Manage Talent Pipeline

1. N ©2007 MDA Leadership Consulting, Inc.
Managing the Talent Pipeline
Best Practices in Succession Management
and High Potential Identification and Development
HR Tomorrow Conference
April 20, 2007
Robert C. Barnett, Ph.D., L.P.
MDA Leadership Consulting

2. O ©2007 MDA Leadership Consulting, Inc.
Agenda
¾Best Practices in Succession Management
¾Identifying High Potentials
¾Best Practices in Leadership Development
¾Questions and Discussion

3. P ©2007 MDA Leadership Consulting, Inc.
First Who . . . Then What
“There are going to be times when we can’t wait for
somebody. Now, you’re either on the bus or off the
bus.”
-- Ken Kesey, from The Electric
Kool-Aid Acid Test by Tom Wolfe
“The key point . . . is not just the idea of getting the right
people on the team. The key point is that the ‘who’
questions come before ‘what’ decisions – before
vision, before strategy, before organization structure,
before tactics. First who, then what – as a rigorous
discipline, consistently applied.”
-- Jim Collins, from Good to Great

4. Q ©2007 MDA Leadership Consulting, Inc.
Leadership Matters
In a variety of studies, strong leadership and effective
management have been shown to be related to . . . . .
• Increased productivity, profit, market value, and growth (Centre for
Economic Performance and McKinsey & Company, 2005; Huselid, 1995, Pfeffer
and Veiga, 1999; Hanson, 1986; Zenger and Folkman, 2002)
• Increased sales revenue (Huselid, 1995, Pfeffer and Veiga, 1999).
• Better long-term returns and shareholder wealth (Blimes, Wetzker, and
Xhonneux, 1997; Huselid and Becker, 1997).
• Increased firm longevity (Welbourne and Andrews, 1996).
• Greater customer satisfaction (Rucci, Kim, and Quinn, 1998).
• Decreased turnover (Huselid, 1995, Pfeffer and Veiga, 1999; Zenger and
Folkman, 2002).
• Increased employee commitment (Zenger and Folkman, 2002).
• Enhanced high potential retention and development (Corporate Leadership
Council, 2005).

5. R ©2007 MDA Leadership Consulting, Inc.
Succession Management
Managing the talent pipeline to ensure the
quantity and quality of executive leaders needed
by an organization are identified, fully capable,
and ready to contribute to the continued
effective performance of a business over time.

6. S ©2007 MDA Leadership Consulting, Inc.
Succession Management Typically
Refers to Leadership at the Top
The Talent Pipeline
Executives
Directors
Managers
Employees
Succession
Management
High Potential
Identification
& Development

7. T ©2007 MDA Leadership Consulting, Inc.
The Leadership Pipeline
Self-directed learner;
high integrity and
professionalism
Open-minded,
reflective, and eager
to learn
Egalitarian and
fair-minded
Is an aggressive
learner
Has integrity; and
confidence; is
emotionally stable
Managing
Self
Plans for growth; sets
priorities for whole
business
Demonstrates long-
term perspective
Links activities to
business goals;
deploys resources
Sets priorities and
plans for team;
productivity focused
Sets priorities,
organizes self;
responsible, reliable
Managing
Work
Poised, approachable;
does not neglect the
soft issues
Listens more than
talks; strong team
player; networks well
Interpersonally skilled;
considerate and warm;
breaks down silos
Collaborative, builds
good relationships;
not abrasive
Communicates well;
interpersonally
effective
Relating to
People
Unrelenting drive and
energy; eager for risk-
taking
Excited by the new
and unfamiliar
Likes leading;
continually reaches for
more responsibility
Likes getting results
through others
Drive to exceed
expectations; concern
for quality results
Achieving
Creates business
strategy; manages
complexity, P&L focus
Strategic mindset –
external focus;
holistic view;
business thinker
Decisive, action-
oriented; understands
business strategy
Systems thinker; sees
tactical implications
of function strategy
Intelligent, good
critical thinker;
understands strategy
Thinking &
Deciding
Visionary; involves &
empowers; architect
for organization
Manages profitability;
aligns functional
work; influences out
and up
Develops others; is
ultimate coach;
integrates teams
Establishes self as
credible leader;
manages
performance
Assertive and able to
be influential with
others
Leading
Senior Executive
Function Executive
Senior Manager
Front-Line
Manager
Individual
Performer
Source: Charan, R., Drotter, S., and Noel, J. (2001) The Leadership Pipeline. New York: Jossey-Bass.

