If you are not careful, you get so wrapped up in the process, turning the wheel, getting everything done, that you can completely forget the point of it. I see my goal being to lead the leaders to lead the talent. Therefore I try to focus on what’s most important, what’s most critical for the business, not on covering every person or role.
Becky Snow, global talent director, Mars
IN THE EARLY YEARS of this century, Nokia, a multinational communications and information technology company based in Finland, had an enviable reputation as a magnet for some of Europe’s best and brightest engineers and managers. But in 2006, it introduced a new strategy, aimed at creating a reliable pipeline of talented people who could occupy roles within senior and middle management that had a critical impact on its performance.
Nokia had previously relied on fairly informal processes for identifying such roles within the organisation. However, the leadership team decided the company needed to be more systematic about how it defined these roles so it could groom people to fill these positions.
Regular workshops were held at which managers of each business unit worked with the HR team to look at their business goals and leadership capabilities, and a “talent map” was introduced using a nine-box grid to identify performance and potential (see Figure 1.1). Those with “star potential” in the upper right box were steered towards experiences and job assignments that would help prepare them for a more critical role in the future.
Nokia developed a “return on investment” matrix to help it quantify the potential benefits and risks of moving individuals into new, more stretching roles. The four quadrants mapped risk of failure against potential impact. Managers could then map the result against the cost of the individual’s development.
This analysis was designed to make sure that the most money for personal development was allocated to managers who could potentially make a big impact in a role but who ran a high risk of failing. To give these managers the best chance of success, “a strong transition plan and support” were put in place. Nokia hoped that this risk-based approach would encourage managers to apply for more challenging roles and business leaders to give these individuals a chance to prove themselves.
The new approach for measuring performance and potential was adopted across the international business in line with Nokia’s “egalitarian” culture, which gave business units considerable discretion on how to implement talent management. An internal review conceded, however, that while managers were clear about the competencies needed for a critical role, they were less clear about how to define potential. Cultural differences across regional units also influenced decisions about who was marked out as a rising “star”.
Nokia’s approach to talent management was well thought through but did not work. By 2011 it was clear that it had failed to understand how the market for mobile devices had shifted. Rivals like Apple and Samsung seized Nokia’s dominant share of the market, while Stephen Elop, the new chief executive, in an infamous leaked memo, admitted that the firm “fell behind, we missed big trends and we lost time”.
Elop’s verdict was that Nokia had failed to adapt to a very different and intensely competitive marketplace. The firm continued to do the wrong things very well. Elop says:
We poured gasoline on our own burning platform. I believe we have lacked the accountability and leadership to align and direct the company through these disruptive times.
He also pointed to a lack of collaborative ability, a quality that the firm urgently needs if its strategic partnership with Microsoft is to succeed against the “ecosystems” built by Apple and Samsung (see Chapter 6).
The Nokia example is a cautionary tale for business leaders and the managers that develop their best people. However large and well-oiled the machine for bringing on these people, it will fail to deliver the right results unless it also instils the need to keep a watchful eye on the bigger picture.
Processes and pipelines
As earlier chapters have outlined, a decade of talent management has led to many international companies focusing on the option of “building” a small number of high-flyers over several years. The mantra of the processes involved has been consistency, compliance and standardisation across international and global businesses.
This has arguably led to an industrial model of talent management, with concepts like talent “pipelines”, “systems” and “infrastructure” becoming common parlance. The goal is to help gain an end-to-end view of talent management, but there is a tendency to think of talent more as a commodity rather than people who need to be trained and developed in ways that are individually tailored.
A strength of the model has been that it has brought professionalism and thoroughness to a process of selection and development that is otherwise prone to nepotism or cronyism and a tendency for managers to recruit successors in their own images. It has drawbacks, however. Organisations can become locked into a potentially narrow and rigid set of definitions of talent and potential and a management system that becomes increasingly complex and unwieldy as it develops a life of its own.
Eric Olsen at Heidrich & Struggles believes that HR staff are particularly prone to a tendency to construct overly complex talent programmes:
In the FTSE 100 companies we studied, we saw a drive towards process. The only way these directors feel they can make an impact is to get involved with process, TM becomes a tight path of HR procedures, competency frameworks, etc. Yes, these are nice processes but they often don’t really address the broader issues.
Roselinde Torres, senior partner and managing director at Boston Consulting Group, also highlights the need for HR to help develop more “customised” approaches:
Talent management is no longer about one size fits all. When you consider developed as opposed to developing markets, you need different types of leadership and you need to reconfigure your talent, especially in areas like research and development.
There needs to be a move towards a more customised and streamlined approach. In the absence of this, HR conducts a tremendous amount of activity with very little result.
Other managers overseeing talent management concur. David Smith of Accenture thinks that many companies have dug themselves into an administrative pit. As he puts it:
A lot of companies are stuck in a HR, administration led view of talent management. They tend to work in deep functional segments like performance management, recruitment and compensation. They need to take a more strategic view and look at the whole question of how they are going to attract and recruit talent into the organisation.
