Today, more and more organizations face a shortage of leaders at both the executive and general management levels. This shortage is driven by a variety of factors, including rapid growth, a dramatic rise in retirements, poaching of key people by competitors, and the difficulty of retaining talented people. And it’s happening at a time when leadership is increasingly important to an organization’s success.
To contend with this reality, organizations essentially have three options: 1) intensify their efforts to hire hard-to-find, increasingly expensive people from outside their organization; 2) do nothing and likely experience a competitive decline, which could lead to being acquired or going out of business; or 3) tap into the quality people already in their organization, thus growing and keeping their own leaders.
The third option is, of course, the most desirable. By finding effective ways to grow their own leaders, companies can make sure they have the executive talent they need in an increasingly competitive world. They can reduce the time and resources that they devote to attracting outside talent. And, they can improve their ability to retain their best and brightest employees. In today’s opportunity-rich economy, talented leaders enjoy a myriad of alternatives. Research has shown that a primary reason people leave companies is lack of personal growth and job challenge opportunities (Axel, 1998; SHRM, 1997 [as cited in AMA, 1997]). By growing your own leaders, you give high-potential people the chance to pick up new skills and knowledge and take on new responsibilities. You give them clear opportunities to reach for bigger and better things, and in so doing you give them a solid reason to stay with your organization.
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denotes that information on this topic is available at the Grow Your Own Leaders web site (www.ddiworld.com/growyourownleaders).
The benefits of being able to grow your own leaders are clear. Nevertheless, many organizations try to do so by using traditional “climb the corporate ladder” approaches and replacement-planning programs—systems that are increasingly out of place in a fast-paced, ever-changing leadership environment.
In this book we provide a more systematic and targeted method for identifying and developing high-potential individuals. We call this approach the Acceleration PoolSM. Compared to traditional approaches, it is:
Faster and simpler, requiring less paperwork and management time (e.g., eliminating the yearly replacement-planning forms that have long plagued managers).
More accurate in terms of getting the right person in the right job at the right time to meet organizational needs.
More developmental, with improved diagnoses of development needs, a sharper focus on building skills and knowledge, and better support for change and growth.
Fairer by providing greater integrity and transparency, minimizing “old boy network” influences, and creating more diversity by encompassing high-potential people wherever they are in the organization.
More closely linked to business plans and strategy. The focus is on the development of leaders who can run the organization as it will be, not necessarily as it is now.
More involving. Participants decide whether they want to join the Acceleration Pool, share in the responsibility for creating and executing their development plans, and are consulted relative to their assignments.
More flexible because it can accommodate late bloomers, work-life conflict considerations, and people from outside the organization who are coming into middle- and senior-management positions.
More contemporary in its approach to retaining top talent. It provides the job challenges that top talent crave as well as the appropriate support. Top talent feel they are growing in terms of skills and responsibilities.
More tailored to specific organizational situations and needs. It is not a “one size fits all” approach.
To understand the value of Acceleration Pools, it helps to take a look back at the more traditional approach. For decades replacement planning has concentrated on preselecting backup people for key positions and then charting a series of job assignments to prepare them to fill the positions. One company called this approach “bus planning,” as in “What would we do if Joe were hit by a bus?” It was not a bad system for the times. Back then:
Organizations were stable, large, and hierarchical; there were few changes in job titles, job responsibilities, or organizational direction.
Organizations employed many middle managers, most of whom had time for assignments outside their regular job duties.
Technical and competitive changes occurred much more slowly.
Human resource staffs were large, and control of personnel systems was more centralized.
Succession planning was largely an HR-managed means of knowing who would replace departing leaders.
Typical career path options within an organization were generally understood and rarely deviated from. People changed jobs and moved to new towns when asked to do so.
In such an environment managers could tolerate—not necessarily enjoy—a forms-driven system that consumed days or even weeks of their time each year. One study in the 1980s found that line managers at Exxon spent as much as one-third of their time on succession-planning and human resource development activities (McManis & Leibman, 1988).
Today it is impossible to conceive of devoting even a fraction of that much management time to replenishing managerial talent or other related HR activities. For business in the 21st century, the landscape is far different from the relatively stable times of two or three decades ago. In today’s business world:
Organizations are flatter, with horizontal career paths taking an increasing importance in addition to vertical paths.
There are fewer middle managers—and those who remain have multiple demands that compete for the time required to develop themselves or coach and mentor their direct reports.
Rapid change is occurring in all sectors—technology, competition, distribution, globalization, etc.
There is greater decentralization of business units, resulting in fragmentation of HR initiatives.
Top executives face myriad pressures that severely restrict the time they can spend on leadership development and succession management; yet, shareholders and board members show an increasing interest in the quality of the organization’s executive talent.
Quarterly pressure to meet Wall Street’s expectations is enormous for some companies, often leading to short-term thinking relative to the development of leadership talent.
Talented individuals expect unique attention that addresses their personal goals and aspirations, not just the promise of promotion if solid performance persists.
