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December 2007 Newsletter

Leadership’s Leading Edge: Five Trends in 2007/08
Dr. Todd Harris and David Osborne

Predictive Success, a PI Worldwide member firm and PI Worldwide recently conducted a web-based research study with 770 of our international clients to identify their business challenges. The top three challenges cited were: (ranked in order) attracting and retaining skilled staff, increasing market share and acquiring new customers. Leadership Development was identified as the preferred approach to addressing ALL of these issues.

As companies position for growth in 2007/08, leadership development continues to be a critical component of their strategy. Human Resource professionals realize more than most the impact of the aging workforce to their organization. This demographic trend only emphasizes the importance of businesses developing and retaining their future leaders.

Here are five leadership development trends to watch for in the months ahead:

Build the Bench
Given today’s dynamic, hypercompetitive marketplace, and the accompanying scarcity of talent, companies are increasingly recognizing the need to develop and retain leaders from within the organization. Research continues to indicate that executives developed internally outperform those brought in from the outside. For example, Dan Ciampa and Michael Watkins report in their book “Right from the Start” that 64% of new executives hired from the outside don’t make it in their new jobs. The Center for Creative Leadership reports that 40% of newly hired executives fail within the first 18 months. With failure rates like those, it is not surprising that progressive companies are making significant investments in the area of leadership development – clarifying its vision and mission, aligning it with the business, and putting robust processes and metrics in place to measure its impact.

Align the Culture
Successful leadership development programs do not occur in a vacuum – they specifically consider the corporate culture in which they exist. For example, perhaps your company places a premium on face-to-face communication and relationship building (i.e. a “High B” culture in PI terms). If so, leadership development programs that support informal networking, mentoring and experience-sharing may be a good fit. If your company has a decentralized structure that encourages autonomous decision-making (such as that favored by High A’s), build enough flexibility into your leadership development efforts so that they can be quickly customized.

Keep it Simple
Focus on two or three employee development initiatives and execute superbly against those, as opposed to trying to simultaneously work on many programs at once. For example, a leading athletic apparel company has two primary leadership development priorities for 2007: (1) provide promising mid-level executives with direct experience in China, and (2) launch an enhanced career planning website for its employees. The vast majority of the company’s leadership development budget and personnel resources will be devoted to these two objectives alone. An additional benefit of this type of strategy is the ability to generate momentum for additional leadership development based on the effectiveness of the initial programs.

Find the Balance
Today’s executive is evaluated on a much broader range of criteria than purely the financial results that he or she delivers. Companies are recalibrating the balance between results such as income, profitability and stock price and the process by which those results are achieved. An executive’s ability to build a team, to communicate, to shape an organization’s culture, to retain key performers, and to identify and develop high-potentials are all critical dimensions of the modern leadership mandate (and not coincidentally, all areas in which the PI can be used to leverage). For example, a Fortune 500 food and beverage company is realigning it’s 2007 performance management and development process for top executives (and consequently their compensation) to evenly weigh behavior and results, shifting away from a model in which results counted for 67% and behaviors for 33%.

Crossing Boundaries
Leadership development programs are increasingly geared toward providing high potentials experiences across a wide range of business units, product lines and countries. The reason is that growth increasingly comes from non-traditional combinations of products, services and markets, a “secret sauce” that delivers unique value to the organization and its customers. In the healthcare arena, the combination of medical device technology with advances in pharmaceuticals led to drug-coated stents for the treatment of coronary artery blockages. This is now a multi-billion dollar business that didn’t exist as recently as three years ago. Superior leaders see these interdependencies before they emerge and quickly position their companies to act on them.

Being aware of these trends and incorporating them into your own company’s leadership development efforts will help you to grow leaders who are better prepared to meet the challenges of today’s dynamic marketplace.

Dr. Todd Harris is the Director of Research at PI Worldwide in Wellesley Hills, MA and David Osborne is Vice President of Predictive Success Corporation, a PI Worldwide Member Firm and the successor to the John Watson Group.