December 13, 2007
In Search of CEO Talent
There’s a leadership crisis in business as top talent becomes harder to find due to an aging executive class along with increased demand from emerging nations.
According to a newly released study, The Best Companies for Leaders, from the Hay Group and Chief Executive Magazine, companies in the U.S. and Europe are seeing a dearth of talent and are now reacting with a variety of practices intended to train replacements.
“If organizations want to ensure they have the right leaders in the right roles to not only meet future talent shortages but also continue their growth in an increasingly volatile global economy, they will have to commit to major investments over the long haul,” Rick Lash, head of Hay Group’s Leadership and Talent practice for North America, said in press release.
“Organizations need to worry about the supply of future leaders, as well as about whether they really understand the future roles that will be critical to driving their business strategy,” he added.
According to the survey, 86.1 percent of respondents indicated there is greater urgency today to develop leaders in their organizations than there has been in the past.
Study respondents offered seven “best practices” for
developing leaders within businesses:
- Making leadership
development opportunities available to managers; - Holding
managers accountable for creating a work climate that
fosters individual worker and group achievement; - Training and other
activities that create a spirit of cooperation and teamwork; - Analyzing
talent through an understanding of future organizational
needs; - Creating development opportunities and training to
help leaders transition into new roles and responsibilities; - Moving
leaders around to gain international experience; - Creating
orientation programs to help external hires move into
leadership positions.
Interestingly, there were no retailers among the top companies
for leaders. One retail store chain, Home Depot, made the
survey’s list in 2006. The top 10 companies on this year’s
list were:
- General Electric
- Procter & Gamble
- Johnson & Johnson
- Unilever
- Coca-Cola
- Siemens
- PepsiCo
- L’Oreal
- Toyota
- Hewlett-Packard
Discussion Question: Do you see a leadership crisis in business today? Is it more or less pronounced in retailing? What are your “best practices” for developing leaders?
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I’m not sure there is a leadership crisis per se, but there does seem to be a vision crisis at the CEO level. Maybe that’s not their fault though. After all, their primary goal is to increase short-term shareholder value not chase some long-term vision. There is a difference between real leadership and understanding shortcuts and in management–even at the top–you get what you reward.
The one resource your competitors cannot duplicate-perhaps the only one-is the pool of talent you create and cultivate. While many CEOs and an increasing number of boards see the value of succession planning below the CEO level, the truth is the vast majority of companies fail to do it effectively. Recent studies show only 50 percent to 60 percent of companies have at least a nominal succession process or plan, and 94 percent have inadequately prepared leaders to step into senior executive positions.
To establish an effective succession management program, organizations need to have a clear definition of success. Six elements are crucial to the process:
1. A solid understanding of your organization’s talent needs.
2. Targeted, accurate data on your existing talent.
3. A carefully managed process for talent reviews and decisions.
4. A realistic approach to developing talent.
5. A solid, consistent evaluation process.
6. Core principles, policies and frameworks.
I am shocked that the one organization that trains and builds more leaders was not mentioned in this “closed” survey. The United States Military is the greatest source of leaders in the world.
Many businesses in America were built by WWII veterans. Many of those in the ranks of the “new age” businesses got their training in the military. A thought does occur, and it is that CEOs are no longer leaders, just managers!
Chief Executive Magazine is unlikely to run this headline: “CEO Talent Distribution Same As Always – Some Brilliant, Many Average, A Few Clueless, But It’s Best To Be Lucky”. It’s too bad, because the suggested headline could have been run anytime (past, present, or future). The CEO population, is like any other group (doctors, consultants, bus drivers, school teacher, magazine writers, third graders, Senators): a few are outstanding, most are average, and some are in the wrong job. The lucky ones might look brilliant, but put them in a different place, and they might struggle anyway.
It’s too simplistic to bemoan the good old days. Can retailing use more and better leadership? Absolutely–always could and always will.
Customers in the United States have (and take advantage of) a vast array of choices when it comes to pricing, quality, assortment, service, etc.
The absence of retailers from the Top 20 list in the Hay Group survey probably says more about the underlying survey universe (and past recipients) than it does about a dearth of leadership in retailing.
Effective corporate leadership, whether in retail and elsewhere, reminds me of an Olympic relay race. The constant effort is to achieve and then maintain the team’s loftiest vision,not be a vehicle for personal greed and glory. Each participant on the relay team (CEO and senior execs) must be trained to achieve and perpetuate the team’s vision, not an individual’s glory, and make the team more effective than competition. Thus sacrifice and selflessness are also ingredients in effective leadership.
