Leadership Development

Lessons from Yahoo: Enduring Organizations Manage Executive Succession

Posted on November 19, 2008. Filed under: Leadership Development, Succession Planning, Talent Management | Tags: , , , , |

This week we witnessed another vivid lesson in the value of executive succession: Jerry Yang steps down as the CEO of Yahoo!. Yang replaced Terry Semel, who spent years trying to build Yahoo! into a media company, only to see it lose market share to the more innovative, technology savvy Google. Yang presided over an indecisive decision not to merge with Microsoft, and watched the Yahoo! stock drop from $33 to around $11, effectively trimming billions of dollars off the company’s value.

Now we find that yes, in fact, Yang is a great visionary, but not a strong leader – his inability to change the consensus culture at Yahoo! and make rapid decisions (the Microsoft merger seemed pretty logical to me) are now considered out of favor. The board is looking for an internet-savvy leader who can make decisions, drive execution, and build alliances.

Companies do not have to go through this. In fact, Enduring Organizations®, companies that build brand value over decades of business cycles, rarely if ever go through such tremendous soul-searching to find CEOs. They build strong leadership models, capturing the essence of their business and talent strategy in a set of leadership capabilities. Then they identify high potential leaders throughout the company, using well understood approaches to succession management. And they develop leaders internally through a wide variety of approaches: developmental assignments, internal projects, executive coaching, external education, and 360 assessments.

Look at companies like GE, IBM, Procter & Gamble, Textron, McDonald’s, and Goldman Sachs. These companies have deep pipelines of leadership talent, always being developed and assessed for future top positions. When a change needs to be made, 90% of the time it can be made internally.

Sometimes, of course, a company loses its way and an outsider is needed: Lou Gerstner at IBM and Ron Williams at Aetna. But these situations are rare in these companies, they work hard to constantly re-evaluate their leadership needs and build new leaders as business cycles change. IBM, my alma mater, has completely changed its “profile of leadership” in the last 5 years to reflect the company’s new business model of global services, team based consulting, innovation, and expertise development.

In many ways companies like Yahoo! are still young, so these “old-fashioned” processes have not yet taken root. But that’s no excuse: if Yahoo! wants to become an Enduring Organization®, it’s high time they took the executive succession process seriously. It may be too late, time will tell.

Bersin & Associates defines an Enduring Organization® as one which develops long term business value over decades, through many business cycles, and through many transformations. These companies outperform their peers over consistent periods of time. Our research focuses on identifying the proven principles of enduring organizations to help younger companies embrace these proven approaches to managing talent.

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Fear: Does your organization have the Courage to invest in tough times?

Posted on November 13, 2008. Filed under: Enterprise Learning, Leadership Development, Talent Management | Tags: , , |

You can’t pick up a newspaper these days without reading about more business downturns, layoffs, and lowered expectations for retail sales, automobiles, consumer products, housing, and financial services.  Lots of business leaders are making tough decisions right now, and I also know a lot of our HR and L&D readers are worried about their jobs.

In fact, for baby boomers like me, the concept of retirement in the next 10-15 years is now becoming a fleeting thought:  many people now realize that they may have to put off retirement for another time.  (The stock market has lost an entire decade of positive performance, so we all have to wonder what that says about US business competitiveness.)  

So there is a lot of fear out there – and business leaders in almost every industry are being forced to make difficult decisions:  cutting costs, reducing headcount, getting out of certain businesses, and restructuring.  In our just-released Fall 2008 TalentWatch®, we found that almost 1/3 of our respondents have a new CEO or top management team and 26% are going through some type of major restructuring.  These changes bring stress into every person in the organization.

How do organizations deal with these transformations?  The key, of course, is to build a workforce that can rapidly adapt.  In this kind of environment people have to take on new roles, take charge of turning around their operations, and focus relentlessly on execution.  In many cases these changes identify dramatic gaps in capabilities and skills which may have been glossed over during good times.  

An example:  Global Pharmaceutical Company

Let me give you an example.  We are working with a large pharmaceutical company which is going through a business transformation.  This company is a global leader and traditionally built its business through a series of autonomous geographic business units, supported by a global research, global manufacturing, and global corporate functions.  Such a business structure worked well in a market with fast growth, high margins, and highly differentiated products.

The world has changed however.  Today pharmaceutical companies must deal with the loss of patent protection on many products, the need to sell to low cost healthcare providers, a neutral to negative regulatory environment, and the need to continuously invest in R&D as new genetic-based pharmaceutical breakthroughs become possible.

So this highly successful, well regarded company, which is over 100 years old, needs to change.  They are changing in two big ways:  first, they are reorganizing the company into global business units which focus on different market segments;  second they are revamping their manufacturing capacity to more rapidly deliver generic versions of their patent drugs.  These two changes result in new job roles, new leadership positions, and a new sense of purpose among tens of thousands of loyal employees.  The company is now focused on operating as an integrated company, with the ability to reduce costs, increase adaptability, and deal with these market changes.

