The New Project Leader


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The New Project Leader

  1. 1. Heidrick & Struggles reveals the increasingdemands being made on the future generationof Project Directors within the fast-evolvingnatural resources sectorby Luigi Slaviero, Partner, Industrial Practiceand Hugues Mercier, Associate Principal, Leadership Consulting PracticeThe newprojectleader
  2. 2. Professionals within the natural resourcesindustry are faced with ever more complexand daunting projects within the contextof a highly competitive and politicalmarketplace. And in an age when mitigatingrisk is more important than ever, the role ofthe Project Director in particular is becomingincreasingly demanding.The new generation of Project Directors are expectedto know as much – if not more – about the world ofstakeholder management, corporate communications,governance and leadership as it does about engineering.Management skills and accountability are growing inimportance. And the scarcity of Project Directors willingand able to take on these new demands is compoundingthe human resources challenge for the industry.The risk managed by a single Project Director canrepresent up to one third of a company’s entire portfoliorisk and can therefore have a huge impact on theorganisation’s financial health as well its corporateimage. The savvier corporations have recognised thisand acknowledge the need for professionals withstrong leadership skills as well as technical know-how.Projects have become so complex that no one personcan master all the technical challenges. Teamwork andcommunication are crucial.Following in-depth interviews with leaders in the naturalresources industry, Heidrick & Struggles has identified thebenchmarks and best practices that are being developedto enhance project management capabilities and, in turn,sustain the pipeline of the future generation of ProjectDirectors.Survey findingsTalent challengesThe physical and political challenges of leveraging naturalresource reserves in hostile and remote regions aresignificant. Moreover, industry insiders are concerned thatdifficulties in finding talent equipped with the necessarycapabilities are constraining successful and timely projectdelivery. The risks of failing to address talent managementinclude financial loss, brand damage and team burnout,so it may come as no surprise to learn that manyorganisations are now paying closer attention to theirgovernance and hiring policies.These firms are looking at the way they drive projects, andhow they address their project leadership capabilities.They are reassessing the competencies needed by theirproject management function. And they have identifiedthe need for strong leadership and commercial skills.The governance environment has evolved too, along withthe increased complexity and multi-billion dollar capitalexpenditure level of projects. Collaborating with newpartners such as global supply-side alliances and largerconsortia for complex projects with high political visibilityhas increased the governance burden. And as the stakesand expenditure increase, so do the risks.Dealing with such challenges requires robust riskmanagement, contract management, accountability andfront-end commercial astuteness, as well as insightfulforecasting ability. And with many Project Directors nowresponsible for managing stakeholders’expectations– including those of politicians, suppliers, clients andexternal partners – the ability to carry out a plethora ofchallenging and time-consuming responsibilities canrepresent the key to success.Forces of change inproject management2 The new project leader
  3. 3. Locating talent from other sectors, such as IT,infrastructure or transport, is slowly becoming morecommonplace. Anecdotal evidence shows that therehave been several successful cases of senior ProjectDirectors moving from one sector to another, such as fromaerospace technology to gas or oil. After a few months(or even weeks) of learning the jargon they are frequentlyoperating on par with their peers.One executive agreed,“The Project Director profession hasbeen elevated to a leadership role, with communicationsexpertise a necessity, plus the ability to manage a projectvia management information dashboards. Preciselybecause of these additional skills, it is possible to attractProject Directors from other sectors.”Managerial andleadership behavioursProject Directors are no longer simply accountable fordelivery. They are acting as‘mini-CEOs’covering a largespectrum of activities. Intellectual and technical skills areof course necessary but behavioural and communicativedimensions – or leadership intelligence – are now crucialfor success.According to one VP global projects,“We as a firm believethat the winning Project Director has the talent of thegeneral manager, or a mini-CEO – who creates a‘company’(the multi-billion dollar project), manages its lifecycle andalso manages its‘closure’(i.e. commissioning for hand-overto operations).”Another executive concurred,“We realised quite rapidlythat three-quarters of the skill and competency sets thatare required for successful project leadership are thesame as for the company’s general, firm-wide leadershipprogramme through which it develops its business andgeneral managers.”This change in skill set is starting to be recognised byorganisations and is evidenced in recent hires. A largeinternational oil company has recently started recruitingfuture Project Directors from the Navy, for example.