Wanted: Critical Leaders With the ‘Right’ Stuff

When aligned with talent management, CLOs have a broad lens to frame development initiatives and develop top talent for the future, and to accelerate recovery and future business growth in the process.

When aligned with talent management, CLOs have a broad lens to frame development initiatives and develop top talent for the future, and to accelerate recovery and future business growth in the process.

Even the casual observer of business news understands there is a shortage of leaders with the right capabilities to lead and succeed now and in the future.

This chronic leadership shortage — most often a lack of the right leadership talent ready to move into mission-critical roles — will be increasingly vital as businesses emerge from recession and the aftermath of the current economic crisis. Having a pipeline of leaders who can think and act strategically, connect credibly with people, drive change and make tough decisions based on clear values is moving leadership development from an internal corporate imperative to a public one.

The companies that will survive and come out ahead will be the ones with leaders who look, act and perform differently. To accomplish such a task requires the active involvement of the board of directors, CEO and senior team in what was once viewed as HR’s domain. It changes the relationship among talent management, learning and leadership development and has significant implications for CLOs who, along with talent managers and business leaders, must craft more robust and integrated leadership solutions to address the leadership gaps.

We need to accelerate the development of leaders in a new way. Accelerating leadership development is not a matter of developing more programs or initiatives, but instead comes from innovative efforts to more closely integrate talent management and development efforts. The leadership innovators ensure leadership development activities have a clear line of sight to the overall talent strategy and are driven by the business strategy.

In many cases, this acceleration requires more active involvement by the board of directors and CEOs, not only in providing direction, but also in the active support of leadership development, especially at the most senior levels. CLOs have a broad lens to frame their initiatives to develop top talent for the future — and, in so doing, accelerate recovery and future business growth.

A Systematic Approach to Building Leadership Talent
CLOs in leading companies today take a systematic approach to building leadership talent — explicitly articulating an executive talent strategy that is tied to the CEO agenda, driven by the business strategy, based on accurate assessment data and designed to manage talent risk. There are five main elements to this approach:

• Leader requirements: The complexity, diversity and uncertainty confronting business leaders today has been documented in the recent book titled Leading in Times of Crisis. Given that context, the first step in devising a comprehensive talent strategy should be to determine what the leader of the future will look like. What capabilities are core to strategy? Which are unique to what the business is trying to accomplish?

A financial services company has the goal of re-establishing trust between its bank and its customers, so character — defined as putting purpose before self, delivering on commitments and leading with integrity — is a critical component of its leadership profile. The corresponding question is, “What leadership roles will make or break the company in the future?”

In the current economic climate, CLOs and talent managers must help their companies focus on the critical roles and the success criteria for those positions to get the greatest return on their leadership development investments.

• Bench assessment: Analyze talent risk by determining gaps between what’s available and what’s required at both an individual and an aggregate level. CLOs in best-practice companies collect much more individual assessment data to target learning at the right talent and the priority leadership gaps.

• Talent planning: Regular and robust talent reviews, informed by objective assessment data, promote real dialogue, succession planning and identification of the next generation of leaders who can fit the profile for key roles. In best-practice companies, business leaders are held accountable for having as robust an understanding of their talent as they do of their financials. Talent planning is facilitated by HR but is driven by the line.

• Leadership development: High-impact leadership development is built on a foundation of assessment data and targeted to leaders who are currently in or will fill mission-critical roles in the near future. Such programs start with an end in mind: to get leaders ready to meet the requirements of the profile that has been defined for key roles. These development initiatives incorporate action learning and leaders teaching leaders so the experience is grounded in the business imperatives for company turnaround or growth. Initiatives also are integrated from level to level and across various leadership roles to ensure consistency of leadership practice and sustainability of the development effort.

• Leadership brand: At the core of this integrated talent strategy is leadership brand. A clear and compelling leadership brand ensures all leadership development efforts can demonstrate impact on employees, customers and shareholders. An effective leadership brand goes beyond individual leadership development and ensures a company’s leadership is a source of value for all stakeholders.

Focusing on Mission-Critical Roles
An important link between talent management and leadership development centers on the identification of key roles and building the talent pipeline to fill them. Structure follows strategy, and the best companies define future leadership roles based on business requirements. They begin with the end in mind to design development plans, mentoring and coaching, job rotations, action-learning assignments and leadership programs to build the capabilities needed to ensure leaders are ready for the roles they are slated to fill.