8. U ©2007 MDA Leadership Consulting, Inc.
How is Executive Success Different?
Rob Kaiser and Bartholomew Craig, SIOP, 2005
.39***
.25***
.24***
Model R2
— .17***
+ .06*
+ .12
Lack of Follow Through
+.03
— .22***
— .52***
Abrasiveness
+ .05
+ .17***
— .34**
Interpersonal Warmth
+ .21***
— .12***
— .14
Empowerment
— .19***
+ .21***
+ .12
Decisive, Action-Oriented
— .20***
+ .02
+ .20***
Work-Life Balance
+ .50***
+ .19***
+ .29***
Learning Orientation
Executive
β (n = 483)
Manager β
(n = 1,457)
Supervisor
β (n = 225)

9. V ©2007 MDA Leadership Consulting, Inc.
Success at Different Levels
¾ Learning is more important than ever
¾ Executive leadership is demanding – professionally and
personally
¾ Slow down and deliberate
¾ Involve, empower, and rely on staff
¾ Keep your word and follow through
Executive
¾ Keep learning
¾ Show urgency and learn to make the tough decisions – when
in doubt, act!
¾ Trust your staff while maintaining appropriate controls
¾ Interpersonal effectiveness is critical
Senior
Manager
¾ Aggressively seek out new knowledge and learn
¾ Treat people well – can’t be abrasive, but no need to get
too close
¾ Maintain some balance
Front-Line
Manager

10. NM ©2007 MDA Leadership Consulting, Inc.
The Business Case
¾ Now, more than ever, organizations must get leadership
right—HR executives indicate succession management and
leadership development are their top two priorities.
¾ Organizations are larger and increasingly more global, but
leaner in their management structures.
¾ Employee retention is more difficult and talent poaching
is easier—while the “baby boom” generation is beginning
to retire.
¾ Leadership effectiveness has become an increasingly critical
source of competitive advantage.
¾ But, the vast majority (nearly 75%) of executives believe their
organizations’ succession management systems fail to
produce a sufficient supply of talented leaders.
Source: Corporate Leadership Council, High Impact Succession Management, 2003

11. NN ©2007 MDA Leadership Consulting, Inc.
Succession Management Minimizes Risk
1. Vacancy Risk: Critical leadership positions vacant.
2. Readiness Risk: Underdeveloped successors.
3. Transition Risk: Poor integration or derailment at
the executive level.
4. Portfolio Risk: Poor deployment of talent against
business goals.
Source: Corporate Leadership Council, High Impact Succession Management, 2003

12. NO ©2007 MDA Leadership Consulting, Inc.
Best Practices in Succession Management
1. Business strategy is translated into a talent strategy.
2. Talent development imperatives receive active support from the top.
3. A systematic and cyclical process of talent identification, review, and
development is installed.
4. Key departures are anticipated—succession planning is focused on the talent
most critical to the business’s future.
5. A core set of leadership competencies are used to evaluate successor
candidates, including those competencies required for success in the future.
6. Succession planning is not ‘replacement’ planning.
7. Talent is reviewed across the organization—talent is not siloed.
8. Succession planning spans several levels.
9. Performance does not necessarily equate to potential to succeed at the
next level.
10. Succession and development systems are coordinated with other talent
management systems and processes. HR is a critical partner.
11. Diverse developmental experiences aligned with business strategy increases
leadership readiness.
12. The most talented leaders are placed in the most critical business functions.
Source: W. Rothwell, Effective Succession Planning, 2005; and Corporate Leadership Council, High Impact Succession Management, 2003.