Becky Snow is well aware of this danger for a global business like Mars. She describes talent management variously as a big “tanker” and a “big machine”. She warns:
If you are not careful, you get so wrapped up in the process, turning the wheel, getting everything done, that you can completely forget the point of it.
There is also the danger that talented people get lost in this machine and begin to feel undervalued and ignored by the organisation. This is particularly true for younger staff, as Sandra Schwarzer, director of careers services at INSEAD, an international business school based in France, reports:
Organisations that recruit MBA talent are often very strong on finding the right individuals and selling their organisations to them. But where they fall down is that once these individuals are on board, [there is not enough thought] about what happens to them.
Some of our alumni, for example, go on rotational programmes and get great experience, great exposure to the company’s operations. But often after about three years, they feel like they are on their own … Talented people are often left inside the different business units and get lost.
According to Snow, it is important to stop trying to build a perfect system.
I see my goal being to lead the leaders to lead the talent agenda. Therefore I try to focus conversations with our leadership team on what’s most important, what’s most critical for the business, not on discussing every person or every role.
New complexities and challenges
The old rules for talent management focused on standardisation and simplification; the new rules are intended to help companies adapt to change. Interviews carried out for this book suggest that companies are rethinking three aspects of their talent strategy:
A broader view of talent
The traditional focus of talent management is on a small cadre of managers who are groomed to be the future leaders of a firm, focusing on succession planning as the main means to this end. However, this view of talent is too narrow for the many firms where the contribution of talented staff really does mean the difference between success and failure.
Often talented people are defined as those who have a disproportionate impact on the success of the business or who can generate significant added value (whether this takes the form of revenue, knowledge, reputation, and so on). The underlying principle is that the organisation needs talented individuals at all levels, not just at the very top.
Chapter 2 outlined how Olam International has gone through a transition in how it thinks about talent. As a result of its strategy of growth through vertical integration, the company has switched from needing general managers to needing “domain experts”, leaders who can build new businesses in highly specialised fields. It has created two management groups or “streams” from which these roles can be filled:
The people filling these roles are directly responsible for the profit and loss of a business or a section of businesses in more than one country. They are also part of a team of global business heads overseeing global strategy, resource allocation and logistics.
Olam has three talent pools to help fill these roles:
Santander UK, a British bank wholly owned by the Spanish Santander Group, takes a similarly broad view of talent. It has expanded its definition of talent to include “exceptional functional and cross-functional talent” and has been piloting a talent assessment tool that reviews cross-functional/organisation skills, functional skills and a range of leadership skills linked to specific behaviours.
The bank pays a lot of attention to the development of young employees to support its rapid global expansion. The talent management team plans to recruit some 600 “early in career” individuals during 2014. These include apprentices, school leavers and university graduates.
As well as its graduate development programme, the bank has a “Flying Start” programme for school leavers to help them gain professional banking qualifications. It lasts for four years and is marketed as a “paid alternative to university”. Selected school leavers go through induction and are assigned both a mentor and a buddy from their workplace to help them during the programme. They receive professional training through a mix of classroom training, e-learning and work shadowing. Participants progress through a series of professional qualifications, culminating in becoming a chartered banker. At the end of the four years, they are assigned to a role as a team leader, sales specialist or technical specialist.
Santander UK is also seeking to scoop up talented people overlooked by its competitors, such as postgraduates or high-flying graduates who are in their first or second job.
Although it has invested considerable resources in overhauling its entire talent management system, directors at the bank still look for as yet unidentified sources of talent. Stephen Dury, managing director of strategy and market development, comments:
Whenever I have an innovative and challenging project, which is about changing the business and shaping the organisation, I look for intrapreneurs, those people that feel an individual responsibility for doing things better, who think differently and want to make a difference … people who might not appear on our talent map but who you know fit the talent profile that is needed.
Caroline Curtis, head of talent, succession and leadership development, is equally concerned about talent outside the core banking business of Santander UK. She comments:
My feeling is that there may be opportunity to cast our net further afield; looking at the talent that we have within some of our own internal support companies.
The issue of looking for talent at the “periphery” of the organisation (part-time, contract and associate staff) is explored in more depth in Chapter 6.
Demographic change
As outlined in Chapter 1, an ageing workforce is forcing companies operating in the United States and western Europe to rethink their talent strategies.
Such is the predicament of 3M, a technology company with 19,000 employees in more than 30 countries, which has ambitious growth plans, intending to fill 4,300 positions by 2015. When the talent implications for its five-year business plan were examined, a number of serious skills gaps became apparent. It also realised that it might struggle to achieve its target for succession planning, given that its workforce was ageing (with a forecast average age of 46.5 years by 2015) and not enough younger managers were in the pipeline.
3M therefore broadened its definition of talent to include both technical and leadership skills and recognised the need to take a more flexible approach to differences of demographics and labour conditions within European countries. The newly created global Centre of Expertise for Talent Solutions now works in partnership with the country/region board of directors to fill their skills gaps through external recruitment and moving high-potential individuals around the business. Internal mobility has tripled since the new talent management processes were implemented.
In a 2012 report on talent mobility by the World Economic Forum, 3M advises that companies need to focus on a more tailored approach to developing people with talent:
Organisations must move from “one size fits all” tactics. Increasing workforce diversity means human capital planning must be innovative … regional management teams should be flexible regarding talent mobility, leadership styles and generational differences.
