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3 msleadershipcompetencyframework

  1. 1. CORPORATE LEADERSHIP COUNCIL DECEMBER 2000 www.corporateleadershipcouncil.com CASE PROFILE 3M’s Leadership FEATURED COMPANY Competency Framework EXECUTIVE SUMMARY MINNESOTA MINING AND ! In the face of complex competitive pressures, 3M required an COMPANY: MANUFACTURING CO. (3M) up-to-date leadership model to guide targeted leadership development across its diverse businesses and a strong succession HEADQUARTERS: ST. PAUL, MINNESOTA planning process to secure future corporate leadership. INDUSTRY: MANUFACTURING ! 3M involved its senior executives and leadership talent in the development of a global framework of leadership competencies 1999 EMPLOYEES: 71,000 specific to 3M’s business, vision and values. ! The model’s identified competency areas, framework and 1999 SALES: $15.7 BILLION behavioral anchors now facilitate leadership assessment and development and the executive succession planning process.CHALLENGE AT HAND Although 3M had developed a leadership competency model in the mid-1980s, a review of this model against more recent literatureIn the mid-1990s, 3M faced significant structural changes to the showed that the identified competencies needed to be updated —business environment in which it operated. Globalizing markets, particularly with respect to changes in leadership philosophy torapid changes in product and information technologies, and a critical address the rapidly-changing global business environment — for theneed for organizational agility refocused attention on the nature of company to be able to pursue its growth plans.corporate leadership. In addition, these structural changes,particularly globalization, have impacted the type of leadership Issue #2 — Facilitating Leadership Successioncapabilities required for organizational success. 3M faced a second challenge in relation to its leadership team. The3M faced two challenges in particular: first, to update its model of company has a policy of promoting from within in order to ensurecorporate leadership and cultivate the leadership talent necessary for that individuals filling leadership positions possess the broadgrowth; and second, to improve the effectiveness of its succession understanding of 3M’s diverse businesses to provide effectiveplanning process to ensure capable leaders are properly deployed in executive leadership. It was therefore critical not only that thethe organization. These challenges are described below. company’s leadership development process was properly targeted, but that succession planning was carefully managed.Issue #1 — Stewarding Future Growth Recent research indicates that the use of competency models as aIn order to survive competitive pressures and grow the company, 3M basis for objective talent assessment and succession planning is arequired strengthened leadership, both in the contemporary senior common practice in large organizations. A Leibman Associatesmanagement cohort and in the pool of high-potential leadership study of the practices of over 100 Fortune 500 companies showedtalent. As advocated by the quote below, one approach to ensuring that approximately two-thirds had developed explicit leadershipthe development of skills and behaviors that support corporate competencies.2objectives is the creation of a model that describes the organization’sdesired competencies. 3M had need of a company-specific, but company-wide, leadership profile on which to base objective assessment of leadership potential, "To be effective, the development of workplace and managerial identification of development needs and probable career-pathing. skills must reflect the current and projected needs of the organization. It is a critical responsibility… to identify the core Objectives of the new leadership competency profile were: competencies of the enterprise and to ensure that the competencies required by managers, specialists and the ! To accurately assess leadership capability workforce in general are adequate and appropriate."1 ! To more effectively develop talent within the organization ! To select and place leaders into key positions — Pickett, Les. “Competencies and Managerial Effectiveness: Putting Competencies to Work”  2000 CORPORATE EXECUTIVE BOARD PAGE 1 CATALOG NUMBER: CLC12NLK2
  2. 2. CORPORATE LEADERSHIP COUNCIL DECEMBER 2000 3M’s Leadership Competency FrameworkHR SOLUTION Critically Reviewing Established CompetenciesIn 1995, 3M convened a global conference of HR professionals to The project team used the identified stakeholder groups heavily inposition leadership selection, assessment and development as the reviewing 3M’s current set of competencies and revising them toprimary HR priorities for the company. At the conclusion of the reflect the company’s current business environment. These groups’conference, two HR professionals were identified to lead a team in roles in critical stages of the competency model development processcreating initiatives aimed at competency-based leadership are outlined below.development. The first step was the creation of a global leadership ! Ensuring fit of new competencies with leadership philosophycompetency framework that would describe and drive the type of Project leaders met individually with each member of theleadership required by the company. Executive Resources Committee to review current competency materials and discuss