13. NP ©2007 MDA Leadership Consulting, Inc.
Succession Management Process
Translate
Business
Strategy to
Talent Needs
Determine
Succession
Needs
Identify
Qualified
Successors
Manage
Development
& Talent
Moves
Monitor &
Measure
Effectiveness

14. NQ ©2007 MDA Leadership Consulting, Inc.
Succession Management Design Choices
• When will follow-up reviews be conducted?
• What is the format of these reviews?
• How will impact be measured?
5. Monitor & Measure
Effectiveness
• Who owns ‘development’?
• How is feedback provided?
• What feedback is provided?
4. Manage Development
& Talent Moves
• Position-based, pool-based, or combination approach?
• Which levels, positions, or persons should be included?
• How is succession linked to other HR systems?
• How do we train and prepare managers to participate?
2. Determine
Succession Needs
• Who will provide input/ratings?
• How will assessments of performance and potential be made?
• What sources of information are available?
• What are the legal considerations?
3. Identify Qualified
Successors
• Do senior leaders see the need?
• What is the purpose and how will it be communicated to the organization?
• Where does succession planning belong in the annual business cycle?
1. Develop a
Succession Planning
Strategy
Source: B. Dowell, (2002) Succession Planning, in Implementing Organizational Interventions, J. Hedge & E. Pulakos, (Eds.), Jossey-Bass

15. NR ©2007 MDA Leadership Consulting, Inc.

16. NS ©2007 MDA Leadership Consulting, Inc.
Strengthening the Executive Bench
Organizations can no longer rely only on
executive-level succession planning and
traditional leadership development programs
to supply the quality and quantity of leaders
their organizations will require in the future.

17. NT ©2007 MDA Leadership Consulting, Inc.
The Business Benefit
¾A strategic focus on high potential talent is the single
thing an organization can do to maximize current and
future performance.
ƒ Organizations rich in high potential talent – those where
one in five employees is high potential – outperform
average employees across organizations by 14%, and have
a 22% performance edge over organizations where only
1 in 50 employees are high potential.
ƒ All other things being equal, organizations that implement
effective strategies to grow their employees’ potential will
have a powerful human capital advantage over competitors
that do not – now and in the future.
Source: Corporate Leadership Council, Realizing the Full Potential of Rising Talent, 2005.

18. NU ©2007 MDA Leadership Consulting, Inc.
The Dilemma
¾High potential talent is in short supply.
ƒ The majority (nearly 75%) of executives believe
their organizations’ talent management systems
fail to produce a sufficient supply of qualified
leaders.
ƒ Fewer than 20% of employees have better than a
50% chance of being successful in more senior,
more critical roles.
Source: Corporate Leadership Council, Realizing the Full Potential of Rising Talent, 2005.

19. NV ©2007 MDA Leadership Consulting, Inc.
Definitions of ‘Potential’ Are Vague
¾ The ability to learn, grow, and change.
-- International Truck and Engine Corporation
¾ An individual’s capacity to develop the new skills
and willingness to take on the challenges that come
with bigger positions.
-- The Leadership Pipeline
¾ The High-Potential employee is an employee with
the ability, engagement, and aspiration to rise to
and succeed in more senior, more critical positions.
-- Corporate Leadership Council

20. OM ©2007 MDA Leadership Consulting, Inc.
Traditional Predictors Are Inadequate
High performance does necessarily mean
high potential.
29%
High Performance
17%
Competency Ratings
8%
Turnaround or
Management Experience
8%
Tenure
% Hi Potential
Method
Source: Corporate Leadership Council, Realizing the Full Potential of Rising Talent, 2005.

21. ON ©2007 MDA Leadership Consulting, Inc.
Understanding Potential
Cognitive Ability
Motives/Values
Personality
•Learning Orientation
•Organizational Commitment
•Successful Intelligence
•Dominance
•Sociability
•Drive
•Stability
•Versatility
Note: Source material referenced separately