Such Changes Demand Investment:

This particular company realizes that in many ways they are not prepared for this transformation.  So they are investing in a series of new leadership development programs, a new global leadership model, and a new program to rebuild the “nobility of first line management” through a new focus on managerial talent development.  

They also realize that many people who’s careers were built in one business function (e.g. sales or marketing) have to broaden their understanding of the business, so they have built a business simulation which teaches leaders about how the entire company and the pharmaceutical industry work. 

These programs show a commitment to building skills and capabilities during the downturn, with a clear understanding that now is the time to empower and enable managers and leaders to make the changes needed.

Does Your Company have this Courage?

It takes courage and leadership to invest in talent now.  One of the easiest things to cut during tough times are HR and L&D budgets.  While you may have to tighten the screws on your learning and HR operations, you will find that a continued focus on talent development today is more important than ever.  Our 2008 High Impact Learning Organization® research clearly found that organizations with a continuous, systemic focus on organizational learning greatly out-perform their peers.   Your role as an HR or L&D leader is to help build confidence in your leadership that they should continue to invest and hold you accountable to deliver the programs and strategies that help your organization transform itself during today’s economic slowdown.

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Five Talent Management Strategies for a Business Downturn

Posted on February 9, 2008. Filed under: Enterprise Learning, Leadership Development, Performance Management, Talent Management | Tags: , , , , , , , , , |

We are clearly entering some form of economic slowdown.  Our most recent index of talent management executives (January of 2008) showed some significant changes from May of 2007:  21% greater interest in cost-reduction, 18% lower focus on product introductions, and a significant increase in focus on building new leadership (18% increase).  So let’s assume your business does see a downturn (and if you are in financial services or housing-related industries, this is already happening), what should you do?

First, a little history.  I lived through severe downturns in several companies.  I worked for IBM in the 1980s (1981-1992) and saw the company start to disintigrate as the computer business shifted from one of monolithic providers (IBM) to one of seperate product and software companies (Dell, Compaq, Microsoft, Cisco).  The company had become far too complacent with its “deserved market share” and watched its businesses rapidly decline.  For almost three years the company issued multiple early retirement programs, restructurings, sold off businesses, and lost many of its best and brightest.  Luckily Lou Gerstner arrived in time to remind IBM that the company had strong core values in its customer service, innovation, and employee focus.  In the subsequent years the company shed its money-losing technology businesses and emerged stronger.

I also worked for Sybase, one of the fastest growing companies in Silicon Valley.  Sybase rocketed to almost $700M in revenues during my tenure, and became a magnet for many of the smartest, brightest minds in technology.  One day Sybase woke up and realized that Microsoft and Oracle had “figured out” client/server computing (Microsoft had the benefit of actually licensing Sybase technology), and in a few quarters this fast-growing company ground to a halt.  Sybase had beem through a torrid pace of acquisitions (one company a quarter for almost four years) and had done little to build the talent culture it needed to weather the downturn.  When the tornado hit, there were tremendous layoffs (several waves of them), and the company whittled itself down to a core — losing many of the innovators who built the company.  As the new management team entered they focused on one thing:  making a profit.  To do this the new Sybase leadership team continued to cut products, reduce sales commissions, and lose people.  Eventually the company did become profitable, and only then could they start to implement a growth strategy to re-emerge.

A third company I lived through was DigitalThink.  This company was also a high-flyer.  When I entered the company it was a 300 person fast-growing developer of e-learning solutions.  It felt like Sybase and IBM in the early days:  the best and brightest were all there.  The leadership team had big goals and the company was run like a huge rugby team:  everyone took to the field, banged into each other, and marched down the field.  Many of us had conflicting opinions about what strategy to pursue, but we had a big market ahead of us so we all focused on the areas we felt were most important.  But the company had little or no real talent management program.  When DigitalThink hit the wall, the company woke up one day and found itself in shock.  Again, layoffs occurred, and again in painful stages.  And the strategy which seemed so brilliant only a few months ago was in question.  Today DigitalThink is gone, having been acquired by Convergys.

As I have studied many companies and talent management strategies over the years, I have learned many lessons.  As we enter a rough spot in the economy, let me try to share a few of them here.

 1.  Downturns should be expected, so plan for them.  Do not be surprised or panic.

The first lesson is simple:  prepare now for a downturn.  What would you do if you lost 20% of your revenue next quarter?  What programs, organizations, and people would you cut?  What program would you maintain?  Would it challenge your business strategy?  Or would you see it as an inevitable cycle?  Where would you cut and where would you invest?  Think about this now.

Every business and every market is dynamic.  You must constantly expect challenges:  new competitors, product cycles, buyer changes, and economic downturns.  Plan now.  And when the downturn occurs, pull out the plan and implement it.

One of the funniest quotes I ever read was this:  “Only when the tide goes out do you know who has been swimming without a bathing suit.”  (Warren Buffet I believe.)  Dont swim naked.  You should constantly investigate the weaknesses in your business and find the areas of long-term strength.  Invest in them during good times and bad (Merck invested heavily in R&D during its recent downturn, HP invested heavily in its imaging technology during its hard times, and IBM never stopped its R&D labs throughout its tough times) — these are your “bathing suit” – you’ll need them when the waters thin.

