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Global Leadership Research Project

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  • 1. 1
  • 2. Join The Effort The Global Leadership Research project will be expanded to collect data from organizations on a continuing basis. Each year, the survey will be refined to collect additional data on issues that previous surveys have identified as important. As such, the research process will be a continuing process. We are seeking participation once annually from those leaders and HR executives most involved in leadership development and succession planning. The Global Leadership Research Project will be periodically updated as various academics and research partners complete more in-depth analyses of the massive database begun in 2010. We thank you in advance for your interest, and look forward to your future support and participation.2
  • 3. The Future: UnderstandingWhy Organizations May Want To Join Leadership RequirementsThe Global Leadership Research Project in the emerging #1 global economy, China, withWe will also be expanding the concept of Leadership Development Criteria such as:ranking beyond the concept of “Corporate Olympics” (see page 10)to establish a rating process to document classes of effectiveness. • Guanxi: an obligation of oneWe will recognize all the companies that have established successful party to another, built overprocesses, based on the practical principles that Leadership Devel- time by the reciprocation ofopment is not a zero sum game…and that many companies rated social exchanges and favors.as excellent but not ranked as number one are equally effective in • Longtermism: the creation ofdeveloping their future leadership, as witnessed by their ability to a sustainable organization forreturn substantial benefit to all their constituencies. The ratings will the future.provide identification of specific areas of strength or opportunityfor improvement. • Mentoring: personal, contin- uous coaching tailored to theThis leadership project also will establish multiple categories of needs of a specific individualexcellence so that we are evaluating comparables and identifying that’s more encompassing inand recognizing the different processes that may be appropriate what is imparted, since tacit knowledge, relationships,for different organizational circumstances. Preliminary findings and intimacy with values andsuggest that “leadership” is a broad term that actually includes informal social structure canseveral types of leadership appropriate for different situations. be imparted only through mentorship.The Future Plan • Parsimony: economy in theThe Global Leadership Research Project will be expanded to collect use of means to an end.data from organizations on a continuing basis. Each year, the surveywill be refined to collect additional data on issues previous surveys • Collectivism and harmony: pride in the community andhave identified as important. As such, the research process will be a concern with one’s reputationcontinuing process, seeking participation once annually from those in the community.leaders and HR executives most involved in leadership developmentand succession planning. • Ambicultural sensitivity: taking the best from Eastern and Western philosophies and business practices while avoiding the negatives. 3
  • 4. 4
  • 5. Table of ContentsResearch Team, Sponsors, Participating Organizations 6Executive Summary 8The First Annual Global Leadership Research Project 13The Initial Project Analysis 29 Leadership Roles 30 The Leadership Paradox 32 The Leadership & Succession Planning “Risk Factors” 34 The CEO’s Role in the Depth of the Leadership Pipeline 38 Leadership for the Future 39Global Leadership Research Project Participating Partners 41Global Leadership Research Project 2010 Survey Response Summary 45 5
  • 6. Research Team Research Ken Carroll Chally Group Worldwide Jenna Filipkowski M.A. Christopher Holmes Ph.D. Scott Hudson James Killian Ph.D. Bart Mosele Scott Runkle Howard Stevens M.A. Sally Stevens Peter Tassinario M.A. Brett Lippencott Chally International J.P. Donlon Chief Executive Group Sandi Edwards American Management Association (AMA) Jean-Francois Jadin Imperial Consulting John Read Marjorie Woo MBA Keystone Group, Inc. Karen Lindquist MBA Management Centre Europe (MCE) Erick Myers Sanja Licina Ph.D. Personified (a Division of CareerBuilder) Stephan Rantela ProActive Oy Ab Sanna Salmela Michael Haid Right Management Gerald Purgay Deborah Schroeder-Saulnier Shi Bisset Shi Bisset & Associates Satyan Menon Turning Point Ajay Namboodiri Academic Fu Yan (Laura) Hauzhong University of Science & Technology Tina Iansisi Hauzhong University of Science & Technology Jason Jordan University of Virginia’s Darden School of Business Corey E. Miller Ph.D. Wright State University Das Narayandes Ph.D. Harvard Business School Wu Bin (Julie) Hauzhong University of Science & Technology Production Team Barry Breig Cindy Burgess Trisha Lamb Deb Tackett Heath Wilkins Dean Wright6
  • 7. SponsorsResearch Partners andParticipating Organizations 7
  • 8. Executive Summary The Global Leadership Development Project Executive Summary Bringing More “Analytics” to Leadership Development, in lock step with talent management, has seemingly become the primary focus of this millennium’s business consultants, business oriented authors, and business associations, and for good reasons! 1. The total quality management (TQM) “revolution” of the ‘60s and its evolution through Six Sigma, ISO standards, and other efficiency and quality methods, has essentially eliminated a competitive edge through better product quality, for any serious business competitor. And differing global standards for the protection of intellectual capital have reduced innovation advantages…or at least sustainable advantage. 2. Ubiquitous global access to raw materials, components, and even labor and more advanced professional services made available through supply chain management, digitally based communication, and access to information have tended to standardize costs across those same serious business competitors. Another competitive strategy defused! 3. The speed of change in product life cycles and the rise of new competitors, as well as emerging new productivity, communication, and distribution systems lessen the old long-term advantages of size, capital investment, and even real estate.8