“Engineering and technical skills are nice-to-have butleadership skills are a must-have. This trend has emergedin the last decade and we try to bear it in mind whenappointing new Project Directors,”confirmed its VPHuman Resources.Generation gapThere is another area of concern, too – the acutegenerational gap in the natural resources industry. Severalof Heidrick & Struggles’interviewees, all executives inleading natural resources corporations, admitted that theproblem is“grossly underestimated”. Many engineeringgraduates are no longer heading to exotic destinationsto work on mega-projects, but are instead turning to anurban career in finance or consulting, and the more family-friendly work-life balance that comes with it.Respondents also noted a decrease in commitment to jobsand organisations, a contrast to the historically committed‘company people’. One VP global project services said,“We are aware of the concerning phenomenon of youngertalent looking for immediate outcomes, or instantgratification. There does not seem to be a high patienceor willingness to work through the learning curves.”Thistrend evolved in Generation X, and seems to be even moreacute in Generation Y.The widening gap between aging engineers and ProjectDirectors and the scarcity of new talent is compoundedby risk-averse companies’reluctance to give a younger,un-proven, project manager a high responsibility role.Likewise, project management roles are often seen bypotential recruits as‘too risky’.Transferable skillsThere is also an historical tendency for the naturalresources industry to look for talent within its own sectoror, worse still, within the same natural resource, suchas gas. This practice frequently ignores the wideningrole of the Project Director – that of a true managementprofessional first and foremost, over and above his or hercapabilities as a specialised engineer.According to one executive,“The companies that say‘talent must come from our sector’are living in the past,because what they are really saying is‘a Project Directoris a super technician, a super engineer, a super processwizard.’The more advanced and informed view is‘a ProjectDirector equals a project management professional and aleader of people.’”Heidrick & Struggles 3
  4. 4. Effective teamworkIn addition, Project Directors are increasingly findingthemselves in the position of“talent officer”, acting ashuman resources managers as they take on accountabilityfor managing and developing their project team. Projectshave become so complex that no one person can masterall the challenges. The required expertise is so vast thatspecialisation at the top of the organisation can in fact bedamaging to the project, with the risk of time and moneybeing spent unwisely on the smallest engineering details,rather than the bigger business picture.Teamwork and the presence of varied expertise havebecome crucial. Teams need to be multi-disciplinaryand multi-cultural. To manage such a diverse team, anefficient Project Director must have an entrepreneurial orcommercial (“P&L”) attitude and excel at developing andcommunicating with people.This new focus on the need for emotional intelligence andastute communication skills in Project Directors cannotbe underestimated, especially in the face of increasinglydemanding projects and with billions of dollars at stake.One of the executives interviewed commented,“Thereis a risk of underestimating the psychological profile ofa Project Director. Not all engineers or technical profileshave the right psychological decision making profile –far from it.”For another executive, recognising“good work on a dirtyjob”is a vital part of appraising Project Directors. Heexplained,“Acknowledge people who are stepping upto the plate on a train-wreck project where no one elsewould or could: it is a sign of leadership and courage.”The role of Project Director has become so important thatone global transport and infrastructure company is nowtelling its young talent that“for an advanced, executivelevel career in our company, project manager or ProjectDirector experience is a must-have on your CV.”It will no longer be surprising to see a mega-ProjectDirector holding a vice-president or even a senior vice-president rank, reporting directly to the CEO of the firm,especially if they are involved in projects of high-value tothe overall organisation.A word of warningProject Directors, however, are not always the saints ofmega-projects. With the scarcity of Project Director talentand the increase in responsibility has come an increase inpower, something that some Project Directors are wieldingto the detriment of the wider company.Business efficiency suffers – and company risk increases– when Project Directors have a low acceptance offirm-wide methods, for example, or yield too easily tofigure 1The skills and expertise ofthe new Project DirectorA typical Project Director in naturalresources has an Engineering degree, oftencomplemented by a business education.They have occupied various roles in projectengineering, project construction andcorporate project/function, and havebeen exposed to project complexities.A successful Project Director will havehad experience in leadership and peopledevelopment, finance and technology.4 The new project leader