Wells Fargo, a multinational banking and financial services company, has taken a different approach to capitalise on the skills of both older and young workers. In some parts of the business, especially in the Great Lakes region of the United States, more than 50% of the workforce is under 30. In other regions, notably Indiana and Minnesota, there is a larger proportion of older staff. The company wanted to improve career-development opportunities for both these groups of employees, so the talent management group launched two internal networks, which are sponsored by senior managers and have dedicated resources to develop and engage them (see below).
Wells Fargo
Wells Fargo, one of the largest companies in the United States based on revenue, recognised that many of its older employees were likely to be forced to delay their retirement as a result of economic circumstances. It wanted to find a way to keep these employees motivated and engaged in their own career development.
In 2009 the talent management group launched an internal network for those born between 1946 and 1964, the “Boomers Network”, which focuses on providing career-development opportunities for older workers and helps them deal with issues such as caring for elderly parents that might be affecting their well-being or career prospects. The company believed that older workers were being overlooked because of the stereotypical assumption that they were not interested in furthering their careers.
Wells Fargo already has approximately 52 internal networks in the Great Lakes region. These “Team Member Networks” represent specific groups of employees based on culture, ethnicity and sexual orientation. Each group must gain executive approval and enlist an executive sponsor, officers and chairs. The networks are allocated a budget and must submit annual plans detailing how they will provide opportunities for professional development, education and awareness, community service, as well as how they will benefit the business in any of the following five areas:
The effectiveness of the networks is assessed, using measures such as satisfaction scores of participants, growth of participation in the networks and how they have helped develop leaders, as are their business benefits, such as insights on customer preferences or feedback about new products.
Soon after the creation of the Boomers Network, young employees asked for a similar arrangement. So the Young Professional Network, which provides career development for employees aged below 30, was formed.
Members of both networks have worked with Wells Fargo’s talent management group to look at how they can become more effective leaders. Courses in partnership with St Catherine’s University were set up, some of which are offered on site at Wells Fargo and others on-campus. One programme, for example, leads to a graduate certificate in organisational leadership that can also count towards a degree in the same subject. There is also a leadership perspectives course, designed for baby-boomers, which aims to build on the experiences and leadership of people who want to develop their leadership skills in both their work and their personal life. Participants can opt for a life coach, although they have to contribute towards some of the costs of coaching.
Both networks have run a series of seminars looking at career development and other work–life issues, such as successful mid-life career changes, networking, managing money, healthy lifestyles and retirement planning.
Wells Fargo is now considering offering older employees more opportunities for part-time work, and is including health and wellness in its diversity and work–life programmes for all employees.
The talent management group looks at networks as both sources of talent and an ideal way to develop leaders. Each network is assigned two executive “advisers”, who are chosen from the company’s pool of high-potential talent. They then select the president of each network who puts together the network organisation. The advisers also set up meetings with senior managers to discuss business plans and how the networks can contribute; and senior managers may ask the networks for help on specific projects.
Diversity
An increased desire for diversity also demands that talent management become more flexible and customised.
A more diverse customer base has highlighted the need for companies to reflect greater diversity at every level of the organisation, not just at the top. In an analysis of this trend, Jean-Michel Caye and Karen Hinshaw, consultants at Boston Consulting Group, assert:
Companies staffed exclusively with similar-looking, like-minded employees lack the broad range of insight and experience needed to meet the challenges of a globalising world. By contrast, organisations that tap into the full spectrum of capabilities of a diverse workforce are better equipped for a dynamic environment.
They say that managing a more diverse spread of talented people will pose challenges for firms, creating the need to modify the incentives they offer employees to meet more varied expectations. Mobility and regular feedback, for example, matter more to the latest generation of workers than they did to their older counterparts.
An Economist survey on diversity in 2011 reveals that while many firms acknowledge the benefit of developing more diverse senior leaders, such diversity is hard to achieve. Indra Nooyi does not feel that PepsiCo has cracked this particular nut:
How do we get people to embrace multi-generational, multi-cultural and multi-ethnic talent – and get people to walk in their shoes? Tough questions.
Despite the difficulties, she urges firms:
[To] leverage and integrate diversity. I’m talking about diversity of thought, background, experience, capability, culture, race, gender and also age diversity.
PepsiCo equates diversity in the way people think and act with a greater emphasis on recruiting and developing external talent:
Talent management requires courage, because outside points of view can shock inside talent … they stretch us in terms of our thinking because many of us get locked into a traditional model and outsiders ask us whether we are wearing “Emperor’s clothes”. That makes a huge difference.
Age diversity in the top team is also desirable to PepsiCo, as Nooyi points out:
Too often at the top, everybody in that group tends to be of the same age group, even though we are dealing with technologies that we have never heard of. Yet we feel very uncomfortable when someone who is 10–15 years younger joins a senior team. We live in very unsettling times, but if we don’t encourage age diversity at the top, I think our models might become outdated.
