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Peakinsight LLC

Linkage Change 2001 Conference, April 30–May 3, 2001. San Francisco, CA.

Articles Worth Reading

 “Personal Reflections on New Year’s Resolutions and Change” Katherine Holt. Linkage’s Link and Learn Newsletter, January 2001

Reflections on Cancers, Forest Fires and Other Catalysts” Katherine Holt. Linkage’s Link and Learn Newsletter, February 2001

 “Reflections on the Flotsam and Jetsam of Change” Katherine Holt. Linkage’s Link and Learn Newsletter, March 2001

Level 5 Leadership: The Triumph of Humility and Fierce Resolve.” Jim Collins, Harvard Business Review, January 2001.

The War for Talent” Elizabeth G. Chambers, Mark Foulon, Helen Handfield-Jones, Steven M. Hankin, and Edward G. Michaels III. The McKinsey Quarterly, 1998 (3)

Favorite Books

Champions of Change: How CEOs and Their Companies are Mastering the Skills of Radical Change D. A. Nadler (Jossey-Bass,1998)

Leading Change J. P. Kotter (Harvard Business School Press, 1996)

Leading the Revolution G. Hamel (Harvard Business School Press, 2000)

Small Decencies: Reflections and Meditations on Being Human at Work. John Cowan  (HarperCollins, 1992)

Synchronicity: The Inner Path of Leadership J. Jaworski (Berrett-Koehler, 1996)

The Change Handbook: Group Methods for Shaping the Future P. Holman, T. Devane (editors) (1999)

The Dance of Change: The Challenges to Sustaining Momentum in Learning Organizations P. Senge, A. Kleiner, C. Roberts, R. Ross, G. Roth, B. Smith (1999)

Values Shift: The New Work Ethic & What It Means for Business J. B. Izzo, Ph.D., P. Withers (2000)

Whole-Scale Change: Unleashing the Magic in Organizations Dannemiller Tyson Associates  (2000)

Favorite Websites

ASTD

Fast Company Magazine

Group Jazz

Harvard Business School Press

Learning Master

Meridian Resources

The Institute for Women’s Leadership

The news is filled with companies under siege. High impact players in senior executive roles exert a huge influence on markets as well as their own firms. These CXOs (Chief “Fill-in-any-eXecutive-initial-here” Officer) are vitally important in leading change in organizations, especially changes in their cultures. As a result, attracting and retaining these top executives must take high priority. This article summarizes the evolution of CXO talent management and highlights some new questions based on what’s been happening in the human capital revolution.

From Assessing Potential to Developing Executives

I have followed the evolution of leadership development research and practice ever since my first training and development course in the early 1970s. Moreover, I have experienced many of the fads and fashions personally, as my own career has cycled between managerial and consulting roles for the past 25 years. The works cited below have made a huge impact on how I have come to think about executive development.

The now-famous AT&T Management Progress Study was conducted to better understand adult development and improve the recruiting and training of managers. They assessed 422 men in the late 1950s and kept the assessment center ratings secret in order to determine the predictive validity of that data based on what happened to people who were assessed. Their longitudinal study revealed that the assessment ratings accurately predicted the career progress people made over the next decade. A 20-year follow-up revealed that jobs offering “stimulation, challenge, and enough freedom to develop their own resourcefulness” also impacted people’s career success. Doug Bray served as lead researcher and co-authored several books (with Ann Howard) about their findings, including Formative Years in Business: A Long-Term AT&T Study of Managerial Lives (1974) and Managerial Lives in Transition (1988).

I came across John Kotter’s book, The General Managers, while developing an executive competency model. He based the book on his groundbreaking research on the development of effective GMs. He investigated their family background, basic personality, education, career path, and accumulated knowledge and relationships. Kotter discovered that many successful GMs found an early fit for their talents and rose rapidly through one function after another into executive roles. They gained industry knowledge, developed organizational savvy, and built a network of relationships along the way.

Morgan McCall Jr., Mike Lombardo and Ann Morrison wrote their classic book, The Lessons of Experience: How Successful Executives Develop on the Job, in 1988. It was based on interviewing successful and derailed executives plus conducting other research through the Center for Creative Leadership (CCL) in Greensboro, NC. That research also led to the development of CCL’s original Benchmarks 360° feedback instrument. Meanwhile, Mike Lombardo and Bob Eichinger taught a popular workshop called “Tools for Developing Successful Executives” at CCL. That course equipped an entire generation of HR professionals to get more engaged in executive development.

