Feeding the Pipeline

Although leadership development may have become a "lost art" at many organizations, HR professionals consider it a top concern and continue to rely on best practices for building the leaders of tomorrow.

Friday, August 1, 2008
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With so much riding on the shoulders of those at the top, it's no surprise leadership development is a major concern among HR professionals. According to a 2007 IBM study entitled Unlocking the DNA of the Adaptable Workforce, more than 75 percent of HR executives say they are concerned about their organization's ability to develop future leaders.

And yet, surprisingly enough, the majority of American employers are not investing in developing future leaders from among their own ranks, according to Peter Cappelli, professor of management at the University of Pennsylvania's Wharton School, director of its Center for Human Resources and author of Talent Management on Demand: Managing Talent in an Age of Uncertainty.

Only one-fourth of the participants in Wharton's Advanced Management Program -- "the kind of program where you would send people who are on the high-potential track," he says -- are from the United States.

"U.S. companies won't send people," says Cappelli. "It's all about the time and money."

For the most part, he says, companies stopped seriously investing in leadership development about a generation ago. Unfortunately, they also laid off many of the HR experts who had been involved in developing future leaders, creating a significant skills gap in the profession that persists to this day.

"The priority had shifted from developing candidates to getting rid of them, so they also got rid of everyone who was involved in the training and development of talent," Cappelli says. "All the institutional knowledge about how to do this stuff is gone."

The few organizations that continue to receive accolades for their leadership-development programs -- GE, Procter & Gamble, IBM, etc. -- aren't really doing anything revolutionary, he says. It's just that they didn't dismantle their programs when everyone else did.

"They are not doing anything the least bit new," he says. "They are doing exactly what they did a generation ago. It's just that they're the last ones standing, so everyone is pointing to them as examples."

Sales or Operations?

Given GE's history of leadership development, it should come as no surprise that a GE spin-off is investing heavily in this area. At Shelton, Conn.-based Gexpro, an electrical-distribution business spun off from GE in 2006, the identification of young high-potentials begins the moment they start working for the company.

"The day anybody starts with the organization, we begin by asking 'Is this somebody who has the potential to do something great within the business?'" says David Pasternak, director of organization development.

When the answer is "yes," those new recruits are entered into the company's college entry-level pipeline program, a two-year process during which the potential future leaders spend the first year rotating through different functions within the business to give them a greater understanding of how the company operates as a whole.

The second year, says Pasternak, is all about "declaring their major." That's when the participants decide if they're going to continue on an operations track or a sales track. The year is then spent developing skills in their chosen area.

At the same time, they also participate in Gexpro's Personal Leadership Course, which is intended to help them understand their role in the organization, as well as their influence on other people.

With young employees spending less time at each employer than the generations that preceded them, it's incumbent upon organizations to identify potential future leaders early in their careers, get them started on an appropriate development path and convince them of the opportunities that await them before they start thinking about greener pastures elsewhere, says Monica Dearth, president of ISHR Group, an HR consulting firm based in Suwanee, Ga.

"With early-career high-potentials, you've got to spend some time developing them with the hope that they'll see the path you've paved for them; thus, making it more likely they'll stick around," says Dearth, whose company worked with Gexpro in setting up its program. "If you set up the presumption that [certain employees are] high-potential and you give them extra development, they see that you're actually doing something to develop and promote them."

Being known for developing great leaders may be helpful, in that aspiring future leaders may seek out such organizations as potential employers. At the same time, however, such companies run the risk of losing them to the competition. Often, other companies can afford to pay more because they don't invest much in their own employee-development efforts.

"Companies that are known as really good developers of leaders will be subject to [hiring] raids," says Edward Lawler, distinguished professor of business at the University of Southern California's Marshall School of Business and founder and director of the University's Center for Effective Organizations. "There's a rush to learn from them, copy them and, in many cases, steal their leaders."

Identity Crisis

The identification of potential future leaders can take many forms. For San Juan Capistrano, Calif.-based Silverado Assisted Living, the company's relatively small size -- 2,000 employees -- makes it easier for managers see firsthand whether employees have leadership potential.

"We're still small enough that people are identified simply by what they accomplish," says Dawn Usher, senior vice president and chief administrative officer. "Often, it's just a matter of someone recognizing that [he or she] might be a good administrator candidate, so we'll sit down and talk to [him or her] about their interests and where they want to go."