Spotting and accelerating the development of a young manager is not easy, so some firms have resorted to “reverse mentoring”, where young people with a fresher view of the market counsel their elders. As the example of Boeing reveals, bringing together different generations of employees can result in powerful benefits both for individuals and the organisation.
Multinational aerospace and defence corporation Boeing was concerned about both the loss of expertise as older workers approached retirement and the need to retain and motivate young “generation Y” workers, who represent the future workforce.
The company wanted to improve collaboration between these two groups of employees and to help them learn from each other. It especially wanted to help older workers become more confident with technology-based collaboration tools, and younger employees who were technically oriented to become better “people managers” and improve their communication and collaborative skills, especially using conversation as a means of problem solving.
Boeing piloted an approach to bring together generation Y employees and experienced managers in a “Workplace Innovation Lab”. In 2009, it asked REACH (a network for early-career Boeing employees) members and their managers to seek volunteers to participate in the project. Managers and younger employees were asked to work together in pairs and commit to spending 24 hours over three months, including two face-to-face workshops, on achieving a business goal or project of their choice. Over the next ten weeks, they participated in a series of conference calls to discuss new ideas and approaches that could help Boeing improve the three areas they had chosen:
Participants also attended a 24-hour “Innovation Event”, an intensive programme of theory and practice in relation to affecting change and innovation. The final stage was to demonstrate the results of the project to Boeing’s global head of HR. The experiment was judged to be highly successful and some valuable ideas were generated, leading to improvements and cost savings.
Managers and younger employees reported benefits from two-way mentoring; for example, older managers felt more confident about using collaboration tools such as web X, share point, global conference calling, webcams and Insite, Boeing’s internal social-networking site. There was improved communication between the two groups, and both recognised the value of combining seasoned experience with a fresher and sometimes more questioning perspective.
Boeing plans to repeat the innovation labs but with one important difference. Instead of drawing together a wide variety of participants from across the whole organisation, it will aim for a critical mass of participants from a single business area. It believes this concentrated approach will generate more focused and measurable business benefits.
Cisco UK & Ireland, part of Cisco Systems, a multinational designer and manufacturer of networking equipment, also uses reverse mentoring for strategic planning. Small groups of generation Y employees (broadly, those born between 1980 and 2000) meet the senior management team regularly to discuss emerging trends which might pose both opportunities and threats to the business.
Reverse mentoring is part of a wider effort at Cisco UK & Ireland to build a broader and more diverse culture. It has been particularly successful at using mentoring and other schemes to attract and develop women. Indeed, its chief executive, Phil Smith, won “Mentor of the Year” at the Women of the Future Awards 2010 for his efforts in making the company an attractive employer to women.
Smith says that when he first started at Cisco’s new country operation for the UK and Ireland in 1994, the fledgling company was “mainly middle-aged males”. Its workforce of approximately 4,000 is now one of the Times Top 50 Places Where Women Want to Work.
The company’s success is based simply on “listening to your employees” and being responsive to their individual needs, Smith says. There are many issues that are minor to solve for the company, but make a huge difference to staff, particularly work–life balance. Smith believes that a business must reflect the diversity of its customers and society at large, and that without that diversity it will lack dynamism; but he is also of the view that it must never be about fulfilling quotas. As he explains:
This is not good for an individual or a company. You need the best people for the job, and you as a company need to be doing the best for them.
However, despite extensive efforts among firms to get more women into senior management positions, few are succeeding. The reasons are examined in greater depth in the next chapter, but two reports highlight the problem.
A 2012 report by McKinsey, “Unlocking the full potential of woman at work”, reveals that women may be well represented in junior management but many fail to progress to top management roles because they are either sidelined into staff jobs, get stuck at middle management, or leave the corporation. In terms of four “success” measures for getting women to the top (for example, having at least 55% of women vice-presidents and senior vice-presidents) only 12 of the 60 companies surveyed met three of the four measures.
A similarly dismal picture is painted by Catalyst, an American nonprofit research organisation, which produced a report in 2010 based on the career-path profiles of 9,927 alumni who graduated between 1996 and 2007 from MBA programmes at 26 business schools in Asia, Europe, the United States and Canada, and additional data from 4,143 women and men who graduated from full-time MBA programmes and worked full-time at companies and firms at the time of the survey.
Sponsored by corporations that include American Express, Barclays Capital, IBM, Chevron, Procter & Gamble and Deloitte, the report pointed out that although women represented 40% of the worldwide workforce, few of them reach senior management positions (the results of this research are discussed in greater depth in Chapter 4). James S. Churley, chairman and CEO of Ernst & Young, a multinational professional services firm and a sponsor of the research, admits:
Frankly, the fact that the pipeline is not as healthy as we’d thought is both surprising and disappointing. Companies have been working on this, and I thought we’d seen progress. The last decade was supposed to be the “promised one” and it turns out that it wasn’t.
This is a wake-up call for corporations. First, we need to put more pressure on business schools to coach women and men during the job placement process. Second, companies need to be looking at where women land when they come into the corporation. Then we need to make sure they’re getting the same development and visibility chances as the men.
We need to focus even more on how we’re leading our companies to get the most out of employees … In this war for top talent we can’t afford to do otherwise.
