Industryweek 1996 Futleaders

Identifying Your Future Leaders

Aug. 12, 2010
Sustained, committed leadership development can be a key differentiator between the most successful manufacturers and the also-rans. Are you taking care of your talent pipeline?

A group of General Mills' senior managers recently had a chance to interact with one of history's great explorers -- Sir Ernest Shackleton, who had to abandon his ship, the Endurance, trapped in the ice of the Antarctic waters, in November 1915 and then led one of the most famous and dangerous missions in history to rescue his crew.

Shackleton, played by a New York actor, was part of a program held every two to three years by General Mills called "Building Great Leaders." Groups of the company's 500 top managers take a day to individually sit down with a human resources manager, review results of their 360-degree feedback and two personality assessments, then listen to a senior vice president address leadership issues. As a result of these discussions, managers take the development plans they have brought with them and modify them based on this information. Later, managers take part in the two-hour theatrical experience set up in press-conference format to explore the themes of what makes a great leader.

"We communicate with the participants' managers after the course to ensure that there is dialog and discussion after the program," reports Beth Gunderson, director of organizational effectiveness at General Mills.

The "Building Great Leaders" program is just one part of the leadership development program at General Mills, but it is indicative of the company's wholesale commitment to developing leaders throughout their careers and to making mentoring and other development activities an important part of each manager's responsibilities. The reason is fairly simple, according to Gunderson. Based on the company's internal and external research, she states, "If you have better leaders, you will see better business results."

Faced with a harsh economy and the need to conserve cash, many companies trimmed severely or even eliminated their leadership training programs in the past couple years. Plenty of other companies have no real program for identifying and developing talent. But mounting evidence shows these companies are putting themselves at a competitive disadvantage.

In May 2009, Deloitte, The Manufacturing Institute and Oracle conducted a survey of large manufacturing organizations. While 55% of companies with top-quartile profitability rated themselves "high" in linking their people strategy to their business strategy, only 30% of the companies in the bottom quartile of profitability did so.

In 2009, Hewitt Associates conducted the most recent of five studies dating back to 2002 looking at talent management and leadership practices. This research shows a link between financial success and leadership practices such as comprehensive succession planning and the dedication of senior leaders to talent development.

Earlier this year, the American Management Association commissioned the Institute for Corporate Productivity to conduct a study on global leadership development. The study found a "significant statistical correlation" between the degree to which respondents said their firms have global leadership development programs and improved market performance.

The focus on talent development comes as many businesses assess the impact of the upcoming baby boomer exit. "There are 76 million boomers and they are turning 65 at the rate of one every eight seconds," notes Bonnie Hagemann, the CEO of Executive Development Associates. "There are 11% fewer Gen Xers. There will be a drop in the number of employees and then there is the issue of which ones are ready to leave."

Filling the talent pipeline to avoid a leadership void in the future was just one of the motivations for W.R. Grace (IW 500: No. 256), the $2.8 billion specialty chemicals manufacturer, to develop a manufacturing leadership program in 2002. "We made a conscious effort to design a program where we could hire in some really talented people off college campuses, provide a two-year rotational development program for them where they are going to get exposed to different aspects of the manufacturing and operations world, and then be primed to be candidates for leadership openings as we continue to grow and develop our organization," explains Troy Vincent, Grace's vice president for global talent acquisition.

Vincent said the company looks for college students with a technical degree, such as chemical engineering or chemistry. Grace also looks for evidence of leadership qualities, such as becoming president of a fraternity or becoming a supervisor in a job they hold while going to school. In addition, the company provides internships to students and frequently offers promising interns jobs after they graduate.

Such was the case with Jennifer Summerhill, who interned two summers at Grace before graduating from Carnegie Mellon University with a chemical engineering degree. She was recruited into the Leadership Program and did rotations in Cambridge, Mass., as a Six Sigma black belt leading projects in different plants, in Houston as a plant manager, and in Mt. Pleasant, Tenn., as a process engineer.