leadership philosophy, business complexityIdentifying Stakeholders and language.In keeping with best practices identified in literature regarding ! Building consensus for the leadership modelcompetency-modeling,3 3M included in its leadership analysis those The project leaders also presented several drafts of the competencyindividuals who shape the positions targeted by the model: in this model to the Human Resources Policy Committee. Discussioncase, the members of the executive leadership team. surrounding the phrasing and interpretation of the competency definitions helped clarify leadership philosophy and facilitatedIn order to ensure that the model would accurately illustrate the true consensus-building.leadership needs of the organization, the project leaders worked withthree groups of senior managers to create, review and edit the At the end of this process, the group had made several revisions toevolving competency model development. These groups would also competency labels and definitions (See Figure 1 for examples) anddetermine when it was appropriate to move to the next stage in finalized a set of 12 identified leadership competencies. 4implementing the leadership development and succession processesand tools that would be built upon the competency framework. The Creating a Framework for Revised Leadership Competenciesthree groups were: The company further refined the model by organizing the 12! Executive Resources Committee (ERC) identified competencies into a framework that described how these CEO, business unit Executive Vice Presidents (EVPs) and HR competencies might be developed over time. Vice President (VP). Responsible for selection and development of individuals in the top 500 positions at 3M. A group of HR practitioners from across 3M’s global operations! Human Resources Policy Committee distinguished ‘fundamental,’ ‘essential’ and ‘visionary’ clusters of Market EVPs, HR VP and several VPs of corporate service competencies that would help clarify the applicability of the model to functions. Mandates policies with human resources impacts. experienced, junior or potential future leaders. The twelve competencies and the competency framework are described in detail! Operations Committee in Figure 2 overleaf. CEO and 13 direct reports. Oversees 3Ms operations and approves the formation or restructuring of staff or operating units. 4 FIGURE 1: REVISIONS TO LEADERSHIP COMPETENCIES AT 3M Original Competency Revised Competency Rationale for Change Label Label ! The use of ‘nurturing’ highlights the importance of proactively creating an environment in Innovation Nurturing Innovation which staff can freely exchange ideas, challenge the status quo and learn from failures ! Emphasises leader’s role of mentoring idea originators through all stages of a product’s life ! Stresses the importance of delivering results; avoiding the implication that growth should be Business Health and pursued at all costs Business Growth Results ! Encourages leaders to manage all organizational subsystems to be ‘vibrant and flexible’ ! The removal of ‘systemic’ was intended to avoid the perception that the competencies were Systemic Change Integrated Change expressed with jargon ! The term ‘integrated’ would be more clearly and widely understood Capable of Handling ! Acknowledges the existence of paradoxical leadership situations Effective Analysis of Multiple, Complex and Complex Situations Paradoxical Situations ! Introduces the concept of using judgment in leadership ! Highlights the reciprocal nature of the feedback process, to overcome the one-way, top-down Feedback and Gives and Seeks Open and implications of the original statement Reinforcement Authentic Feedback ! The term ‘authentic’ communicates the expectation of candor  2000 CORPORATE EXECUTIVE BOARD PAGE 2
  3. 3. CORPORATE LEADERSHIP COUNCIL DECEMBER 2000 3M’s Leadership Competency FrameworkHR SOLUTION (CONTINUED) The expression of the competencies as outcomes allows direct demonstration, observation and assessment. In addition, 3M’s work3M’s leadership competency framework reflects several with senior executives in the development stages ensured that therecommendations from literature regarding the construction of a model reflects a third best practice: the competencies are expressed inuseful competency model, including relating the competencies to language that is familiar to those people who will make use of therealistic workplace practices and expressing them as outcomes rather tool. 6than as procedures.5 FIGURE 2: 3M’S LEADERSHIP COMPETENCY FRAMEWORK6 Fundamental Leadership Competencies Essential Leadership Competencies Visionary Leadership Competencies Fundamental competencies are those Visionary competencies are those which 3M which an individual may possess at the Essential competencies are those that leaders must possess to assume increased time of hire, but which will develop further the individual will develop as he becomes levels of responsibility. They enable leaders as the individual progresses through responsible for a functional unit or department. to look beyond their locus of control and add successive management positions. perspective to their leadership decisions. Ethics and Integrity Customer Orientation Global Perspective ! Exhibits uncompromising integrity and ! Works constantly to provide superior value ! Operates from an awareness of 3M’s commitment to 3M’s corporate values, to