22. OO ©2007 MDA Leadership Consulting, Inc.
Components of Potential
The extent to which a person values, believes in and identifies with their organization. Committed
individuals will go above and beyond the call of duty and stay with their organization.
Organization
Commitment
The disposition to make the most of one’s experiences and exploit the opportunities to learn the
competencies required for future success. Individuals with a strong learning orientation are proactive,
adventurous, reflect on and learn from mistakes, and seek and use feedback.
Learning
Orientation
Motives
and Values
The degree to which a person is flexible, adaptable, open to new experiences and to others’ points-of-view.
Versatile individuals are curious, imaginative, have wide-ranging interests, and make transitions easily.
Versatility
The degree of positive adjustment, stability, and tolerance for stress. Emotionally stable individuals are
calm, even-tempered, and rational.
Stability
The tendency to strive for competence and success. Achievement oriented individuals have high
standards, are competitive, ambitious, and confident. They are disciplined, reliable, and responsible.
Drive
The degree to which a person likes to be and work with others. Sociable individuals are outgoing,
affiliative, and participative.
Sociability
The degree of impact and influence one has and exercises. Effectively dominant individuals are forceful
and persuasive, as well as active, energetic, and dynamic.
Dominance
Personality
The capacity to analyze, evaluate, and accurately and insightfully judge information. Successfully
intelligent individuals solve problems effectively, make sense out of their experiences, and apply what they
know to adapt to and shape their environment; and manage themselves, others, and tasks.
Successful
Intelligence
Cognitive
Ability
Description
Attribute
Component

23. OP ©2007 MDA Leadership Consulting, Inc.
Best Measures of Potential
9
9
Organizational
Commitment
9
9
Versatility
9
Stability
9
9
9
Drive
9
Dominance 9
Learning Orientation
Sociability
Successful Intelligence
Component
9
9
Motives &
Values
9
9
Personality
9
9
Cognitive
Ability
Testing
Employee
Opinions
Manager
Ratings

24. OQ ©2007 MDA Leadership Consulting, Inc.
Testing Works…But, Which Tests Work Best?
¾ Well researched, well-validated personality inventories are
the best measures of leadership and interpersonal ability,
achievement, and motivation.
ƒ California Psychological Inventory
ƒ 16 PF
ƒ Hogan Personality Inventory
ƒ Hogan Development Survey
ƒ Motives, Values, Preferences Inventory
ƒ Strong Interest Inventory
¾ Standardized, validated cognitive ability tests are best
measures for understanding intellectual skills and ability
to learn.
ƒ Employee Aptitude Survey
ƒ Watson Glaser Critical Thinking Appraisal
ƒ Ravens Progressive Matrices

25. OR ©2007 MDA Leadership Consulting, Inc.
Best Practices in High Potential
Selection…and Development
1. Definitions of “potential” are clear, well-understood, and accepted in the
organization.
2. Selection is key. Employee potential is evaluated through measures of cognitive
ability, personality, and motives/values.
3. High potential identification strategies are customized for different types (e.g.,
levels) of employees.
4. Potential is not static – it can be increased or diminished.
5. High-impact development systems use multiple and integrated strategies to
awaken, align, and accelerate learning and growth for participants.
6. Only a limited number of drivers can substantively build potential:
ƒ Relationships with peers, managers and reports – surrounding HIPOs with good
people is critical.
ƒ A credible organization commitment to development – flawed development planning
is worse than no plan at all.
ƒ Challenging job experiences – especially those inherent in leading and managing
people.
7. HiPos’ managers matter – manager quality is among the strongest drivers of
potential. The effect of bad managers lasts. Limit manager churn. Train HiPo
managers for competence in managing expectations.

26. OS ©2007 MDA Leadership Consulting, Inc.
High Potential Identification
& Development Overview
Identify
High
Potential
Target Pool
Design
Screening
Process
Select
High
Potentials
Develop
High
Potentials
Develop
High
Potentials’
Managers

27. OT ©2007 MDA Leadership Consulting, Inc.
High Potential Development Design Choices
¾How will the organization ensure a “credible commitment” to
development is conveyed?
¾What help do HiPos’ managers need to effectively coach and
manage expectations?
5. Support Managers
¾What elements will be incorporated to Awaken, Align, and Accelerate
development?
¾How will relationships and stretch assignments be maximized to
stimulate growth?
4. Design
Development
Program
¾Who will review and select high potentials?
¾What would the selection process involve? How long might it take?
¾How often would high potential identification/selection be conducted?
3. Select HiPo
Candidates
¾What are the best measures of potential? What tools or processes
are available?
¾What would managers rate or contribute? What would employees
themselves contribute?
2. Design Screening
Process
¾At what level should high potentials be targeted and identified?
¾What is the best available indicator of “high potential”?
¾What number of high potential leaders should be identified annually?
1. Identify HiPo Pool

28. OU ©2007 MDA Leadership Consulting, Inc.
What We Know About Development
¾Most people don’t change over time.
¾Some people do change over time.
¾People develop primarily through experience:
9 70% - experience/assignments
9 20% - people
9 10% - reading/coursework/seminars
Source: R. Eichinger, Ten Things We Know About Leaders, Human Resource Planning Society Annual
Conference, April 26, 2006, Tucson, AZ.