McCall’s latest book, High Flyers: Developing the Next Generation of Leaders, makes a strong case for strategic executive development. He offers a prescriptive model for developing executive talent based on taking the right kinds of action in areas such as business strategy, experience, talent, mechanisms for movement, and catalysts. The book concludes by encouraging people to take charge of their own development.

Meanwhile, firms like Personnel Decisions International (PDI) and Development Dimensions International (DDI) have implemented assessments to assess leaders at all levels. Some Fortune 500 companies now require all internal and external CXO candidates be assessed. This levels the playing field, especially for international candidates. Exercises and languages can be mixed and matched to simulate what is required on the job. The assessment feedback can be particularly powerful for CXO candidates who may not be getting straightforward feedback from their colleagues. Executive assessments have helped mergers and acquisition integration teams understand the executive talent in each organization, identify key performers, and analyze cultural differences.

PDI recently co-sponsored an executive development research study with the International University Consortium for Executive Education (UNICON). According to Elaine Sloan at PDI, “Having a coach, mentor, or learning partner seems to be a critical catalyst for applying new knowledge and turning it into new skills and concrete results.” Their study found that many participants were promoted after attending general management programs. Dr. Sloan commented that, “Participants in general management programs who saw their participation as part of a broader executive development strategy were more committed to their organization and reported more positive outcomes.” For example:

 92% were better prepared for new organizational challenges

 90% were better able to develop other managers

 90% made better management decisions

 67% found new ways to grow the business and increase revenue

 55% found new ways to reduce costs and save money

“Organizations that focused on individual needs as well as organization outcomes, and seemed to have strong executive development strategies and integrated talent management systems reported more positive outcomes in terms of both leadership development and organization effectiveness,” according to Dr. Sloan. This makes a strong for the value of systemic solutions.

Coaching has grown rapidly over the past decade, thanks in part to executives talking so openly about it that having a coach became fashionable. I have noticed a significant shift in my coaching clients over the past 10 years. I rarely work with “fix-it” cases any more. Most people I see are designated high potentials, sometime with an unlimited budget to invest in their own coaching. All are extremely busy executives, but use the monthly appointment to get perspective on what they are doing and how. For more about coaching, see “Accelerating Leader Learning in the Zone of Not Knowing” in this same issue of LiNE Zine.

From Succession Planning to Talent Management

Succession programs initially focused on replacement planning along with the development of future executives. People identified early in their careers as having high potential, “crown princes,” were given special development opportunities. Their subsequent promotion to executive roles became a self-fulfilling prophecy. But then came EEO laws prohibiting discrimination. People grew concerned about the fairness of succession planning processes that favored “crown princes” who were disproportionately white and male.

The downsizing environment in the 1980s and early 1990s further discouraged some companies from investing in succession management. As a result, many companies developed severe bench strength problems and are now facing a shortage in top management successors. A tight labor market in the late 1990s forced employers to be creative in their attempts to attract and retain the best talent.

Some companies are now using the Internet as a one-stop source for recruiting CXO candidates. And 6-figure people are using Internet services such as BigWigs.net, ChiefMonster.com, and 6FigureJobs to build resumes, benchmark their skills and compensation, search jobs, and expand networking activities. 

Lately there has been a rebirth of interest in succession planning, but with a broader emphasis on talent management for key roles at all levels. Technology changes plus shifts in global competition and demographics have created a strong demand for new and different leadership talent.