Diversity and business performance
In a survey of 656 business leaders in 2011, conducted by the Economist Intelligence Unit, diversity of gender, ethnicity and nationality is seen to be beneficial, but difficult to attain. The majority of respondents believe diversity in management:
Despite this belief, the vast majority of firms in the survey had no specific policy on diversity. A majority believed that the share of women and ethnic minorities in their global senior management is not fairly representative of their customers and markets. A plurality believes the same about foreign nationals.
The survey points to a connection between strong performance and greater diversity among executives. Among executives describing their firm’s financial performance as “better than their peers”, nearly half (47%) believe their board broadly reflects the gender, ethnic and nationality make-up of society. Only 27% of firms that are considered to perform “worse than their peers” claim this to be the case.
Whatever the difficulties involved, the message emerging from forward-looking companies is that organisations need an open mind and a broader approach if they are to tap into a wider set of abilities. They have to broaden their search to find talented individuals who might not fit traditional talent profiles. They need to have the courage to look outside for talented people who are willing to challenge entrenched thinking. Firms also need to “dig deep” into their own organisations to find talented individuals.
The great paradox of this new way of thinking is that it leads to a view that talent is abundant instead of a rarity – a view expressed in a report on global talent in 2009 by Tomorrow’s Company, produced in partnership with Heidrick & Struggles, together with BT, Career Innovation and the UK government’s Talent and Enterprise Taskforce. The report concludes:
Today’s competitive challenges require us to become very good at tapping into the talent we have, the full range and potential of it – what “Tomorrow’s Global Talent” terms “the abundance” of it; building the skills that are needed and encouraging the creativity that is possible … [Talent] is abundant in the sense that it is not a rare quality, but diverse and multifaceted, which everyone has, to some degree and in some form. And taking this view means that there is a wider pool of talent for companies to work with, if they know how to unlock it.
Redefining talent
Uncertainty lurks in today’s business environment with change becoming less predictable, more disruptive and at an accelerating pace, which makes it all the more important that companies review on a regular basis the leadership and technical skills they need to be successful.
At Apple, every employee is expected to be innovative and to focus on product success rather than individual results. In pursuit of groundbreaking products, different teams may be assigned to the same product area and work in secrecy from each other. Innovation is stimulated through peer vetting of ideas and brainstorming to encourage bolder innovations and higher levels of risk-taking.
Mars has had a hard rethink about the qualities it needs to achieve its business plan. The company now looks for high performance and high potential in six areas. At the individual contributor level, it looks for the ability to deliver consistent results and to create collaborative relationships. For people leaders it adds engaging staff and developing talent. And for senior leaders it adds the ability to practise “breakthrough thinking” and to navigate complex challenges.
Mars’s priorities are evident in Becky Snow’s assertion:
We are still working on all those capabilities but we have very good senior people. They are very good at collaborative relationships. They are not individualists. They are absolutely team players and they are very approachable as team leaders. This approachability is a core part of who we are as a business.
Apple and Mars have figured out what they need to do best to thrive in their very different contexts – and this has resulted in two very different sets of managerial and leadership abilities. The two companies have built an appropriate talent strategy around these capabilities, with Mars opting for a systematic, partnership-based approach to career development and Apple opting for few formal processes in favour of individuals managing their own career paths – which they do by networking and promoting their expertise so they get assigned to the most stretching projects.
According to Emily Lawson of McKinsey, too few companies achieve the clarity of Mars and Apple. They may well have ambitious plans and growth targets, but they have yet to spell out what this means for their talent strategies. She asserts:
We find that lots of companies don’t know what they are looking for. I had a typical conversation recently with a global organisation about its plan to expand its business in Asia. I asked them “in order to grow your markets, what do you need? Do you need great sales people, do you need very technical marketing people?” They didn’t know. They just knew they wanted to grow 40% of their market.
The critical thing is to start from your business strategy and to be really clear about what talent you need and therefore where your gaps are – because they may not be where you think they are.
Interviews carried out for this book suggest that companies are rethinking their talent requirements across three dimensions: the first is the ability to move across different business models; the second is having the right blend of leadership, management and technical skills; the third is to be able to manage through uncertain or fast-changing business conditions.
Identifying the right leadership skills
BCG’s research suggests that many firms are failing to adapt their leadership models quickly enough, as Torres explains:
We have looked at the programmes, policies and practices used by global companies to develop their leaders. What we found is that, in headline form, most of those approaches were wired for leaders in the 20th century world rather than 21st century world.
What we mean by that is that they presume more stability and less globalisation in [business] interactions. They don’t account for the transparency and flow of information in a digital world. They tend to develop people in one business model or one geography.
BCG advocates the need for “adaptable leadership”. This has four dimensions:
Rival consultancy McKinsey has gone down a different route. Instead of advocating a specific set of leadership traits, it has highlighted business context as the all-important ingredient.
McKinsey worked with Egon Zehnder, a global executive search firm, to identify the leadership traits that are most likely to deliver revenue growth. The research consisted of a statistical analysis of the relationship between managerial quality and revenue growth across a global sample of more than 5,000 leaders in 47 listed companies. The analysis was based on Egon Zehnder’s eight-scale leadership framework.
