Identifying Candidates for Leadership

A critical task in the succession planning process of any organization is identifying candidates. Traditionally, candidates have been identified based on past performance. While this seems logical, it is problematic in practice.

Past performance always measures success in a current lower-level position. What is needed in succession planning is a system to identify potential for success in a future higher-level position. The best predictive model I have found is the Leadership Pipeline Model by Charan, Drotter, and Noel.

The Leadership Pipeline provides a model that describes the skills, time applications, and values required to succeed at different levels in the organization. While most leadership models and theories describe characteristics of leaders in general, the Leadership Pipeline describes specific criteria for success in transitioning from one level to the next.

The Leadership Pipeline Model helps us to see the importance of identifying candidates for positions throughout the entire organization. The pipeline must be continuously filled with leaders who have been identified for development for the next higher level. A pipeline clog at one level will clearly harm leadership development and succession throughout the entire organization. What is needed is a carefully monitored system for developing in-house talent from front-line supervisors to CEOs.

At GE and Citicorp, two companies using the Leadership Pipeline Model, leadership passages from one level to the next are seen as “turns” in the leadership pipeline. These turns (or passages) provide significant developmental experiences. If these turns are skipped the individual may not be prepared for higher levels of leadership. The focus for development should be the lack of critical skills and values for the next higher level, not past performance.

I am often asked “Is it better to recruit from outside the organization or to develop leaders from within?” The safe, but rather uninsightful answer is, “It depends.”

Recruiting from outside the organization makes sense when a major change in corporate culture or direction is needed. But, I would caution against the over-dependence on the outside recruitment of leaders. Desperate attempts to recruit leaders from outside the organization suggest an inadequate leadership pipeline.

Recruiting leaders from the outside of the organization can be very expensive. As we all know, there is a talent shortage in the marketplace. This can lead to paying high premiums (or even outright price wars) for promising talent.

The Leadership Pipeline Model offers a common language (terminology) and specific criteria for what to look for in leaders at the next higher level. The Model provides a description of the skills, time applications, and values required of leaders at each successive level. This criteria is critical in not only identifying candidates but also in their subsequent development.

The key to identifying candidates for higher levels of responsibility is to predict their potential to succeed in attaining and using the skills, time applications, and values of the next higher level. Past performance is often a poor predictor of future success. Remember the skills, time applications, and values of each successive level of leadership are dramatically different.

The challenge in succession planning and identifying candidates is making sure people are assigned to a level that is appropriate for them. The challenge is complicated by the fact that people change (hopefully for the better) over time. An appropriate position for someone today may not be appropriate three years from now.

Identifying candidates for the organization’s future leadership positions is a critical task. Do you have a system for identifying candidates that considers not only their current skills, but also their willingness to adopt new work values and time applications?

To learn more about identifying candidates read “The Leadership Pipeline” by Charan, Drotter, and Noel or look for my upcoming special report entitled “Identifying Candidates for Leadership Positions.” There are also always free articles on my website at www.mikebeitler.com.

Employee Retention: It’s a Changing Game

As a management consultant, I have seen some poorly conceived retention policies at otherwise well-run companies. The philosophies underlying these policies lack some basic knowledge of two things:

1. human nature, and
2. the changing world around us


Human Nature

Let’s start with human nature. The practice of management requires an understanding of how people work. Successful managers can be forgiven if they do not know how a particular machine works, or how to debit and credit the general ledger, or how to write HTML code. But, managers must know how people work. Specifically, they need to know how people work well.

People are motivated by goals… their own! Organizations that help individuals achieve their goals and career aspirations have less trouble with retention. Are you helping your best employees achieve their goals?

I recently read some research findings that were just plain silly. The findings you ask: Workers leave organizations for two reasons:

1. they feel mistreated or unappreciated
2. they can get more money/compensation from another organization

The researchers went on to say, most workers are unaware of more money at other organizations until they feel mistreated or unappreciated. Did you catch that? If not, re-read the “two” findings.