  5. 5. client demands. As one global HR director explained,“Today, the Project Director is king. They have a highdegree of freedom and discretion. With the liberty andempowerment they enjoy, some Project Directors haveconceded business too much or too easily to clients.”DevelopingProject DirectorsBest practicesThe methods adopted by the most forward-thinkingorganisations to nurture and develop Project Directorsare evolving to meet the increasing demands of the role.These companies are using three main strategies, which,when combined, can significantly impact individualdevelopment. Heidrick & Struggles’research indicates thatindividual development is driven by:• on-the-job training• internal mentoring/external coaching• formal academic training (which can alsobe delivered internally)1 On-the-job trainingSuccessful companies have developed initiatives toencourage efficient on-the-job training opportunities,including internal reorganisation, streamlining reportingprocesses and methods for early detection of potentialtalent.Internal organisationOrganisational models have evolved to help supportprojects and develop talent. Large projects are beingdivided into packages and smaller semi-autonomoustasks, for example, which not only increases individuals’responsibilities but also helps manage the risk associatedwith the project. Being given the opportunity to leadthese tasks helps to develop talent, and represents anopportunity for future Project Directors to experiencethe company’s standard processes and protocol. Projectcontrol or executive assistant positions are also a wayto increase exposure to political, project and controlcomplexity. Moving between functions and projectsallows junior staff to cross-fertilise experience andexpertise while mitigating company risk.Reporting lineLarge projects may have multiple partners, which cancreate complex relationships between project teams(which can be composed of different companies’staff)and parent companies. Streamlining reporting routesshortens the decision-making process while ensuringefficiency. Given that natural resources Project Directorsbear a significant part of the company’s financial risk,many organisations have adapted their reporting line toaid communication with top management.Early detection of potentialA major tool in improving staffing decisions is a‘peoplereview’, in which a leadership team reviews a groupof people and collectively builds a consensus on eachindividual. This enables the organisation to identifypotential next steps for career development whileensuring any potential risks are acknowledged. Thesecollective decisions emphasise the fact that no managerowns his or her resource pool. Not only does earlydetection of talent shape careers, it also helps to ensurethat staffing decisions take into account individualdevelopment needs as well as project requirements.2 Internal mentoring/external coachingSuccessful companies are using mentoring to enhanceand to improve the transfer of knowledge and experiencebetween seasoned Project Directors and more juniorproject managers. The mentor relationship reinforces thefeeling of community within the‘project population’andis a way to impart non-written information or unofficialprotocol. Mentoring can be complemented with externalcoaching to accelerate career trajectory.Heidrick & Struggles 5
  6. 6. 3 Formal Academic trainingIn order to ensure Project Directors are effective and bestpractice is shared, some companies are sending theirhigh performers to top academies to provide them withtraining in finance, HR, legal, PR and negotiation skills. Thistraining is often completed by in-house workshops. Thisis an effective way for companies to create a communityof seasoned managers. It also supports the sharing anduse of company standards, tools and processes, ensuringstructured project delivery, and making talent moreportable within the organisation.The need to develop leadership and behaviouralcompetencies has led forward-thinking companies toinvest in leadership development training too. In orderto measure the impact of this training, companieshave developed competency models tailored to theirpopulation of Project Directors. These frameworks aresimilar in terms of emphasis and scoring to those usedby executive search firms when assessing executive levelcandidates.Training can be used at different stages of the ProjectDirector’s career. In the early stages, the emphasis will beon technical skills such as finance, HR and law. Later thefocus is on leadership.The impact of such strategies is two-fold. Individuals aredeveloped faster and more effectively, while staffing risksare mitigated by balancing inexperience with controland by supporting people with processes and expertise.The head of a project academy for an international oilcompany said,“We have been pleasantly surprised bythe power of combining development training andcommunity building. Project Directors regularly go to theacademy to learn, close a specific competence gap or toteach. This reciprocity has proven highly motivational forall involved.”Is your companygrowing the new breedof Project Directors?Analysis of Heidrick & Struggles’survey findings identifiedthree critical questions that organisations need to considerin order to optimise project management and to controlrelated risks:• What project governance is in place?