The 2011 study confirmed the importance of outstanding leadership, as opposed to merely good leadership. However, the most important leadership skills depend wholly on the context in which a firm operates. The study concludes: “Talent matters: executives of high-growth companies have a higher level of competency than those of low-performing firms.” But it also makes it clear that having good leaders is not good enough; only excellence makes the difference. Companies with outstanding leadership teams have a high correlation with revenue growth, while those with solid but unexceptional leaders have no correlation at all.
Beyond a focus on “customer impact”, the analysis revealed that there is no standard skill set for success. Instead, companies need “spiky leaders”. As Emily Lawson explains:
When we say “spiky” we don’t mean sharp-elbowed and edgy. We mean people with a clear spike in their performance so that they are exceptionally strong in two or three of the core leadership traits identified by the research.
The report advises: “Celebrate the extremes, develop and promote spiky leaders.” Lawson adds: “This finding was contrary to what we expected. It hasn’t been what we were advising to clients.”
Whatever leadership skills work best for a company, managing uncertainty is becoming a crucial ability for senior managers responsible for deciding and implementing strategy.
Following its rapid growth, Standard Chartered, a British multinational banking and financial services company, has redesigned its leadership development and succession planning. It wants to develop more adaptable leaders and also prepare them for a much more complex environment where sudden shifts in politics, legislation or social attitudes can combine in unpredictable ways and force a rethink of strategy. It now operates in over 70 markets, and its leadership team grew by over 40% between 2009 and 2011, with almost two-thirds of new leaders coming from inside the bank.
Standard Chartered recognises that it cannot adopt a single model of leadership when its staff comprises 125 nationalities and managerial styles vary according to the specific culture and business situation faced by each business region. Simon Lau, head of the bank’s leadership development programmes, says:
You have to look at whether traditional Western leadership philosophies are going to work in the Middle East, for instance. What we do is to build leadership around the context.
Heather Ward, leadership succession manager, adds: “Leadership is distributed around the business, and it is a collaborative process.”
The bank has put in place a comprehensive range of programmes to help nurture its leaders and managers, from external hires at director level to those managing a small team. An important learning module for all leaders covers leadership in turbulent times. Lau explains:
Our leaders need to be comfortable anticipating and dealing with change. This module covers the skills leaders need in such circumstances. They need to be able to focus their people, communicate, involve them in the problem and empower them to take some ownership of how to solve it.
Formal leadership training is supported by on-the-job learning. All leaders receive one-to-one coaching and team support, which is provided by in-house leadership coaches.
Tata Chemicals, a global company based in India, has found that in its Asian operations young, ambitious employees become frustrated and anxious when they cannot easily make decisions in the face of ambiguous or contradictory data. This has sometimes caused them to leave the organisation. Helping these youngsters to cope with these pressures is crucial. Budaraju Sudhakar, chief human resources officer, explains:
When we are putting youngsters into challenging positions, their ability to manage their own confusion and anxiety is becoming a very big issue. We are spending a lot of time building their ability to do this. Helping them develop emotional intelligence is a priority for us.
The company focuses on helping young managers develop more realistic goals and to develop the right “attitude, humility and respect” to thrive in uncertainty or difficult work environments. The company also works with senior leaders to “create a mindset of nurturing the organisation,” says Sudhaker.
Focus on people, not abilities
Where does this leave a company’s talent strategy if its leadership requirements are unclear or in the process of shifting, and where the very definition of outstanding leadership is heavily determined by the context in which it is applied? The answer is arguably to focus on the underlying attributes that help make a high-flyer adaptable in the face of uncertainty and change. These often include self-awareness, resilience and the ability to learn rapidly.
For example, Ian Pearman, chief executive of Abbott Mead Vickers, an advertising agency, says that personal commitment is more important than ability for his company. He maintains:
You hire for attitude and you train for skill. That is dead right. If the definition for performance is capability plus commitment, you train for capability. The degree of commitment or drive comes from within. While we offer to enhance everybody’s capability equally, the thing that creates the difference is people’s level of commitment.
Marielle de Macker, HR managing director at Randstad, has reached similar conclusions. Whether leadership or expert talent, the latter of which is fast becoming a priority for the company (as a result of more complexity in labour legislation and different labour-market conditions), the company focuses on three personal attributes:
When I think about talent, I think about three things. First, I think about drive – does somebody have the drive and the energising skills to encourage people to go the extra mile.
Second, I think about judgment – the world is no longer black and white and you will have to formulate decisions based on incomplete and conflicting information and data. What is required is expertise and experience as well as intelligence and a highly developed sense of integrity.
Third, I think of courage – you need to be prepared to take a position and defend it, not to the level of insanity obviously but people are looking for someone to lead them. People want leadership. You need the courage to be able to stand up for your beliefs, to stand up for your company, to stand up for your people and go for it.
McKinsey’s Emily Lawson endorses this message:
Our research shows that companies are pretty much focusing on the same leadership traits; they are just calling them different things.
I would probably not put my investment in finding the right leadership model. I think companies should spend their money on discovering what kind of people they need to deliver the business.
