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Finding Leaders Early

What makes the companies on Aon Hewitt's 2014 Top Companies for Leaders list exceptional is different than in years past, and these organizations are more focused than ever on identifying and nurturing would-be leaders early on, experts say.

Monday, December 8, 2014
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An exceptional corporate leader typically possesses a combination of tangible and intangible qualities-professional acumen, communication skills and uncanny business instincts, for example-that spurs teams and organizations on to great things.  

The 2014 Global Aon Hewitt Top Companies for Leaders list-a group of 25 organizations selected and ranked by a panel of independent judges including experts from the University of Pennsylvania's Wharton School; the Indian School of Business in Punjab, India; the Pontifical Catholic University of Minas Gerais in Belo Horizonte, Brazil; and Western University's Ivey School of Business in Ontario, Canada-identifies the companies that excel at spotting and developing these qualities in their people.

The Aon-assembled panel weighed criteria such as strength of leadership practices and culture, examples of leadership development on a global scale, alignment of business and leadership strategy, business performance and company reputation in compiling the list.

This year's list is headed by General Electric, followed by International Business Machines Corp., Hindustan Unilever Limited, General Mills Inc. and ICICI Bank.

(Click here for the full 2014 list.)

How did these and other companies make their way onto the 2014 list? Aon Hewitt singled out five key characteristics these organizations shared in their approach to identifying and nurturing leaders. Top Companies, for example, "assess the whole leader" early in their careers, evaluating leaders' experiences, competencies, values and organizational fit, according to Aon Hewitt.

In addition, these organizations boast leaders who "demonstrate tremendous self-awareness by understanding their personal strengths and weaknesses ... using this information to become more effective leaders, according to the Aon report.

Top companies also excel at "build[ing] resilience in their leaders," pinpointing and building engaging leaders who "are stabilizers, demonstrate versatility and stay connected to people and events inside and outside" the organization, and building talent programs that are nimble enough to respond quickly to the market demands, "yet sustainable [enough] to deliver superior business outcomes."

Aon Hewitt has compiled its Top Companies for Leaders list since 2001. The emphasis top organizations place on leadership programs has changed in that time, "and what we see now is a really elevated urgency to develop leaders," says Lorraine Stomski, partner and head of Aon Hewitt's leadership consulting practice.

"The environment we're operating in is a volatile one, which has really shifted what leaders need. We see that overlaying everything," says Stomski, who notes that what made organizations stand out in terms of leadership even two or three years ago is now "table stakes" for top companies.

The increasing emphasis on developing leaders is also "interesting as an outgrowth of what companies need to do to be competitive in what I call the 'transient advantage economy,' " adds Rita Gunther McGrath, associate professor of management at Columbia University's Columbia Business School in New York.

"What that means," she says, "is that, increasingly, a company's ability to deliver exceptional results over time is going to depend on their key leaders being able to nurture new advantages."

The first step toward establishing such a competitive advantage is to pinpoint potential leaders early on in their careers and nurture them with stretch assignments and coaching, for example, and reiterating to these high-potential employees that they have a bright future within the organization, says McGrath.

Identifying and developing future leaders is a "systematic process" at IBM, says Ted Hoff, vice president of leadership and learning at the Armonk, N.Y.-based company, which occupies the No. 2 spot on Aon Hewitt's 2014 Top Companies for Leaders list.

While that process seems fairly straightforward, "it's something we try to continue getting better at," says Hoff. "We look across all IBMers, asking managers and senior leaders to identify people with high potential, and the potential to stretch into new areas. We also have a disciplined process by which we ask managers to ask members of their teams what their career interests are, so we can explore what people want to do."

Equipped with that knowledge, managers provide guidance to would-be leaders around the development opportunities available to them, he says.

"This could perhaps mean an opportunity to participate in a formal leadership development program, in person or online, but it's mostly about finding mentors or engaging in projects that help them become members of communities where they can learn from colleagues."

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Hoff and the HR team "asks managers and leaders to encourage IBMers to take advantage of all those opportunities."

Fairfield, Conn.-based General Electric-which holds the top spot on this year's Top Companies for Leaders list-views its ability to identify leaders early and bring them along through the organization as "one of our defining qualities," says Marilyn Gorman, of the executive learning and development function at GE Crotonville, the Ossining, N.Y.-based home to the GE Management Development Institute.

"Like many big businesses, we have campus recruiting [programs to help spot those with leadership potential]," says Gorman. "But more importantly, we offer leadership program participation that gives employees the opportunity to rotate assignments, [get] exposure to learning opportunities and gain access to senior leaders in a way that helps them feel recognized and valued, but also allows them to learn from leaders.

For example, GE Crotonville houses the organization's Leader in Residence program, in which top executives spend one-week stretches teaching, coaching, mentoring and learning with as many as 200-plus of GE's high-performing managers and individual contributors from around the world. Executives interact with attendees in one-on-one coaching sessions, teach groups in classroom settings and conduct "speed coaching" with handfuls of early-career leaders in five-minute discussions centered on specific focus areas, according to GE.

Attendees "are in a room with executives, not only helping them solve problems for the business, but thinking about how they're working together as a team and how they're [developing] as leaders," says Gorman, who estimates that roughly 30 percent of GE's current senior executives are graduates of the organization's leadership program.

The need to spot and nurture these future leaders will only continue to increase -- and will continue to differentiate top companies in an uncertain and ever-more demanding environment, says Stomski.

"There are certainly challenges around driving growth, and some organizations find an insufficient number of leaders ready to meet those challenges," she says.

"Filling the talent pipeline is critical, and there are cost pressures that are happening," adds Stomski. "[Such factors] are changing the demand for talent and the [leadership] skills required for success. Companies need leaders that are going to adapt to the business environment more quickly, and that can be more resilient in the future."

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