When a down turn occurs, rather than cutting across the board, focus on building your strengths and cutting your weak areas.  Invest in your strengths during a downturn, and cut the areas which were already weak, failing, or were perhaps propped up by the “good times.”

2.  Maintain and invest in your talent programs.  A downturn will remind you that “talent is all you have.” 

We have studied hundreds of companies and constantly look at the maturity of their talent management strategies.  Again and again I comment to people that the most well-developed talent management strategies happen to reside in companies that endured terrible economic or business cycles.  These organizations have been forced to search their souls, and what they found (if they survived), was that “talent is all we have.”

Consider the rapid product cycles in almost every industry.  Your organization’s success is totally dependent on your workforce’s ability to innovate, reinvent itself, provide excellent customer service, and remain loyal and dedicated when tough times come.  You cannot build this culture during a crisis.  You must build it before the crisis, and use it to weather the storm.  IBM had an enduring culture far before its downturn hit.  Sybase and DigitalThink did not. 

This means several things:  do not sacrifice your values, principles, and people.  If you do need to lay people off, do it surgically – focusing on the people, projects, and organizations which most need change.  Across-the-board layoffs will dramatically impact your employee loyalty and engagement.  And the process of downsizing can be humane.  I’ve lived through two unhumane examples and one humane example.  When and if layoffs do occur, you do not want the “survivors” to worry.  It must be done in a positive way.

And do not forget to reward your high performers.  Even during a downturn you will find many people performing a high levels of performance.  In fact you are likely to find that many people “rise to the occasion” and perform at greater levels during stress.  Operations managers cut costs and improve productivity.  Sales teams find new approaches to solving customer problems.  Internal personnel find waste and manage internal projects aggressively.  You should recognize and reward these people.  Give bonuses and rewards.  Recognize tremendous achievement.  Such an approach will build an enduring culture, one which will help you survive a downturn and grow when the good times come back.

3.  Continue to search for great talent.  Consider this an opportunity.

If we do have a real broad downturn, the job market will soften.  This means that many of the best engineers, sales people, marketing people, managers, and executives will be looking around.  Rather than “freezing all hiring,” you should use this as an opportunity to upgrade your own organization.  During the last economic downturn in my career (2000-2001), many of my most talented friends were looking for work.  These were people who were “proven winners.”  Keep looking for these people and hire them wherever you can.  Consider it an opportunity to “upgrade” your workforce.

4.  Communicate honestly and clearly.

One of the most powerful things that happens during a crisis is that people pull together.  They talk to each other a lot.  They look for leadership.  They want to know what is happening.  And if you are not communicating clearly and realistically, they will worry.  This is your organization to clearly explain your “rainy day plan” – where you are going to invest – and how you plan to bring the company out of the problems it is in.

I have found that people are actually very loyal to their organization.  If you clearly state the truth, and provide a clear, well-developed plan for survival and growth, most people will get on board.  If people have been well managed in the past, they will rally to the cause. 

This is when leadership is tested.  Can you leaders clearly communicate a plan?  Can they convince people to come together in the interest of the organization?  Do they really understand what and where to cut, and where to invest?  This is when your leadership development programs, culture, and core principles will really be important.

When IBM went through its dark days, I do remember that the company continued to invest in its people.  Even though the company lost money, it did not eliminate its employee development programs or its R&D labs.  The company’s strong culture of customer service remained.  It took a new strategy to turn the company around, but once this strategy was clear, Lou Gerstner communicated it vigorously and clearly.

5.  Turn outward, not inward.

Avoid spending time standing around the water cooler.  When a downturn occurs there is a natural tendency to spend a lot of time and energy on internal efficiencies.  While this must be done, you should make sure you spend even more time focusing on customers.  Now is the time to remind youself what business you are in.   What products and services are doing well?  Which are not?  How has the economy affected your customers?  What are their new needs?

When we saw a downturn at DigitalThink, we rapidly shifted our product mix from “growth-enabling” solutions to “efficiency-producing” solutions.   If you stay close to your customers they will tell you what to do.

In my personal experience this is often the hardest rule of all.  When a company starts to lose money or market share there is an immediate reaction to “fix things.”  While this must take place, it should also be an opportunity to “see new opportunities” and move into new markets.  And if a broad economic downturn is affecting your customers, it is important to see this quickly, so you can adapt your business to go in different directions.

During the 1980s Intel, one of the most successful high technology companies in the world, went through a major upheaval.  The company suffered major losses through its investments in the memory business and the delay of a major new product.  It was a tough time, and several of my friends worked there.  The company implemented what they called the “10% solution.”  Every employee took a 10% pay cut and was asked to work 10% harder.  The company buckled down and reinvested in its core.  It spent even more time with customers.  And it identified new strategies, eventually creating the Intel Pentium, one of the most successful products in the company’s history.

Five simple lessons: 

  1. Plan ahead.  Don’t swim naked.  Cut strategically.
  2. Continue to invest in talent.  Reward high perfomers.  Keep the culture in tact.
  3. Look for great hires.  Dont freeze all headcount.
  4. Communicate clearly and honestly.
  5. Turn outward.

