helps promote the brand;
increases profitability;
deepens knowledge of new international markets.
Despite this belief, the vast majority of firms in the survey had no specific policy on diversity. A majority believed that the share of women and ethnic minorities in their global senior management is not fairly representative of their customers and markets. A plurality believes the same about foreign nationals.
The survey points to a connection between strong performance and greater diversity among executives. Among executives describing their firm’s financial performance as “better than their peers”, nearly half (47%) believe their board broadly reflects the gender, ethnic and nationality make-up of society. Only 27% of firms that are considered to perform “worse than their peers” claim this to be the case.
Talent in abundance
Whatever the difficulties involved, the message emerging from forward-looking companies is that organisations need an open mind and a broader approach if they are to tap into a wider set of abilities. They have to broaden their search to find talented individuals who might not fit traditional talent profiles. They need to have the courage to look outside for talented people who are willing to challenge entrenched thinking. Firms also need to “dig deep” into their own organisations to find talented individuals.
The great paradox of this new way of thinking is that it leads to a view that talent is abundant instead of a rarity – a view expressed in a report on global talent in 2009 by Tomorrow’s Company, produced in partnership with Heidrick & Struggles, together with BT, Career Innovation and the UK government’s Talent and Enterprise Taskforce. The report concludes:
Today’s competitive challenges require us to become very good at tapping into the talent we have, the full range and potential of it – what “Tomorrow’s Global Talent” terms “the abundance” of it; building the skills that are needed and encouraging the creativity that is possible … [Talent] is abundant in the sense that it is not a rare quality, but diverse and multifaceted, which everyone has, to some degree and in some form. And taking this view means that there is a wider pool of talent for companies to work with, if they know how to unlock it.
Redefining talent
Uncertainty lurks in today’s business environment with change becoming less predictable, more disruptive and at an accelerating pace, which makes it all the more important that companies review on a regular basis the leadership and technical skills they need to be successful.
At Apple, every employee is expected to be innovative and to focus on product success rather than individual results. In pursuit of groundbreaking products, different teams may be assigned to the same product area and work in secrecy from each other. Innovation is stimulated through peer vetting of ideas and brainstorming to encourage bolder innovations and higher levels of risk-taking.
Mars has had a hard rethink about the qualities it needs to achieve its business plan. The company now looks for high performance and high potential in six areas. At the individual contributor level, it looks for the ability to deliver consistent results and to create collaborative relationships. For people leaders it adds engaging staff and developing talent. And for senior leaders it adds the ability to practise “breakthrough thinking” and to navigate complex challenges.
Mars’s priorities are evident in Becky Snow’s assertion:
We are still working on all those capabilities but we have very good senior people. They are very good at collaborative relationships. They are not individualists. They are absolutely team players and they are very approachable as team leaders. This approachability is a core part of who we are as a business.
Apple and Mars have figured out what they need to do best to thrive in their very different contexts – and this has resulted in two very different sets of managerial and leadership abilities. The two companies have built an appropriate talent strategy around these capabilities, with Mars opting for a systematic, partnership-based approach to career development and Apple opting for few formal processes in favour of individuals managing their own career paths – which they do by networking and promoting their expertise so they get assigned to the most stretching projects.
According to Emily Lawson of McKinsey, too few companies achieve the clarity of Mars and Apple. They may well have ambitious plans and growth targets, but they have yet to spell out what this means for their talent strategies. She asserts:
We find that lots of companies don’t know what they are looking for. I had a typical conversation recently with a global organisation about its plan to expand its business in Asia. I asked them “in order to grow your markets, what do you need? Do you need great sales people, do you need very technical marketing people?” They didn’t know. They just knew they wanted to grow 40% of their market.
The critical thing is to start from your business strategy and to be really clear about what talent you need and therefore where your gaps are – because they may not be where you think they are.
Interviews carried out for this book suggest that companies are rethinking their talent requirements across three dimensions: the first is the ability to move across different business models; the second is having the right blend of leadership, management and technical skills; the third is to be able to manage through uncertain or fast-changing business conditions.
Identifying the right leadership skills
BCG’s research suggests that many firms are failing to adapt their leadership models quickly enough, as Torres explains:
We have looked at the programmes, policies and practices used by global companies to develop their leaders. What we found is that, in headline form, most of those approaches were wired for leaders in the 20th century world rather than 21st century world.
What we mean by that is that they presume more stability and less globalisation in [business] interactions. They don’t account for the transparency and flow of information in a digital world. They tend to develop people in one business model or one geography.