29. OV ©2007 MDA Leadership Consulting, Inc.
Sources for Development in Managerial Jobs
¾Handling adverse business conditions
¾Something important is missing (e.g., top management support, etc.)
Overcoming
Obstacles
¾Influencing without authority
Non-Authority
Relationships
¾Assignments with high pressure or ambitious deadlines
¾Managing diverse business responsibilities
¾Handling external pressure
High Level of
Responsibility
¾Developing new directions
¾Dealing with inherited problems
¾Managing a difficult, non-performing team
Creating Change
¾Handling unfamiliar responsibilities
¾Proving yourself in difficult situations
Job Transitions
Example
Type
Source: McCauley, C., Ruderman, M., Ohlott, P., and Morrow, J., (1994) Assessing the developmental components of managerial jobs.
Journal of Applied Psychology, 79, 4: 544-560.

30. PM ©2007 MDA Leadership Consulting, Inc.
High Impact Development Prevents Derailment
¾ Inability to learn from mistakes
¾ Problems in interpersonal relationships
¾ Problems in developing people – and inability to
build and lead the team
¾ Inability to make transitions, failure to take a broad
view, ‘functional prejudice’ and lack of openness to
new or different ideas
¾ Lack of reliability, follow-through, or accountability
Source: Lombardo, M.M., & McCauley, C.D., (1988). The Dynamics of Management Derailment, Greensboro, NC: Center for
Creative Leadership; and McCauley, C.D. (2004). Successful and Unsuccessful Leadership. In The Nature of
Leadership, Antonakais, J. et al (Eds.) Thousand Oaks, CA: Sage.

31. PN ©2007 MDA Leadership Consulting, Inc.
High-Impact Leadership Development Systems
¾ Are linked to the organization’s vision, mission, and values.
¾ Operate on a clear picture of leadership effectiveness – usually
a well-developed competency model.
¾ Require leadership development that forces business
outcomes.
¾ Rely heavily on multiple integrated development strategies.
¾ Facilitate the integration of organizational and personal values.
¾ Require selective investment – in those in the highest impact
jobs, in those who are highest potential, and in leaders at key
transition points.
¾ Are linked across organizational levels and supported and
reinforced by other organizational systems and practices.
¾ Measure impact at various levels: individual, team, and
the business.

32. PO ©2007 MDA Leadership Consulting, Inc.
MDA’s Leadership Development Architecture

33. PP ©2007 MDA Leadership Consulting, Inc.
HiPo Development Program: Example #1
¾ Situation
• Large U.S. based financial service firm (50,000+)
• Needed to build more leadership bench strength
¾ Challenge
• No formal HiPo program
• Needed to shift mindset of executives to “talent developer”
¾ Program Elements
• Leadership Advisory Council
• 2-year rotating executive role
• Integrated approach that includes action learning, coaching ,
assessment, targeted development plans, external thought leaders
and leaders teaching leaders

34. PQ ©2007 MDA Leadership Consulting, Inc.
HiPo Development Program: Example #1
Year 1
Year 1 Year 2
Year 2
• Pre-work
• Assessment
• Coaching
• Action learning
project
• Key organization
messages
• Targeted
development
• Leadership tool
kits
• External thought
leaders
Session 1
Action Learning
Teams
• Action learning
team results
• Development
plan report
• Targeted
development
• Finalize
development
plans
Session 2
• Coaches
• AL advisors
• Program advisors
(Leaders
Teaching
Leaders)
Involvement
in Year 2
Executive
Round
Tables
Action
Learning
Meetings
Development Planning + Action Learning + Coaching
Nomination
Process
Leader
Advisory
Council

