Leading the Way: Three Truths from the Top Companies for Leaders - Rilegato

Gandossy, Robert; Effron, Marc

Rilegato

ISBN 10: 047148301X ISBN 13: 9780471483014

Casa editrice: Wiley, 2003

Riassunto

In Leading the Way, Hewitt Associates’ business leaders Robert Gandossy and Marc Effron present their findings from the largest research project ever conducted on leadership, the "Top Companies for Leaders." Using data from more than 600 companies around the globe and interviews with senior executives at the top companies, they present a compelling business case for investing in growing leaders. Their stories, examples, and tactics provide tangible, practical tools for leaders everywhere.

Su questo libro

Informazioni sull'autore

ROBERT GANDOSSY is the Global Leader for Hewitt Associates’ Talent and Organization Consulting. Prior to joining Hewitt, he was a senior management consultant at a general management consulting firm.

MARC EFFRON is the Global Leader for Hewitt Associates’ Leadership Consulting Group, helping global companies build leadership quality and depth. He brings practical insight to his work through senior leadership roles at large Fortune 500 organizations.

Dalla quarta di copertina

Sustained earnings growth ranks at the top of every company?s performance objectives but, despite heroic efforts, all too few ever realize this goal. Their investments in technology, marketing, new products, or logistics bring temporary benefits at best. The top companies for leaders start with the value proposition that great performance begins with great leadership?and they have the financial results to prove it!

In Leading the Way, Hewitt Associates? business leaders Robert Gandossy and Marc Effron present their findings from the largest research project ever conducted on leadership, the "Top Companies for Leaders." Using data from more than 600 companies around the globe and interviews with senior executives at the top companies, they present a compelling business case for investing in growing leaders. Their stories, examples, and tactics provide tangible, practical tools for leaders everywhere.

Their "three leadership truths" define the fundamental building blocks used by top companies to build a sustainable pipeline of great leaders:

• The CEO and Board of Directors provide leadership and inspiration: Going beyond lip service to active and passionate involvement in building leaders? capabilities
• A maniacal focus on high-potential leaders: Carefully identifying and aggressively developing your absolute best talent
• Doing the right programs the right way: Creating programs and processes that enhance the few differentiating leader-ship capabilities in a nonbureaucratic, measurable way

While many organizations successfully execute one or two of the truths, top companies differentiate themselves by consistently executing all three.

Going far beyond a simplistic best-practices approach, Leading the Way shows how growing great leaders begins with understanding the type of leaders your business strategy demands. Gandossy and Effron also highlight the "little things that count"?the secrets that allow the top companies to sustain their success.

Leading the Way drives home its conclusions with financial analysis that shows how the three leadership truths translate into sustained financial success for the top companies, and how they can do the same for your organization as well. Put the knowledge of how IBM, Johnson & Johnson, Pepsi, FedEx, and other top companies build great leaders and great financial results to work for you.

In Leading the Way, Hewitt Associates? business leaders Robert Gandossy and Marc Effron present their findings from the largest research project ever conducted on leadership, the "Top Companies for Leaders." Using data from more than 600 companies around the globe and interviews with senior executives at the top companies, they present a compelling business case for investing in growing leaders. Their stories, examples, and tactics provide tangible, practical tools for leaders everywhere.

Their "three leadership truths" define the fundamental building blocks used by top companies to build a sustainable pipeline of great leaders:

• The CEO and Board of Directors provide leadership and inspiration: Going beyond lip service to active and passionate involvement in building leaders? capabilities
• A maniacal focus on high-potential leaders: Carefully identifying and aggressively developing your absolute best talent
• Doing the right programs the right way: Creating programs and processes that enhance the few differentiating leader-ship capabilities in a nonbureaucratic, measurable way

While many organizations successfully execute one or two of the truths, top companies differentiate themselves by consistently executing all three.

Going far beyond a simplistic best-practices approach, Leading the Way shows how growing great leaders begins with understanding the type of leaders your business strategy demands. Gandossy and Effron also highlight the "little things that count"?the secrets that allow the top companies to sustain their success.

Leading the Way drives home its conclusions with financial analysis that shows how the three leadership truths translate into sustained financial success for the top companies, and how they can do the same for your organization as well. Put the knowledge of how IBM, Johnson & Johnson, Pepsi, FedEx, and other top companies build great leaders and great financial results to work for you.