Living through a business downturn is not always fun, but it can be a tremendous opportunity.  Consider this an opportunity focus on your core, strengthen your talent programs, identify weaknesses, and reinvent your company.  As HR or business leaders, you can use these proven approaches to help your organization thrive if times get tough.

 

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Leadership Development: The Six Best Practices

Posted on January 26, 2008. Filed under: Content Development, Enterprise Learning, Leadership Development | Tags: , , , , , |

In our recent study, High-Impact Leadership Development: Trends, Best Practices, and Industry Solutions, we identified the best practices and the top providers in leadership development. Our study covered all aspects of leadership development and evaluated a number of HR consultancies. With rich data in hand, we revealed six best practices in leadership development that yield business impact.

1.  Develop strong executive engagement: The most important practice of all is to obtain the engagement of top leaders and managers. Their commitment means that the program will be highly regarded, aligned with corporate strategy and focused on the right business issues.  Philips Medical Systems – Ultrasound believes a key to its success is the active role of senior management in shaping, marketing, supporting, and executing the leadership development program. For example,

  • The CEO and executive team are instrumental in defining the deficiencies and identifying the critical content and topics that are the key to successful leadership within the organization. 
  • Senior leaders work closely with program participants to create individual development plans and help them select the top two priorities for action learning.
  • Senior leaders continue to meet with participants to coach and monitor progress on action learning throughout the year.


2.  Define tailored leadership competencies:  Successful leadership development programs are based on identified leadership competencies. By isolating and agreeing upon leadership competencies most important to your business, you will have the foundation for leadership development, as well as succession planning, career development and other talent-related processes. All high-impact programs we’ve studied are built on well-established leadership competency models.  For example, Aetna’s leadership curriculum supports three distinct levels of leadership.  Each training level focuses on specific competencies and builds on the level before it.

  • Foundational – First-level manager content that focuses is on the leadership competency area of engagement and performance; for example, engaging and developing people, and creating accountability.
  • Advanced – Mid-level manager curriculum that targets the leadership competency area of business discipline; for example, executing strategy and working effectively across business units.
  • Mastery – Senior-level manager program that builds the leadership competency area of value creation; for example, driving change and innovation.

3.  Align with business strategy:  Leadership development is far more than management training. As leaders move up in the organization, their skills must shift from people and project management to strategic business and operations management. Organizations such as Agilent, Aetna and Cisco focus heavily on company-specific business strategies in their leadership programs. Such programs cannot be totally comprised of off-the-shelf content. Furthermore, leadership development programs must be included in business conversations and planning. At New York Mellon, senior executives ensure a strong alignment to the culture, values, and strategies of the company.  For example,

  • The top 10 executives meet quarterly, to review how the efforts of the leadership development group are supporting the company’s current business initiatives. The top 30 to 35 executives identified common attributes and assembled them into an organized set of leadership competencies.
  • Executives identify real-time business issues and then spend time listening to and providing feedback on recommended solutions by leadership program participants.

4.  Target all levels of leadership:   Effective leadership development isn’t about training individuals.  Its primary objective should be the development of a leadership team capable of moving a company forward and meeting key strategic objectives.  To do this, every layer of management has to be equally prepared.  At Shell, three primary audiences are targeted.   They are:

  • Line managers participate in a program called Shell Life, which includes basic training in coaching, change management, delegation and development.
  • Functional managers participate in a program that focuses on business leadership, business management, vision and other leadership qualities.
  • Top business leaders are involved in a third program, which focuses on Shell’s business management and uses external education and consultants to train top global leaders.

5.  Apply a comprehensive learning approach:  No sound leadership development program consists solely of an instructor-led training event. Programs must include developmental assignments, 360-degree assessments, meetings with global counterparts, case studies, external education and a wide variety of e-learning and other media to give leaders a complete experience. People learn to lead by doing, so the best leadership development programs focus heavily on experiential learning. The National Basketball Association (NBA) designed a blended leadership program to train the company’s middle managers.  The program format includes five components described as follows:

  • Kick-off – A ½ day in the classroom for an introduction to the program.
  • On-line Instruction – A 3-week period for learners to complete six hours of e-learning.
  • Classroom Instruction – A one day workshop that summarizes the online training and provides opportunity for application, practice and exercises.
  • Review and Coaching.  Three follow-up review and coaching sessions to address principles learned in the course and to help work through any difficult situations.
  • Three Month Review. After 3 months, a one-hour in-class “refresher” course is conducted for the learners to discuss how they have been using the leadership models in their everyday challenges.