For example, a professional services firm might focus its talent strategy on three key roles: general managers to lead regions or businesses, client-facing leaders to lead large account teams and functional leaders to lead finance or technology for a division or the enterprise. In each case, it sees a dramatically changing set of capabilities needed to guide the firm out of the current downturn and lack of available talent with the right capabilities to step into these roles. It should interview key stakeholders, including board members and business leaders, as well as research best practices and benchmark leading firms to develop the future profile for these roles.

The CLO must be a full partner in this effort, involved from the beginning of the process and not just called upon when the need for training arises. That way, he or she has the benefit of the underlying context and talent strategy and can ensure development efforts are focused on the areas of competence required for success.

Assessing Key Talent for Succession and Planning
Determining bench strength is an urgent issue that requires robust assessment. There is a need for more rigor to assess leaders who have the potential to play key strategic roles. Increasingly, companies target their investments on high potentials who have the highest likelihood to step up. In the current economic climate, development and learning resources are under pressure, so decisions about who to invest in must be backed by rigorous and objective data. While this may seem obvious, many corporations are hesitant to embark on rigorous executive assessment and executive development.

With their boards now expecting CEOs to report on succession plans, have firsthand knowledge of their leadership bench strength and identify talent-related risks, CEOs are looking to their heads of HR, learning or talent to produce good data. There is a new openness to assessment that is more reliable and built on data from multiple sources. The use of multiple assessment tools reduces the risk of bias from one method, viewpoint or perspective.

In addition, customized assessments built on leadership profiles, grounded in the company’s future strategy, are much more likely to be experienced as meaningful and relevant than generic off-the-shelf tools. A number of companies insist on a comprehensive assessment suite to provide data they deem credible enough to present to the board for succession planning with internal CEO, CFO, COO or business-unit president candidates.

Targeted Leadership Development
The assessment and talent planning process also is more likely to be welcomed by leaders if it is tied to timely and practical development opportunities. Where talent strategies fail most often is in the handoff between assessment and development. Too often, a third party such as an executive coach creates a comprehensive but impractical development plan that is presented to the leader, put on a shelf and then promptly forgotten. While a coach can work with a leader to co-design a development road map, the leader must own the plan with his or her manager.

When development is linked to and flows from the larger business and talent management strategy, it is more focused and produces better results. Leadership development cannot and should not operate in a vacuum. That is the surest way to ensure that it loses credibility and buy-in from top management. Action learning, coaching, exposure to executives and thought leaders and the acquisition of new skills and knowledge have impact when directly connected to the CEO’s change agenda.

For example, the strategy at a global consumer-products company is focused on growth in emerging markets. The business dilemma is a shortage of general managers to lead in these growth markets. The clear imperative is to get more leaders ready more quickly to be able to step in and capture the opportunities that these emerging economies present. The talent strategy was designed to collapse time so the expansion opportunities would not be squandered due to insufficient general managers (GMs) who were not ready to lead.

The CEO initiated a high-visibility, high-impact learning experience to prepare people who would eventually be moving into these GM roles. The GM clinic was an intensive, six-month learning experience to build capabilities identified in a GM profile. It started with assessment of each individual to identify strengths and gaps. All of the learning content focuses on this end point. It includes exposure to top executives to understand the strategy, financial, marketing and execution issues in new markets and included action-learning projects that enable participants to learn the related business and leadership dynamics required to establish a new business unit in a growth market.

Participants spend 10 days in China or India to visit suppliers, retailers and customers and to grasp the culture and the realities of doing business there. The entire focus of the learning experience is to close gaps and prepare high-potential GM talent to step into the roles with a greater chance of success.

This is one of many examples in which effective CLOs are partnering with talent management colleagues to align the learning, talent strategy and business imperatives.

The CLO’s Role
In developing leaders within both the larger context of business and the talent strategy, the traditional role of a CLO is being redefined. Effective CLOs are asking tough questions of themselves and their organizations:
1. Do we have a line of sight from our business strategy to our overall talent strategy to our learning strategy?
2. Have we identified both core and differentiated leadership competencies?
3. Are our development and learning investments targeted at mission-critical roles?
4. Am I joined at the hip with my head of talent?
5. Have we established metrics to measure the impact of our leadership development efforts, and are those aligned with our talent management metrics?

As learning focuses more directly on business and leadership imperatives, the CLO evolves from having a narrow training mindset to one that encompasses integrated development, leveraging the full set of talent management tools and executive sponsorship. Rather than being a center of excellence, the CLO becomes a trusted adviser to the CEO, division president or HR head.

Learning that is more fully aligned with the business and talent strategies becomes a critical element in securing the success of the CEO’s agenda. Doing this well will create greater access as a trusted adviser to C-suite executives seeking faster and more effective execution of the company’s business strategy.