fast track to leadership

8/14/2019 Fast Track to Leadership

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2007 Hay Group. All rights reserved.1


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Companies are facing a massive leadership andtalent shortage

75 million US employees eligible to retire in the next 5-10years. Only 45 million people will replace them.

US Census Bureau

50% to 75% of current senior management will be eligiblefor retirement by 2010.

Forrester Research

97% of organizations report significant leadership gaps more than 40% say the gaps are acute.

Corporate Leadership Council

60% of the CEOs of Americas largest healthcare systemscan retire in 5 years.

American Medical Association

The UK is running out of head teachers.

National College of School Leaders and Hay Group


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The impending leadership shortage is global

In Bangalore, wage inflation is 20% per year, and averageturnover is running 40% per year.

The Economist

Senior managers in India and China are particularly scarce.

The Economist

Call centers are being located and relocated to Europebecause talent is now too scarce in India.

National Public Radio


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The impending leadership shortage is global

Regardless of where they are in the world, the companies in ourstudy felt the same high sense of urgency to develop leadership

Companies

Se

nseofUrgencyto

DevelopLeadership

EasternEurope

High

LowPacific Middle

East/Africa

CentralAsia

WesternEurope

EastAsia

NorthAmerica

South &CentralAmerica

Source: 2006 Chief Executive magazine/Hay Group Best Companies for Leaders Survey


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Even the best companies are feeling the effectsof the impending shortage

Even companies alreadydoing the best job atdeveloping leaders feel an

urgent need to continueto develop them.

Hay Group

Comp

aniesSenseof

Urgency

toDevelopLead

ers

AllOthers

20 BestCompaniesfor Leaders

High

LowSource: 2006 Chief Executive magazine/Hay Group

Best Companies for Leaders Survey


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Our database shows 34% of executivesand 24% of senior professionals can retire NOW

Source: Hay Group Survey Database

Entry-Level

Professionaln = 880

Mid-Level

Professionaln = 3,618

Senior-Level

Professionaln = 4,462

First-Level

Supervisorn = 12,262

Mid-Level

Managern = 21,189

Executive-

Leveln = 20,974

Percent of People at Different Ages in Each Job Level

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

55-69 (34%)

45-54

35-44

25-34

Distribution of

Age Groups(24%)


7/21 2007 Hay Group. All rights reserved.7

Certain leadership abilities will be in particularlyshort supply

From Hay Group research, the retiring population is higher thanthe remaining population in almost all leadership competencies.The competencies particularly salient in the retiring populationare:

1. The ability to inspire ones organization through a compellingvision (Team Leadership)

2. Sensitivity to organizational and industry power dynamics(Organizational Awareness)

3. The ability to use sophisticated influence strategies toconvince others (Impact and Influence)

4. The ability to look over 5 years into the future to anticipateissues and develop strategies for addressing them(Initiative/Proactivity)



Certain leadership abilities will be in particularlyshort supply

Team Leadership

Organizational Awareness

Impact and Influence

Initiative/Proactivity

Many of these departing abilities are maturational in natureand develop as a result of life growth experiences.

The development of these abilities needs to start early.The Best Companies for Leaders gives us insight into how todevelop more of this kind of leadership faster.



The Best Companies for Leaders: 2006 vs. 2005

2006 Best 20 Companies for Leaders General Electric Procter & Gamble PepsiCo Citigroup

Johnson & Johnson HSBC Holdings BASF Home Depot IBM Coca-Cola Dell Microsoft Novartis Verizon Nestl Lockheed Martin GlaxoSmithKline Amgen Hewlett-Packard

BAE Systems

2005 Best 20 Companies for Leaders Procter & Gamble PepsiCo IBM General Electric

Johnson & Johnson Dell Microsoft Home Depot JP Morgan Motorola Pfizer FedEx BASF Verizon BAE Systems Johnson Controls Siemens BP LOral

Colgate-Palmolive



The Best Companies for Leaders report havingmore & better leaders

The Best Companies report:

more leaders

better leadersFor all organizations, havingenough leaders is the morecritical issue.

Companiesreportonnumber

an

dqualityoflead

ers

Qualityof Leaders

Numberof Leaders

20 Best Companies

All Others

High

Low




Why study the Best Companies for Leaders?