6.  Integrate with talent management:  To build a sustainable leadership pipeline, organizations must implement programs to assess leadership potential (part of the performance management process), identify successors to existing leaders and place these individuals into the right development programs as part of the company’s regular business practices.  In fact, one of the biggest indicators of a first-class leadership development program is a set of established practices and a corporate culture that encourages development throughout the enterprise.  At Textron, talent management processes are integrated as follows:

  • Performance Management – One-hundred percent of the worldwide salaried workforce participates in and completes a consistent performance assessment process. The performance management process not only looks at what employees need to get their jobs done, but also allows individuals to plan their careers.
  • Succession Planning – Succession planning at Textron is a process that naturally feeds into the identification, assessment and development of its leaders. The potential of leaders against long-term strategies is assessed and appropriate developmental plans are put into action.
  • Recruitment and Selection – Talent assessments are reviewed through a centralized sourcing and recruitment function which enable the company to identify candidates and ensure a strategic fit, ensure high potential people are moved frequently acorss businesses and functions, and align talent selection with Textron’s core leadership competencies.

In our most recent research, we found that leadership development

is the number one talent management function that needs the

most improvement, as identified by 43% of companies.

In this same study, 60% of companies (up from 51% in 2007)

identified “gaps in the leadership pipeline” as their number one talent issue.  

 

As companies evaluate their business challenges, we urge them to also consider their current leadership development strategies and think about the steps that they need to take to ensure that their leadership pipelines will be ready and able to execute business strategies that are critical for long-term success.  We highly recommend that they do this by assessing themselves against the six best practices.

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High Impact Talent Management: Top 22 High-Impact Processes

Posted on July 17, 2007. Filed under: Enterprise Learning, HR Systems, Leadership Development, Organization & Governance, Performance Management, Sourcing and Recruiting, Succession Planning, Talent Management, Talent Strategy, Workforce Planning |

The Top 22 Business Processes which Drive Business Impact


In 2007 we conducted one of the largest-ever studies of corporate talent management:  we interviewed and surveyed more than 750 corporations to gain an understanding of their business problems, their talent challenges, and their levels of maturity and sophistication in 62 different talent management processes.

This research was designed to do three things:  first, gain a clear understanding of how corporate talent management is defined;  second to understand the trends and directions in implementing these processes;  and third, most importantly, to see how talent management drives business results.

The research was extremely successful and also very enlightening.  Readers who would like to get a good understanding of the findings should read the executive summary

The full 300+ page report is available at www.bersin.com/hitm or by joining our research membership program.

The most interesting, and perhaps controversial part of the research, however is the following.  When we looked at the 62 different things which organizations can do to improve their talent processes (the list is available in the report), we found that there were 22 in particular which drove particularly high impact.  These “top 22” as we call them represent the “priority list” for HR executives, managers, and business leaders to consider when they decide they want to “do a better job of managing and developing talent.”   In other words, they tell you precisely where to focus.

When we looked at the final results, the findings were both obvious and subtle at the same time.  While many books and articles have been written about the value of various HR processes, we consider this list “modern,” “unbiased,” and “scientific.”  We have not applied any personal opinions to this list – it was generated from the research statistics and analysis.  (For a description of the methodology, please read the executive summary.)

Top 22 High Impact Talent Management Processes

Fig 1:  Top 22 High Impact Talent Management Processes

Here is the list.  Each process is clearly described, and color coded into process areas (performance management, sourcing & recruiting, workforce planning, competency management, learning & development, and leadership development).  Let me spend some time explaining some of the startling findings here:

1.  The #1 process organizations should focus on is coaching.  Coaching?  Is that really a talent management initiative?  Yes it is.  Organizations with strong coaching cultures, programs, and support structures develop much higher levels of engagement, leadership, flexibility, and performance.  For more details on coaching, read our article “Coaching, a new imperative for Leadership.”  This article explains why this process is so hard-hitting and what you can do to develop a better coaching program in your company.
2.  Workforce planning must become far more scientific and must identify skills gaps.  Skills-based workforce planning processes (#2 and #3) are critical today.  Most organizations have a workforce planning function, but it often consists of little more than a collection of headcount requirements for each business unit.  Organizations that succeed in today’s “tight talent” market must gain a deep understanding of their skills gaps.  They must understand these gaps among the “mission-critical” jobs first, and they must have visibility into the future of these gaps. 

One of our research clients embarked on a 9 month study of workforce skills gaps and factored in retirements, attrition, new project demands, and known demographic shifts only to find that in order to make their business plan for the next 5 years they needed to find 45,000 new engineers.  This startling finding led them to a whole series of initiatives to change their sourcing, internal career development, and job placement strategies – including moving job to people and not vice-versa.

3.  Competency management is now fundamental.  While we do not recommend that organizations try to build enterprise-wide models up front, this research (and much of our other research) shows clearly that competency management is the “currency” for talent processes and decisions.  Without a fundamental understanding of the “secret sauce” which makes your organization succeed, much of your talent decisions sit on quicksand.  Well-defined competencies help you set goals, appraise people, identify high-potentials, create development plans, identify leaders, and develop the leadership pipeline.  Seven of the top 22 processes fell into this area.

4.  Performance management is a heavy hitter.  But high-impact performance management is not what you think.  While annual appraisals are important, they are far less important than coaching, goal-setting, goal alignment, and development planning.  In fact, performance appraisal and linkage to compensation is less important than coaching, goal-setting, and development planning. 