But in a society that icon-isizes individual celebrities and increasingly rewards the top or most publicized individuals with infinitly greater accolades than the vitally-necessary supporting players, a cloud is spread across the meaning of leadership and different values and heroes are created. This mandates some problems. It is then the experts and media jump in and proclaim that there is a dearth of leaders who lead with integrity, to which Pogo might opine, “We saw the enemy of good leadership and it is us.”
The leadership crisis in retailing seems to be greater than some other industries. The transfer of some outstanding GE executives to retail has not turned out well. I see too many senior executives as elites. Many have no idea who shops in their stores and why. Just look at the number of once successful retailers that are no more. Until senior management gets out of their plush headquarters office and into the stores, nothing will change.
I see more challenges in succession and sustaining a consistent vision than lack of leaders. The problem most often is that each leader likes to leave their particular ‘stamp’ on an organization by changing or creating a ‘new vision’. That’s not a problem if one didn’t exist prior to their arrival. The problem comes when personal ambitions that cause nothing but churn get in the way, leaving a trail behind them for the next guy to clean up with yet again another ‘new vision’.
Companies that can create solid succession and choose leaders that can sustain and enhance that vision, become far more successful. There are others, of course, that select a leader, allow for a new vision to be created, and fail to walk away from it when the vision realization is a total failure.
Retailing has a history of spawning its leaders in unorthodox ways. Very few of the leaders comes from the classical MBA track as in most industries. The management training programs at Macy’s which developed so many great leaders in the mid 20th century is a thing of the past.
No, the industry grows its leaders through the incessant push from below of great entrepreneurial ventures. The industry has a way of constantly generating hundreds of promising startups. The entrepreneur responsible locks into the vision, makes it work out of sheer hard work and determination, and then surrounds him- or herself with good operations managers. Phenomenal success is achieved. Usually these great careers started slowly and with early failure.
Look at the careers of past generation of leaders who have either retired or who are at their pinnacle: Charles Lazarus of Toys R Us, Arthur Blank of Home Depot, Richard Schulze of Best Buy, Howard Schultz of Starbucks, Phil Knight of Nike, Ralph Lauren, Liz Claiborne, Sam Walton of Wal-Mart. Each achieved incredible success without following a traditional management playbook.
The current generation shows the same dynamics. Think of Michael Dell, Jeff Bezos, and certainly Steven Jobs, who must at this time be classified as a great retail leader.
If you want to learn how to become a great retail leader, read and understand the careers of these great entrepreneurs. Notice how their entrepreneurial spirit played such a large hand in their success. As long as the retail entry costs remain fairly low, we can count on a constant stream of great leaders being produced from the dynamics of the industry.
Sometimes I think Mark is a pretty harsh critic–and sometimes he’s just right. Today’s comments are VERY much on target. Having worked in and with a few of those companies listed as “Best Practice”–we can all attest that having a dedicated leadership development effort (note we did not say “management development effort”) improves your odds. It’s just like going to Harvard and Kellogg to recruit managers and marketers–your odds are higher there than at Podunk U. But you can bet your bonus check that the next Bill Gates is in a garage somewhere–not a class room.
Having read a great deal of history and worked in a couple large companies, what I find is that great leaders have the ability to identify and develop talent around them. Go back thousands of years in history and you will see this pattern repeated time and time again. Great leaders don’t generally accomplish great feats alone.
Unfortunately, many corporations set up cultures that reward self-promotion and turf building. A manager may ask themselves what skills and abilities does this employee have that will help me achieve my goals? Employees are not looked at as a resource that should be developed for the long-term benefit of the company. Making the boss look good is as important to getting ahead as the real contributions an employee makes to the company. In such an environment talent is not managed as a company asset. There is no motivation to prepare an employee for the next level if the next level means loosing a good employee.
I agree with Mark. Absolutely this is a prevalent problem. Many companies don’t invest enough time and energy into succession plans and identifying “A” talent to be groomed in C level positions. Unfortunately, many get to these spots just because they have “hung around” long enough to move up in the company. The industry if full of c-level people who one might wonder “how they get to that spot.” This is a definite opportunity and an area that will need to be focused on to maximize company potential.
This sounds like more human resources mumbo jumbo that is more theory than reality.
I see no leadership crisis in retailing or otherwise. Organizations don’t develop leaders. I really don’t see a CEO being developed. Top management roles are claimed by people with a competitive desire and proper connections. Those who don’t have what it takes will just go through the motions their entire career and be stuck in some some “best practices” program for developing leaders. Strong leaders separate themselves from the pack and simply rise through the ranks. Weak leaders are put in management training and other development programs.
Certainly the leadership gap is evident throughout industry and retail is not insulated. The retail executive crunch has been in existence for many years and the problem continues. It’s evidenced by the amount of non-retail executives filling slots at retailers.
The days of formal training squads at the nation’s top retailers are gone and the resulting top level executives these programs produced, eliminated for the most part.