Grow Your Own Leaders describes a new system for managing leadership development and succession that we believe is essential in this rapidly changing and highly demanding world. We have used the following beliefs to shape the Acceleration Pool approach.
Business strategy can be implemented only if appropriately skilled and experienced leadership is in place.
Decisions about filling positions are more accurate when candidates are from inside the organization.
Effective succession management systems operate as both talent-growth and talent-retention mechanisms; both are central to the system’s success.
Organizations don’t have the time or resources to develop the leadership skills and organizational savvy of all their people. They must concentrate on those who will benefit most.
Organizations need to actively identify high-potential individuals. We do not subscribe to the “bubble-up” theory, which maintains that the best leaders inevitably move upward and gain the skills and experiences needed to meet the increasingly complex challenges of today’s organizations.
Organizations should cast a wide net in choosing people to be developed. Companies can’t afford to miss good people, wherever they are. Although relatively young individuals will be the primary source for Acceleration Pools, leaders in later stages of their careers should also be eligible.
Accurately selecting the talent to bring into the organization is critical. Everything depends on the developability of the organization’s talent.
Diagnosis of individual development needs is critical. A “one size fits all” development plan is a waste of money and fails to produce results.
Diagnosis should cover experience and knowledge required at the executive level, executive competencies derived from organizational strategy, and executive derailers (personality attributes that can cause executives to fail).
Executives should both leverage their strengths and develop their weak areas. They can change behavior and develop new skills if they are motivated and provided with the required resources and support.
High-potential individuals (high potentials) should be responsible for their own development.
High potentials should be consulted regarding their job assignments and development plans.
Leadership development is a continuous process—not a one-time event.
Developmental assignments that stretch people, such as challenging job responsibilities and task force membership, have more impact than training experiences.
High potentials should have development goals for each assignment or training activity and a plan for immediately implementing their new skills or knowledge in the workplace.
Development initiatives should have a measurable impact on job objectives, not be an extra responsibility added to people’s job objectives.
Senior management should own the succession management system and be fully accountable for its success. As part of their involvement, senior managers should teach special programs for high potentials and show their support in other ways. Top managers should be given incentives to be active participants in the succession management process and to develop the leaders below them.
The best way to grow your own leaders is not to earmark specific backup people for specific jobs. It is much more effective to identify and develop a pool of people who have the potential to fill multiple senior management positions, except of course for the very top leadership positions in the organization, for which specific backups should be identified.
Good performance is required in every job—there is no room for “crown princes” or “princesses” who move through their jobs with no real responsibilities. Individuals operating below their potential or the organization’s standards need management attention and corrective action.
The role of the Human Resource department is to facilitate the succession management system. It should support the executives who are identifying and working with high potentials and help those individuals manage and monitor their own development.
Forms and meetings should be minimized. Executive time should be focused on high-impact activities that directly support high-potential identification and development.
The ideas expressed in this book are based on more than three decades of experience that Development Dimensions International (DDI) has had in helping organizations find and nurture leaders and managers. In those 30-plus years, DDI has worked with 19,000 organizations throughout the world, including 470 of the Fortune 500 companies. Distinguishing hallmarks of DDI’s practice include our ability to help clients both identify and develop high-potential individuals and our extensive research evidence that confirms the effectiveness of our systems.
Although most of our experience has been with large, publicly owned companies, we believe the ideas presented in this book can be put to work in all types of organizations—large and small, new and old. Indeed, DDI has applied them in health care systems, schools, religious groups, and government agencies—in dozens of countries.
Grow Your Own Leaders is designed to help you understand and implement systems that will identify talent and develop the high-potential people your organization needs to grow and prosper—and to do it at “Web speed.” As most senior executives realize, organizations need more good leaders, and they need them now.
Grow Your Own Leaders describes a complete succession management system (Acceleration Pools), but an organization need not adopt the entire approach to benefit from this book. In fact, organizations just starting an Acceleration Pool have the freedom to begin their efforts through many different doors. For example, they can pilot a streamlined version of the Acceleration Pool and build toward a more comprehensive strategy as buy-in grows. Many organizations will benefit by using the ideas discussed here to tune up their already-effective succession management systems. Other organizations fighting for survival (e.g., young dot-com companies) might view the concepts we describe as a premature focus for them. While such organizations might gain the most from focusing on near-term market windows, they should not neglect the future. Remember that Cisco Systems was a dot-com start-up just a few years ago, but now that it’s a dominant computer-technology player, it has recognized that it must play catch-up to build a competitive, long-term leadership bench.
In his recent book, On Writing, author Stephen King (2000) describes an “ideal reader” as one whose anticipated interests and reactions help to shape his novels. While the authors of this book do not claim to be as mesmerizing writers as Stephen King, we too wanted to shape our book around the needs of our “ideal readers.” We considered two constituencies: 1) CEOs and other executive stakeholders (i.e., decision-making groups), such as members of the Executive Resource Board, and 2) HR practitioners, who are often the unsung strategic partners in organizations and serve as a cultural insurance policy for identifying and implementing sound people or leadership practices.