35. PR ©2007 MDA Leadership Consulting, Inc.
HiPo Development Program: Example #2
¾ Situation
• Large U.S. based retail organization (40,000+)
• Needed to retain senior manager HiPo talent
¾ Challenge
• Preparing senior managers to fill the executive ranks
• Create more exposure with other leaders to break down silos
¾ Program Elements
• Use of external coaches and stretch assignments
• Annual cycle
• Use of mini-metrics to assess change
• Integrated approach that includes coaching, group learning, stretch
assignments, individual development planning, assessment

36. PS ©2007 MDA Leadership Consulting, Inc.
Example #2: Process Flow
April
Leadership
Assessment
July
Event #1:
Strategic
Leadership
October
Event #2:
Strategic
Influence &
Action
Executive
Coaching
May
Leadership
Agenda &
Development
Planning
Pre-session
Reading &
Step Up
Opportunity
Executive
Coaching
Step Up
Opportunity
Pre-session
Assignments
Executive
Coaching
January
Mini-Survey
Follow Up &
Executive
Coaching
Participate in
Next LD program

37. PT ©2007 MDA Leadership Consulting, Inc.
About MDA Leadership Consulting
¾ Established in 1981
¾ Located in Minneapolis
¾ 36 staff, including 24 consultants and professionals
¾ Focused on middle-market, middle-America
¾ Range of services that assist leaders in the
selection and development of their people, teams,
and organizations
¾ Leadership Matters…..Without Great Leadership,
Nothing Works

38. PU ©2007 MDA Leadership Consulting, Inc.
Contact Information
Robert C. Barnett, Ph.D., L.P.
Executive Vice President & Principal
MDA Leadership Consulting
150 South Fifth Street, Suite 3300
Minneapolis, MN 55402
612-259-4243
bbarnett@mdaleadership.com

39. PV ©2007 MDA Leadership Consulting, Inc.
Leadership Matters: References
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Bloom, N., Dorgan, S., Dowdy, J., Van Reenen, J., & Rippin, T. (2005) Management practices across firms and
nations. Centre for Economic Performance and McKinsey & Company.
Corporate Leadership Council (2005) Realizing the full potential of rising talent. Corporate Executive Board,
Washington, DC.
Hanson, G. (1986) Determinants of firm performance: An integration of economic and organizational factors.
Unpublished doctoral dissertation. University of Michigan Business School.
Huselid, M. (1995) The impact of human resource management practices on turnover, productivity, and
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Huselid, M. & Becker, B. (1997) The impact of high performance work systems, implementation effectiveness,
and alignment with strategy on shareholder wealth. Academy of Management Best Papers
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Pfeffer, J. & Veiga, J. (1999) Putting people first for organizational success. Academy of Management
Executive, 13, 37-48.
Rucci, A., Kim, S., & Quinn,R. (1998, February) The employee-customer profit chain at Sears. Harvard
Business Review, 82-98.
Welbourne, T., & Andrews, A. (1996) Predicting the performance of initial public offereings: Should human
resource management be in the equation? Academy of Management Journal, 39(4), 891-919.
Zenger, J., & Folkman, J. (2002) The extraordinary leader. New York, McGraw-Hill.

40. QM ©2007 MDA Leadership Consulting, Inc.
High Potential: References
Bono, J. & Judge, T. (2004). Personality and transformational and transactional leadership: A meta-analysis. Journal of Applied
Psychology, 89, 910-910.
Corporate Leadership Council, (2005). Realizing the Full Potential of Rising Talent, Washington, D.C. Corporate Executive Board.
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organizational psychology. In N.R. Anderson, D.S. Ones, H.K. Sinangil, & C. Viswesvaran, (Eds.), Handbook of Industrial, Work, and
Organizational Psychology, Vol. 1 (pp. 233-277). London and New York: Sage.
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Psychology, 87, No. 4, 765-780.
Kaiser, R.B. and Craig, S.B. How is executive success different? Presented at the SIOP Fall Consortium, St. Louis, October 28, 2005.
Lomabardo, M.M., & McCauley, C.D., (1988). The Dynamics of Management Derailment, Greensboro, NC: Center for Creative Leadership.
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Sternberg, R.J. (2007). A systems model of leadership. American Psychologist, 62, 34-42.
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