Our research clearly shows the following:  performance management is “management.”  It takes place every day, not once or twice a year.  It describes the way that individuals interact with their immediate managers, their executives, and their work teams.  The appraisal is no more than a single point in this wide continuum of activities.  By the way, most mature organizations realize a simple fact:  all we really have in business is management.  Your company is not successful because of its products – it is successful because of its people.  How they are managed is the backbone of success.

5.   Sourcing and recruiting is becoming a science.  In today’s labor market it is harder and harder to meet hiring targets.  We estimate that over the next 15 years there will be more than 10 million jobs available than there are ready skilled people.  This means several things:  you have to do a far better job of targeting, sourcing, assessing, recruiting, and marketing to the right candidates.  Recruiting has moved from a “purchasing” function to a “sales and marketing” function.

Moreover, there are a wide variety of new tools now available to improve the efficiency and effectiveness of talent acquisition:  exciting new assessment systems, fine-grained job boards and sourcing sites, innovative university recruiting programs, and new competitive intelligence approaches.  In addition, the days of “career development” programs are back.  Organizations must now invest in training and development programs which take the “unrefined new hires” and move them into key positions throughout their career.  Most of the learning & development managers we speak with are rebuilding a wide variety of “talent development” programs to develop engineers, sales people, manufacturing managers, and executives.

6.  Finally, a surprising fact.  HR systems, for all their excitement, don’t add as much value as people think.  In fact, in our ranked list of 62 processes which drive impact. HR systems ranked in the mid 50s.  There are more than 50 more valuable things to focus on than the selection and implementation of an “applicant tracking system” or a “talent management suite.”

This is not to say that automation is not important – it is.  But take it for what it is – automation.  HR systems do not “create processes” – they automate processes which you must design.  A few interesting facts:  organizations that have automated performance management software are 14% more effective than those with paper processes.  But organizations with in-house developed systems are 9% more effective than those with vendor solutions.  Vendor software, then, actually reduces overall impact for the first 2-3 years.  Only after 2.4 years do vendor solutions “catch up” to internally developed systems.

What this illustrates is that software systems which automate well-designed, well-implemented processes (typically home-grown systems) add value.  Software systems which automate non-existing processes or poorly defined processes simply create overhead.  Do not fall into the trap of thinking that your talent management “strategy” is centered around buying software.  Your strategy should focus on implementing business-driven, carefully governed processes which focus in the 22 areas above.  Each of these 22 processes takes years to implement.  They require a close alignment with business managers.  They require careful investments in training and change management.  Software may facilitate these processes, but it does not create them.  Do not let the next big wave of software vendors convince you otherwise.

Bottom line:  we have clearly entered a “third wave” of HR – a time when HR can add strategic value by focusing on high-value roles, solving business-specific talent problems, and helping the organization adjust to the changing workforce.

 

Evolution of HR

 

Fig 2:  The Third Wave of HR

Focus your time on three things:  First, focus on the processes and people that matter to the business.  Find the 30% of your workforce which generates 70% of your organization’s value and spend your time there.  Second, work with your business leaders to design and implement processes that drive impact, with a careful focus on change management, governance, and monitoring and maintenance.  Third, automate as much as you can, but focus on automating processes which work – not using software to drive change.

We believe that if you follow the guidance from this research you will find talent management to be a transformational, exciting, business-changing experience.  As always, we welcome your feedback and comments on this article.

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Coaching: An Imperative for Leaders

Posted on June 18, 2007. Filed under: Leadership Development, Performance Management, Talent Management |

We recently completed High Impact Talent Management®, a major research study on the business impact of corporate leadership and talent management processes. One of the goals of this research was to understand where organizations could best focus their leadership development and management efforts to drive greatest business results. We call these findings the top 22 high-impact talent management processes.

What we found was very enlightening (and somewhat surprising):  the talent process which delivers the single greatest overall business impact is coaching – implementing a process for executive and management coaching throughout the organization. This process scored higher than many of the things we consider sacrosanct: setting goals, aligning goals in the organization, understanding critical competencies, and high performing recruiting. 

What does this result really mean?

What is the role of a Coach?

Consider the role of a coach. If you feel that you’ve been successful in your career you can likely trace back your success to two things: first, you had a series of developmental experiences in your career that gave you experience, judgment, and insights; and second, you had a manager sometime in the past that took a personal interest in you – in your work success, your career, and your personal development. This person was a good coach. Most likely, your success as a leader today is largely a result of the time, attention, and focus you received from this person.

All leaders must consider their roles as a coach. Consider the impact of a good coach.  Don Nelson, the new coach of the Golden State Warriors, is one of the “winningest basketball coaches” of all time. In a single year he took a team which had not reached the playoffs for 12 years and put them into the playoffs. 

What makes such a coach so successful? Does he know more about basketball than anyone else? Does he have some magic secret which prior coaches could never figure out? Or does he have a unique and uncanny ability to identify the skills in each player and align them toward the ultimate goal: winning basketball games? Clearly it is the latter.

