:: Leadership 2012 ::

Executive Summary

McKinsey’s Lowell Bryan and Claudia Joyce write in “Mobilizing Minds, Creating Wealth from Talent In The 21st Century Organization” that many companies are unable to capture the opportunities of today’s global economy because they were designed using a 20th century model. The digital economy has increased the size, scope and diversity of these companies, thereby increasing their complexity. Future growth will continue to be strained under complex workforce structures, functional silos, confusing matrix reporting structures, e-mail overload and job complexity. The book calls these factors “complexity constraints” and provides evidence for how these constraints will continue to thwart organizational growth.

Bryan and Joyce analyzed the concept of “profit per employee”, a metric that sheds light on the firm’s intangible assets that result from “thinking-intensive” work. They found that “thinking-intensive” companies – those with a large percentage of employees who must think subjectively and solve problems rather than perform well-defined tasks – are delivering staggering income, profitability and market capitalizations. These are the firms that are more adept at creating an environment where knowledge workers can translate their mind work into high-quality, high-return benefits.

The author’s research is based on a study of 1,500 companies, and found that “profit-per-employee” in thinking-intensive organizations was $30,000 more than competitors in the same industry. Based on their findings, Bryan and Joyce argue that a company with 100,000 employees could increase revenue by tens of billions of dollars by more effectively mobilizing knowledge, skills and relationships to deliver superior service to customers.

The writers lobby for organizations to make new investments in organization design to unlock the inherent value in talent and create a new business structure that can effectively overcome external threats. These new conditions can only come about through the purposeful acts of dedicated leadership teams. And yet, many companies still are not wholly committed to, organized for, or effective at developing a great leadership bench.

Corporate University Xchange, (CorpU) - a global learning and leadership research and consulting firm that has spent over a decade studying employee performance optimization and measurement - recently completed the Leadership 2012 study, focusing on trends and best practices for developing leadership talent. The study included 80 Global 2000 organizations, phone interviews and a survey of 225 data points on leadership and talent practices. Organizations involved in designing and completing the research included UBS, Wharton, Harvard Business School, Toyota, Honeywell, Google, and many others. A complete list is available at the end of this summary.

 

 

Real Leadership Challenges

The results from CorpU’s Leadership 2012 study revealed that current models for developing leaders seem to be falling short of delivering adequate leadership talent, which organizations desperately need to execute their business strategies. A small selection of the survey results indicates the degree of the current problem. For example:

  • 97% of surveyed organizations indicate that they are concerned about current leadership bench strength or their ability to develop the leadership talent required to support the company’s future growth objectives.
  • 81% of surveyed organizations have “significant” concerns about the leadership bench strength and their ability to support growth initiatives.
  • 69% say they are “somewhat” or “significantly” challenged to develop the leadership talent required to compete in emerging markets.
  • 91% say they are challenged to identify high potentials early in their careers.
  • While organizations say that “developing talent” is a key competency for their leaders, the topic receives the fourth lowest amount of attention in formal leadership development programs and action taken by managers.

Many participants in the study voiced concerns regarding their ability to support their firm’s business plans and strategies by delivering key leadership talent when and where it’s needed. Their concern is not yet translating to a substantial change in action at the top of their organizations, and a full 68 percent of survey participants said their firm’s commitment to leadership development is either weak or is not backed up by appropriate levels of financial investment.

Additionally, participants noted that the focus of leadership competency models is requiring leaders to coach and mentor employees, but that the day-to-day actions of leaders do not match the organization’s rhetoric. For example, leaders often do not release people for stretch assignments or give them adequate time to complete their development plans as corporate training policy may dictate.

Survey participants indicate they are following the mechanics of building good leadership development processes by implementing the well-publicized success tactics of Jack Welch at General Electric’s Crotonville Leadership Center. Most have 9-box models to slot leaders into performance buckets, and have instituted “leader as teacher” programs. They also conduct action learning activities that model GE’s Workouts where teams of high potentials analyze real business challenges and develop recommended solutions that they present to senior leaders.

However, activities from the Jack Welch playbook are getting mixed results in their firms. For example, only 32 percent say their leader-as-teacher programs are highly effective. This is likely a factor of the subtle cultural nuances that make them effective programs in one organization and a wasted effort in another. The newness of these activities might also be a factor in organizations that have not yet experienced or observed the impact of changes taking place as a result of their new efforts.

Survey participants know that their challenges to attract, grow and keep good leaders will only become more difficult as the projected shortage in leadership talent becomes a reality in the next few years. They also know that they have promoted significant numbers of people who are technically gifted but who do not possess the overall traits required to lead successful teams. Some reported, during telephone interviews, that their businesses have already bungled growth opportunities because they didn’t have the right leaders, or any leaders, to drive them.