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Leading the Way

Three Truths from the Top Companies for LeadersBy Robert Gandossy Marc Effron

Jossey-Bass

Copyright © 2003 Robert Gandossy
All right reserved.
ISBN: 978-0-471-48301-4

Chapter One

The Looming Leadership Crisis

Leaders aren't born, they are made. And they are made just like anything else, through hard work. -Vince Lombardi

Surveying the crowd at the first meeting of IBM's Senior Leadership Group in 1996, Lou Gerstner, the blunt-talking chief executive charged with saving Big Blue from the brink, issued an edict: Go back to school! The directive must have surprised and likely angered more than a few of the 300 senior executives-including Gerstner's own direct reports-many of whom had been with the tech giant for decades.

But Gerstner hadn't been recruited from R. J. R. Nabisco to make friends. His immediate challenge was to save an institution that had quite literally been placed on a 24-hour deathwatch. Those in the room that day understood they had been hand selected because they were critical to IBM's recovery. So, when Gerstner told them they would be participating in a program focused on developing their own leadership capabilities, they knew they'd better listen.

That's not to say that everyone had confidence in Gerstner's ability to breathe new life into IBM. A downward spiral had taken the company's $6 billion profit in 1990 and quickly turned it into an $8.1 billion loss by 1993. In an industry that was rapidly expanding, IBM had lost half of its market share since 1985. They ranked 11th in customer satisfaction among companies in the computer industry, trailing several companies that no longer existed. IBM's stock price stood at an all-time low, and competitors like Hewlett-Packard and EMC clawed at its market share. On April 1, 1993, the day Gerstner took charge, IBM's stock had dropped from a high of $43 per share in 1987 to $13 per share.

The organization that had long held court as America's most admired company was forced to abandon its practice of lifetime employment, sending tens of thousands of workers in search of new jobs. Many of those workers found employment within the legions of new dot.coms and undoubtedly snickered at IBM as a soon-to-be-extinct dinosaur. However, it wouldn't be the dot.com millionaires but Big Blue that would ultimately have the last laugh.

Just as Wall Street was preparing to throw the first shovelful of dirt onto IBM's casket, something miraculous happened: The giant rose from the dead. In 2001, profits reached over $8 billion on revenues of $83 billion, and shares hit an all-time high. The company once credited by The Washington Post for inventing the computer industry was back-with a vengeance. And, in an instance of ultimate irony, BusinessWeek declared IBM the largest dot.com in the world. Gerstner and his team had pulled off the turn-around of the century, leading IBM back to profitability-without chopping the company into separate operating units, a plan that had been in the works when he took over as chief executive.

While Gerstner himself has been given much of the credit for IBM's amazing turnaround, Big Blue's boss clearly recognized that the company's leadership strength extended far beyond his office.

On his watch, a comprehensive approach to building great leaders was crafted, including careful selection, development, and rewards for IBM's best talent. Leaders were held accountable for growing other leaders, and good leadership was viewed as a critical asset to be carefully managed for the best possible return.

Gerstner's mandate accomplished much more than saving IBM. It positioned the company for the future by building a deep bench to ensure that Big Blue's dramatic turnaround wasn't just a passing phase. The fact that the transition from Gerstner to new CEO Sam Palmisano in 2002 was flawless in the eyes of the hypersensitive stock market and critical business press drives that point home. And with IBM facing likely retirement of as much as 75 percent of its senior management team by the year 2007, Gerstner's investment in a powerful leadership-development and succession-management process will prove to be an absolute necessity if IBM is to retain its regained crown and Gerstner's turnaround legacy is to last.

Reaching the Boiling Point

As Gerstner's story demonstrates, it is the development of a strong leadership team, rather than the actions of a single individual, that sets one organization apart from the rest. The facts are indisputable: Great leadership teams build trust and confidence among their people. They motivate and inspire. They anticipate challenges and redirect the enterprise in timely and appropriate ways, unifying the workforce behind a single cause and driving the kind of performance that allowed a Southwest Airlines to soar or an IBM to reboot itself. Simply put, they deliver better business results, and the opposite is true as well: An incompetent leadership team wreaks serious damage and creates inflexible bureaucracies, often destroying shareholder value and dooming the organization to failure. The corporate landscape is littered with hundreds of overly managed, poorly led institutions.

