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Leadership Development Secrets of Top Companies

Feb. 23, 2010

By Norm Smallwood

Every two years my firm, The RBL Group, partners with Hewitt to conduct a study on the Top Companies for Leaders. It highlights those companies that have gone beyond the basics of grooming strong leaders and have come up with new ways to test their employees in the global marketplace.

Quality of leadership within a company helps meet the expectations of investors, customers, and employees, and sets the stage for growth, so developing the next generation of effective leaders is perhaps the most important undertaking of a forward-thinking company.

What's most interesting about this study is how similar the majority of companies are in the way they approach development, and what factors differentiate the best. Bob Gandossy, Hewitt's lead partner on the study and I have come up with six components that differentiate the top company approaches versus the less successful companies.

Centralized efforts. Top companies centralize their management of talent. Top talent is owned by corporate not by a function, business or geography — the term is "corporate property." This simple logic makes a huge difference in the variety of experiences leaders have in top companies because businesses, geographies and functions can't deprive their best talent from moving across boundaries in order to optimize that organization.

Top executive involvement. If you want to develop leaders, you need to involve leaders. Former P&G CEO and now Chairman A.G. Lafley conducts his own senior leadership development program. Lafley invites each participant to the program personally. Members of P&G senior executive team teach, coach and mentor these leaders every month. In addition, these same senior executives sponsor the recruiting efforts at targeted universities.

Focus on a few key processes. Top companies for leaders live by the precept of finding and hiring top talent vs. fixing and developing mediocre talent. If you hire great people, you are a lot more likely to find some great leaders. Once you've got the right talent in the door, you need robust performance management with lots of feedback. Finally, you need to expose these people to a variety of development experiences that build knowledge, perspective and skills.

Make it a strategic focus. Top companies are never laissez faire about leadership development — they see the infusion and growth of talent as crucial to strategic success and they are unrelenting in their approach to building talent. Their leadership development is centralized and intentional about developing a series of experiences that build good functional leaders and general managers.

Build leaders and leadership. Leadership capability increases as HR systems such as performance management, compensation and job assignments are linked across organization boundaries, and are intentional about building the right kind of leaders. Most companies are primarily focused on building individual leaders through assessment of individual leader competencies and training and development to improve those competencies. Top companies for leaders also build robust leadership capability that supports a culture of integration and opportunity to develop from within.

Create value for inside and outside stakeholders. Top companies develop leaders who have the desired competencies to deliver on their strategy AND the competencies to ensure customer delight. At a recent senior leadership meeting of one of the top companies, my partner Dave Ulrich asked the executives to watch a series of TV commercials from their company and then to describe the messages their company was promising customers: "Innovation," "No Hassle Service," "Great Prices."

Following this, he brought out the existing leadership competency model and asked them to compare the messages in the model to the TV commercials. There was very little if any overlap. This is wrong and it is common practice. Competencies are the means to deliver results and value to stakeholders not the end state of development. Top companies desire to build leaders not to just become better people, but to become better people who know how to provide value to employees, customers, investors and other stakeholders.

Norm Smallwood is co-founder of The RBL Group, a strategic HR and leadership systems advisory firm. He is author, with Dave Ulrich and Kate Sweetman, of the 2009 Harvard Business Press title, The Leadership Code: Five Rules to Lead By and with Dave Ulrich of the 2007 title, Leadership Brand.

Posted February 22, 2010


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