Ultimately, results of the Leadership 2012 research study indicate that HR, Learning and Talent Management professionals are concerned that:

  • They are not building a strong core of great leaders.
  • Programs and processes for developing leaders need strengthening.
  • Without change, shortages of leadership and other key talent may prevent their companies from achieving their objectives, leading to a negative impact on company performance.

 

What to Fix First

As pressure mounts in all organizations to attract and retain top talent, leadership development challenges will require more attention than ever before. CorpU summarizes below the three changes believed to be essential for delivering a good flow of leadership and core talent to sustain successful operations and pursue growth initiatives:

  • Integrated Processes - Leadership talent identification, selection and development processes are still highly fragmented, and no single approach emerges as a solid best practice. In reviewing 225 data points, CorpU found only a few rare occasions when a strong majority of survey respondents agreed on a practice, an organization structure, a reporting relationship, or on the effectiveness of a program or activity.

    In general, leadership talent processes are not managed as an integrated set of activities in the way that other organization core processes are. Leadership activities often are managed as discrete and separate activities owned by a variety of groups within the HR, Learning and Development, Organizational Development, Talent Management and other support functions.

    Organizations should consider the “integrated supply chain” as a more appropriate model for structuring leadership and talent processes. The model must streamline the flow of information among the owners of the process steps and improve the efficiency for moving leadership talent through its development evolution.
  • Transparency - Very few companies have built a technology or systems infrastructure to offer significant transparency into leadership talent pools across the enterprise. Stand-alone systems monitor independent activities such as performance results, 360-degree assessments, past work experiences, specialized skills and knowledge, formal training, task force assignments, employee engagement study results, individual development activities and other variables that contribute to an in-depth profile of potential future leaders.
  • Efficacy - Morgan McCall, author, professor and thought leader on the topic of leadership development, writes extensively on his research into the making of effective leadership talent. McCall says the key to the development of successful executives has little to do with formal training and more to do with increasingly challenging work experiences.

    The majority of participants in the CorpU study revealed that developmental assignments are often performed in an ineffective, ad hoc manner based on gut-level feelings from supervisors about the experiences they “think” potential leaders require. In addition, participants indicated that there is little or no science behind how stretch and rotational assignments are used to round out a leader’s developmental experiences.

    There is often little or no follow-up to determine the effectiveness of any assignment in the development of a single individual, or whether or not a similar type of assignment should become an ongoing recommendation for other future high potential leaders. In addition, there is apparently significant pushback from supervisors to release their people for developmental assignments.

 

A Time of Change

Based on survey participation and interview responses, study participants describe leadership development programs that are in an almost constant state of flux. Some participants in the Leadership 2012 study who said they wanted to complete the survey came back a few weeks later to withdraw their responses saying that their programs were about to change significantly, rendering their responses irrelevant. Participants from one automotive company withdrew because they were unraveling a previous merger and realized that they would need to rebuild significant aspects of their programs. Others reported changes at the CEO level that were driving philosophical shifts in their overall approaches to leadership development, thereby causing delays in the execution of those programs.

Data collected in another recent, self-funded CorpU study focusing on employee development practices in large, international organizations shows that 41 percent of the 226 participants said that Executive Development programs have completely or significantly changed in the last 18 months.

 

The degree of change in programs for other leaders and high potentials is even more dramatic, with almost 50 percent of respondents reporting significant or complete change.

 

Leading magazines and business news publications such as Harvard Business Review, Business Week, The Economist and even Time are writing about challenges faced by organizations in building quality leadership talent fast enough to keep pace with their aggressive growth strategies around emerging markets. Leadership talent easily has the potential to become a significant inhibitor, and that is likely a main driver for these sudden and substantial changes as organizations try to quickly improve their structures, processes and programs to facilitate their ability to produce good leaders faster.

 

Bright Spots On The Horizon

As it becomes increasingly important for organizations to develop good leaders who are capable of working on a global stage, new ideas are emerging about how to improve current leadership practices. Some new ideas that emerged through pre- and post-survey telephone interviews include:

  • Embracing the notion that HR is evolving as a “decision science” and creating the structures, systems and measurements to make fact-based decisions, as well as identifying new metrics that can improve how organizations predict talent needs and estimate the value of talent.
  • Creating local talent review teams that can become intimately familiar with employee capabilities, and can direct development activities to supplement coaching and development offered by individual supervisors.
  • Understanding the impact that leadership roles have on an individual’s entire family, and therefore, beginning to include spouses or partners in decision-making processes and in the leadership development programs themselves, to strengthen the family’s commitment to a future leader’s success.
  • Creating consortiums with other organizations to facilitate knowledge sharing, networking, idea exchanges and development opportunities across industries.
  • Building integrated systems to track rich and broad profiles on employee performance, development, experience and unique talents to improve transparency into the organization’s talent pool.