Other organizations have far more complex means of identifying potential leaders. Indianapolis-based Eli Lilly and Co. uses its Talent ID tool, a method of talent assessment that examines an individual's past and current performance, as well as his or her capabilities and soft skills. This helps managers make an objective assessment of an individual's potential for advancement.

In Toronto, Sun Life Financial Inc. conducts an annual talent review for employees at the director level and above. The process begins with managers assessing their own talent and inputting their information into a software application. That's followed by a series of conversations throughout the organization, cascading all the way up to the senior-most levels, according to Cathryn Klassen, vice president of leadership and talent development.

"We look at our population and its potential rankings and decide how employees might be able to move within the organization and what type of development activities we need to put in place for them," says Klassen.

Ideally, companies should use a mix of classroom and on-the-job experience, says Gayle Lantz, president of WorkMatters Inc., a Birmingham, Ala.-based consulting and coaching firm, and author of Take the Bull by the Horns: The Busy Leader's Guide to Growing Your Business and Yourself.

At Eli Lilly, the rule of thumb is 70/20/10: Seventy percent of development experiences should be experiential, 20 percent relational -- mentoring, networking and coaching -- while the remaining 10 percent can be satisfied through formal training.

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"It's important to make sure that [candidates] have had a variety of different experiences and cross-functional assignments, so as they begin to lead different facets of the business, they have both the breadth and depth of experience to be effective," says Glen Burkhardt, the pharmaceutical company's manager of global staffing. "That requires us to create a career trajectory that is both fruitful and timely."

Charting the Course

Some organizations are creating their own leadership curricula. Each year, Albany, N.Y.-based Capital District Physicians' Health Plan puts 18 managers through Rising Stars, the company's 12-week "action learning" program, which combines classroom learning with a process-improvement project that is ultimately presented to the senior leadership team.

"Rising Stars is one of our highest- profile programs, from a succession perspective, as far as helping individual high-potential contributors gain access to senior leaders and directors outside of their normal work environment," says Steve Russell, director of corporate learning and development.

Gexpro uses a four-tier leadership curriculum developed with assistance from the ISHR Group. Dearth calls it an "interactive dynamic course," designed to mirror GE's famed Management Research and Development Institute in Crotonville, N.Y.

The program, which is based on formal classroom training, consists of four different leadership courses, each designed for different levels of the organization. Participants are nominated by their supervisors, then sent to the Dolce Peachtree Hotel in Atlanta for the courses, which range in length from three to 10 days.

The entry-level course, dubbed Personal Leadership, is designed for those with less than five years of experience at Gexpro, but who clearly possess leadership potential. The course teaches them basic skills, such as how to present themselves, how to read people and how to influence others.

The second course, Influential Leadership, is intended for those who've already moved into their first leadership role. Attendees focus on finding key talent and motivating others to perform. Those with at least five years of leadership experience are placed into the third-tier Accelerated Leadership class, which focuses on the transformation from leader to strategic thinker.

The top tier is the Executive Leadership course, which is attended by just 15 people each year. Pasternak describes it as "two weeks of strategic thinking," in which participants are placed into teams and assigned one or more real-life business issues to resolve. The teams present their strategies to the company's senior leaders, and then set about implementing those strategies within the business.

Senior management's involvement begins long before the final presentation, however. Pasternak describes the courses as a "huge networking opportunity," in that all participants gain valuable exposure to key leaders, including Gexpro's CEO, Mitch Williams, who prides himself on attending every session.

At Grand Rapids-based Steelcase Inc., CEO James P. Hackett takes charge of the office-furniture manufacturer's Leader Program. That 18-month-long program is designed to accelerate the development of 12 top performers who've been identified as having the potential to reach the top, according to Laurent Bernard, vice president of global human resources.

This sort of commitment from the C-suite is critical to the success of a leadership- development program, says WorkMatters' Lantz, who adds that the sole responsibility for leadership development should never rest solely with HR. Granted, HR can play a key role in facilitating such a program, he says, but without support and involvement from the very top, even the most genuine attempt at leadership development is doomed to fail.

"If HR executives are in a situation where they have to own [the program], they're in trouble," says Lawler. "They need to say to senior leadership, 'I can't do this without you.' If the senior leadership doesn't see the value in immersing themselves in this kind of initiative, then it's time to move on."

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