And lastly, the retail environment, with its labor intensive long hours and ongoing, challenging environment is not the career of choice for today’s bright college graduates.
America’s retailers need to confront this problem or continue to suffer the consequences of limited talent.
I agree with Susan’s comments and would like to take this a step further.
In the “Good Ol’ Days” of retailing, those who had worked the floor and understood the concepts of retailing filled the executive level. These were not those who had necessarily studied retailing from case studies of failed and successful companies, but rather those who had to meet the customers that shopped their stores face to face on a daily basis.
This experience can be humbling, and can light a fire under those with the desire to be a merchant, not just a retailer executive. There is a difference.
To be successful in today’s work environment, you must balance the Experience (Time On The Job) with the Job-Hopping (Varied Experience). Unfortunately, we now have a plethora of individuals with a wide background but very little depth in a single industry. This trend will impact our retail industry for some time, until the emphasis shifts back to depth.
The consumers will always be the judge of who is doing it right.
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I’m not sure there is a leadership crisis per se, but there does seem to be a vision crisis at the CEO level. Maybe that’s not their fault though. After all, their primary goal is to increase short-term shareholder value not chase some long-term vision. There is a difference between real leadership and understanding shortcuts and in management–even at the top–you get what you reward.
The one resource your competitors cannot duplicate-perhaps the only one-is the pool of talent you create and cultivate. While many CEOs and an increasing number of boards see the value of succession planning below the CEO level, the truth is the vast majority of companies fail to do it effectively. Recent studies show only 50 percent to 60 percent of companies have at least a nominal succession process or plan, and 94 percent have inadequately prepared leaders to step into senior executive positions.
To establish an effective succession management program, organizations need to have a clear definition of success. Six elements are crucial to the process:
1. A solid understanding of your organization’s talent needs.
2. Targeted, accurate data on your existing talent.
3. A carefully managed process for talent reviews and decisions.
4. A realistic approach to developing talent.
5. A solid, consistent evaluation process.
6. Core principles, policies and frameworks.
I am shocked that the one organization that trains and builds more leaders was not mentioned in this “closed” survey. The United States Military is the greatest source of leaders in the world.
Many businesses in America were built by WWII veterans. Many of those in the ranks of the “new age” businesses got their training in the military. A thought does occur, and it is that CEOs are no longer leaders, just managers!
Chief Executive Magazine is unlikely to run this headline: “CEO Talent Distribution Same As Always – Some Brilliant, Many Average, A Few Clueless, But It’s Best To Be Lucky”. It’s too bad, because the suggested headline could have been run anytime (past, present, or future). The CEO population, is like any other group (doctors, consultants, bus drivers, school teacher, magazine writers, third graders, Senators): a few are outstanding, most are average, and some are in the wrong job. The lucky ones might look brilliant, but put them in a different place, and they might struggle anyway.
It’s too simplistic to bemoan the good old days. Can retailing use more and better leadership? Absolutely–always could and always will.
Customers in the United States have (and take advantage of) a vast array of choices when it comes to pricing, quality, assortment, service, etc.
The absence of retailers from the Top 20 list in the Hay Group survey probably says more about the underlying survey universe (and past recipients) than it does about a dearth of leadership in retailing.
Effective corporate leadership, whether in retail and elsewhere, reminds me of an Olympic relay race. The constant effort is to achieve and then maintain the team’s loftiest vision,not be a vehicle for personal greed and glory. Each participant on the relay team (CEO and senior execs) must be trained to achieve and perpetuate the team’s vision, not an individual’s glory, and make the team more effective than competition. Thus sacrifice and selflessness are also ingredients in effective leadership.
But in a society that icon-isizes individual celebrities and increasingly rewards the top or most publicized individuals with infinitly greater accolades than the vitally-necessary supporting players, a cloud is spread across the meaning of leadership and different values and heroes are created. This mandates some problems. It is then the experts and media jump in and proclaim that there is a dearth of leaders who lead with integrity, to which Pogo might opine, “We saw the enemy of good leadership and it is us.”
The leadership crisis in retailing seems to be greater than some other industries. The transfer of some outstanding GE executives to retail has not turned out well. I see too many senior executives as elites. Many have no idea who shops in their stores and why. Just look at the number of once successful retailers that are no more. Until senior management gets out of their plush headquarters office and into the stores, nothing will change.
I see more challenges in succession and sustaining a consistent vision than lack of leaders. The problem most often is that each leader likes to leave their particular ‘stamp’ on an organization by changing or creating a ‘new vision’. That’s not a problem if one didn’t exist prior to their arrival. The problem comes when personal ambitions that cause nothing but churn get in the way, leaving a trail behind them for the next guy to clean up with yet again another ‘new vision’.