  • 9. Executive SummarySo what’s left? People! That is, having better people, because they innately have moreability, can be deployed to their best utilization, are receptive to training and develop-ment to maximize their capabilities, and can be nurtured and supported to maintain their,and therefore your, sustainable competitive advantage.The World Class Sales Research Benchmarking Project, ongoing since 1992 (see chally.com), demonstrates, quite powerfully, that even sales growth has less to do with quality,price, marketing, etc., than the effectiveness of the salesperson interfacing with thecustomer.And people, be they employees or customers, bring us to the need for leadership.The art and science of organizing, directing, and motivating people, directly as inemployee, or indirectly as in customer (or voters for that matter), is the sole domainof a leader. And while the particular skills may differ by the type of organization,public or private, big or small, fairly stable or rapidly changing, the common threadis what we call Leadership.But we have never applied TQM to people, not to mention Six Sigma or ISO… So we are still operating primarily through tribal wisdom, personal experience, orcollections of anecdotes to help us figure out what to aim for, who to use, and howto channel their efforts toward the goals we have aimed for. Most recently there is amovement toward the same kind of “analytics” used in other business functions, butis indeed nascent.There has also been research on applying the principles of TQM to the human sideof an organization. TQM or TQTalentM (see chally.com) with the somewhat surprisingbut irrefutable evidence that our old “star” mentality of attempting to select the rightpeople, motivating them with exceptional rewards, and supporting them with all theother non-stars…just doesn’t work for long in organizations with more than one topperformer. TQM teaches us that business stars are exciting, praise worthy, and oftengreat authors, but overrated as business resources. Jim Collins has documented theflaws of the well positioned, flamboyant types, who are indeed very good, but whoare also out performed by the less flamboyant, often invisible (outside their ownorganizations). Jack Welsh, for example, led GE from $26.8 billion (the year before heassumed leadership) to over $150 billion the year before he retired. However, underthe leaders he put in place, GE has lost over $300 billion in the last 10 years. Whilecompanies reported by Collins such as Walgreens, with a much less visible leader,have continued to grow through leadership succession. 9
  • 10. Executive Summary Chally Worldwide and its partners believe it is time to move The Trouble with past “research for marketing value” to research to advance “Corporate Olympics” our organizational effectiveness. We are focused on three differentiators from the typical annually published corpo- The Olympic model for identifying rate Olympics ranking through a panel of experts as if this the “best” athletes has become one were figure skating or diving. of the most successful financial and First, we have assembled a broad team of both academic and marketing promotional events in business experts… to design the data collection…and analyze the the world today. data collected. This does not remove the problems of self-reported As a business, it’s phenomenal. As data, but does insure that the data is provided by individuals who an accurate measure of athleticism, have firsthand knowledge versus outsiders who may or may not the competition itself is somewhat have intimate knowledge of the companies involved. dubious. There is little doubt that Second, this research project will become an ongoing progression being selected to participate in the of data and analysis with each year building further insights on the Olympics does put an athlete in an previous years’ findings, and tracking changes in leadership devel- elite class. But “winning the gold” opment techniques. on a given day is often almost an accident. The difference between Thirdly, we’ll develop “categories” or levels of leadership develop- a medal winner and “losing” is so ment effectiveness since the economic indicators suggest that trivial as to be essentially meaning- there are little to no effective differences between companies less. Nevertheless, winners achieve within the same quartile. world recognition, greatly enhanced financial prospects, and at least their 15 minutes of fame. In business, this type of ranking may have attractive PR value, but the practical implication of im- proved business performance is not in the rank…but being in that “class” of companies, or within the broad range of companies who are legitimate candidates for consideration. The research on financial performance suggests a rough correlation for the top quar- tile versus the bottom quartile… but absolutely no correlation with rank within the quartile. So we enjoy the competition, and enjoy learning who won…it is indeed an honor…for at least 1510 minutes!
  • 11. Executive SummaryBrief Findings:1. Top-ranked companies for developing leaders produce substantiallybetter financial performance than bottom-ranked companies.• Top-ranked companies had a 10-year growth of market cap of 17% while bottom-ranked companies lost 2%• Top-ranked companies produced 5% total returns to shareholders, while the bottom- ranked companies lost 39%2. The required competencies for different “C” Level positions are substantially different.• Only CEOs are seen as having responsibility for Strategy• Only COOs had as many as two of the four most important competencies in common with the CEO, Finance CFOs who are also likely to succeed to CEO, had only one• This suggests that job rotation may be invaluable for understanding the business but be less helpful in preparing high potentials in planning strategy for the future3. The most frequent sources of succession failure or “leadership risk factors” are relatedto people skills.• This was amplified if the promotions were internal• The leading “Leader Failure” cause was reported as “failure to adapt to the culture”4. The Data is insufficient, but here are strong indicators supporting thefact of real differences in required competencies in Asia and the Far East.• Non-Western companies are more likely to share strategic responsibility across several “C” Suite leaders• Less “personal profit” driven economies, such as China, seem to have dramatically different leadership requirements5. The extent of the CEOs personal involvement in the Leadership DevelopmentProcess, is a critical key to the program’s overall effectiveness. 11
