Executives in virtually all industries bemoan a dearth of leadership talent, a shortfall that is poised to get worse when the economy strengthens and baby boom-era executives retire. A recent research report from the Conference Board, “Developing Business Leaders for 2010,” highlights the impending competition for talent since the age cohort that follows the baby boom group is approximately 18 percent smaller in both the United States and Europe. This phenomenon, especially in an era of constrained resources, places increased pressure on organizations to identify and develop leadership talent both more efficiently and more effectively.
Senior leaders in the great majority of companies are quick to join the chorus in saying, “People are our source of competitive advantage.” But the attitudes prevalent in talent-mindset companies such as General Electric, Colgate-Palmolive and PepsiCo are quite different from the philosophy and practice of most organizations. Leaders in these companies base their succession planning and talent development practices on certain fundamental assumptions:
• Future leaders develop best via a rich set of on-the-job experiences.
• Developing leadership requires a willingness to take risks on people and take them out of their comfort zone.
• On occasion, positions should be filled for explicit leadership development purposes, not necessarily with the best-qualified candidate.
• Future leaders must get candid and constructive feedback about their performance and what they need to develop to get ahead.
• External recruiting is an integral part of talent development. As a result, every management-level search is viewed as an opportunity to upgrade the leadership “gene pool.”
• Attracting, developing and retaining talent are core expectations of all managers to the extent that it’s a key factor in their own career advancement.
Such attitudes need time to take hold. However, a certain set of practices — if supported by even a few senior executives and HR leaders — can create a fertile environment and build stronger leadership capability in the process.
Building a ‘Talent Mindset’ Organization
Clarify the core selection factors use to make C-suite level promotion/placement decisions. Often with the best of intentions, companies confuse their senior leaders and upwardly aspiring managers by publishing all-inclusive “kitchen sink” leadership models that mix must-have capabilities with skills that are nice to have. This complicates the task of senior executives identifying and developing future leaders and reduces the credibility of the leadership development effort as managers see people promoted without all the capabilities embedded in the models.
Companies should start by clearly delineating the non-negotiable factors — those required to be considered for promotion to the executive level — versus the typically few skills that differentiate those who do and don’t get promoted. For example, a track record of producing consistent results is viewed in most companies as “table stakes,” a minimum requirement to be a candidate for a C-suite position, but it’s rarely the primary reason someone is promoted. In most organizations, such placements are based on a relatively short list of factors including:
• Strategic skills: ability to craft a winning strategy and align the organization behind it.
• Ability to surround himself/herself with talented people who form a strong team.
• Ability to manage execution without getting bogged down in the details of implementation.
• Ability to identify significant innovations and lead the change management process — even if that demands pushing the organization out of the status quo.
• Lateral management skills: the knowledge of how the organization works, how decisions get made, and the influence and persuasion skills required to get things done across organizational boundaries.
Finally, executive presence is an important criterion for advancement in most organizations. Although poorly defined more often that not, it typically stems from the individual’s ability to project the self-confidence required to lead others and step up to the difficult and often unpredictable situations that go with the territory at the executive level.
Create forums that bring senior leaders together to talk about future leaders in probing and thoughtful ways. Many HR leaders criticize senior executives for failing to devote time to talent development. In many companies, members of the executive group are more than prepared to do so —as long as the discussion is well-coordinated and productive.
The agendas for many senior executive talent sessions include discussion of a host of managers with widely varying potential for career growth and without tight guidelines for evaluating potential, determining core development needs and driving developmental action. Such discussions rarely add value or contribute to a talent mindset. When executive talent forums are successful, they typically focus on a relatively few of the highest-potential candidates who have been carefully vetted to avoid the conversation becoming bogged down by a discussion of managers who have limited potential for career growth.
By contrast, productive executive talent discussions are characterized by the following:
• Candid and mature discussion of the individual’s demonstrated strengths, development needs, career goals and potential.
• Identification of specific actions to develop the individual with a focus on future job assignments.
• Clear definition of the capabilities the individual needs to develop and display to maximize potential.
• Follow-up plans that not only monitor implementation of agreed-upon development steps but also test whether the individual has grown in the most important areas.
• Agreement regarding who will provide individuals with constructive feedback on how they are viewed in terms of the core selection factors and the skills they need to develop and display to breed confidence in their ability to succeed at higher levels.
Properly done, these executive talent discussions can also provide the impetus to move promising managers across organizational lines for development once the team gains conviction about the manager’s long-term career potential.