Tales of leadership successes and failures have served as juicy fodder for the likes of The Wall Street Journal, CNN, and Fox News. They've put leadership on the map, awakening many sleeping corporate giants in the process. It's clear now that there is a cause and effect-great returns for those organizations that invest in leaders and failure for those that do not. After decades of largely paying lip service to building great leaders, executives everywhere have begun to think more seriously about their own leadership processes.

This new awareness arrives at the right moment as two daunting demographic trends loom. Those trends will forcefully challenge how companies develop their leadership talent. In the 1970s, 1980s, and 1990s, companies became spoiled by the enormous baby boomer generation-the pig moving through the python-which provided millions of talented, dedicated workers. While efforts were made to increase the capabilities of this group, the mindset that you could "buy" a leader when needed became ingrained in many firms. Revenue at executive-search firms nearly tripled in the seven-year period from 1993 to 2000 as companies tried to find outside what they could not or did not develop inside. "Twenty years ago," says Jeff Sonnenfeld, associate dean at Yale's School of Organization and Management, "only 7 percent of major firms hired CEOs from the outside. Now it's over 50 percent."

In the late 1980s, one Fortune 50 company was so concerned about the inability to grow leadership talent and the shortage of qualified leaders inside the company that it began to identify and track executives outside the company. The CEO and senior vice president of human resources undertook a confidential, but rigorous, process to review exceptional executives from other firms-the company even developed tracking mechanisms on their growth and development. They went so far as to structure forums-industry task forces, board presentations, golf outings-to observe targets firsthand.

The shortage will worsen. Aging boomers are beginning to trade the workforce for the golf course, trading corner offices for porch rocking chairs, company cars for golf carts. As this boomer bubble bursts, we will see a 15 percent drop in the number of men and women of "key leader age"-those in the 35- to 44-year-old range. Since peaking in the late 1990s, the numbers for this group have decreased markedly and will continue falling until approximately 2015 when they will once again begin a slow upward climb. It's a fundamental economic principle that, when supply of a product decreases, its price increases. Companies looking to pay the "market price" for an executive may soon find the quality they want is not in their range.

The second key trend was more difficult to predict. For nearly 50 years, the percentage of women entering the ranks of the American workforce rose steadily. The growing numbers made up for the declining number of men in the workforce. Since 2000, however, an increasing number of women have chosen motherhood or other pursuits that keep them out of the workforce. In fact, female leaders have been departing Fortune 500 companies at twice the rate of their male counterparts. So in addition to the overall leader pool's shrinking, women are no longer making up for the number of men leaving the workforce, further exacerbating the leader shortfall.

But that's not all. Boards of directors and shareholders have grown increasingly impatient with leadership teams that do not produce results. In 2001, a record 555 CEO departures were recorded. In 2002, nearly 100 CEOs of the world's largest 2,500 companies were replaced for performance reasons, almost four times the number asked to leave in 1995. The challenges of running complex, global enterprises are immense. Modern leaders must carefully manage organizations with large cultural differences, be able to draw out multiple perspectives, and lead diverse teams. Leaders who can do all these things effectively will be a rare, valuable commodity through the "boomer trough."

There is a third pattern-too early to call a trend-and that is the midcareer metamorphosis: would-be leaders exiting the corporate world for lifestyle reasons. This phenomenon is not new ("downshifting" has been discussed and observed by the media over the last decade) but in the post-9/11, post-Enron world, it appears to be accelerating. Fifty-four percent of Fortune 1,000 executives surveyed last summer by Burson-Marsteller, the public relations firm, said they did not aspire to become CEOs of their companies, compared to 26 percent a year earlier. People no longer see the top as enviable. Career workshops that train people to make the transition from the corporate world to the nonprofit world are overflowing. As companies recognize the value that superior leaders deliver, they're fighting harder than ever to recruit and retain the best. When Hewitt Associates asked its clients about their plans regarding external leadership hires, more than half indicated they planned to upgrade the quality of leadership talent they bring into their organizations. A McKinsey study on talent found four out of five companies did not have enough talented leaders to pursue their company's business opportunities. So, with the one-two punch of a declining leadership pool and greater competition for those who remain, how will organizations win the battle for leadership talent?

Focusing on the Facts

The combination of demographics and economic challenges means that companies no longer have the luxury of taking a trial-and-error approach-or of having no approach at all-to building leadership quality and depth. They want fact-based, tested methods and tools that fit with their organization's culture and support their business goals. They need clear guidance on how to build a diverse, highly qualified leadership team today and how to plant the seeds for great leadership tomorrow. Unfortunately, many companies find that fact-based, clear guidance is in short supply.