  • 12. 12
  • 13. The First AnnualGlobal LeadershipResearch Project 13
  • 14. The First Annual Global Leadership Research Project The efforts to identify the companies who are best at developing leaders have become a major business media topic for most of this decade and in academic research for decades earlier. Fortune and Hewitt likewise have promoted their research. Today, there are three publications that feature these surveys, now including Bloomberg BusinessWeek in cooperation with The Hay Group. The previous research has been valuable, especially in focusing on the processes and procedures that are most effective and most commonly used by top ranked companies, these include: • Having a formal process that involves the active participation of the CEO • A development program for a wide funnel of high potentials in the formative years of their careers. There is also a reasonable consensus on a variety of developmental techniques, including “action learning,” monitoring and coaching, formal classes, etc. identified across all the research that will assist any company trying to develop or refine its “talent management” regimen. Taking the Research to the Next Level Chally Group Worldwide is pleased to introduce the First Annual Global Leadership Research Project overview results.14
  • 15. We have engaged:Multiple business and academic partners who are committed to expandingour global knowledge base, in order to transcend concerns of results beingdriven by any one organization’s marketing needsA blue-ribbon team of research analysts from Harvard, the University of Virginia’sDarden School of Business, Chally Group Worldwide, Right Management,Personified/CareerBuilder, Wright State University, Huazhong University ofScience and Technology, The American Management Association, TurningPoint and more.We have investigated key trends in effective leader development with analysis ofdifferences found in functional roles, organization types, and with considerationof the impact of geo-cultural variations.Research Goal:To establish broadly recognized and ongoing thought leadership researchdocumentation outlining global standards in Leadership Practices, LeadershipDevelopment, and Succession Planning. 15
  • 16. Several key questions, previously unanswered in these studies, have been addressed: 1. Does leadership development really drive better business performance? All the research assumes that leadership development is important, but there is less understanding of the actual ROI that can be attributed to these efforts. Without a mean- ingful calculation of long-term return, it is difficult for companies to expand their invest- ment consistently, especially in trying economic periods. In fact, almost two-thirds of responding companies listed “financial limitations” as their number one challenge in achieving their leadership development goals. 2. Does leadership development actually produce higher quality leaders who drive better organizational performance, and if not…What goes wrong? For several decades there has been significant business and organizational emphasis on developing leaders. We’ve seen substantial investment, research, consulting activity, reporting, and books published on the “State of the Art”. So, why has the CEO turnover (failure) remained as high as it has and even deteriorated over the decades? And why is there relatively so much less research on the causes of failure. In other important aspects of business, the principles of Total Quality Management (TQM) are routinely applied to identify and correct sources of troubling issues. We propose to identify and establish the principles of “Total Quality Talent Management (TQTalentM) by identifying Leadership Development and Succession “Risk Factors” and ultimately document the approaches of organizations that are successful at minimizing those. 3. Is leadership development effectiveness more subject to external factors outside an organization’s control? And if not, how can companies rated as BEST in Leadership Development drop out one year later, or be high on one research list and not even appear on another in the same year? 4. How do we separate the marketing hype from the Critical Success Factors (CSFs) Since resources are limited, which are the most important factors influencing Leadership Development, and ultimate business success, and how good is good enough?16
  • 17. In order to establish more empirically based findings,the research defined multiple qualifying criteria forinclusion and final ranking in The Best Companies ForLeaders. These included:• The existence of a formal development program• The percentage of time the CEO was personally involved• The percentage of both senior leadership and middle management recruited internally• The frequency of being cited as a recruiting target by other organizations• The long-term growth of market capitalization and shareholder valueThese measures will be consistently applied across time. 17
  • 18. The following information provides a high-level summarization of the research sample. This research represents responses from C-Level and Senior Human Resources and Development leaders from over 1,000 global organizations. Organization Size Annual Revenue of organizations in US$ Revenue CEO (%) HR (%) Less than 25 million 49.4 20.1 25 to 50 million 8.0 13.6 50 to 100 million 6.1 10.0 100 million to 500 million 13.5 14.1 500 million to 1 billion 3.6 8.2 1 to 5 billion 10.7 12.4 5 to 10 billion 3.6 11.3 Over 10 billion 5.5 10.5 Number of Employees Employees CEO HR Fewer than 500 62.0 34.4 500 to 1,000 8.4 11.3 1,000 to 2,500 7.3 13.5 2,500 to 5,000 5.0 9.6 5,000 to 10,000 5.3 7.9 10,000 to 25,000 3.1 7.6 25,000 to 50,000 4.5 5.9 50,000 to 75,000 0.8 3.1 75,000 to 100,000 0.1 2.8 More than 100,000 3.1 3.918
  • 19. Location of CompanyHeadquarters HR CEO 0 0 HR CEO 14.0 7.0 HR 74.6 HR 2.3 CEO 80.9 CEO 0.5 HR 1.5 CEO HR 1.8 CEO 0.5 1.5 CEO 7.8 HR HR 0.4 1.7 CEO HR 0.3 3.4 CEO 1.0 Regions North America Southeast Asia South & Central America East Asia Middle East / Africa Oceana and Australia Europe Asia South Asia 19
  • 20. 20
  • 21. The Initial Project Analysis: Leadership Roles The Leadership Paradox Leadership and Succession Planning “Risk Factors” The CEO’s Role in the Depth of the Leadership Pipeline Leadership for the Future 21
