questioning, action and reflection, usually with a facilitator. Participants develop individually and also build relationships and shared understanding across the business, while producing real improvements. Its success depends on real problems with real stakes, diverse participants, psychological safety and disciplined reflection on what was learned.
Design the pipeline around transitions
A leadership pipeline maps the roles the business needs and the transitions between them. In a project-based business, a typical sequence might run from technical specialist to team leader, project engineer, project manager, senior project manager and, eventually, general manager or director.
Each transition requires people to stop doing some things, not just learn new ones. The new team leader must stop solving every technical problem personally. The new project manager must spend more time on clients, money and people than on design. The senior manager must lead through other leaders rather than directly. Development at each stage should target these shifts. The promoting a specialist into leadership article explains why the first transition is so often mishandled.
For each stage, define:
- The capabilities required, including behaviours, not just knowledge.
- The typical development experiences that build them.
- How readiness is assessed, using evidence from real work.
- Who supports people at that stage: coaches, mentors, managers.
Prepare successors for critical roles
Identify the roles whose sudden vacancy would most harm the business: the senior project manager who holds a key client relationship, the operations manager, the estimator whose judgement underpins pricing. For each:
- Identify potential successors, ideally more than one, at different stages of readiness.
- Give them exposure to the role: deputising, joining key meetings, leading parts of the work.
- Transfer relationships, by introducing successors to clients, suppliers and stakeholders early.
- Capture knowledge that sits only in the incumbent’s head.
- Review readiness at least annually.
Talk openly with potential successors about their development without making promises about specific roles, which can create expectations the business cannot keep.
Make learning transfer to work
Development that does not change behaviour at work is wasted. Practices that help transfer:
- Agree development goals with the person’s manager, linked to their real role.
- Apply learning immediately to real work, such as a project or problem.
- Have the manager follow up, discussing what was tried and what happened.
- Reflect regularly, alone and with a coach or mentor.
- Recognise new behaviour when it appears.
Measure what matters
Attendance and satisfaction scores say little about whether development works. Better measures include:
- Behaviour change, observed by managers, peers and direct reports.
- Readiness: how many people are ready, or nearly ready, for critical roles.
- Internal fill rate: the share of leadership roles filled from within.
- Performance of newly promoted leaders in their first year.
- Retention of high performers and new leaders.
- Outcomes in the work they lead, such as project delivery, team engagement and client feedback.
Scale it to the business
A small business does not need a formal academy. A workable minimum is a simple map of the leadership roles it needs, one or two named successors for each critical role, a development conversation with each potential leader twice a year, a deliberate stretch assignment for each, a mentor drawn from the senior team and a short regular forum where leaders share problems. External coaching can be reserved for the moments of greatest risk, such as a first leadership role or a step into general management. What matters is that development is deliberate, connected to real work and reviewed.
A worked example
This is an illustrative example. A 120-person engineering contractor promotes most of its project managers from its engineering staff. About a third of its project manager roles in recent years were filled externally because nobody internal was ready, and two newly promoted managers left within a year.
Pipeline. The business maps its leadership roles and the transitions between them, and defines the capabilities required at each stage. It identifies three critical roles: the senior project manager for its largest client, the estimating manager and the operations manager.
Cohort. Eight engineers with leadership potential are selected for an 18-month development programme. Each completes a developmental 360-degree feedback process, with results used only for development and interpreted with a coach, and agrees a development plan with their manager.
Experience and support. Each participant takes a stretch assignment, such as leading a smaller project end to end or managing a difficult client package, and has a senior project manager as mentor. The cohort forms two action learning groups, each tackling a real business problem: one improves the handover from tender to project team, the other reduces late changes on fabrication projects. A short formal course covers commercial and contract management.
Collective leadership. Monthly forums bring all project managers together to share problems and practices, building relationships across teams that previously worked in isolation.
Succession. Two participants are identified as potential successors for the senior project manager role. They attend client meetings, deputise during leave and are introduced to the client’s key people.
Result after two years. All four project manager vacancies are filled internally, and none of the newly promoted managers leaves in their first year. The tender-to-project handover improvement reduces early-stage rework on new projects. When the senior project manager retires, one successor takes over the client relationship with no disruption.
Applying this in an Australian business
- Develop both leaders and leadership: individual capability and collective relationships.
- Combine assessment, challenge and support.
- Lead with experience, supported by relationships and some formal learning.
- Use 360-degree feedback for development, with interpretation and follow-up.
- Use coaching at transitions and mentoring for judgement and direction.
- Build networks across functions and with clients and suppliers.
- Use action learning on real business problems.
- Map the pipeline and the shifts each transition requires.
- Prepare successors for critical roles and transfer relationships early.
- Measure behaviour, readiness and outcomes, not attendance.
Where leadership development goes wrong
- Relying on courses alone.
- Promoting the best technician without preparing them for a different job.
- Using 360-degree feedback for pay decisions or without support.
- Developing individuals while ignoring how they work together.
- No succession plans for roles the business cannot afford to lose.
- Development disconnected from real work and managers.
- Measuring satisfaction rather than change.
Questions for owners and managers
- Which leadership roles will we need to fill in the next three years, and who could fill them?
- Which roles would hurt most to lose suddenly, and who is ready to step in?
- How do our new leaders learn to stop doing their old jobs?
- How do we use feedback, and does it lead to change?
- Do our leaders work well together, or mainly within their own teams?
- How do we know our development efforts are working?
Bringing it together
Leadership capability can be built deliberately rather than left to luck. Develop individual leaders and the collective relationships through which leadership happens. Combine assessment, challenge and support, rely mainly on real experience and relationships, and use formal learning where knowledge is needed. Use 360-degree feedback for development with proper follow-up, coach people through transitions, encourage mentoring and networks, and tackle real problems through action learning. Map the pipeline around the transitions that matter, prepare successors for critical roles and measure behaviour, readiness and outcomes. A business that grows its own leaders this way is ready when growth or departures demand it.
Source: KEVOS editorial notes, drawing on earlier KEVOS project leadership handbooks on leader development and leadership development, leadership development systems and the project manager pipeline, 360-degree feedback, coaching, mentoring and action learning. The worked example is illustrative. This article is general information.