the 3M customer, making each global markets, capabilities and human resource principles and business interaction a positive one. resources. conduct policies. ! Exerts global leadership and works ! Builds trust and instills self-confidence Developing People respectfully in multicultural environments through mutually respectful, ongoing ! Selects and retains an excellent workforce to 3M’s advantage. communication. within an environment that values diversity and respects individuality. Vision and Strategy Intellectual Capacity ! Promotes continuous learning and the ! Creates and communicates a customer- ! Assimilates and synthesizes information development of self and others to achieve focused vision, corporately aligned and rapidly, recognizes the complexity in issues, maximum potential. engaging all employees in pursuit of a challenges assumptions and faces up to ! Gives and seeks open and authentic common goal. reality. feedback. ! Capable of handling multiple, complex and Nurturing Innovation paradoxical situations. Communicates Inspiring Others ! Creates and sustains an environment that clearly, concisely and with appropriate ! Positively affects the behavior of others, supports experimentation, rewards risk- simplicity. motivating them to achieve personal taking, reinforces curiosity and challenges satisfaction and high performance through the status quo through freedom and Maturity and Judgment a sense of purpose and spirit of openness without judgment. ! Demonstrates resiliency and sound cooperation. ! Influences the future to 3M’s advantage. judgment in dealing with business and ! Leads by example. corporate challenges. Building Alliances ! Recognizes when a decision must be made Business Health / Results ! Builds and leverages mutually beneficial and acts in a considered and timely manner. ! Identifies and successfully generates relationships and networks, both internal ! Deals effectively with ambiguity and learns product, market and geographic growth and external, which generate multiple from success and failure. opportunities, while consistently delivering opportunities for 3M. positive short-term business results. ! Continually searches for ways to add Organizational Agility 3M includes this fundamental value and to position the organization for competency to remind leaders that the ! Knows, respects and leverages 3M’s future success. culture and assets. company expects sound judgment from those in whom it places trust, and that ! Leads integrated change within a this should be demonstrated to the staff. 3M intends this competency definition to business unit to achieve sustainable focus leaders on building an enterprise that competitive advantage. creates profit and generates business with ! Utilizes teams intentionally and the ultimate objective of delivering an appropriately attractive return on shareholder investment. By including this competency, 3M aims to develop leaders who can “see around corners” to anticipate changes in market conditions and proactively position the company for future competitive advantage.  2000 CORPORATE EXECUTIVE BOARD PAGE 3
  4. 4. CORPORATE LEADERSHIP COUNCIL DECEMBER 2000 3M’s Leadership Competency FrameworkHR SOLUTION (CONTINUED) Linking the Leadership Competency Model to Leadership Development and Succession PlanningAnchoring Leadership Competencies in Behaviors The three primary applications of 3M’s new leadership competencyIn order to ensure that the organization could utilize the competency model are presented below:model effectively for the purposes of assessment, developmentplanning and succession planning, it was important to ‘anchor’ the ! Leadership Talent Review Toolidentified competencies in observable leadership behaviors. This In order to build the use of the competency framework into a talentwould enable current executives to pinpoint which aspects of review process, the project team designed a personal interviewleadership they were delivering on, what their development needs process that asked senior executives to rate the degree ofwere, and would clarify for more junior employees the paths to competence of each of their direct reports (against the identifiedexecutive roles at 3M. behavioral anchors) as “not a strength”, “sufficient” or “a strength.” In a pilot program, the members of 3M’s OperationsThe project team’s objective was to describe, in behavioral terms, Committee rated their direct reports, a total of 70 individuals. Thewhat is a high degree of leadership competence. In order to identify CEO then led a review of leadership talent among this group at arelevant behaviors at different levels of competence, the global HR monthly meeting of the company’s Executive Resource Committee.team conducted critical incident interviews with 70 executives across This talent review is now an annual process at 3M.3M’s operations. ! Targeting Leadership Talent DevelopmentCritical incident interviewing is a long-established method of 3M’s comprehensive competency model helps executives toidentifying the characteristics of effective job performance. consistently communicate to the employee population theIndividuals in the position being analyzed are asked to identify competencies and behaviors that 3M expects its future leaders tobehaviors or activities that can be demonstrated to be critical to either display. Current and potential leaders and their managers have aeffective or ineffective performance.7 