BCG advocates the need for “adaptable leadership”. This has four dimensions:
navigating ambiguous business environments – mainly through cultivating a diversity of perspectives and sharing the lead with the individual or group best equipped to guide a specific decision;
leading with empathy – through creating a shared purpose and managing through influencing;
leading through self-correction – by insisting that individuals and teams learn through experimentation while still staying focused on business priorities;
creating win-win solutions – by focusing on sustainable success for the companies and its shareholders, building “collaborative platforms” and using “soft power” to ensure stakeholders’ agendas stay aligned.
Rival consultancy McKinsey has gone down a different route. Instead of advocating a specific set of leadership traits, it has highlighted business context as the all-important ingredient.
McKinsey worked with Egon Zehnder, a global executive search firm, to identify the leadership traits that are most likely to deliver revenue growth. The research consisted of a statistical analysis of the relationship between managerial quality and revenue growth across a global sample of more than 5,000 leaders in 47 listed companies. The analysis was based on Egon Zehnder’s eight-scale leadership framework.
The 2011 study confirmed the importance of outstanding leadership, as opposed to merely good leadership. However, the most important leadership skills depend wholly on the context in which a firm operates. The study concludes: “Talent matters: executives of high-growth companies have a higher level of competency than those of low-performing firms.” But it also makes it clear that having good leaders is not good enough; only excellence makes the difference. Companies with outstanding leadership teams have a high correlation with revenue growth, while those with solid but unexceptional leaders have no correlation at all.
Beyond a focus on “customer impact”, the analysis revealed that there is
no standard skill set for success. Instead, companies need “spiky leaders”. As Emily Lawson explains:
When we say “spiky” we don’t mean sharp-elbowed and edgy. We mean people with a clear spike in their performance so that they are exceptionally strong in two or three of the core leadership traits identified by the research.
The report advises: “Celebrate the extremes, develop and promote spiky leaders.” Lawson adds: “This finding was contrary to what we expected. It hasn’t been what we were advising to clients.”
Uncertainty and turbulence
Whatever leadership skills work best for a company, managing uncertainty is becoming a crucial ability for senior managers responsible for deciding and implementing strategy.
Following its rapid growth, Standard Chartered, a British multinational banking and financial services company, has redesigned its leadership development and succession planning. It wants to develop more adaptable leaders and also prepare them for a much more complex environment where sudden shifts in politics, legislation or social attitudes can combine in unpredictable ways and force a rethink of strategy. It now operates in over 70 markets, and its leadership team grew by over 40% between 2009 and 2011, with almost two-thirds of new leaders coming from inside the bank.
Standard Chartered recognises that it cannot adopt a single model of leadership when its staff comprises 125 nationalities and managerial styles vary according to the specific culture and business situation faced by each business region. Simon Lau, head of the bank’s leadership development programmes, says:
You have to look at whether traditional Western leadership philosophies are going to work in the Middle East, for instance. What we do is to build leadership around the context.
Heather Ward, leadership succession manager, adds: “Leadership is distributed around the business, and it is a collaborative process.”
The bank has put in place a comprehensive range of programmes to help nurture its leaders and managers, from external hires at director level to those managing a small team. An important learning module for all leaders covers leadership in turbulent times. Lau explains:
Our leaders need to be comfortable anticipating and dealing with change. This module covers the skills leaders need in such circumstances. They need to be able to focus their people, communicate, involve them in the problem and empower them to take some ownership of how to solve it.
Formal leadership training is supported by on-the-job learning. All leaders receive one-to-one coaching and team support, which is provided by in-house leadership coaches.
Tata Chemicals, a global company based in India, has found that in its Asian operations young, ambitious employees become frustrated and anxious when they cannot easily make decisions in the face of ambiguous or contradictory data. This has sometimes caused them to leave the organisation. Helping these youngsters to cope with these pressures is crucial. Budaraju Sudhakar, chief human resources officer, explains:
When we are putting youngsters into challenging positions, their ability to manage their own confusion and anxiety is becoming a very big issue. We are spending a lot of time building their ability to do this. Helping them develop emotional intelligence is a priority for us.
The company focuses on helping young managers develop more realistic goals and to develop the right “attitude, humility and respect” to thrive in uncertainty or difficult work environments. The company also works with senior leaders to “create a mindset of nurturing the organisation,” says Sudhaker.
Focus on people, not abilities
Where does this leave a company’s talent strategy if its leadership requirements are unclear or in the process of shifting, and where the very definition of outstanding leadership is heavily determined by the context in which it is applied? The answer is arguably to focus on the underlying attributes that help make a high-flyer adaptable in the face of uncertainty and change. These often include self-awareness, resilience and the ability to learn rapidly.