Having a strong leader pays.4.07%

0.54%

20 BestCompanies

S&P 500

Five-year Avg.

Total Shareholder Return

Source: Research Insight, Dec. 2006



The Top Three Practices that predict more betterleaders are the same this year as last

2006 Best Practices

1. Having leaders at all levels who focus oncreating a work climate that motivatesemployees to perform at their best

2. Ensuring that the company makes leadershipdevelopment a top priority

3. Providing training and coaching to help intactleadership teams, as well as the individualleaders, work together more effectively

Rotational job assignments for highpotentials

External leadership development programsfor mid-level managers

Web-based self study leadership modules formid-level managers

Executive MBA programs for mid-levelmanagers

2005 Best Practices

1. Having leaders at all levels who focus oncreating a work climate that motivatesemployees to perform at their best

2. Ensuring that the company makes leadershipdevelopment a top priority

3. Providing training and coaching to help intactleadership teams, as well as the individualleaders, work together more effectively

Providing job-shadowing opportunities formanagers in mid-career

Ensuring that high potentials receiveobjective 360-degree assessments andfeedback on their leadership ability early on

Ensuring that mid-level managers getenough time to take part in leadershipdevelopment activities early in their careers



Contribution to number and quality of leaders

Everything else

The next four

Contribution to number

and quality of leaders

High

Low

The top three best practices accountfor 68% of the difference in thenumber and quality of leadership.


Top 3 best practices

All other practices account for only2% additional.

Together with the next four, theyaccount for 74% of the difference.



Some leadership development practices add no value

Some development activities at any level and some that arestarted too late in a persons career are negatively related toa supply of quality leaders and are a wasted investment.

1. Outdoor activity-based programs at all levels of management

2. Paper-based self-study leadership modules at all levelsof management

3. Job-shadowing for Senior Managers

4. Web-based self-study for Senior Managers5. Executive MBA for Senior Managers



The 20 Best Companies for Leaders aredifferent in how they handle high potentials and theirability to fill positions internally

0 20 40 60 80 100

Actively manage the careers of high-potentials

Have a formal process for identifying individuals whoare likely to assume leadership roles in the future

Have career tracks for high-potential professionals

or individual contributors that are separateHave formal programs that are designed to

accelerate leadership development

Included marketing as an organizational functionfrom which they get their high-potentials

Mid-level manager positions are filled from within

Senior-level manager positions are filled from within

CEOs are promoted from within

20 best companies Rest of the companies Percentage Shown

The 20 Best Companies do these more

Resulting in more of thisSource: 2006 Chief Executive magazine/Hay Group Best Companies for Leaders Survey



There were some significant differencesin Best Practices between Developing vs.Developed Countries

Developed Countries = North America, Western Europe, andAustralia/New Zealand

Developing Countries = Eastern Europe, Asia, Middle East/ Africa

Two of the top 7 Best Practices were the same for DevelopingCountries:

Holding leaders accountable for creating motivating climates

Helping leadership teams be more effective, as well as developingindividual leaders

Two practices were more important in Developing Countries: Providing for additional development activities for mid-level

managers

Providing mid-level managers mentoring by another seniormanager or executive



Five key steps to identifying and managing potential

Know what youneed from people: start with strategy

Identify long-term potential through the growth factors notjust job-specific abilities, or past performance

Be able to answer Potential for what?

Fulfillment of potential

Create systems that enable effective talent management



Potential equation

Potential is:

The fit between a persons current capabilities and possiblefuture roles

Taking into account the persons longer-term capacity forpersonal growth and possible derailers

Potential = XGrowth Factors

Derailers

FutureRole

Require-ments

PersonsCurrentAbilities



Growth factors

Where should you invest your development resources?

Best bets are people who will be able grow and develop.

Look for these characteristics:

Thinking beyond the boundaries

Curiosity and eagerness to learn

Social understanding and empathy

Emotional balance


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Beyond identifying potential

The organizations responsibilities:

Fulfillment of potential providing opportunities andexperiences that enable employees to grow, develop andmake their full potential contribution to the company.

Create enabling systems for effective talent management to take full advantage of the potential of the employees


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2007 H G All i ht d21

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