Here’s my interpretation: If you treat your workers well and make them feel appreciated they will stay with your organization; money is not the primary driver for workers leaving. Help you workers achieve their goals. I believe “appreciative” workers are more motivated than “happy” workers.

Before you think this is more “soft” management talk, let’s look at some “hard” facts. The average cost of hiring a new worker is one-and-a-half times the worker’s annual salary. And, the average worker will need a year to master his/her job skills.


The Changing World Around Us

As the world changes around us, we must change the way we think about retention (and everything else). Gone are the days of the homogeneous workforce. The world is being changed by unstoppable trends: globalization and an aging workforce.

Future work teams will include three generations of workers (a 23-year-old worker, a 48-year-old worker, and a 73-year-old worker), workers with different religions and nationalities, and workers with dramatically different life experiences.

The brain drain in developed countries can be slowed by retaining older, highly skilled workers. But, that is not nearly enough. Companies must compete globally for talent. (And remember what is necessary to retain these individuals. We must understand their individual goals and career aspirations.)

American companies that hope to depend on American talent exclusively will fail miserably. American knowledge workers are losing their competitive edge. Let’s look at some more “hard” facts:

1. In China, 42% of students earn undergraduate degrees in science or engineering. In the U.S., the figure is less than 5%.
2. Only 70% of U.S. high school students graduate. The U.S. public education system was recently ridiculed by a British news journal. When you consider that the British public school system is arguably the worst in Europe, Americans should hear this as a wake-up call.
3. Only 32% of U.S. students leaving high school qualify to attend a four-year college or university.

Add to this some alarming facts about off-shoring. One organization recently said it was off-shoring jobs to India not simply because the cost was lower, but because the quality of work was better. The off-shoring of high-level professional jobs (such as engineering and IT) is now a common practice.


Conclusion

Organizations must do two critical things:

1. develop retention policies that recognize the need to understand the individual workers’ goals and career aspirations, and
2. learn how to recruit and develop talent from around the world.

These are big changes for most organizations. Is your organization ready for these changes?

To read more about how to plan and implement organizational change see my book, Strategic Organizational Change.

Action Learning: It’s More Than OJT

For centuries companies have used on-the-job training (OJT). OJT works because it follows much of what we know about adult learning theory. For example, we know:

1. Adults learn best when new learning can be applied immediately.
2. Much of classroom “learning” is lost because it does not transfer back to the job.

Action learning is a two-part method to maximize learning and productivity by maximizing OJT. Action learning involves teams of organizational members working on real organizational projects and problems. The team members’ work is also accompanied by regular (and spontaneous) facilitator-led reflection and discussion meetings.

Action learning projects have led to new product launches, acquisitions and divestitures, and large-scale organizational changes. In addition to extensive and measurable productivity, there are significant learning benefits from these action learning projects. The benefits include:

• exposure to other parts of the organization,
• development of emotional intelligence (EI),
• learning the political realities of the organization, and
• being able to showcase skills to senior management.

Obviously, action learning projects require serious senior management commitment. Senior management buy-in includes not only contribution to choosing projects and participants, but also a commitment to evaluating and implementing projects.

Not every organizational project is an appropriate action learning project. Many projects have severe time constraints that would not allow sufficient time for reflection and discussion for the project team. Some projects are not strategically important enough to justify the investment of organizational resources (time, people, and money).

The facilitator for the action learning project must be a trained facilitator. To maximize the learning in an action learning project, the coach or facilitator must know how to extract learning from the team’s work. Learning goals must be identified early in the project. Provoking critical thinking, reflection, creative thinking, and self-awareness is the job of the facilitator.

Action learning is one of many organizational learning strategies. Action learning must be used in alignment with the other organizational learning programs, such as individual coaching. For example, many coaching discussion topics can be based on the real-time learning that takes place in an action learning project.

Obviously, action learning projects (like any other organizational learning methods) are not a cure-all for every learning need. But, the productivity and learning benefits of action learning should be considered by every organization.