These and other new ideas are discussed throughout the 57-page CorpU report, and build a clear picture of the issues relating to this problem that must be understood in order to take the first steps towards developing leadership strength.

This documentary, along with more than 50 video interviews with learning leaders from Fortune 500 companies around the world can be viewed along with supplementary articles at www.corpu.com.


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More articles, interviews, and research on Leadership Development



:: About the Leadership 2012 Report ::


Study Overview

Corporate University Xchange (CorpU) was asked by a leading international corporation to conduct a study on current leadership and talent management trends, as well as best practices in leading organizations. CorpU worked to create the “Leadership 2012: Trends and Best Practices” study that is based on a survey of 55 questions representing more than 225 data points related to leadership and talent management practices. Of the 55 questions, 9 were demographic questions to further characterize participating companies by organization size, industry, regions of the world where their programs operate and other survey population characteristics.

CorpU also created questions to be used during telephone interviews to probe for deeper insight concerning specific practices in selected organizations. The survey was promoted to the CorpU subscriber database of more than 20,000 organizations. More than 150 organizations asked if they qualified to participate. After screening out organizations that did not meet the target audience profile, user names and passwords were issued to 120 firms. 72 organizations (including 26 global companies) completed the survey.

 

Study Objectives

The intent of the study was to analyze leadership and talent management practices across the following 8 dimensions:

  • Organization culture
  • Structure and authority of learning and talent management organization
  • Leadership development activities
  • Leadership team characteristics
  • Forecasting talent needs
  • Succession planning
  • High potential talent and talent pools
  • Impact and measurement

CorpU researchers aimed to identify emerging trends in the practices organizations use to identify and develop current and future leaders. The research team also wanted to find activities that could be classified as “best practice” and that might be of value and interest for other organizations to consider.

 

Report Structure

The Leadership 2012: Trends and Best Practices Research Report is organized into the following 6 sections described below:

Executive Summary – Provides an overview of the survey findings, telephone interviews and award-winning programs to derive recommendations that organizations must consider in order to fix their current leadership and talent programs.

Study Overview – Describes the study objectives, the participants and the series of activities that were undertaken to execute all aspects of the research and analysis effort.

Study Findings – Provides results of the quantitative survey and analysis of the data that was collected.

Interview Details – Includes write-ups of interviews conducted with selected organizations to identify best in class characteristics of their leadership and talent management activities.

Highlights from Leading Organizations – Illustrates award-winning and other notable leadership development practices reviewed in Corporate University Xchange (CorpU) industry award programs.

Conclusion – Offers parting thoughts on the state of leadership and talent management activities within organizations today.

Appendix – A description of the target audience and practices used to execute the survey.

 

Data and Conclusions

To compile the conclusions, findings and recommendations that are included in this report, the CorpU research team relied on:

  • Data collected in the quantitative survey activities of the Leadership 2012 research study.
  • Concerns and needs from HR and Talent Management professionals gathered in telephone interviews as pre-work and preparation for the Leadership 2012 study.
  • Details on specific leadership and talent processes, programs and other activities gleaned from telephone interviews with participants as a follow-up to their participation in the Leadership 2012 survey.
  • Findings from the CorpU 8th Annual Global Benchmarking study conducted in June with 226 companies.
  • Findings from a CorpU research study on performance management practices conducted with more than 150 companies in February.
  • Applications and materials that were submitted to the CorpU annual awards program for excellence and innovation.
  • Research conducted routinely by CorpU for its member organizations seeking information on a wide variety of topics related to learning and leadership development.
  • Daily interactions with learning executives in thousands of corporate universities around the world.

 

Charted Data

Percentages displayed in charts throughout this report have been rounded up to a whole number. In some cases where percentages have been rounded to the nearest whole number, the data does not total100%. However, if the decimal places were included, totals would equal 100%.

 

Organization Characteristics

CorpU agreed that the Leadership 2012 Study would be available to organizations with the following characteristics:

  • Any Global 2000 organization with formal learning and leadership programs.
  • Mid-tier companies operating substantial learning and leadership programs.
  • Small companies.

 

Survey Participants

CorpU agreed that the Leadership 2012 Study would be available to organizations with the following characteristics:

  • Any Global 2000 organization with formal learning and leadership programs.
  • Mid-tier companies that operate formal learning and leadership programs.

CorpU excluded from the survey:

  • Companies that were consulting firms intending to participate in order to receive a copy of the findings and that would not contribute to the quality of the findings.
  • Independent professionals or academicians who were not overseeing leadership and talent management programs.

 

Study Participants

The list below identifies companies that completed the survey and the country where their headquarters is located.