The percentage of companies confident in their succession strategy is in the single digits, yet a vast majority of companies aren’t investing – or aren’t investing the right way – in their leadership transition efforts. We have uncovered four biases that make leaders less likely to develop their next leaders in spite of the demographic certainty of the need.

Confirmation bias

“If millennials are lazy, entitled, and disloyal, why invest in them at all? They’re just going to leave regardless, so what’s the point?”

It’s hard to blame anyone for that belief given the limitless articles using stereotypes for kicks and clicks. These news sources provide an endless stream of information that confirms what one might already believe, making it easier to abandon efforts to grow and retain millennials.

Gen Y mythbusting aside (we wrote a book on that), businesses who are investing in developing their next leaders are bucking the bias. Not only are they successfully attracting, growing, and retaining millennials, they’re making the entire organization more comfortable with the transition. In an overheated talent market, those who haven’t made these proactive moves pay more for less.

Survivorship bias

“We’ve done pretty well without actively developing next leaders, why do we need to change now?”

It is easy to get distracted by past success and lose sight of the big picture (think Blockbuster, Kodak, and Research in Motion). Things change. For instance, a majority of the workforce will be millennial-aged by 2020, and centuries of experience are walking out the doors of organizations every day. Without a plan to transfer crucial knowledge, this will have catastrophic consequences for the ill-prepared.

The most successful organizations have been able to uncover the almost invisible elements of their success and pass that down to high-potential employees who are learning the business. This active effort has made it easier to plan for a drastic organizational change.

Availability heuristic

“We do speeches, seminars, and lunch-and-learns, so we’re comfortable with how we develop people.”

When making decisions, we prioritize what is nearest to us, both in proximity and in our minds. Since most leaders have spent decades going to seminars, listening to keynotes, and sitting through countless lunch-and-learns – getting “a nugget or two” out of each interaction – they assume those methods worked. Unfortunately, with significant knowledge transfer needing to happen in the next five years, a few nuggets here and there are not enough.

Organizations that successfully develop next leaders are digging deeper for creative solutions beyond the most available. They recognize that resources are needed to implement solutions designed to solve problems of today and tomorrow rather than decades ago.

Overconfidence effect

“It’s my job to develop our next leader. If I can’t, then who can?”

Organizational leaders, particularly founders, tend to feel that it’s their exclusive responsibility to groom the next generation of leadership. They’re confident that they can guide these less-experienced members of their team into executive success, even on top of their current responsibilities.

Our experience in working with organizations to develop next leaders has shown it takes a full-time employee to build a program from scratch, not to mention the hours needed to coach them through the process. How, when most executive leaders are already working 50-60 hours a week, are they supposed to carve out an additional eight hours (at minimum) for coaching and development?

Wrapping up

It’s easy to assume future success when you’ve had success in the past. What if the future looks a lot different? Are you preparing your team to solve future challenges, or are they being trained to fixate on past problems? Instead of confidently choosing what is most available, maybe it is time to consider alternatives. The future of your business is all that is at stake.