Paul VanKatwyk, Director of Strategic Talent Management at PDI, strongly recommends that succession management criteria be “aligned with the business strategy.” He reports that many organizations are assessing “adaptability and ability to learn” and are giving people diverse experiences, overseas assignments, and opportunities to deal with new challenges. He cites the following as emerging trends in succession management programs:

 External benchmarking of talent

 Emphasis on increasing diversity 

 Real-time, active learning strategies 

 Integration with other HR processes

 Job shaping for top talent

 Proactive recruiting of talent

 Talent pools extending outside the organization

Last year Linkage, Inc. convened a consortium benchmarking study with DDI on “Effective Succession Management: Building Winning Systems for Identifying & Developing Key Talent.” Linda Murray, Director of Research at Linkage’s Center for Organizational Research, invites people to call her at 1+781-402-5621 to learn about the study. Their research report summarized learnings about various trends and best practices, including:

1.   Seek active participation of top management
2.   Link succession efforts to business needs and objectives
3.   Make succession planning and management a constant preoccupation
4.   Link executive rewards to cultivation of talent
5.   Identify high potential talent early and devise retention strategies
6.   Encourage rapid socialization of high potential new hires to avoid turnover
7.   Apply mentoring programs to encourage real time coaching and development
8.   Manage assignments and rotations to build talent
9.   Track talent and monitor its development over time
10.   Minimize paperwork and bureaucracy

The Human Resource Planning Society offers an excellent two-day workshop called “Succession Planning and Leadership Development: A Roadmap for Designing and Managing Value-Added Processes,” often led by Pat Pinto and Randee MacDonald. I attended their workshop in 1999 to see how much had changed since I had attended Center for Creative Leadership’s tools course 10 years earlier. I didn’t find any revolutionary new information, but they provided an excellent overview along with current case studies.

What’s Next?

There is growing awareness that human talent will make the difference in companies that succeed in the future. With the human capital revolution under way, some important questions must be addressed by companies scouting future CXO talent:

1.   Where do the best people want to work?
2.   What will it take to attract and retain CXO talent in the next generation?

Top talent is migrating to work where corporate culture fits their values. Many of the best people want to work in great places. I have seen this in my coaching, where executives talk about what’s important to them in their work as well as the business and personal leadership challenges they are facing. A growing number are becoming vocal about wanting more alignment between what they value and how their companies are managed. Some of them are trying to make changes in the organizations where they work. Others are resigning to take on CXO roles in firms where they see a better fit for their values.

One company in Japan is trying to recruit people with the potential to become the “Bill Gates of Japan.” They want to attract independent, action-oriented risk takers and develop pools of future business leaders. It’s an interesting experiment, but those people may not stay long enough for that company to capitalize on their investment. I believe the company will need to work on changing the culture in the rest of the organization—otherwise the transplants will be rejected, or will simply get frustrated and leave.

Twenty years ago, Robert Levering started looking into what makes some companies great places to work. His Great Place to Work Institute now cooperates with Fortune magazine on their annual list of 100 Best Places to Work for in America. Many of his findings boil down to three trust factors:

 Management credibility

 Attitude of respect toward employees

 Fairness in the workplace

I recently heard John Izzo discuss his work with organizations around values. He sees people shifting away from money and power to wanting to make a difference in the world. And they are shifting from having a separation in their work and personal lives to pursuing integration. He talked about these six trends in workforce expectations:

1.   Balance and synergy
2.   Partnership
3.   Growth and development
4.   Work as a noble cause
5.   Community
6.   Trust

Although most of these are not new concepts, their combination is a powerful force to be reckoned with. I encourage people to read Izzo’s book, Values Shift: The New Work Ethic & What It Means for Business, for more details.

Sharp young people are already writing their own tickets, and seeking jobs where they can keep learning. Job shaping is an interesting new phenomenon where organizations are collaborating with people in designing unique roles to capitalize on their passions and address their individual circumstances.

Right now my website is being designed and hosted by Rocket dog new media, a company of high school and college students headed by a CEO who just turned 16. Amazingly, Aaron, the CEO, has already been doing this for several years. If I hadn’t met him through his dad, I would not have known from his work that his was only in his teens.

Aaron is passionate about design and savvy about what’s happening on the web. He develops rapport with customers and is immensely flexible. He transacts business on his cell phone during the day at high school. His contracting and invoicing processes are incredibly professional. He has organized his operations team to deliver on commitments. He is living out his first vision for a business. And there’s a lot more ahead for him.

Although Aaron seems exceptional, he represents a whole new generation of free agents and entrepreneurs with different values. Aaron is wondering if he can survive as a free agent or as a leader of other free agents rather than working for a company. He is wondering how much freedom he would have to give up in order to have more security.