• How do we nurture talent within the projectmanagement function?• How do we promote the leadership competencies thatare necessary for successful Project Directors?All this requires support from senior management as wellas a robust training and development programme. Thoseresponsible for nurturing the talent pipeline – whichshould include the Executive Committee as well as HR –need to have a clear understanding of the necessary skillsand competencies in this ever-changing profession. Theyneed to know that there is now a need for an emphasison‘soft’metrics as well as technical expertise. Successfulproject management is not just about delivering projectson time and within budget. It must also involve a focuson the team, effective people management, a persuasiveleadership style and true client and partner satisfaction.A talented Project Director will display managerial flairby building internal and external relations, fosteringopen participation and non-hierarchical communication,proactively leading teamwork across a variety of situationsand thinking ahead while also learning from pastexperiences. Tomorrow’s success depends on growingthis talent and on helping this new breed of ProjectDirectors to deliver ever more complex, multi-billiondollar projects. MethodologyHeidrick & Struggles conducted a survey on project management in the natural resources industry in 2009. This involved38 in-depth and confidential interviews with Project Directors and other senior executives. Almost 40% of ProjectDirectors interviewed had a distinct non-technical experience within their career – such as a managerial, financial orcommercial position. The scale of project management represented in the survey exceeded US$63 billion.6 The new project leader
  7. 7. Industrial PracticeOur Industrial Practice team, which consists of theNatural Resources Practice and other specialty practices,combines unparalleled search resources with a deeplyconsultative approach. Working closely with the client,we develop the ideal candidate profile against theorganisation’s unique competitive challenges, businessobjectives, and leadership culture. By considering far morethan candidates’functional or industry backgrounds,we enlarge the talent pool to help find the talent mostqualified to meet those business objectives and addressthe client’s real hiring needs. Perhaps most importantly,this approach helps avoid the disastrous mismatchesbetween candidate’s capabilities and role requirementsthat have plagued many industrial companies during thistime of dramatic change and increasing complexity.Our dedicated group of over 125 consultants has deepexperience in each industry sector. We serve every regionaround the globe, including China, Russia, the Middle East,Eastern Europe and other emerging markets. The morethan 1200 assignments we conduct for clients each yearinclude executive search, leadership development andconsulting projects. This work has earned us outstandingcustomer satisfaction ratings and created long-standingrelationships marked by the trust we develop and theresults we deliver in every engagement.Luigi Slaviero is a Partner at Heidrick & Struggles, and co-leader of the global Natural Resources Practice.lslaviero@heidrick.comLeadershipConsulting PracticeHeidrick & Struggles partners with the world’s mostprestigious companies to build and develop winningleadership teams. Our experience has taught us thatmanaging leadership talent is as important as acquiring it.To help clients transform how they manage their leaders– and ensure the sustainable business success theirstakeholders demand – we have assembled a global teamof deeply skilled consultants well-versed in leadership,senior team dynamics and strategic human capitalmanagement.Our services are designed directly with clients toaddress Leadership Risk at the individual level (StrategicLeadership Assessment, On Boarding), team level (TopTeam Effectiveness and Alignment) and organisationallevel (Board Performance, M&A due diligence and Talentstrategy). Our Leadership Consultants offer clientstailor made leadership solutions that drive requiredorganisational change, enhance leadership teams, developtop talent and improve business performance.Hugues Mercier is an Associate Principal in the Paris officeof Heidrick & Struggles, and is a member of the globalLeadership Consulting Practice.hmercier@heidrick.comHeidrick & Struggles 7
  8. 8. Copyright ©2010 Heidrick & Struggles International, Inc.All rights reserved. Reproduction without permission is prohibited.Trademarks and logos are copyrights of their respective owners.201001GJTSMI53Heidrick & Struggles is the leadership advisory firmproviding senior-level executive search and leadershipconsulting services, including succession planning,executive assessment, talent retention management,executive development, transition consulting for newlyappointed executives, and M&A human capital integrationconsulting. For almost 60 years, we have focused onquality service and built strong leadership teams throughour relationships with clients and individuals worldwide.Today, Heidrick & Struggles’leadership experts operatefrom principal business centers in North America, LatinAmerica, Asia Pacific and Europe, Middle East &