  • 22. Differences are evident in: Leadership Roles • Functional responsibility. Where Leaders Come From • Career path opportunities: Leadership development would be infinitely simpler if leader- The more broadly one’s ship were a singular, finite competency or set of competencies career exposure across busi- that applied in all situations. However, the facts loudly refute ness units, product/market this perhaps naïve, hope. Leaders evolve from a wide variety of segments, or customers backgrounds, experience, and job functions. Western corporate (Operations, Finance, and CEOs are most likely to come from Operations and Finance. Sales), the higher likelihood of selection for the senior When asked what functional areas are most likely to produce leadership positions. your C-level executives, Operations was the most likely to be indicated (68%) and Finance was second ranked (56%) with • Geo-cultural environment: Sales third (49%). The more specialized functions were less likely India and the Far East have meaningfully different views to provide the career path to the top. Marketing was less likely of leadership development at 34%, Human Resources, 24%, Engineering 22% , IT 13%, and than the “West”. Research and Development only 8%. “Other” was indicated by 2% of respondents. • Size of the organization: Where there is a tendency What functional areas are most likely to produce to manage/lead directly your C-level executives? (check all that apply) (and personally) rather than through layers of subordi- Operations 68.4% nates, dictates whether there is a need for different skill Finance 55.6% sets. Sales 48.6% • Type of organization: Public, Marketing 34.0% Private or Governmental/ Human Resources 24.1% Charity: Where the responsi- Engineering 22.0% bilities of different functional leaders, as well as the con- Information Technology 12.8% stituencies they must serve, Research & Development 8.2% may differ substantially. Other 1.7% Factors That Drive Effective Leadership To date, survey respondents have supported the premise that leadership, while often thought of as a singular capability, is actually several variable sets of skills. Leadership development, therefore, should include differing practical experiences (often referred to as “Action Learning”) and training/education oppor- tunities unique to the requirements of a specific leadership role.22
  • 23. Differences inLeadership Roles...In trying to determine the lessons behind the wide disparity between functional roles ascareer paths, it is only partially clear why most CEOs come from Operations and Finance. Ifall leadership roles required the same skill set, we would expect all functional areas to beequally represented. If all positions required the same skill set as the CEO position, thenall individuals from all the functions should have similar skill sets. We would assume thatpeople are promoted to CEO from Operations and Finance because they are perceivedto have developed competencies that are important for the CEO role. It is possible thatFinancial people in their rise to the top are exposed to all the business functions or divisionswithin the company.Possibly Operations people are at least familiar with all the products and services andsalespeople are familiar with all the customer segments. Alternatively, it might be arguedthey were rotated through these functional management roles because they were originallychosen for their “C” suite potential. In either case, there is strong evidence that suggests thatdifferent leadership roles require a different set of competencies and experience in func-tional roles in itself does not prepare one for succession to CEO particularly well.We asked respondents to rate which of the most commonly suggested critical competencieswere the four most critical for several typical C-level positions. Taxonomy Table 2 presentsthe results. The top four competencies for CEO were Creating a Strategic Vision (91.7%),Inspiring Others and Maintaining Key Leadership Responsibility (62.3%), Developing an Ac-curate and Comprehensive Overview of the Business (56.9%), and Decision Making (54.5%).This analysis helps explain why CEOs are more likely to come from Operations and sec-ondarily from Finance. The CEO role shared two critical competencies with the COO andone critical competency with the CFO position. The COO position emphasizes “Developingan Accurate and Comprehensive Overview of the Business” and “Decision Making”, whichare two of the four critical CEO competencies. The CFO position had only “Developing anAccurate and Comprehensive Overview of the Business” as critical. The fact that only oneor two competencies overlap may also suggest why succession, even from these “closest”functions, may fail. 23
  • 24. The Leadership Paradox How would a company develop leaders that have a demonstrated track record of Creating a sound Strategic Vision and Inspiring Others and Maintaining Leadership Responsibility when these roles are more likely to be a fairly exclusive domain of the CEO? The CEO role seems to be positioned almost as royalty. By achieving that Paradox 1. position they seem to be almost exclusively responsible for creating the strategic vision and inspiring others to achieve it. Functional leaders are unlikely to have had a chance to practice those key CEO skills, or demonstrate competence. If the organization’s strategy is to promote successful people from the lower levels, might not the wrong person be pro- moted? Someone may be successful in the COO role because they had Techni- cal and Business Expertise, and skill at Directing, Delegating, and Establishing Monitoring Systems. These competencies are seen as least important to the CEO role. It is likely that all too often, someone may be promoted because they had a mix of competencies that lead to success in their functional role, for example, but may actually lead to failure in the CEO role. Those promoted from the COO role, which emphasizes Identifying and Focusing on Critical Priorities and Technical and Business Competence/Expertise may be less prepared to plan, lead, and monitor long-term strategy.24