According to some predictions, over half the U.S. population may be working as free agents in 50 years. Aaron may be about ready to retire then, if he hasn’t retired already—or if there is even such a thing as retirement by then. What kind of CXO talent will be needed in a world filled with free agents? And what will it take for companies to attract and retain people like Aaron?

I don’t think anyone has the answers yet. And I don’t hear these questions being discussed much. Instead, some companies are busily benchmarking while others are sticking to their old succession planning and talent management formulas. I think the formulas need to change.

Companies can’t shrink their way to long-term viability. They need new ideas and cultures that will embrace change. New business models, technology advances, global competition, and changing employee expectations are demanding different skills in people who are leading organizations. Opportunities abound for leaders who can capitalize on the hidden assets of their firm—their employees—and create a culture of trust that helps innovators transform ideas into new business.

Companies, not examining their cultures and reshaping their talent formulas, will limit their chances for success and survival. Businesses need to be thinking differently, and the right CXO talent can help them do that.

Thanks to continuing advances in artificial intelligence, computers will soon be as smart as people. However, computers will still lack intuition. They can’t read what’s happening with people and make decisions with their gut. Nor can computers provide the inspiration or compelling leadership that will encourage people in organizations to pursue new frontiers.

Potential CXO talent can be scouted and coached to produce winning future performance, much like high school baseball players can be scouted and groomed to play in the major leagues. CXOs in leading companies are now serving as talent scouts and recruiters in addition to their regular responsibilities. They are encouraging top talent to join their organizations and serving as mentors to accelerate the on boarding process.

The war for talent has led many organizations to pay closer attention to their culture. Some are taking steps to foster the kind of culture that will attract and retain employees. CXO roles can make or break a culture of trust, and organizations are getting better at screening out executives who do not fit.

There is a huge upside opportunity here as well—the chance to invest in attracting and developing future CXOs committed to building a better place to work. These trust assets will be far more valuable than capital assets in the long run. Companies and CXOs figuring this out will win the talent war.

A Personal Epilogue

I learned how to sew by watching my grandmother and being coached by my mother. Then I started my first business at 10: sewing doll clothes. Girls in my neighborhood would bring me their dolls, tell me what kind of outfit they had in mind (mostly dresses—after all, it was the early 60s), choose a fabric, and leave their dolls so I could construct something overnight. I would charge up to a quarter, depending on how much work was involved. Sometimes I invested that money in more fabrics. Sometimes I bought ice cream.

That experience taught me some important lessons about running a business, such as:

1.   Give customers what they want, and provide great service
2.   Continually improve supply chain and product quality
3.   Charge enough to buy ice cream after covering expenses

I didn’t reflect on these lessons until years later. Meanwhile, I went on to babysitting, dishwashing, keypunching, and by 19 became an office supervisor. My first challenge there was confronting a poor performer—who quit after my attempted coaching. I then had the headache of reorganizing plus finding a replacement. However, those challenges taught me more lessons.

After college, I was hired as a management trainee in the Bell System, where I rotated between jobs every 9 to 12 months. Those moves were intended to accelerate my development by acquainting me with different functions and exposing me to even more people challenges. Along the way, I also participated in an assessment center, where they evaluated my potential based on my performance in business simulations. The job rotations and assessment center feedback reinforced my interest in people development and I left to pursue a career in HR and consulting.

My story illustrates some talent management practices still in use today: assessment centers, job rotations, challenging assignments, modeling, coaching, mentoring, and learning from experience. We need to figure out what else is needed in light of the changing expectations and experiences of the new workforce.

Organizations have always tried to extract maximum value from their capital assets. In the new knowledge era, however, they must focus more energy on their people—assets that represent distinctive knowledge and value creation capabilities. However, most talent management practices were developed before the Internet, and many were also developed before the personal computer. Based on what I’ve seen, they do not take full advantage of available technology (for example, elearning programs) and aren’t doing enough to understand the new workforce. Worse yet, talent management programs are not yet seen as a strategic imperative by many CXOs. So there’s a lot of work to be done in many organizations. How about yours?

Katherine Holt leads Peakinsight LLC and is a global business coach who nurtures passion, courage, and insight to help executives make personal changes and engage others in dialogue about revolutionary goals. She links strategy and OD consultants to support clients seeking innovation and processes for involving their whole system in change. Please tell her what you’ve figured out about the new workforce at katherine@peakinsight.com.

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