The Leadership Factor

The ability to think strategically and manage change effectively are hallmarks of good leaders. However, many leadership-development programs may be coming up short in these areas.

Monday, February 1, 2010
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Even though he's still settling into his new job as vice president of human resources at a mid-sized technology firm with offices spread throughout the world, Mark Mitford is wasting no time at all in focusing his crosshairs on the company's leadership-development efforts.

"The whiteboard in my office has lots of things scribbled on it, and one of those things is coming up with a global succession plan and identifying leadership traits that are applicable for every employee in this organization," says Mitford, vice president of HR at Telmar Network Technology, an 800-employee company based in Plano, Texas.

Mitford, who arrived at his new job last month after stints at companies including Liberty Mutual, Texas Instruments and PepsiCo, wants to help Telmar succeed by building what he calls a "solid foundation" of six or seven common leadership traits and competencies for every level of the company.

By doing so, Mitford expects that Telmar will be able to identify and nurture potential leaders early on, building them into the sort of executives best equipped to steer the organization past any roadblocks a turbulent economy might throw at them -- thereby bypassing the pitfalls so many companies have stumbled into recently.

"Leaders have the best of intentions around trying to be long-term, strategic thinkers, but there's always that counter-pressure to make sure you deliver what Wall Street wants to see on a quarterly basis," he says. "Typically, the short-term wins out."

There seems to be a widespread agreement among many CEOs today that the leadership-development process at their companies is in need of fixing.

"The overriding theme of what I've been hearing from clients recently is that they're a bit stunned -- shocked, actually -- at how the leadership-development programs they'd had in place were not able to meet the needs of their business as we've gone through these tremendously disruptive economic changes over the past few years," says Bill Pelster, a principal and talent-development leader at New York-based Deloitte LLP.

Companies faced with the prospect of reinventing their business or adapting to a radically changed environment -- as in the financial sector, for example, where government regulators are now playing a much greater role -- are finding themselves with a shortage of executives who are up to the task.

"It's forced companies to rethink what it means to have a comprehensive leadership-development program," he says.

At least two surveys present concurring views. A survey of 1,313 U.S. employers released late last year by Chicago-based Aon Consulting found that, while 84 percent ranked the ability to meet talent and skill needs for leadership roles as a top priority, only 38 percent said their organizations are very or extremely effective at meeting those needs.

Meanwhile, the 2009/2010 Trends in Executive Development study, released late last year by New York-based Pearson and Executive Development Associates, found that many of the 70 leaders from the nation's largest private, nonprofit and government organizations who were surveyed expressed concern that their organizations' up-and-comers were lacking in areas such as the ability to think strategically and manage change effectively.

"Basically, these executives are telling us that these critical competencies are in short supply," says Judy Chartrand, director of Pearson Talent Assessment, which administered the survey.

Lessons from the Top

Having a common set of leadership competencies is the hallmark of companies that are good at producing leaders who can think strategically and manage change, says Norm Smallwood, co-founder (along with David Ulrich) of the RBL Group, a Provo, Utah-based leadership-development firm.

Last year, RBL partnered with Hewitt Associates to produce Fortune magazine's list of "25 Top Companies for Leaders," a list that included Procter & Gamble, IBM and General Electric.

"The best companies have a really good common definition of leadership that's shared throughout the organization," he says.

At Telmar, having a common set of leadership competencies will ensure there's no "misalignment" between executives and junior-level staffers, says Mitford.

"When I worked at Safeco Insurance, which was acquired by Liberty Mutual, our division had a set of six leadership traits that every employee was accountable for emulating, from the CEO on down to a junior-level claims adjuster," he says.

Mitford is currently conducting a series of in-depth interviews with each of Telmar's top 25 executives to determine the traits that made them successful. Based on those interviews, he plans to identify a list of 20 or so leadership traits and competencies, then meet with the company's leadership team and, with their help, narrow that list down to six or seven competencies. The company will then use that list as a basis for its talent acquisition and development, he says.

"If one leadership competency is the ability to think strategically, we'll be able to use the same lens in measuring people up and down the organization for this, even though the scope of responsibilities will vary among the different levels," he says. "We can identify people who have this early on, track their progress and, if they're successful, provide them with some robust coaching and have serious discussions with them about their long-term ambitions."

Another trademark of top companies for leaders is an enduring commitment to leadership development -- in times good and bad, says Smallwood.

"One of the things that distinguishes top companies is that they've continued to invest in leadership -- they haven't taken a 'wait-and-see' approach or cut back completely," he says.

Fairfield, Conn.-based GE (No. 7 on the "Top 25" list) is a good example of a company with a consistent and robust method of producing leaders who can manage well in times of change, says Smallwood. Despite being buffeted by major losses at units such as GE Capital and NBC Universal (which is being sold to Comcast Corp.), GE's commitment hasn't wavered, he says.

"Right now, despite all the gloom and doom, GE still has better leadership-development capabilities than most other companies," says Smallwood. "They do a lot of simple things and integrate them better than anyone else."

Susan Peters, GE's chief learning officer and vice president of executive development, says the company hasn't made any dramatic changes to its leadership-development practices over the years. The company continues to cycle approximately 9,000 up-and-coming managers per year through its famed leadership-development campus in Crotonville, N.Y. -- which is a selling point in itself, says Manager of Executive Development Janice Semper.