For example, Ian Pearman, chief executive of Abbott Mead Vickers, an advertising agency, says that personal commitment is more important than ability for his company. He maintains:
You hire for attitude and you train for skill. That is dead right. If the definition for performance is capability plus commitment, you train for capability. The degree of commitment or drive comes from within. While we offer to enhance everybody’s capability equally, the thing that creates the difference is people’s level of commitment.
Marielle de Macker, HR managing director at Randstad, has reached similar conclusions. Whether leadership or expert talent, the latter of which is fast becoming a priority for the company (as a result of more complexity in labour legislation and different labour-market conditions), the company focuses on three personal attributes:
When I think about talent, I think about three things. First, I think about drive – does somebody have the drive and the energising skills to encourage people to go the extra mile.
Second, I think about judgment – the world is no longer black and white and you will have to formulate decisions based on incomplete and conflicting information and data. What is required is expertise and experience as well as intelligence and a highly developed sense of integrity.
Third, I think of courage – you need to be prepared to take a position and defend it, not to the level of insanity obviously but people are looking for someone to lead them. People want leadership. You need the courage to be able to stand up for your beliefs, to stand up for your company, to stand up for your people and go for it.
McKinsey’s Emily Lawson endorses this message:
Our research shows that companies are pretty much focusing on the same leadership traits; they are just calling them different things.
I would probably not put my investment in finding the right leadership model. I think companies should spend their money on discovering what kind of people they need to deliver the business.
I think you should spend your money on having a really robust employee value proposition that is tailored to the different markets in which the business needs to operate. What works for a graduate in China is not going to work for a senior banker in Dusseldorf.
Leveraging talent across the business
The ability to move talented people across the business has become critical for international companies, both to use and deploy talent more effectively and to make sure that these individuals gain sufficient exposure to different operating environments.
A 2010 report into talent mobility by PriceWaterhouseCoopers, a multinational professional services firm, highlights the importance of moving talent. As well as an increasingly globally connected world, “an explosion of activity in emerging markets has contributed to a significant increase in the need for companies to move people and source talent from all around the world.”
Based on a variety of data, PriceWaterhouseCoopers reports that the number of international assignments increased by 25% between 1998 and 2009. It predicts a further 50% growth in assignments by 2020. There will “especially be more quick, short-term and commuter assignments”. The research also points to the growing importance of emerging markets and the likelihood that skilled employees from these regions will become increasingly mobile, “creating greater diversity in the global talent pool”.
Mars is already grappling with the challenge of making its talent more mobile and is especially keen for its best-performing leaders in emerging markets to have opportunities to move across the business. The company recognises that it will need to differentiate more if it is to channel resources into parts of the company that are growing most rapidly. Strategic workforce planning is becoming increasingly important in making sure that there is enough of the right talent in the parts of the business that are growing most rapidly. Mars also recognises that talented managers within these centres of growth need to get more international experience, and that it needs to focus on spotting and developing talented professionals who originate in centres of the co
mpany’s growth like Asia. As Becky Snow explains:
We decided to stop trying to pay equal attention to every role and every succession plan, which in the past meant we spent about 30 seconds on each individual. The new priority in our reviews is to pick a handful of key people and learn more deeply about them to support their development.
Mobility is a real challenge. When we recently looked at the way we invest in international moves, we found that the majority of the assignees come from mature markets. We want to balance this investment better towards our talented managers in our growth markets.
IBM, a multinational technology and consulting corporation, has decided to focus on younger employees who have been identified as “emerging leaders”, instead of sending senior managers on international assignments. Not only were such assignments becoming increasingly expensive, but only a limited number of managers could take up these opportunities. Now the company aims to provide formative experiences much earlier in managers’ careers so that they can experience the reality of working in global markets.
IBM’s goal is to become a genuinely global firm, not an American company with outposts around the world. Robin Willner, former vice-president, global community initiatives, set up the new approach. He explains:
We needed to begin to work with emerging leaders as well as our existing leadership core to become leaders in a global economy, adept and skilled at doing business in every and any kind of market, and understanding how to lead teams that included “IBMers” who could be in any of 170 countries.
Approximately 500 emerging leaders a year are sent in teams of 8–15 all over the world to spend four weeks working on a real business project. Each team typically comprises individuals from more than ten different countries. They spend three months preparing for the posting, learning about, for example, building a virtual team, the global economy, global leadership, corporate citizenship and, particularly, the growth market where they will be deployed.
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