Writing about Acceleration Pools for two very different target audiences proved to be a more daunting challenge than we anticipated. Any comprehensive treatment of succession management reveals a kaleidoscope of questions, issues, and opportunities that, in practice, reflect unique vantage points, interests, and agendas that the different stakeholders have for outcomes.
As our book evolved, the many layers of the Acceleration Pool “onion” made it difficult to focus our discussion on the tactical execution challenges that HR professionals might face in implementing Acceleration Pools while we also tried to make the book interesting for the executive reader.
The “onion layers” analogy for succession management emerged over the last several years as customers came to us with seemingly different needs (on the surface), varying levels of organizational readiness or commitment, and a range of desired points of entry. Some organizations requested support on focused interventions, such as building executive competency models, facilitating selection processes following reengineering, providing 360° assessment and executive coaching, and planning executive learning events. Others came to us with broader (and sometimes amorphous) requests for help, such as establishing succession management systems, identifying (nominating) next-generation talent, or creating a culture that drives learning and accountability.
In some cases clients were surprised at the extent to which we viewed sound executive assessment, development, and succession management as culture change initiatives. At the same time, we were continually intrigued at just how different both the questions and initial focus were, depending upon whether our “client” was the chief executive or senior HR player.
Listening to a broad array of “presenting needs” during the last five years led us to conclude that communicating one simple path for solving unique organizational talent challenges would oversimplify a complex imperative. Our challenge was constantly to balance comprehensiveness against the risk that any given reader might not identify with our book or care about the content.
Ultimately, we decided to maintain our comprehensive approach to describing Acceleration Pools because there are so few up-to-date “road maps” available for the two constituencies. Therefore, we apologize in advance for our (perhaps overly conservative) bias toward inclusion, and we recommend that you focus on the sections of our book that will add the most value to your own objectives. To aid readers we have printed information on gray paper that will be of particular interest to CEOs and other senior executives.
We have incorporated several navigational tools to help you locate information of interest and have formatted the book into these five broad sections:
Chapter 1 offers an orientation to the business and societal dynamics that have led to a worldwide leadership crisis. In Chapter 2 we propose a unique approach for organizations wishing to expand their leadership bench strength (the Acceleration Pool) and describe how it works. Chapters 3 and 4 elaborate on issues relative to an Acceleration Pool’s operation and explain why various features of a pool overcome traditional problems with succession management systems.
Our chapter in this section focuses on best practices associated with initial identification of high-potential Acceleration Pool members.
This section defines the basic activities and best practices associated with diagnosing the development needs of high-potential pool members. First we describe the executive descriptors (i.e., organizational knowledge, job challenges, competencies, and derailers) that define successful executive performance and highlight an array of assessment tools/practices for supporting an in-depth diagnosis of development priorities. We then deal with the very important—and often neglected—issue of translating an individual’s diagnosis into a commitment to action.
The first chapter in this section overviews development strategies available to fill pool members’ development gaps, with emphasis on developing competencies. These four strategies for facilitating pool member growth and development (assignments, short-term experiences, training/executive education experiences, and professional growth through short-/long-term coaching) are discussed at greater length in Chapters 10 through 13.
Our last section focuses on the processes and logistics associated with successful and enduring implementation of Acceleration Pools. The important development-facilitator roles of supervisors and mentors are described in Chapter 14. Chapter 15 discusses tactics to maximize the effectiveness of talent review discussions (where placement and development decisions are made), and Chapter 16 explores in detail the important role of the CEO. Finally, succession management, HR, and consulting practitioners will appreciate Chapter 17’s discussion, Getting Started.
Throughout this book we describe what we believe are best practices in areas related to successful succession management. For virtually every practice we could have reported that “some do it this way, and some do it the other way” and let the reader choose. Instead, with a few exceptions, we have hammered a stake in the ground and detailed what our experience has shown to be, out of the spectrum of possibilities, the best practices.
After we finished Grow Your Own Leaders, it was much longer than we thought it should be. To get the book to a manageable length while still assuaging our need to be as complete as possible, and to provide forms and lists of steps as appropriate, we have included additional information on various subjects on the Web. Throughout the book we have placed the symbol to denote that you can find additional information about that particular subject at a special Grow Your Own Leaders web site (www.ddiworld.com/growyourownleaders). This web site also provides people who are involved in succession management a place where they can follow new developments and exchange views and best practices. More information about the web site is provided at the beginning of the book.
We all know that today’s business environment, with its warp-speed change, has a way of forcing reactive behavior and a focus on near-term performance. Yet we have witnessed the competitive advantage enjoyed by organizations that have successfully matched their stated values regarding talent advocacy with Acceleration Pool practices, and have been willing to step up to the long-term investment challenges associated with building their leadership bench. We fervently believe that the long-term winners are the organizations that recognize and act as if their business strategy and future viability depend on their current and future talent.