Take Responsibility for Rising Stars
Leadership succession and recruitment need the sharp attention of your company's top executives and board. But who should be held accountable—and how? An excerpt from a Harvard Business Review article by Jeffrey Cohn, Rakesh Khurana, and Laura Reeves.
Many executives believe that leadership development is a job for the HR department. This may be the single biggest misconception they can have. As corporations have broken down work into manageable activities and then consolidated capabilities into areas of expertise, employee-related activities have typically fallen into HR's domain. The prevailing wisdom has been that if HR took care of those often intangible "soft" issues, line managers and executives would be free to focus on "hard" business issues and client interaction.
But at companies that are good at growing leaders, operating managers, not HR executives, are at the front line of planning and development. In fact, many senior executives now hold their line managers directly responsible for these activities. In this worldview, it is part of the line manager's job to recognize his subordinates' developmental needs, to help them cultivate new skills, and to provide them opportunities for professional development and personal growth. Managers must do this even if it means nudging their rising stars into new functional areas or business units. They must mentor emerging leaders, from their own and other departments, passing on important knowledge and providing helpful evaluations and feedback. The operating managers' own evaluations, development plans, and promotions, in turn, depend on how successfully they nurture their subordinates.
Line managers are held accountable not only for aiding in the development of individual star managers but also for helping senior executives and HR experts define and create a balanced leadership development system for the entire company. They must tackle questions such as "How will we balance the need to nurture future leaders with the pressures to eliminate redundant activities?" and "How should we encourage burgeoning leaders to take risks and innovate while maintaining our focus on short-term operations and profit goals?" (Firms shouldn't have to forgo their quarterly targets for the sake of developing high-potential managers.) Practical solutions to these and other challenges don't magically appear in HR conference rooms; they come from the line managers.
If line managers are held responsible for executing the talent development initiatives, the board should assume high-level ownership of the overall system. Traditionally, however, most boards have focused on CEO succession, giving short shrift to systematic leadership development. After all, there was little risk of a calamity occurring if the board didn't monitor the leadership pipeline. There was also little chance that the board members would be held personally accountable for the resulting weak talent pool. In A.T. Kearney's 2004 survey on the effectiveness of corporate governance, participating board directors universally acknowledged the importance of leadership development and succession planning. Yet only one in four respondents believed the board of directors was very good at these activities.
The CEOs of savvy companies realize that their boards are well placed to help them plan for new leadership to take the reins. Detached from day-to-day operations and biases, board directors can objectively look at the company's leadership development systems and bench strength. At Starbucks, for example, the board oversees a formalized succession-planning process for 2,500 positions. Its goal is to make sure the company always has the right people with the right values in the right places at the right times. As Orin Smith explains: "The values and behaviors of the individuals you choose go through the organization like a rifle shot; they can be felt at the line level within months. We can't afford to hire or promote people with the wrong values. It's a path to mediocrity."
Some boards are becoming aggressive in getting to know their companies' rising stars. Pittsburgh-based Mellon Financial, a 136-year-old financial institution, had long required the heads of its major business units to give presentations to the board. But in 2002, CEO Marty McGuinn saw potential value in having the company's rising stars make these presentations. Now, Mellon's unit managers accompany the rising stars to the board meetings. They answer questions when absolutely necessary, but the future leaders get the floor. As a result, the board can assess for itself the efficacy of the company's leadership pipeline and hear about corporate initiatives from the people who are actually "doing things." Meanwhile, the rising stars gain direct access to the board, gleaning new perspectives and wisdom as a result.
Excerpted with permission from "Growing Talent as if Your Business Depended on It," Harvard Business Review, Vol. 83, No. 10, October firstname.lastname@example.org) is a senior manager with A.T. Kearney's transformation practice in Atlanta, specializing in organizational effectiveness.