For more information of action learning projects read Dierck and Saslow’s May 2005 Chief Learning Officer article entitled “Action Learning in Management Development Programs.”

For more information on organizational learning see my book, “Strategic Organizational Learning.”

Outsourced Learning: Are You Ready for Learning BPO?

As the business world enters a period of hyper-competitiveness, every business process will be subjected to examination and possible restructuring. We have already seen outsourcing and offshoring used to an extent what nobody would have dreamed of a few years ago. McDonald’s is testing the offshoring of its drive-thru process to India. How about, “Do you want fries with that?” with a New Delhi accent?

Even though McDonald’s testing of business process outsourcing (BPO) has caused quite a stir, it’s only the beginning. What started as the outsourcing of a few basic business processes, such as payroll or accounts receivable, has grown into a “movement.” No internally performed business process is “safe.”

IT, finance, supply chain management, and customer relationship management have been outsourced. Why not the learning process?

Labor costs in Western countries are out of control. American, German, and French workers are overpaid. To compete with the Asian countries, Western companies must become more efficient. Controlling costs (and remaining competitive) will require the outsourcing of inefficient business processes.

So, what is “Learning BPO?” The best definition is Hap Brakeley’s of Accenture Learning. In Chief Learning Officer (April 2005, p.4), Brakeley defined Learning BPO as:

“a broad range of relationships that organizations establish with an external service company to transfer and/or share responsibilities for the successful operation of the learning function: design, development, delivery, administration, measurement, and reporting.”

Brakeley went on to talk about the range of possibilities for Learning BPO:

“The outsourcing relationship may be as simple as outsourcing the learning management system and the learning administration responsibilities (sometimes called out-tasking) or as complex as arranging for an external company to plan and deliver the entire enterprise learning function, encompassing an organization’s complete value chain, from employees to customers to channel partners.”

How much of the learning process should your organization outsource? Are you fully aware of what outsourcing possibilities are available to your organization? Obviously, you cannot ask your internal providers for an objective evaluation of external resources. Be prepared for strong resistance to change when considering Learning BPO.

To read Brakeley’s entire article on Learning BPO see the April 2005 issue of Chief Learning Officer.

To read more see my special report called Overcoming Resistance to Change.

Leadership and Professional Development

Even though I am known for my organizational effectiveness work, I spend a considerable amount of time doing leadership and professional development work.

Organizational effectiveness entails strategic planning, planning for change, planning new learning and knowledge management systems, and a host of other large-scale efforts. All of these grand plans must be implemented by people. A plan is worthless unless it is successfully implemented.

Thus, leadership and professional development are critical to organizational effectiveness. In organizational design theory we use the terms "line" and "staff." The line makes the products or provides the services. The staff supports the line workers. Don't confuse the term "line workers" with an assembly line. Every organization has a line. The organization’s core competencies are found in the line workers. The staff positions, which can be more easily outsourced, have only one purpose: to support the line workers.

Leadership development is focused on those executives and managers who are responsible for overseeing the work of the line. The executives and managers in the organization are responsible for leading the work of the line workers. This requires a set of skills that should be systematically assessed and developed.

Professional development is focused on those highly trained professionals who are responsible for supporting the line workers. These staff workers are in-house professionals. At some point in time, the organization's leaders decided to have these functions performed in-house. These staff professional positions (which can be outsourced, if a better source becomes available) include attorneys, accountants, financial analysts, IT professionals, HR professionals, trainers, etc.

As an independent consultant, I have helped many organizations with their leadership and professional assessment and development functions. This is no doubt a valuable service. But, organizational leaders themselves must take the responsibility for the performance management function.

Performance management (PM) involves more than performance appraisal. PM requires managers who can help subordinates with goal setting, individual development plan writing, and guidance counseling.

Does your organization have a leadership and professional development system that effectively handles assessment, development, and performance management?

For more information about leadership and professional development read Chapter 6 of my book, "Strategic Organizational Learning."