  • 25. Paradox 2. The results also suggest that many organizations may suffer from a critical but hidden weakness in terms of bench strength. Considering that essentially, all execution will demand accomplishing the corporate goals through others, it may be telling that less than half of all respon- dents cited “Selecting and Developing Successors and Key Reports” as a critical strength for any role. C-Suite Executive CompetenciesTable 2. Taxonomy CEO CFO CIO CLO COO Creating a Strategic Vision 91.7 16.8 22.0 23.2 24.1 Developing an Accurate & 56.9 56.1 31.2 9.7 56.1 Comprehensive Overview of the Business Politically Astute 31.9 10.3 10.7 27.4 16.3 Selecting & Developing Successors and Key Reports 40.4 21.1 19.9 41.1 27.5 Inspiring Others & Maintaining Leadership Responsibility 62.3 15.6 15.8 35.8 33.4 Decision Making 54.5 42.7 31.8 30.5 51.8 Initiative to Produce Appropriate Change 29.9 18.2 29.8 37.9 36.0 Identifying and Focusing on Critical Priorities 34.4 51.6 44.6 37.5 50.5 Technical & Business Competence/Expertise 18.1 61.4 70.5 40.7 49.7 Directing, Delegating, and Establishing Monitoring Systems 13.4 53.0 43.8 26.7 33.2 Objective Self-Assessment of Own Limitations 19.6 15.1 16.4 20.0 18.4 Timely/Effective Execution 17.0 41.0 56.5 35.8 54.7 Collaborative 18.5 29.5 44.6 48.8 30.3 Most Critical For the Role Least Critical For the Role 25
  • 26. Leadership turnover, for non- performance, or other leadership The Leadership and dissatisfaction issues continues to be higher than planned, especially Succession Planning since choices regarding senior leadership could be considered “Risk Factors” the most important corporate decision a company could make. To gain some insight as to Fails to Build Relationships and a Team Environment 40.2% possible sources or “Succession Percentage of those who responded A Mismatch for the Corporate Culture Risk Factors,” we asked for the 32.4% High Risk perspective of the Senior HR Failure to Deliver Acceptable Results Moderate Risk 25.1% Executives who responded to Low Risk Unable to Win Company Support our survey. Arguably, they have a 25.1% unique vantage point as insiders Lack of Appropriate Training 23.5% (with a more intimate view) but Egotistical still somewhat external to the risk 15.1% factors they may observe. Lack of Vision 14.5% Of the HR executives eligible to Not Flexible 13.4% provide this data, 63% responded. Poor Management Skills The table to the right ranks the 12.3% factors believed to contribute Poor Communication 11.2% most to the failure of senior leaders Lack of Political Savvy in their organizations. 11.2% Lack of Organization Since the survey included diverse 8.4% Given no Clear Direction HR Executive responders from 7.8% multiple situations, it is more help- Job Mismatch ful to identify differences within 6.7% Lack of Drive/Motivation different classes of companies. 6.1% Lack of Business Acumen 3.9% Poor Decision Making 3.4% Lack of Honesty 2.8% Left the Business 1.1%26
  • 27. Our hypotheses regarding critical leadership competencies includedanticipating differences according to:Different Succession Practices:Percent promoted internally versus externally recruited executives • Senior level • Mid levelThe size and type of company • Over 1 billion in revenue versus smaller • Publicly held versus private or non-profit • Geo-cultural differencesWe present initial findings across source of promotion and difference by size of company. The Risks of Low Internal Promotion “Bringing In Outsiders Who Don’t Know the Business” The advantages and disadvantages of Failure to Execute 33% internal promotion 3% 30% Many CEOs as well as HR Didn’t get Clear Direction executives identified a 17% corporate preference either 4% 13% to promote: Poor Organization 13% • Almost exclusively 9% 4% from within • Externally, but from their own market vertical The Risks of High Internal Promotion “Promoting the Anointed who Haven’t Learned Humility” (or closely related) Didn’t adapt to culture • Externally from outside 34% their market vertical 7% 27% (for a “fresh” perspective) Lacking Political Savvy 17% 7% 10% Mismatch Role 11% 6% 5% Low Internal Promotion High Internal Promotion 27
  • 28. Do leaders need a deliberate and effective “on-boarding” process to integrate them into a new level of responsibility even if they are internally promoted…much as new employees often benefit from well- conceived integration into a new company and position? We were surprised to see that HR Executives across the board identified lack of company support as a leading new leader “Risk Factor” regardless of where that individual was recruited or promoted from. Companies that emphasized on internal promotions, however, were less than half as venerable than orga- nizations that recruited outside candidates. This may suggest a “sink or swim approach” or that some organizations assume that selecting the right indi- vidual is sufficient. They may assume that if they made the right selection the individual will immediately assume responsibility for his or her own success. It may also mean that the selection criteria were inadequate and focused too much on experience and job knowledge with too limited a concern for readi- ness from the “people management” side of the leader’s new responsibilities. The Surprise! Lack of Support by the Company was Significant Across all Succession Sources Lower Levels of Internal Promotion 40% Moderate Levels of Internal Promotion 24% Higher Levels of Internal Promotion 19%28
  • 29. There may be several explanations for these findings.First, the fewer responses cited by the smaller companies could indicate that smallerorganizations are “easier “to lead. Possible, also, is that smaller organizations are less likelyto attract such “accomplished” recruits so that, as Jim Collins pointed out in Good to Great,“Some more effective leaders but less “self promoting” are more humble and sensitive tothe need to acclimate with the staffs of their new organization or role.”Disadvantages of Smaller Disadvantages ofOrganizations Larger Organizations(Under $1B in Revenue) ( Over $1B in Revenue)Lacked Clear Direction Didn’t Fit Culture 11% 51% 4% 7% 24% 27%Not Organized or Prioritized Egotistical 11% 22% 9% 9% 2% 13% Not Flexible High 20% Low 11% 9% Lack of Political Savvy 20% 8% 12% 29
