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.
VKH040301GR
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