I think you should spend your money on having a really robust employee value proposition that is tailored to the different markets in which the business needs to operate. What works for a graduate in China is not going to work for a senior banker in Dusseldorf.
Leveraging talent across the business
The ability to move talented people across the business has become critical for international companies, both to use and deploy talent more effectively and to make sure that these individuals gain sufficient exposure to different operating environments.
A 2010 report into talent mobility by PriceWaterhouseCoopers, a multinational professional services firm, highlights the importance of moving talent. As well as an increasingly globally connected world, “an explosion of activity in emerging markets has contributed to a significant increase in the need for companies to move people and source talent from all around the world.”
Based on a variety of data, PriceWaterhouseCoopers reports that the number of international assignments increased by 25% between 1998 and 2009. It predicts a further 50% growth in assignments by 2020. There will “especially be more quick, short-term and commuter assignments”. The research also points to the growing importance of emerging markets and the likelihood that skilled employees from these regions will become increasingly mobile, “creating greater diversity in the global talent pool”.
Mars is already grappling with the challenge of making its talent more mobile and is especially keen for its best-performing leaders in emerging markets to have opportunities to move across the business. The company recognises that it will need to differentiate more if it is to channel resources into parts of the company that are growing most rapidly. Strategic workforce planning is becoming increasingly important in making sure that there is enough of the right talent in the parts of the business that are growing most rapidly. Mars also recognises that talented managers within these centres of growth need to get more international experience, and that it needs to focus on spotting and developing talented professionals who originate in centres of the company’s growth like Asia. As Becky Snow explains:
We decided to stop trying to pay equal attention to every role and every succession plan, which in the past meant we spent about 30 seconds on each individual. The new priority in our reviews is to pick a handful of key people and learn more deeply about them to support their development.
Mobility is a real challenge. When we recently looked at the way we invest in international moves, we found that the majority of the assignees come from mature markets. We want to balance this investment better towards our talented managers in our growth markets.
IBM, a multinational technology and consulting corporation, has decided to focus on younger employees who have been identified as “emerging leaders”, instead of sending senior managers on international assignments. Not only were such assignments becoming increasingly expensive, but only a limited number of managers could take up these opportunities. Now the company aims to provide formative experiences much earlier in managers’ careers so that they can experience the reality of working in global markets.
IBM’s goal is to become a genuinely global firm, not an American company with outposts around the world. Robin Willner, former vice-president, global community initiatives, set up the new approach. He explains:
We needed to begin to work with emerging leaders as well as our existing leadership core to become leaders in a global economy, adept and skilled at doing business in every and any kind of market, and understanding how to lead teams that included “IBMers” who could be in any of 170 countries.
Approximately 500 emerging leaders a year are sent in teams of 8–15 all over the world to spend four weeks working on a real business project. Each team typically comprises individuals from more than ten different countries. They spend three months preparing for the posting, learning about, for example, building a virtual team, the global economy, global leadership, corporate citizenship and, particularly, the growth market where they will be deployed.
The pre-work is geared to help teams “hit the ground running,” says Willner. Team members work on a wide variety of tasks, ranging from supply chain management to implementing an HR policy or a new customer relationship management (CRM) system. IBM eschews Western-style hotels in favour of local accommodation to give the team an authentic experience of working abroad as well as getting along with a diverse group of colleagues. Willner believes this experience is succeeding in giving younger managers a more global and informed outlook:
They learn about leadership and teaming and diversity and how to listen and learn how to do business somewhere else. They also learn a lot about themselves.
Procter & Gamble (P&G), a multinational consumer-goods company, is a classic example of a company that has adopted a “build” approach to attracting and retaining talent. It adopts a cradle-to-grave philosophy. Over two-thirds of its leaders were recruited as university graduates and it was in one year able to attract about 600,000 applicants worldwide – of whom it hired about 2,700 – by emphasising opportunities for long-term careers and promotion from within. The website targeted at potential recruits states:
Our success depends entirely on the strength of our talent pipeline, which we build from within and manage with a disciplined process led by the CEO and the senior leadership team.
P&G has established a plethora of elaborate systems and processes to deploy talent. It has tied its talent management processes to its strategy for growth, which means a focus on winning in the emerging markets of China, India, Latin America, the Middle East and eastern Europe. The company is building what amounts to a global talent supply chain management process, co-ordinated worldwide but executed locally. Hiring and promotions are the responsibility of local managers, but high-potential prospects and stretching assignments are identified globally.
New hires tend to be local talent. Line managers in China, for instance, hire Chinese recruits. The days when managerial roles in emerging markets usually went to expatriates are past. Now, local hires are considered growth prospects for the firm and are expected to become managers in that market. Stretching assignments and senior positions, however, are managed by the global HR group and overseen by the global executive team.
The emphasis on hiring local people helps create a more diverse pool of talent for the entire corporation, especially at more senior levels: 300 or so senior regional and country managers come from 36 countries, with 50% from outside the United States; the top 40 come from 12 different countries, with 45% from outside the United States.
As high-potential employees advance, they move through a portfolio of senior-level jobs that are categorised according to strategic challenges, size of the business and complexity of the market. Leadership positions for businesses or countries are earmarked for either novice or experienced general managers.
