Leading companies around the world lack the quality and depth of executive talent needed to grow and compete in the future. Does that surprise you? It sure surprised me.
It’s the most startling finding from my company’s survey of trends in executive and leadership development. We’ve been conducting this survey biannually since 1983 as a way to keep our clients (and ourselves, of course) abreast of critical forces and trends. Our 2004 survey covered 100 major companies, 79% in the US, the rest scattered throughout the world. I’ll use my debut column to highlight the most interesting survey findings, to let you know what the leading companies are thinking about the future (next 2-3 years), and to share some comments on what they’re thinking, as well.
Building leadership bench strength will be crucial.
Executive and leadership development directors and chief learning officers (CLOs), the leaders who completed the survey, are worried that their companies will lack the leadership capacity to achieve their strategic objectives. And they know the answer isn’t hiring talent away from companies because everyone is facing the same problem.
More than 70% of the survey respondents said the lack of bench strength will have a major influence on their efforts in the next few years and 80% say that increasing bench strength, ensuring replacements for key jobs or people, will be the top objective for their executive development efforts. My 2 cents worth is that companies are facing increasingly complex strategic and managerial challenges even as their current executive teams are approaching the traditional retirement age. Cultivating the next generation of leadership is an imperative!
We’ve taken our eye off the ball here during a few years of economic decline, and now were paying the price for our short-sightedness. In my consulting work with major corporations I don’t know anyone who isn’t fretting about the new War for Talent. The new job title in HR is head of talent management, and we are acting as though we can fix this problem by creating a new job in HR. Wrong!
Creating an integrated talent management system is the solution, but we aren’t good at.
70% of respondents said that a system that integrates all executive and leadership development and key HR activities will be a top priority to address the bench strength challenge. For the most part, what we’ve seen in client organizations is the core components of such a system — executive education, on-the-job development experiences, performance management, succession planning, coaching and mentoring, and high potential (or emerging leader) identification and development — were stand-alone functions within the HR department and operated more or less autonomously.
What is obviously needed is to create an integrated, unified system for developing the leadership talent the organization requires — something that will never be achieved with the key system components operating independent of one another. This is so obvious. How have we managed to operate otherwise? (Let’s put that question aside for now.)
The “say-do gap.”
The survey clearly pinpointed the problem — bench strength — and the solution — create an integrated talent management system — so let’s get on with it! Not so fast; there’s trouble in paradise. In another part of the survey, we asked people to rate themselves on a series of executive development best practices. Only 41% say that they have a well-integrated talent management system and only 40% have an effective process for “placing the right executive in the right job at the right time.”
A colleague of mine is fond of saying that “four drunks don’t make a team.” Can you create an integrated system if the individual components aren’t strong? It’s the old story about the chain being only as strong as the weakest link. I would argue that the key link in the integrated talent system would be succession planning, or as it has come to be called, succession management. Only 41% of respondents say they have an effective succession process.
Also essential is an effective process for identifying and accelerating the development of high potential managers — that is, filling the talent pipeline. More bad news: Only 40% say they excel at this critical practice. We have double trouble. We aren’t good at integrated systems, and we’re not so good at the key components either.
The need to invest in the next generation of business leaders is crystal clear. But what’s a company, small or large, to do? Here are seven suggestions:
Conduct a working session with the top management team ASAP to review the survey highlights and compare the key findings with your organization’s hot buttons. The truth is, it doesn’t matter much what these companies said, but it does matter where your senior team stands on the critical executive talent issues.
In that meeting (or a separate one if need be), identify the future executive capabilities needed (quality and quantity) to achieve your vision, address your marketplace challenges, and execute your strategy — linking to strategic objectives is a critical success factor. Be clear about what kind of executive talent and how much of it you need so you can build a system that develops that talent.
Identify what you believe are the core, critical components of an effective talent management system. Decide what must be done to make each element excellent. Remember, you can’t have a great system if the individual components aren’t great. If appropriate for you, benchmark the best practices and “next” practices of organizations you admire.
If you currently have a strategy and system, conduct an audit. Get outside help if you need it. Identify the gaps and fix them — if you conclude that the strategy and system won’t achieve the targets identified above. If you don’t have a strategy and system, create them. Actually create a strategy document. Determine what it will take to make the system a system rather than a bunch of independent programs. For example, if the elements don’t all report to the same person, you are probably going to have serious problems. What’s the glue that will hold the system together? Common leadership competencies? A common information system?
Build in strong consequences to ensure line manager accountability for talent development.
Create metrics that matter to top management and report them regularly.
Continually review and refine your development process. This is a journey, not a destination.
If you would like to read more about the survey, email your request for a free copy of “Mapping the Future of Executive Development: Forces, Trends & Implications,” the first chapter from Bolt’s book The Future of Executive Development.