Leadership Development: Seeing the big picture

CIRANO Leadership for Tomorrow ForumMarch 17, 2006

© Handfield Jones Inc. 2006

Helen Handfield-Jones

2

WHY LEADERSHIP TALENT IS SO IMPORTANT TODAY

Internal pipelines not well stocked

Highly talented

managers in demand

Better talent creates much more value

Demographic crunch on supply

The war for

leadership

talent

3

MANY DIFFERENT WARS FOR TALENT

Talent Intensive Specialized Skill Low Skilled

Performance difference

• Huge • Modest • Little

Supplyconstraints

• High degree of innate talent required

• Talent to be a top performer is rare

• Many years of education, experience, apprenticeship required

• Some innate talent required

• Lots of people have the innate ability

• Several years of education or training, but ready upon graduation

• Little innate talent required

• Widely available labour pool

• Takes a few days to a year of training

Examples • Business leaders• Software designers• Museum curators• Strategy consultants• M&A lawyers• Top research scientists

• Programmers• Librarians• Nurses• Pharmacists• Tool-and-die makers• Pipefitters

• Admin assistants• Call centre staff• Fast food workers• Flight attendants• Assembly workers• Retail sales staff

4

KEY TALENT STRATEGIES DIFFER

Talent Intensive Specialized Skill Low Skilled

Fundamental challenge

• Quality game – get the very best

• Quantity game – get enough to fill spots

• Engagement game – elicit right behaviours

Key talent strategies

• Laser-like recruiting to find and assess the best

• Rich individualized development throughout career

• Regularly weed out lower performers

• Pay high performers significantly more

• Value proposition features challenges and advancement

• Recruit from many diverse pools

• Tap foreign workers

• Increase training capacity

• Encourage people to join this career

• Restructure roles to reduce number needed

• Value proposition features role and work environment

• High-volume recruiting, screen for right attitude

• Manage turnover

• Train company specific procedures

• Recognize and celebrate performance

• Value proposition features job security, working conditions and empowerment

5

ERAS OF EXECUTIVE DEVELOPMENT

1890’s – 1910’s ‘20s ‘30s – ’40s

• Robber Barons• Owner managers• Outsourced to other

owner managers• Acquired owners

became founder executives

• No concept of executive development

• “Generals” emerge• Corporations have

life beyond owners• Founder executives

retiring• Beginning of

professional executives

Executivedevelopment begins:• Career planning• Selection tests• Job rotation

systems• Fill division heads

from a roster

• Depression and War• Survive, hunker

down• Hiring ceased

• Killed the fledgling programs

Source: Peter Cappelli

6

ERAS OF EXECUTIVE DEVELOPMENT

‘50s – ’60s ‘80s

• Booming prosperity• Old executives dying in

office• Realized value of college

educated managers• No pipeline of talent• Can’t hire enough to grow• 15 year planning horizon

Sophisticated executivedevelopment: • High potential programs• Succession planning• Job rotation, career paths• Training programs• Chess masters• Birth of search firms

• Recession• Japanese manufacturers• Lower costs, increase

productivity• Downsized, delayered• Baby boomers and women

entering managerial ranks

• Fewer development positions and ladder rungs

• Reduced intake of talent• Stopped executive

development programs• Downsized HR• Broke the loyalty for lifetime

contract

Source: Peter Cappelli

7

ERAS OF EXECUTIVE DEVELOPMENT

’90s 2000s

• Globalization, new technologies, industries restructuring

• Strategy in the trenches• Dot-com boom• Demand increases for highly

talented managers• Power shifts from capital to

talent

• Human capital notions develop

• Awareness builds• Retention becomes hot issue• Most companies still poor at

talent management

• Same demand pressure as ’90s• Baby boom retirement begins• Next cohort of leaders is

smaller• Internal demographics skewed

to baby boomers• Internal pipelines are weak

• Most companies start talent review, succession planning, high potential programs

• Executive coaching booms• Assessment methods improve• VPs of Talent Management

created

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TALENT MANAGEMENT WEAK IN 1997-2000