  • 30. The CEO’s Role in the Depth of the Leadership Pipeline To evaluate the possible consequence of having, • 48% of respondents from companies with a high or not having, a sufficient leadership pipeline, we split percentage of promoting from within agreed, our sample into three groups - focusing on top and or strongly agreed, that his or her company had a sufficient number of qualified candidates bottom groups. The top group featured those that ready to assume senior leadership positions. In were among the top 20% in filling senior level leader- comparison, only 24% of the bottom companies ship positions and the management levels below agreed that they had a sufficient number of se- by promoting from within (80% or higher internal nior management candidates, and none of them promotions). The bottom group features those with strongly agreed with the statement. the fewest internal promotions (40% or less). • 55% of the top companies agreed, or strongly We found that companies that filled a higher agreed, that they had a sufficient number of qualified mid-level manager candidates, while proportion of positions from promotion only 31% of the bottom-performing companies from within had significantly more personal agreed or strongly agreed. involvement of their CEO in their leadership development system. The converse was also true. • The personal involvement of the CEO has sig- While only 39% of top companies disagreed or nificant benefits; companies that have a higher strongly disagreed that they had sufficient quali- proportion of promotions from within were less fied mid-level leadership positions, 53% of the likely to suffer from a lack of qualified candidates. bottom-performing companies did. While only 28% of top companies disagreed or strongly dis- agreed that they had sufficient qualified mid-level leadership positions, 43% of the bottom-perform- ing companies did. It appears that in the war for talent, those CEOs who invest more of their personal time in developing leaders enjoy a better likelihood that they can fulfill the company’s leadership needs from within. Percent CEOs Percent CEOs Involved Involved Activity Top Companies Bottom Companies Coaching and Feedback 53 54 Appear in Training Classes 51 30 Informal Information Exchange 80 73 Sessions One-on-One Mentoring 71 58 Formal Training Classes 35 2930
  • 31. Leadership for the FutureResearch focused on Geo-cultural differences suggest theMultinational companies will require a New Global Leadershipprofile: the ideal ambicultural leader, will be an enlightenedcitizen/businessperson with competencies such as:• Cross cultural insight: the wisdom and strength to integrate other cultural and business paradigms• Recognition of the shortcomings of other business models to meet the complexities presented by globalization and emerging markets• Openness to new ways of thinking• Balancing the diverse needs of social, geopolitical, environmental, and human needs, and the ability to transcend divisions around the globeA dedication to integrating global awareness into everyday actions:• An emphasis on unity and morality• An ability to balance social good and self-interest• An emphasis on trust-based and legal relationships• An equal appreciation for teamwork and individual stars• A commitment to continued learning, sharing knowledge, and experience in the interest of mutual improvement, and reaching the pinnacles of professional achievement and humanityThe ability to appropriately integrate:• Social good and self-interest• Trust-based and legal relationships• Teamwork and individual achievement• Risk taking and caution• Business and society• Locally and globally sensitive 31
  • 32. 32
  • 33. The GlobalLeadershipResearch ProjectParticipating Partners 33
  • 34. Chally Group Worldwide is a sales and leadership talent management company that was founded in 1973 through a grant from the United States Justice Depart- ment. The grant funded the creation of actuarial assessment techniques and a validation technology that accurately predicts on-the-job effectiveness. Chally’s talent analytics has been improving productivity and reducing turnover for customers in over 49 countries. Customers choose Chally’s talent measurement process for improved candidate selection and employee and organizational development. Chally continues to fund and develop comprehensive research in sales and management development including the Best Companies for Leaders and World Class Sales Research, which has been conducted for several years. Right Management (www.right.com) is the talent and career management expert within Manpower, the world leader in innovative workforce solutions. Right Management helps clients win in the changing world of work by designing and executing workforce solutions that align talent strategy with business strategy. Our expertise spans Talent Assessment, Leader Development, Organizational Effectiveness, Employee Engagement, and Workforce Transition and Outplace- ment. With offices in over 50 countries, Right Management partners with compa- nies of all sizes. More than 80% of Fortune 500 companies are currently working with us to help them grow talent, reduce costs, and accelerate performance. Personified, a division of CareerBuilder, is the leading business intelligence consulting firm focused on talent. We specialize in job seeker and employee research, human capital consulting, and talent sourcing and screening. Our real- time access to job seekers, employees, and employers helps us deepen talent acquisition strategies and swiftly implement recruitment tactics so companies of all sizes realize the best return on their people. Turning Point has been addressing various needs in Sales, Customer Service, Leadership, Vision-Mission, Balance Score Card, Reengineering, and Implemen- tation in different organizations since 1999. The company’s international pool of consultants in India and the Middle East have specialized capabilities in the above-mentioned segments. Over the past several years, Turning Point has es- tablished a name for itself in achieving levels of excellence for its clients.34
  • 35. ProActive is a Scandinavian based company that offers customers a broadand diverse professional expertise to help enable strategic development. Pro-active focuses on competency assessment, strategic planning, managementissues, and strengthening the corporate image. We help organizations clarifyneeds and initiate the evaluation and development process.Imperial Consulting represents the American Management Association (AMA)in Singapore, Malaysia, Philippines, Indonesia, India, and Australia. In partnershipwith AMA, our mission is to provide managers and their organizations with theknowledge, skills, and tools they need to improve business performance, adapt toa changing workplace and prosper in a complex and competitive business world.MCE was established in Brussels in 1961 as the European headquarters of theAmerican Management Association (AMA), and provides high quality andconsistent management development solutions across Europe and globally.We cover the three areas of leadership, managerial, and business functions.American Management Association is a world leader in professionaldevelopment, advancing the skills of individuals, teams, organizations, andgovernment agencies. With over 85 years of experience delivering 140+training seminars throughout the country, AMA has refined their trainingprograms to meet today’s challenges. AMA promotes the goals of individu-als and organizations through a comprehensive range of solutions, includingbusiness seminars, blended learning, Web casts and podcasts, conferences,books, whitepapers, articles and more. 35