Companies that can create solid succession and choose leaders that can sustain and enhance that vision, become far more successful. There are others, of course, that select a leader, allow for a new vision to be created, and fail to walk away from it when the vision realization is a total failure.
Retailing has a history of spawning its leaders in unorthodox ways. Very few of the leaders comes from the classical MBA track as in most industries. The management training programs at Macy’s which developed so many great leaders in the mid 20th century is a thing of the past.
No, the industry grows its leaders through the incessant push from below of great entrepreneurial ventures. The industry has a way of constantly generating hundreds of promising startups. The entrepreneur responsible locks into the vision, makes it work out of sheer hard work and determination, and then surrounds him- or herself with good operations managers. Phenomenal success is achieved. Usually these great careers started slowly and with early failure.
Look at the careers of past generation of leaders who have either retired or who are at their pinnacle: Charles Lazarus of Toys R Us, Arthur Blank of Home Depot, Richard Schulze of Best Buy, Howard Schultz of Starbucks, Phil Knight of Nike, Ralph Lauren, Liz Claiborne, Sam Walton of Wal-Mart. Each achieved incredible success without following a traditional management playbook.
The current generation shows the same dynamics. Think of Michael Dell, Jeff Bezos, and certainly Steven Jobs, who must at this time be classified as a great retail leader.
If you want to learn how to become a great retail leader, read and understand the careers of these great entrepreneurs. Notice how their entrepreneurial spirit played such a large hand in their success. As long as the retail entry costs remain fairly low, we can count on a constant stream of great leaders being produced from the dynamics of the industry.
Sometimes I think Mark is a pretty harsh critic–and sometimes he’s just right. Today’s comments are VERY much on target. Having worked in and with a few of those companies listed as “Best Practice”–we can all attest that having a dedicated leadership development effort (note we did not say “management development effort”) improves your odds. It’s just like going to Harvard and Kellogg to recruit managers and marketers–your odds are higher there than at Podunk U. But you can bet your bonus check that the next Bill Gates is in a garage somewhere–not a class room.
Having read a great deal of history and worked in a couple large companies, what I find is that great leaders have the ability to identify and develop talent around them. Go back thousands of years in history and you will see this pattern repeated time and time again. Great leaders don’t generally accomplish great feats alone.
Unfortunately, many corporations set up cultures that reward self-promotion and turf building. A manager may ask themselves what skills and abilities does this employee have that will help me achieve my goals? Employees are not looked at as a resource that should be developed for the long-term benefit of the company. Making the boss look good is as important to getting ahead as the real contributions an employee makes to the company. In such an environment talent is not managed as a company asset. There is no motivation to prepare an employee for the next level if the next level means loosing a good employee.
I agree with Mark. Absolutely this is a prevalent problem. Many companies don’t invest enough time and energy into succession plans and identifying “A” talent to be groomed in C level positions. Unfortunately, many get to these spots just because they have “hung around” long enough to move up in the company. The industry if full of c-level people who one might wonder “how they get to that spot.” This is a definite opportunity and an area that will need to be focused on to maximize company potential.
This sounds like more human resources mumbo jumbo that is more theory than reality.
I see no leadership crisis in retailing or otherwise. Organizations don’t develop leaders. I really don’t see a CEO being developed. Top management roles are claimed by people with a competitive desire and proper connections. Those who don’t have what it takes will just go through the motions their entire career and be stuck in some some “best practices” program for developing leaders. Strong leaders separate themselves from the pack and simply rise through the ranks. Weak leaders are put in management training and other development programs.
Certainly the leadership gap is evident throughout industry and retail is not insulated. The retail executive crunch has been in existence for many years and the problem continues. It’s evidenced by the amount of non-retail executives filling slots at retailers.
The days of formal training squads at the nation’s top retailers are gone and the resulting top level executives these programs produced, eliminated for the most part.
And lastly, the retail environment, with its labor intensive long hours and ongoing, challenging environment is not the career of choice for today’s bright college graduates.
America’s retailers need to confront this problem or continue to suffer the consequences of limited talent.
I agree with Susan’s comments and would like to take this a step further.
In the “Good Ol’ Days” of retailing, those who had worked the floor and understood the concepts of retailing filled the executive level. These were not those who had necessarily studied retailing from case studies of failed and successful companies, but rather those who had to meet the customers that shopped their stores face to face on a daily basis.
This experience can be humbling, and can light a fire under those with the desire to be a merchant, not just a retailer executive. There is a difference.
To be successful in today’s work environment, you must balance the Experience (Time On The Job) with the Job-Hopping (Varied Experience). Unfortunately, we now have a plethora of individuals with a wide background but very little depth in a single industry. This trend will impact our retail industry for some time, until the emphasis shifts back to depth.
The consumers will always be the judge of who is doing it right.