"The opportunity to go to Crotonville attracts people to this organization," she says.

What is changing is the company's leadership competency model. GE is in the process of retooling it to reflect the attributes of what it believes will be the "21st Century Leader" -- a leader who can thrive in a global economy that's in constant flux, says Peters.

The impetus for the change came directly from Chairman and CEO Jeffrey Immelt, who -- like his predecessor, Jack Welch -- takes a hands-on approach to leadership development. He meets on an annual basis with the company's 600 highest-ranking executives to discuss leadership-development priorities and makes regular appearances at Crotonville to teach classes and meet with attendees.

Immelt believes 21st century leaders "ask more questions than they answer, welcome dissent and debate ... they are systems thinkers who are comfortable with ambiguity," says Peters, adding that the core competencies will include "big thinker, develops self and others, globalist, listener, communicator and networker." 

In the meantime, GE is sticking with its other tried-and-true development strategies, many of which are designed to help managers become better at leading change. These include week-long "action learning courses" such as Leadership, Innovation and Growth, in which teams of senior leaders from various GE divisions participate in experiential learning activities together.

LIG (which was co-created by Peters) was started in 2006 at the behest of Immelt, who wants GE to grow by expanding its existing businesses and creating new ones rather than acquiring existing companies. Prior to the course, team-members undergo 360-degree reviews to determine their strengths and weaknesses in the areas of "growth values."

Once the teams arrive at Crotonville, they hear presentations from representatives of other GE business units about the transformation challenges they've completed or are undertaking and the lessons learned along the way. Afterward, each team meets to discuss what they've learned and whether and how it can be applied to growing their own business.

"LIG lets participants step out of their day-to-day context and think about things differently," says Peters. "We've found LIG to be extremely effective because the management team experiences it at the same time."

The recurring themes of leadership development at GE are consistency -- managers are expected to have regular discussions about development with their superiors and direct reports -- and challenge: Up-and-comers are regularly placed in stretch assignments, whether it's starting up a new business in a foreign country or winding down a business that the company is exiting.

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"We want to ensure our future leaders understand change, and we've learned that experience is the best teacher," says Peters.

Connecting the Dots

Regardless of how good a leadership-development program a company's may be, however, its effectiveness will be limited if it's not supported or well-understood by the organization's managers. The Center for Creative Leadership in Greensboro, N.C., recently conducted a soon-to-be released study in which it asked managers at various companies to rank a list of competencies in their order of importance at the companies they worked for.

Then, the researchers asked the managers to rank the most effective employees at their organizations -- how promotable they were, whether they could be moved into a different functional area, how effective they were as leaders -- and found that the competency profiles of the most-effective employees were the inverse of the competencies selected by the managers as the ones most valued by their organizations.

"Self-awareness and the ability to lead employees effectively were ranked low on the competency list by the managers," says Sylvester Taylor, the CCL's director of assessments, tools and publications. "But when you looked at who they described as the most effective employees, those things were at the top of the list.

"I guess the take-away for the average employee from this is, if you want to know what's important for success in your organization, don't ask your boss," he says ruefully. 

The CCL survey illustrates the disconnect that often exists between leadership development and the rest of the business, says Taylor.

"We don't connect the dots," he says. "We don't say 'Here are the business outcomes we need, what are the leadership implications of those outcomes and how do we go about developing leaders in a way that will help us get those outcomes?' "

"We need to be looking at the leadership-development process holistically, to understand the skills we'll need to grow the business as we move forward," says Elisa Bannon, director of talent acquisition at U.S. Cellular. "If we look at development just by itself, we may not get the traction we need."

At U.S. Cellular, a Chicago-based wireless provider with 9,000 employees and 470 retail stores, building management (and employee) support was crucial after the company decided changes needed to be made to its process for developing leaders in its sales division.

One of the company's goals is to move experienced employees into senior-level business-development positions in which they'll go out and win new business accounts, then work closely with employees at U.S. Cellular's retail stores to implement and service the accounts.

In 2007, some employees voiced concerns that the assessment portion of the company's development process for those positions was flawed and unfair, says Bannon. At the time, only 57 percent of the employees who went through the assessment passed it.

U.S. Cellular decided to retool the program. Working closely with its vendor, Bridgeville, Pa.-based Development Dimensions International, the company developed a process for its senior managers to nominate and select employees for the development opportunities and provide them with regular coaching prior to going through the assessment, rather than using the assessment as a gatekeeper.

In revamping the program, Bannon and her HR colleagues reached out to the company's senior and mid-level sales associates, getting their feedback on the development process at each step of the redesign. When the redesigned program was completed, Bannon brought in groups of managers and employees who'd expressed concerns about the previous program to preview it.

Their positive feedback was used to promote the new program to the rest of the organization. Last year, 90 percent of the employees who entered the program successfully completed it. 

"We went out and brought in as large a cross-section of employees that we could find to become a part of this," says Bannon. "And after they went through the program, they believed in it and went out and supported it publicly."

Read more:

Trends Affecting Leadership Development

Watch the Gap

Planning Vs. Thinking

Make Things Happen

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