Sunday, April 4, 2010

2010: What will be the Patterns and their Implications ?

Who will Lead Now ? Prepare to set up

CEO jobs are dramatically hard. Background, experience, education, and talent may not prepare you for the never-ending-on-public-display-globally-pressured-quaterly-earnings-report work that comes with leadership at the top.

About 40 percent of CEOs fail within 18 months. These odds, plus demands placed on leaders, have caused a downturn in senior executives who want the top position ( from 50 to 35 percent in the last four years). Moreover, CEO turnover is at a five-year high.

Who will lead companies in the future ? this question has caused a leadership succession and development frenzy. Boards are more anxious about finding executive talent whenever they can.

In his book, Searching for a Corporate Savior, Rakesh Khurana, professor at Harvard University, suggests that looking outside for a CEO successor is part of a growing “ irrational quest for charismatic Chief executives” ( selection of outside CEO’s has gone from 6 to 50 percent in recent years). Fearing boards may be focusing on the qualities of presence, personality, and media appeal rather than character and competence, he gives seven guidelines for finding successors; abandon hope for a corporate savior; translate company strategy into operational terms; identify skills required for key activities (activity/competency mapping); assess internal candidates; test and choose from a short-list; and calibrate goals, milestones, and compensation to drivers to success. Khurana favors internal development of candidates, but acknowledges that developing home grown talent is not the only course.

After reviewing 276 companies that have good track records at developing home-grown talent, The Corporate Leadership Counsel defined seven Hallmarks of leadership Success:

1.)A Culture of Development.
2.)Enforcing Development.
3.)Recruiting Senior Executives.
4.)The Power of Meritocracy.
5.)Full Business exposure for rising executives.
6.)A Focus on leadership skills in successor identification.
7.)Succession Management.

Companies that are great at developing future leaders invest much time in cultivating a candidate pool. As managers gain the requisite training, coaching, on-the-job experience, they join an internal pool of high-potential candidates. But what separates the good processes from great ones is an emphasis on self-development.

All this leads me to conclude: Work harder on developing internal talent. You can improve your odds beyond 50-50 by doing the hard, but rewarding, work of developing more leaders internally. While I believe companies must regularly look outside for talent, having an effective process for developing leaders ensures that you will have great candidates when the time comes to add or replace executive talent.