clear view of those criteria against which their performance will be judged and can take targeted action to gain experience and improveThe process used by 3M to identify definitive behaviors indicating in these areas. Employee performance is assessed against theleadership competency is described below.8 competency model and individuals receive feedback on their strengths and needs.1. Members of the global HR team met in pairs with individual participating executives and discussed with them descriptive ! Long-Term Leadership Succession Planning examples of individuals or incidents associated with a high degree 3M examines potential appointments to leadership positions by of competence in two of the identified competency areas. considering individuals’ strengths against the competency model, on the basis that high-potential employees who consistently exhibit2. The discussion yielded a range of behaviors associated with each effective leadership behaviors will progress to leadership career of the two competencies. paths. This progress is validated and closely monitored by3. The team identified three to five of the revealed behaviors — observing business results and the results of objective performance which were observable on the job and generalizable across the assessments, and the company provides appropriately targeted world’s regions and markets — as definitive indicators of high- developmental opportunities to allow individuals to refine their level leadership competence. leadership competencies with the objective of fulfilling the profile specified by the competency model.As an illustrative example of the types of behaviors that wereidentified at 3M, the anchors for the ‘global perspective’ competencyare presented in Figure 3.9 LESSONS LEARNED FIGURE 3: BEHAVIORAL ANCHORS FOR 3M has not published results directly attributable to the creation of its ‘GLOBAL PERSPECTIVE’ LEADERSHIP COMPETENCY 9 leadership competency framework. However, the company’s leadership development executives perceive that the model has been ! Global Information Sourcing — Respects, values and leverages well-received internally, and are confident that it will deliver tangible other customs, cultures and values. Uses a global management results. Because the competencies and behaviors in the framework team to better understand and grow the total business; able to are articulated with reference to 3M culture and values, development leverage the benefits of working in multicultural environments. executives believe the newly-developed competency model to have ! Global Resourcing — Optimizes and integrates resources on a “vitality and relevance” for those using it.10 global basis, including manufacturing, research and businesses across countries, and functions to increase 3M’s growth and "[Although] much work remains to be done… we are well on the profitability. way to deepening bench strength and developing stronger ! Global Customer Orientation — Satisfies global customers and incumbent leaders. With further development of leadership and markets from anywhere in the world. talent assessment and succession applications, 3M leaders expect the extra time invested in customizing these solutions to ! Global Awareness — Actively stays current on world economies, result in measurable business success."11 trade issues, international market trends and opportunities. — 3M Executive Director of Selection, Assessment and Leadership Development, and Development and Measurement Center Manager  2000 CORPORATE EXECUTIVE BOARD PAGE 4
  5. 5. CORPORATE LEADERSHIP COUNCIL DECEMBER 2000 3M’s Leadership Competency Framework1 Les Pickett. “Competencies and Managerial Effectiveness: Putting Competencies to Work,” Public Personnel Management (22 March 1998). (Obtained through Lexis-Nexis).2 Cited in Faye Cope, “Current Issues in Selecting High Potentials,” Human Resource Planning (January 1998). (Obtained through Dow Jones Interactive).3 Stephanie Craig, “Using Competencies in Career Development,” in Designing and Achieving Competency, 1992, McGrw-Hill (UK).4 Margaret Alldredge and Kevin Nilan, “3M’s Leadership Competency Model: An Internally Developed Solution,” Human Resource Management Vol. 39, Nos. 1 and 2 (Summer/Fall 2000).5 Les Pickett. “Competencies and Managerial Effectiveness: Putting Competencies to Work.”6 Margaret Alldredge and Kevin Nilan, “3M’s Leadership Competency Model: An Internally Developed Solution.”7 Rajvinder Kandola and Michael Pearn, “Identifying Competencies,” in Designing and Achieving Competency, 1992, McGrw-Hill (UK).8 Margaret Alldredge and Kevin Nilan, “3M’s Leadership Competency Model: An Internally Developed Solution.”9 ibid.10 ibid.11 ibid. PROFESSIONAL SERVICES NOTE The Corporate Leadership Council has worked to ensure the accuracy of the information it provides to its members. This project relies upon data obtained from many sources, however the Council cannot guarantee the accuracy of the information or its analysis in all cases. Further, the Council is not engaged in rendering legal, accounting or other professional services. Its projects should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from any errors or omissions in their reports, whether caused by the Corporate Executive Board or its sources. The views expressed herein by third-party sources do not necessarily reflect the policies of the organizations they represent.  2000 CORPORATE EXECUTIVE BOARD PAGE 5