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  • 37. Global LeadershipResearch Project2010 SurveyResponse Summary 37
  • 38. Global Leadership Research Project 2010 Survey Response Summary Does your organization have a formal process for developing leaders? % % Formal Process CEO HR Yes 52 54 What development opportunities are included in it? Opportunity CEO HR Coaching and mentoring 94 93 Action learning/developmental assignments 77 77 Assessment and feedback 84 89 High-potential programs 1 65 International assignments 30 44 Cross-functional team projects 69 72 Exposure to senior executives 77 76 Exposure to internal and external thought leaders 59 51 Formal classroom training 69 79 External workshops and training 69 79 Tuition Remission 52 52 Other: please specify 8 14 Does your company have international operations? CEO HR 39 52 What does your company do to ensure it has a good leader pipeline? Action CEO HR Provide informal development opportunities to key internal people 80 74 Rigorously recruit and hire external candidates who have the potential to become 37 45 top-level leaders to fill specific position openings Maintain a network of potential external leadership candidates 30 22 Other: please specify 11 20 What are the greatest challenges individuals face in being successful leaders outside of their home country? Response HR Adapting business practices to local conditions 48 Cultural assimilation 80 Family issues 738
  • 39. % %Language barriers 19Disconnect with domestic organization 8What percent of your current senior management team was recruited internally? CEO HR 54 52What percent of your current next level under senior management was recruited internally? CEO HR 52 55What functional areas are most likely to produce your next C-level executives? (Choose the top FOUR)Functional Group CEO HREngineering 16 28Finance 50 62Human Resources 26 23IT 12 13Operations 67 69R&D 9 8Sales 48 49Marketing 36 32Other 11 13In your location, how do the skill requirements differ among various leadership roles? (Pick the top FOUR most important skill requirements within each job title category.)Critical Skills for CEOSkill CEO HRDeveloping an Accurate and Comprehensive Overview of the Business 58 55Creating a Strategic Vision 92 92Technical & Business Competence/Expertise 18 19Objective Self-Assessment of Own Limitations 21 17Decision Making 57 50Timely/Effective Execution 18 16Politically Astute 29 37Collaborative 23 13Initiative to Produce Appropriate Change 30 31Inspiring Others & Maintaining Leadership 63 62ResponsibilityIdentifying and Focusing on Critical Priorities 33 35Directing, Delegating, and Establishing Monitoring Systems 15 11Selecting & Developing Successors and Key Reports 40 40 39
  • 40. Critical Skills for COO % % Skill CEO HR Developing an Accurate and Comprehensive Overview of the Business 47 52 Creating a Strategic Vision 21 29 Technical & Business Competence/Expertise 48 51 Objective Self-Assessment of Own Limitations 20 16 Decision Making 52 51 Timely/Effective Execution 56 52 Politically Astute 16 17 Collaborative 33 27 Initiative to Produce Appropriate Change 36 35 Inspiring Others & Maintaining Leadership Responsibility 32 35 Identifying and Focusing on Critical Priorities 48 53 Directing, Delegating, and Establishing Monitoring Systems 38 28 Selecting & Developing Successors and Key Reports 29 25 Critical Skills for CFO Skill CEO HR Developing an Accurate and Comprehensive Overview of the Business 56 55 Creating a Strategic Vision 13 23 Technical & Business Competence/Expertise 61 60 Objective Self-Assessment of Own Limitations 15 16 Decision Making 41 44 Timely/Effective Execution 41 44 Politically Astute 10 13 Collaborative 30 28 Initiative to Produce Appropriate Change 17 21 Inspiring Others & Maintaining Leadership Responsibility 13 19 Identifying and Focusing on Critical Priorities 52 51 Directing, Delegating, and Establishing Monitoring Systems 53 51 Selecting & Developing Successors and Key Reports 21 20 Critical Skills for CIO Skill CEO HR Developing an Accurate and Comprehensive Overview of the Business 31 24 Creating a Strategic Vision 18 26 Technical & Business Competence/Expertise 73 67 Objective Self-Assessment of Own Limitations 16 17 Decision Making 30 34 Timely/Effective Execution 55 59 Politically Astute 11 10 Collaborative 48 40 Initiative to Produce Appropriate Change 32 29 Inspiring Others & Maintaining Leadership Responsibility 14 19 Identifying and Focusing on Critical Priorities 42 4740
  • 41. % %Directing, Delegating, and Establishing Monitoring Systems 38 50Selecting & Developing Successors and Key Reports 20 20Critical Skills for CLOSkill CEO HRDeveloping an Accurate and Comprehensive Overview of the Business 29 34Creating a Strategic Vision 18 29Technical & Business Competence/Expertise 40 40Objective Self-Assessment of Own Limitations 20 21Decision Making 30 31Timely/Effective Execution 35 37Politically Astute 27 27Collaborative 50 48Initiative to Produce Appropriate Change 33 46Inspiring Others & Maintaining Leadership Responsibility 32 42Identifying and Focusing on Critical Priorities 36 40Directing, Delegating, and Establishing Monitoring Systems 30 21Selecting & Developing Successors and Key Reports 42 40Do you reserve key top-level management positions within foreign countries for locally recruited/developed nationals? CEO HR 49 43How would you rate your organization’s ability to develop leaders?Response CEO HRPoor 9.3 13.8Average 25.2 30.4Good 28.9 30.4Very Good 24.8 19.2Excellent 11.8 6.3What challenges do you face in developing leaders within your organization? Response CEO HRLimited financial resources 57 60Difficulty balancing long-term and short-term business requirements 57 53Rapidly changing business requirements so criteria for success is fluid 36 34Difficulty identifying high potential development prospects 15 25Difficulty retaining top talent 10 20Difficulty attracting top talent 21 26No systematic process for identifying and developing talent 35 41Other: please specify 12 13 41