Anecdotes and case studies abound when it comes to companies that are known for developing leaders. Every consultant has a model, every conference a seminar, and every leader a story about how a company can build great leaders. But no clear answers exist about what exactly enables an organization to continually produce a stream of great leaders. Why is it that GE had three CEOs in waiting when Jack Welch decided to retire-a situation that would throw many other companies into a crisis? How is it that Procter & Gamble can fill all leadership positions for a growing $43 billion business without a single executive hired from the outside and, at the same time, have 60 P&G alumni in CEO positions elsewhere?

The answers are elusive. Our research discovered that narrowly focused studies on topics like succession planning, executive education, and performance management were widely available, but that no study looked broadly and systematically at the combined factors that enable companies like GE, IBM, or Colgate-Palmolive to be so successful in growing great leaders. And that combination of factors seems to offer the best possible explanation for the consistent stream of great leaders at top firms. After all, it was more than great leadership development programs that produced GE's three CEOs-in-waiting.

When you look at many of the existing studies on leadership, they cite companies that consistently underperform their industry or the marketplace. It makes one wonder: If a firm can't beat its own peer group, what can it teach others about growing great leaders?

Our Process

We set out to tackle the issue in a fundamentally different way. We wanted to understand holistically the organizational characteristics that provide the sustained capability to create leadership quality and depth. In other words, how do great companies combine culture, performance management, coaching, compensation, job assignments, leadership support, and more in a way that enables them to consistently deliver business results and create a strong pipeline of leaders for the future?

We started our research in 2002 by surveying CEOs and human resources (HR) executives at 240 of the world's top 500 multinational companies, posing questions about a broad variety of topics that would influence how leadership strength is built. We conducted hundreds of in-depth interviews with leaders at more than 50 companies. We then sought the input from 25 of the world's leading HR and leadership experts-Dave Ulrich, Jeff Pfeffer, Rosabeth Moss Kanter, Jon Katzenbach, and others-who provided their own thoughts about which organizations develop leaders well. In 2003, we added a global perspective, surveying not only 320 U.S. companies, but almost 300 more in Europe and Asia as well.

To avoid a common pitfall of previous studies, we maintained the basic premise that there had to be a relationship between great leadership and superior financial results. So we passed all data through a financial screen. In our 2003 study, we used the five-year compounded growth rate of earnings before income and taxes (EBIT) as this screen. Companies that failed to perform at or above their industry medians over a five-year period from the study date were eliminated, surprisingly knocking out many well-known firms with reputations for strong leadership programs. Other factors considered included nominations by peer companies and leadership experts in addition to how many leaders from that company were now executives at other Fortune 500 companies.

As a final checkpoint, we asked Chief Executive magazine (where the initial results of our study were published) to assemble a judges panel to independently evaluate our research. In both 2002 and 2003, they impaneled a group composed of world-renowned authors, business executives, professors, and executive coaches, such as Jay Conger, Rakesh Khurana, Marshall Goldsmith, Jeff Sonnenfeld, and Steve Drotter. This team studied our findings and made the ultimate selections for the Top 20 Companies for Leaders. The lists for 2002 and 2003 are included in Appendix A.

In the second phase of our study, we went back to the Top Companies and interviewed nearly 100 senior executives and high-potentials, including a number of CEOs, to better understand-from their perspective-what makes the difference in companies that build great leaders. These in-depth interviews provided the nuance and subtlety that separated one company's programs from another's and reinforced what we heard in the survey process.

We want to be clear: We know all lists have problems. This book is not about the list. This book is about discovery, about understanding what Top Companies do to develop leadership talent. We weren't interested in comparing companies ranked 15 through 20 with those ranked 1 through 5. Rather, we were interested in defining the best. This process was our best attempt at identifying a sample of Top Companies. This book is about understanding what makes them so.

(Continues...)

Excerpted from Leading the Wayby Robert Gandossy Marc Effron Copyright © 2003 by Robert Gandossy. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Dettagli dell'edizione

• Editore: Wiley
• Data di pubblicazione: 2003
• Lingua: Inglese
• ISBN 10: 047148301X
• ISBN 13: 9780471483014
• Rilegatura: Copertina rigida
• Numero di pagine: 240
• Contatto del produttore: WROX; https://www.wiley.com/en-us; ; 111 River Street; Hoboken; NJ; 7030; U.S.A.
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