Institute targeted assessments. Too many companies get confused about the nature of assessment and miss a critical link in talent development. Achieving momentum in talent development involves taking risks by placing managers into new stretch assignments. In essence, the company is placing bets on its future leaders and needs to be clear about the individual’s long-term potential and how much he or she can be stretched.
Today many companies use the nine-box exercise where executives place the names of staff members in a three-by-three matrix based on current performance and perceived growth potential. After that rating, they declare victory, thinking they have identified those eligible for promotion. In reality, this is only the first step in talent identification, a winnowing of managers for more formal assessment to determine growth potential, best fit career path — for example, leading a large operating group, a staff or functional group or small team of professionals, and key development priorities.
While such assessments are rarely definitive by themselves — and need to be considered against the individual’s development over time — they contribute insight into certain capabilities related to the executive-level success factors noted. For example:
• Abstract, conceptual thinking ability and comfort in dealing with ambiguity, which are keys to strategic thinking.
• Comfort with risk taking and willingness to stand alone and go against the organizational grain, which are components of innovation and change management
• Willingness to delegate and hold others accountable, which is a building block of the ability to manage execution through others.
• Empathy: the ability to read people and situations, which is an important requirement for communicating a compelling strategic vision and influencing peers and co-workers to adopt a proposed course of action.
Such assessments shouldn’t be seen as a once-in-a-career event. Rather, periodic re-assessments contribute to senior executive discussions of managers in the talent pipeline and serve as a way to gauge the individual’s learning ability over time.
Create meaningful development plans for potential future leaders. Even companies that promote in-depth discussion of managers with the potential for career growth often drop the ball when it comes to putting in place highly customized and impactful development plans. The cursory development plans created tend to emphasize useful but sometimes ancillary development actions like coaching, mentoring or serving on cross-functional task forces. For certain individuals such actions can add value, but they are often a way for senior executives to avoid the core of development: new job assignments designed to increase the individual’s skills and breadth of perspective on the business and organization. If the individual is relatively new in a position, coaching, mentoring and on-the-job experiences are called for, but development plans need to consider “next move” assignments for when the manager is ready for a new assignment.
Integrate talent development and external recruiting. Too many companies view talent acquisition and development as separate activities. External recruiting focuses on filling jobs, while talent development is designed to develop future leaders. By maintaining this distinction, companies lose an important lever in building overall leadership talent. Even in talent-mindset companies intent on developing leaders internally, recruiting is used as a way to calibrate the ability of managers versus the outside market and increase the pool of future leaders. The keys to doing so are:
• Assessing external candidates for hire against the same leadership selection criteria used for internal candidates.
• Ensuring that all external hires at the management level and above exhibit the potential for career growth.
Establish outcome-oriented metrics. By definition, talent development is a long-term and somewhat qualitative activity. However, like any business priority, metrics are required to monitor progress and maintain focus within the senior leadership team. Too many HR organizations track process-oriented measures such as percent of positions with ready-now successors. While such metrics are helpful in tracking the health of the succession planning process, they are less useful than results-oriented measures, such as percent of promotions from inside the company — since the ultimate test of a company’s leadership strength stems from the decisions senior executives make when it comes time to fill executive-level positions.
Examples of such outcome-oriented metrics include percent of management positions filled internally, percent retention of managers designated as high-potential, and percent of outside recruits into management positions identified as promotable 24 months after hire. Reviewing such metrics periodically at the senior executive level and making them a part of incentive compensation serves as a powerful motivator.
Winning the Hearts and Minds of Leaders
Even with the best design and support from HR staff, the practices outlined need consistent implementation on the part of a company’s senior executives. Too many organizations, however, ignore a potent reinforcer: tying an aspiring manager’s career progress to his or her demonstrated track record in developing talent.
Think for a minute: In your current talent review discussions, how much attention is devoted to a candidate’s success in talent development? Often companies define this in terms of the manager’s level of activity in serving as a mentor or sending people to training programs — as opposed to evaluating the strength of the manager’s team or track record for having developed talent promoted within the company.
For years, PepsiCo, a company with a reputation for leadership strength, made sure the following questions were asked of all candidates put forward for promotion to the senior level. To what extent had the manager:
• Brought talent into the organization?
• Developed people and then let them go on to new development assignments within the company?
• Stepped up to address performance problems that sapped organizational strength?
Rather than simply talk about the benefits of leadership development, the company quickly brought home a central fact to its aspiring executives: their personal career advancement was directly related to their success in developing talent for the organization. Once that was understood within the company, managers at every level got on board the talent development train.
John Beeson is principal of Beeson Consulting and author of The Unwritten Rules: The Six Skills You Need to Get Promoted to the Executive Level. He can be reached at email@example.com.