If I've heard it once, I've heard it a thousand times from the leaders of growth companies: When it comes to leadership talent, they prefer developing it in-house to hiring it from the outside.

The benefits are obvious: It's cheaper to develop talent in-house; you need not waste time or money on searching, recruiting, selecting, or onboarding. Moreover, in-house talent grasps the company culture in a way no outsider can. 

There's just one problem. Sometimes it's hard to tell if in-house talent is truly ready to handle a leadership role. The reason? You've only tested them in their current roles. Luckily, there are few steps you can take to assess if your young stars are ready to make the leap. A white paper released this week from recruiting firm Korn Ferry mentions two of them.

1. Define what readiness means. "Before trying to measure anyone's readiness, the organization must answer this question: ready for what?" asks the paper. This comes down to two things: Crystalizing what the leadership job function actually means. What are the deliverables? How will the leader be measured? In addition, the organization needs to define the ideal candidate's talents and credentials. 

Korn Ferry suggests crafting what it calls a success profile for each position. Success profiles "are the bar against which an individual's competencies and experiences can be compared to see whether he or she is ready to move up."

2. Assess the readiness of individual candidates. This is easier said than done, when it comes to leadership positions. Intangible talents--by definition difficult to assess or measure--come into play. Korn Ferry suggests "creating a scenario that parallels the new role and observing the individual's behavior."

For instance, you'll need to determine if a potential leader can enter a new situation and hold others accountable. You can test this by asking candidates about their experiences dealing with inherited problems.

Scenario Testing

If possible, you can even test a potential leaders' readiness with actual company scenarios. Peter Bregman, in a Harvard Business Review article called "Why So Many Leadership Programs Ultimately Fail," suggests integrating leadership development into the work itself. In the example Bregman provides, an Executive Committee is holding a meeting. There is an elephant in the room: No one at the meeting is holding the leader of a European division accountable for his poor results. 

In a situation like that, you'd want to see a developing leader step up and ask--in a professional manner--what's wrong with the situation in Europe? Of course, your young leaders might be too timid to challenge someone with more seniority.

Bregman recommends taking a 15-minute break. Use the break as a teaching moment for young leadership talent. Find out what it would take for them to speak up. And encourage them to do so. Chances are, they'll speak up when the break is over.

More importantly, they'll feel emboldened to speak up at subsequent meetings when there's an elephant in the room. And you'll have taken a step in developing a future leader in the organization.