A relatively small country-manager position – in Taiwan, for instance – is considered appropriate for first-time general managers. Such assignments then set up the incumbents for placement in larger countries, such as Italy or Brazil, which in turn can lead to roles in clusters of countries, such as eastern Europe or the UK. These last roles then become springboards for leaders who demonstrate the potential to become senior managers.
P&G offers formal training and development programmes and sometimes enrols managers on external executive education programmes. The lion’s share of development, however, takes place on the job, with the immediate manager’s support and help from mentors and team members. A typical marketing manager, for example, will have worked with a number of different brands over a period of time. A finance manager will have gone through various assignments, ranging from financial analysis to treasury to auditing to accounting.
Most high-potential managers are also placed in important multifunctional task-forces or project teams from time to time. New postings and task-force participation are expected to challenge employees, and they signal to managers that P&G will always offer new opportunities.
People and positions are tracked in a technology-based talent management system that is sufficiently robust to accommodate all the company’s more than 135,000 employees but is primarily used to track 13,000 middle- and upper-management employees. The system captures information about succession planning at the country, business-category and regional levels; includes career histories and capabilities, as well as education and community affiliations; identifies top talent and their development needs; and tracks diversity. It also makes in-house talent visible to business leaders, who no longer have to scour the company to find candidates by themselves.
To keep the system relevant, P&G has instituted a global talent review – a process by which every country, every function and every business is assessed for its capacity to find, develop, deploy, engage and retain skilled people, in the light of specific performance objectives. For example, if the company has stated diversity hiring objectives, the review is used to audit diversity in hiring and promotions. Determinations made in these reviews are captured in a global automated talent development system and can be accessed by decision-makers through their HR managers.
The processes used by P&G are well-established but the managers who run them are conscious of the way talent management is being transformed by changing demographics and the new demands of candidates from generation Y and women (see Chapter 4).
P&G’s head of HR, Sonali Roychowdhury, argues that the processes adopted by the company are “social” as well as technical. As she concludes:
In the current scenario and increasingly becoming stronger there are three major trends that I see shaping the talent management space: one is the overall talent management approach moving away from the traditional “checking the box” approach of competencies to more a social process; second is the increasing importance of the use of technology specially as an integrator of all the functions in talent management; and finally the relevance of diversity in the talent management strategy going forward.
Talent management needs to be understood as both a formal and a social process. Traditionally competencies have been analysed following a formal structure and primarily focusing on final results. Currently it is a formal structure process, one-fits-all approach. Today, that cannot work any more; today we need to have a more targeted approach to be able to leverage the talent of different people and deselect those who do not fit a particular mould.
Results are of course important but how those results are achieved is becoming equally important; that’s why I think talent management today is as much a social process. The softer aspects of talent management will be the differentiators in the future. In P&G we look at the numbers, the results, but also the way those are achieved. This focus on the process helps us identify skills that people have that otherwise could have been missed.
Our talent review process includes senior leadership, mentors, managers observing the individual in a series of assignments/situations (meetings, management interactions, accelerator experiences – often spanning years) from which they get intimate insights into “how” results are achieved (the context in which the results were delivered, influencing skills, peer interaction, collaboration across different cultures, social intelligence, ability to form and sustain productive networks internally, etc).
This is then converted into an actionable assessment of potential and destination roles that the individual would be a good fit for. This results in customised talent plans for individuals and finds a fit for different skills throughout the organisation.
Conclusion
In the past decade there has been growing use of a process-led approach to talent planning, focusing on a small cohort of high-flyers who are destined to become future top leaders. Such an approach works well when the business environment is relatively stable and companies are reasonably confident about their strategies and the capabilities to execute their plans successfully.
The benefit of an HR process-based “machine” is that it helps ensure consistency and a useful end-to-end view of how and where talent needs to enter and move across the organisation. The drawback is that it can become so resource intensive that companies spend too much time and energy on administration and operational issues rather than assessing whether it still supports the business strategy.
Companies in uncertain or highly competitive conditions are rethinking their approach to talent management. They are not necessarily dismantling their systems but are looking at the question of how to build in more flexibility.
They are reconsidering their talent requirements in the light of their strategic priorities and moving towards a broader view of talent. They are widening their focus beyond leadership succession to include technical and functional specialists and any individuals who have a “disproportionate” impact on business performance. These employees are increasingly required to have a complex set of skills and attributes in order to operate across different business models and different business contexts.
International companies, especially those with growth ambitions, need their talented staff to be highly mobile. To guarantee that talented individuals have both sufficient depth and width of experience, companies are resorting to longer-term career paths.
This is a tall order for talent planning and it presupposes that talented people are willing to be developed and deployed at the whim of the company. This may not necessary be the case.
Companies cannot afford to presume that they “own” their talent. Nor can they treat talent like a commodity or lump their most valuable employees into an amorphous “pool” of talent. Instead, they need to take a more tailored approach and work with talented individuals to agree a career path that benefits both parties.
The next chapter looks at how companies can take a more tailored and differentiated approach to their most valuable employees.