This coaching quality is clearly vital to successful organizations. A coach is not necessarily a “mentor” or a “manager” – they are something different. Most coaches know less about the subject matter than the people they are coaching. In fact business coaches often come from different disciplines or different industries. Consider Lou Gerstner, the man who turned around IBM. Gerstner was called “Oreo Cookie Man” when he first appeared at Big Blue (where I worked at the time) – reflecting his experience at Nabisco (and inexperience in technology). No one thought he could figure out the complexities and business issues in a complex global high technology company. But as history proved, Lou Gerstner was in fact a fantastic coach. He applied the business disciplines and leadership qualities which IBM badly needed.

Coaching is an important skill for any leader. A good coach helps people see the ultimate goal. He asks people questions they may not have asked themselves. He gains a deep understanding of the challenges and solutions to an organization’s problems. And through his persistence, listening, and often pointed direction he brings out the best in people. And a good coach inspires people to perform.

What makes a Great Coach?

I regularly meet with business managers and executives as part of our research process. When I meet a high performing leader I always observe many common traits:

1. They have a Clear Direction:  They have a crystal clear understanding of where they are going. Good coaches know precisely where you need to go, and they help you get there through clarity of their vision.

2. They are Excellent Judges of People:  They have a keen and refined judgment of people. Good coaches know what each individual in the organization is capable of, and they put “the right people into the right jobs” or they change the jobs to reflect the excellence of the people.

3. They Create Winning Game Plans:  They have an uncanny ability to take complex problems and decompose them into step by step solutions. They know how to create the “winning plays.” They watch the team perform and when they identify brilliance they “write it into the playbook.”

4. They Know how to Develop People:  They develop people. By taking a tough but personal interest in their team, the inspire others to follow, improve themselves, and work hard for success. They usually do this through focus on individuals: their strengths, opportunities, and areas of improvement.

These coaching qualities apply to every leader – whether in sports, academia, business, or government. 

Why does Coaching have such High Impact?

Why does coaching create such high impact in organizations? There are many reasons: primarily, however, it indicates an overall focus on the alignment, development, and improvement of people at all levels. Organizations with well-established coaching programs have realized that performance and talent management matters.  Leaders are expressing to employees that they matter. 

It also reflects a commitment to invest in performance. Coaching programs require investment – investment in dollars and time. This investment is focused on improving operational and individual performance. These coaches are hired to “win” – not to “improve.” Such a focus forces the organization to make sure that each manager, each director, and each project leader is operating at the highest levels of performance. This rigor creates accountability and inspiration.

Applying Coaching to Your Organization

How do you build such coaching skills and success in your organization? Right now executive coaching is becoming a fad: there are more executive, management, and personal coaches than ever before. The Harvard Business Review (2004) believes that the executive coaching industry is a $1 Billion industry. There are university programs dedicated to developing executive coaches. Every major leadership development company now offers executive coaching. Executive coaches can charge $100,000-200,000 per year and most organizations state that they are well worth it.

But how do you develop a coaching program in your organization? How do you implement coaching as a leadership quality in all of your leaders? One organization, NASA, found that its managers (mostly engineers and scientists) were not engaging well with employees. They were very capable of solving engineering and technical problems, but were having a hard time dealing with strategy, planning, and personnel issues. The result was an in-house coaching program, offered through a small set of senior employees who had unique skills in listening, coaching, and development. These coaches quickly became highly regarded and the organization is now trying to figure out how to leverage and grow these coaches throughout NASA.

Ultimately coaching is a skill for any leader. Consider yourself the coach of your team – can you help them win more games? Do you have a clear picture of how to win? Do you have the right people playing the right positions? Do you have a play book? Are you exhibiting enough tough love? Do you drill your team and give them specific areas of improvement?

There are many ways to build and institutionalize coaching in your organization. High-impact organizations build coaching into the performance plans of leaders and managers. Other organizations formally assign coaches to key individuals who have high potential. Some, like NASA, build formal programs with explicit coaching roles. And still others create special 1:1 mentoring relationships with senior executives.

If you can exhibit all these skills and apply them to your organization, then you are likely one of the highest impact organizations in our research. If you are not there yet, then you should probably rethink your role as a leader: think “coach”, not “manager”. Think “building a winning game plan” not “managing the organization.” 

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Coaching: The Next Big thing in Leadership Development

Posted on May 13, 2007. Filed under: Leadership Development |

We recently completed High Impact Talent Management®, a large research study on the business impact of various leadership and talent management processes. One of the goals of this research was to understand where organizations could best focus their leadership development and management efforts to drive greatest business results.

What we found was very enlightening: the talent process which delivers the greatest overall business impact is coaching – implementing a process for executive and management coaching throughout the organization. This scored higher than many of the things we consider sacrosanct: setting goals, aligning goals in the organization, understanding critical competencies, and high performing recruiting. What does this result really mean?

What is the role of a Coach?

Consider the role of a coach. If you feel that you’ve been successful in your career you can likely trace back your success to two things: first, you had a series of developmental experiences in your career that gave you experience, judgment, and insights; and second, you had a manager sometime in the past that took a personal interest in you – in your work success, your career, and your personal development. This person was a good coach. Most likely, your success as a leader today is largely a result of the time, attention, and focus you received from this person.