Brings in highly talented people

18%18%

Retains high

performers

7%7%

Knows who are high and low performers

16%16%

Source: The War for Talent, Harvard Business School Press, 2001

Percentage of senior managers who strongly agree

Removes low performers

3%3%

Develops people effectively

3%3%

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BOARDS OF DIRECTORS INCREASING THEIR FOCUS ON TALENT MANAGEMENT

78

76

66

61

55

51

Talent and skills

Strategy and risk

Developing management

Evaluation of top management

50CEO succession

Evaluation of CEO performance

Current company performance

31Audit and compliance

26Compensation

Percentage of directors who want to spend more time

Source: January 2005 McKinsey Quarterly survey of 1,016 corporate directors

How would you change the amount of time your board is spending on the following issues?

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HOW TO BUILD A STRONG POOL OF LEADERSHIP TALENT

1. Talent review process and leadership development

2. Laser-like recruiting strategies

3. Attractive value proposition

11

FUNDAMENTAL PRINCIPLE OF TALENT MANAGEMENT

A+ High potential Invest heavily in their development

A High performers Retain and leverage

B Good performers Affirm and engage

C Low performers Act decisively

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WHAT REALLY DRIVES DEVELOPMENT

0

10

20

30

40

50

60

70

80

0 10 20 30 40 50 60 70 80

Informal coaching/ feedback

Told strengths/

weaknesses

Role models

Being mentored

Development plans

360-degree feedback

Formal performance evaluation

Testing/ assessment

outside

Feedback/coaching

Non-traditional learning programs

Individual learning

Training within company

Traditional training outside

company

Formal training

Job rotation

Way jobs structured

Speed of job rotation

Special project assignments

Stretch/developmental jobs

Co

mp

any

effe

ctiv

enes

s

Exc

elle

nt

or

very

go

od

Importance to my development

Absolutely essential or very important

Source: “How Executives Grow”, McKinsey Quarterly 2000 Number 1

Percentage of top 200 executives

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Advancement opportunities blocked

Their people not developed

Productivity and morale of group is low

Fewer “A” players attracted to join the company

Performance in job is low

Keep low performers in

leadership jobs

Keep low performers in

leadership jobs

THE VICIOUS CYCLE OF “C” PLAYERS

Source: The War for Talent, Harvard Business School Press, 2001

High performers leave the company

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TALENT REVIEW PROCESS DRIVES LEADERSHIP DEVELOPMENT

Talent review process

Feedback

Learning programs

Staffing decisions

Coaching and

mentoring

Job experience

Develop-ment plans

Recruit for future

needs

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WHAT IS A TALENT REVIEW PROCESS

• Get the spotlight on the As and Cs

• Develop insights into each person’s strengths and weaknesses

• Craft action plans for each individual

• Assess succession depth

• Identify strengths and gaps in the pool

• Craft action plans for each business unit

The overall talent pool:

Each individual:

Leadership team discusses talent 1-2 layers below

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ABOVE AND BEYOND PERFORMANCE MANAGEMENT

Performance evaluation Talent review

• Help individuals improve and understand themselves

• Help individuals chart satisfying careers

• How well performed this job this past year

• What might they be capable of in the future

• Perform the job to best of their ability

• Develop future leaders

• Drives recognition, rewards, and coaching

• Drives promotions, moves, terminations, and improves coaching

• Manager to individual • Leadership team looking collectively at a pool of people

17

Average-performing companies

High-performing companies

37

24

40

28

20

7

21

8

Identifies high, average, low performers

Has intensity and importance of the budget process

Includes frank, open discussion

Results in action plans for individuals

Our talent review process:

HIGHLY EFFECTIVE TALENT REVIEWS

Source: The War for Talent, Harvard Business School Press, 2001

Percentage of corporate officers who strongly agree

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LEADERSHIP DEVELOPMENT STRATEGY FRAMEWORK

Development plans

Talent Review

Additional Assessments

Training/ Learning Programs

Performance Management

Job Experience and Staffing

Coaching / Mentoring

Assess and give feedback

Provide development opportunities