  • 42. Describe the processes you use to identify top internal talent (e.g., succession planning, talent pool planning, potential identification and tracking, etc). % Response HR Have no formal process 21 Succession Planning 39 Performance Reviews/Development plans 19 Identification and Tracking of hi-potentials 18 Coaching/mentoring 4 Annual talent review 22 360 Feedback 5 Nomination by boss 1 Assessment Results 8 Leaders pick next leaders/hi-potentials 8 Do you have a formal definition of high potential? HR HR 34 What are the two best ways to identify hi-potential talent? (Check the Top TWO.) Responses HR Credentials 24 Recommendations from superiors 75 Peer Nominations 22 Completion of minimum identified assignments or course work 19 Assessment Tests 21 Assessment Centers 20 Other: please specify 20 How far down in your organization do you go in identifying and track high potential leaders. HR Individual Performers with no Management Experience 35 First Level Supervisor 14 Middle Managers 32 Upper Level Managers 13 Other 5 What percent of your time is spent engaging in other’s development activities? CEO HR 28.8 16.942
  • 43. In which of the following development activities do you get personally involved? % %Response CEO HRTeaching formal training classes 43 14Guest appearances in training classes 45 48Mentoring one-on-one 82 38Coaching and feedback for skill development 79 45Informal information exchange sessions 81 75Other: please specify 6 15What percent of your time is spent on your own personal development activities? CEO HR 19.2 15.3What developmental experiences were most impactful in preparing you for the role of a CEO/C-Level executive during your career?Response CEOSitting on Boards 2Cross-functional responsibilities 21Formal education/advanced degree 13Experience at multiple organizations 21Given stretch goals 26On-the-job training, hands-on learning 34Service roles outside of work 11Formal training 14Other companies actively try to recruit our organizations leaders.Response CEO HRStrongly Disagree 5.6 4.3Disagree 12.8 13.5No Opinion 27.0 28.0Agree 40.5 40.1Strongly Agree 14.1 14.0Retention of key talent is a formal performance metric for our managersResponse CEO HRStrongly Disagree 5.9 14.0Disagree 20.4 32.4No Opinion 22.4 18.4Agree 36.8 26.1Strongly Agree 14.5 9.2 43
  • 44. My company has a sufficient number of qualified internal candidates that are ready to assume mid-level manager positions % % Response CEO HR Strongly Disagree 3.9 8.2 Disagree 29.9 27.9 No Opinion 21.4 17.3 Agree 36.2 37.5 Strongly Agree 8.6 9.1 My company has a sufficient number of qualified internal candidates that are ready to assume senior manager/executive positions Response CEO HR Strongly Disagree 7.0 11.2 Disagree 36.8 39.5 No Opinion 22.2 19.0 Agree 27.8 25.4 Strongly Agree 6.3 4.9 Upper-level managers recruited externally have been successful. Response CEO HR Strongly Disagree 5.4 1.9 Disagree 11.9 9.2 No Opinion 22.8 29.6 Agree 47.6 54.9 Strongly Agree 12.2 4.4 Mid-level managers recruited externally have been successful. Response CEO HR Strongly Disagree 2.7 1.5 Disagree 8.8 5.3 No Opinion 29.5 20.9 Agree 51.2 66.5 Strongly Agree 7.8 5.8 HR is an effective partner in the leadership development process Response CEO Strongly Disagree 4.1 Disagree 10.2 No Opinion 23.8 Agree 35.0 Strongly Agree 26.944
  • 45. Sector: % %Sector CEO HRPublicly Traded 22.0 36.4Privately Held 72.0 56.4Government Entity 5.9 7.2What processes do you use to recruit and hire top external leadership talent? (Check all that apply.)Response HR (%)Use specialized recruiting firm 66Recommendation from internal managers/executives 65Recommendation from external executives 47Networking at industry events 47Assessment Process 31General Interviews 44Structured Interviews 60Other: please specify 9What on-boarding processes do you use for top-level leaders? (Check all that apply.)Response HRAssigned a mentor 31Planned rotation of meeting key individual 70Short-term assignments in different functional areas 23Other: please specify 25Which of the following are most predictive of leadership success? (Check all that apply.)Response HRPrevious experiences 73Educational background 18Interpersonal skills 86Fit with company values and culture 90Motivation to lead 81Lack of derailers 29Other: please specify 5 45
  • 46. List the three greatest causes of leadership derailment or failure. % % Response HR Lack of business acumen 4 Not flexible 13 Poor communication 12 Cultural mismatch 32 Poor decision maker 3 Given no clear direction/expectations by superiors 8 Arrogant attitude 15 Fails to execute 26 Lack of honesty 3 Mismatch with role 6 Left the business 1 Poor management skills 13 Lack of personal drive 6 Lack of organization 8 Lack of political savvy 11 Fails to build relationships/team 40 Not supported by the company 25 Lack of training 24 Lack of vision 15 Describe the best processes to minimize leader derailment. Response HR Provide clear goals and expectations 14 Improve communication 7 Allow person latitude to fail 13 Provide regular feedback 28 Hire good match 29 Be honest about the position’s requirements 3 Provide a mentor 28 Mgt/Corp should support the person 9 Encourage teamwork 10 Provide training and development 47 What are the most critical skills to be a very effective upper-level manager? Response CEO HR Business acumen 16 19 Resilient to change 17 13 Communicates well 33 28 Makes good decisions 14 1546
  • 47. % %Good talent management (hires and groom well) 7 7Honesty 10 12Knowledgeable/experienced 15 10Leadership skills 38 47Listens 18 19Management skills 23 25Motivated to be successful 24 20Organized 12 12Builds Relationships/good interpersonal skills 32 37Sales skills 6 5Builds teams 16 21Analytical thinker, technical competence 20 17Has vision 42 38Additional Comments(The following also appear at the end with the % for each response on the 5 point scale)Question CEO HRHow would you rate your organization’s ability to develop leaders? 3.05 2.24Retention of key talent is a formal performance metric for our managers. 3.34 2.84Other companies actively try to recruit our leaders. 3.45 3.46My company has a sufficient number of qualified internal candidates that are ready to as- 3.15 3.12sume mid-level manager positions.My company has a sufficient number of qualified internal candidates that are ready to as- 2.90 2.73sume senior manager/executive positions.Upper-level managers recruited externally have been successful. 3.49 3.50Mid-level managers recruited externally have been successful. 3.53 3.70HR is an effective partner in the leadership development process. 3.70 N/A 47
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