All leaders must consider their roles as a coach. Consider the impact of a good coach. Don Nelson, the new coach of the Golden State Warriors, is one of the “winningest basketball coaches” of all time. In a single year he took a team which had not reached the playoffs for 12 years and put them into the playoffs. 

What makes such a coach so successful? Does he know more about basketball than anyone else? Does he have some magic secret which prior coaches could never figure out? Or does he have a unique and uncanny ability to identify the skills in each player and align them toward the ultimate goal: winning basketball games? Clearly it is the latter.

This coaching quality is clearly vital to successful organizations. A coach is not necessarily a “mentor” or a “manager” – they are something different. Most coaches know less about the subject matter than the people they are coaching. In fact business coaches often come from different disciplines or different industries. Consider Lou Gerstner, the man who turned around IBM. Gerstner was called “Oreo Cookie Man” when he first appeared at Big Blue (where I worked at the time) – reflecting his experience at Nabisco (and inexperience in technology). Noone thought he could figure out the complexities and business issues in a complex global high technology company. But as history proved, Lou Gerstner was in fact a fantastic coach. He applied the business disciplines and leadership qualities which IBM badly needed.

Coaching is an important skill for any leader. A good coach helps people see the ultimate goal. He asks people questions they may not have asked themselves. He gains a deep understanding of the challenges and solutions to an organization’s problems. And through his persistence, listening, and often pointed direction he brings out the best in people. And a good coach inspires people to perform.

What makes a Great Coach?

I regularly meet with business managers and executives as part of our research process. When I meet a high performing leader I always observe many common traits:

1. They have a Clear Direction: They have a crystal clear understanding of where they are going. Good coaches know precisely where you need to go, and they help you get there through clarity of their vision.

2. They are Excellent Judges of People: They have a keen and refined judgment of people. Good coaches know what each individual in the organization is capable of, and they put “the right people into the right jobs” or they change the jobs to reflect the excellence of the people.

3. They Create Winning Game Plans: They have an uncanny ability to take complex problems and decompose them into step by step solutions. They know how to create the “winning plays.” They watch the team perform and when they identify brilliance they “write it into the playbook.”

4. They Know how to Develop People: They develop people. By taking a tough but personal interest in their team, the inspire others to follow, improve themselves, and work hard for success. They usually do this through focus on individuals: their strengths, opportunities, and areas of improvement.

These coaching qualities apply to every leader – whether in sports, academia, business, or government. 

Applying Coaching to Your Organization

How do you build such coaching skills and success in your organization? Right now executive coaching is becoming a fad: there are more executive, management, and personal coaches than ever before. The Harvard Business Review (2004) believes that the executive coaching industry is a $1 Billion industry. There are university programs dedicated to developing executive coaches. Every major leadership development company now offers executive coaching. Executive coaches can charge $100,000-200,000 per year and most organizations state that they are well worth it.

But how do you develop a coaching program in your organization? How do you implement coaching as a leadership quality in all of your leaders? One organization, NASA, found that its managers (mostly engineers and scientists) were not engaging well with employees. They were very capable of solving engineering and technical problems, but were having a hard time dealing with strategy, planning, and personnel issues. The result was an in-house coaching program, offered through a small set of senior employees who had unique skills in listening, coaching, and development. These coaches quickly became highly regarded and the organization is now trying to figure out how to leverage and grow these coaches throughout NASA.

Ultimately coaching is a skill for any leader. Consider yourself the coach of your team – can you help them win more games? Do you have a clear picture of how to win? Do you have the right people playing the right positions? Do you have a play book? Are you exhibiting enough tough love? Do you drill your team and give them specific areas of improvement?

If you can exhibit all these skills and apply them to your organization, then you are likely one of the highest impact organizations in our research. If you are not there yet, then you should probably rethink your role as a leader: think “coach”, not “manager”. Think “building a winning game plan” not “managing the organization.” Coaching is something we can all do more of.

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Performance Management is Management

Posted on May 11, 2007. Filed under: Leadership Development, Performance Management, Talent Management |

The Seven Important Elements of Performance Management

Performance management is far more than performance appraisal.  In fact, this is probably the last and least important part of the process.  As we see it, “performance management” is “management.”  It describes the ongoing process between employees and managers which takes place every single day.  The seven key elements we discuss in our research are:

  • Goal setting – establishing measurable goals which align employees with their managers
  • Goal alignment – establishing measurable goals which align with corporate goals
  • Self assessment – employees assessing their own performance and sharing this with their managers
  • Manager assessment – managers honestly assessing employees and giving them feedback
  • 360 assessment – obtaining feedback from others and reviewing it
  • Development planning – establishing development plans in the form of training, assignments, coaching, to prepare employees for future assignments
  • Competency management – establishing known, unique competencies and assessing employees against these competencies.

This area of talent management is very complex, but the thing to remember is that the process is far more important and complex than the simple process of completing a performance review.  For more information, please read our High Impact Performance Management research.

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