Summerhill praises the leadership program for providing her the responsibility she desired but also structure and mentoring. She says she has learned a good deal in the past two years about working with different personalities and refining her communications and interpersonal skills. In some cases, that meant finding ways to encourage and influence employees to do things rather than giving an order and becoming upset if there was pushback. Recently, Summerhill took a position as an environmental specialist, but she admits her goal "is to get back in the plant and be a plant manager."

Leadership Characteristics

All companies say they want leaders, but defining the characteristics can be a tricky proposition, particularly with young employees. "The characteristics people develop through training, experience and progress in their activity are not necessarily apparent from who they are when they start," cautions Stephen Balzac, president of 7 Steps Ahead. Moreover, he says many managers "have beliefs about leadership that look like something out of a movie" -- loud, aggressive, in-your-face types of guys. Instead, Balzac urges clients to put employees in confusing or ambiguous situations and watch what happens. "Look for the people who build connections, who bring the team together, who focus everybody on trying out different ideas. Look for the people who essentially provide direction without having to intimidate to get it."

Looking simply at ability is a common mistake that companies make when assessing an employee for a management job. According to research from the Corporate Executive Board, 40% of internal job moves made by people identified by their companies as "high potentials" end in failure. The reason, says Todd Safferstone, managing director of CLC Recruiting, is that companies fail to look at two critical factors -- aspiration and engagement. Aspiration entails whether the candidate really wants the position and is willing to make the sacrifices it may require. Engagement involves the employee's commitment to the company and its mission. In focusing on whether an employee potentially can do a job, he says, "They neglect the question, 'Does he want to do this?'"

Companies also need to be sure they are assessing employees not just for the present but for the environment in which they will be operating in the future. Bob Fulmer, a veteran management development professional and academic director of Duke Corporate Education, says many companies develop competency models based on a set of traits and behaviors associated with success in the company and then measure employees on how well they do relative to those traits. Companies must look at not only what has made people successful, says Fulmer, but also what is likely to be important and what shortages they have.

Companies with the best leadership development programs may not have practices that are significantly different from other firms, says Fulmer. What differentiates them, he says, is that "they execute the basics a lot better." Those major building-block elements are:

Systems Approach -- Individual elements such as training or competencies are not as critical as tying things together in a cohesive approach.

High Profile -- Succession planning or developing leaders is considered important, is on the CEO's radar and involves everyone in the company.

Strategic Tie-in -- Programs are tied directly to the strategy of the company. "You don't just develop leaders that have great leadership skills; you develop leaders who will be useful in executing your corporate strategy and taking you where you want to go," notes Fulmer.

Talent Stewardship

Ingersoll Rand, the diversified industrial company with familiar brands ranging from Trane air conditioners to Schlage locks, is preparing for a future that is globally focused and benefiting from innovation. Right now, the company has about 60% of its sales in North America. In coming years, says Marcia Avedon, senior vice president of human resources and communications, the company hopes to have its sales split equally among North America, Europe and Asia-Pacific. To do that, she says the company needs leaders who "understand the uniqueness of those markets and what the value propositions really look like."

Over the past decade, Ingersoll Rand's portfolio was reshuffled to acquire less cyclical businesses with higher margins. After this period of mergers and acquisitions, the company is stressing organic growth through innovation. That means finding and developing leaders who can help drive innovation in both products and services.

Ingersoll Rand has a talent framework that encompasses four elements: identifying talented individuals, assessing their performance, developing their talents and retaining them. At the center of this model, says Avedon, is talent stewardship, the notion that every leader in the company is personally accountable for developing leaders.

The company aims to capitalize on the variety of its businesses as a tool for developing leaders. "We feel the best way to help people is for them to have broad perspectives and experiences," she says. To lead major parts of the business, Avedon says, senior managers are expected to have met the "2 x 2 x 2" rule -- work in at least two different business units, in two different functional areas such as finance and marketing, and in two different countries. "A lot of our talent planning and leadership review is around who needs what experiences," she notes. "Who do we need to move where? What are people's next assignments so we can continually broaden and grow our talent through experiences?"

Questions like those are never fully answered in dynamic organizations. That is why professionals such as General Mills' Gunderson say it is important to view leadership development as a long-term investment. "We need to keep the innovation pipeline full so we need leaders who are going to take us down that path," she says. "So, we need to continue to invest in them."

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