July 23

The Cornerstone of the “Best Companies for Leaders”

“Regardless of the size of the company he or she leads, every CEO can learn to be a better nurturer of talent and builder of teams. Warren Bennis once observed that whether or not leadership is well understood, it’s impact on performance is dramatic and unmistakable.  An Accenture study several years ago noted that the share price of companies perceived as being well led grew 900 percent over a 10-year period, compared to just 74 percent growth in companies perceived to lack good leadership.”  ChiefExecutive.Net

I used to say; “leadership matters” and as true as that statement is, I have substituted it with; “outstanding leadership matters”. In a Forbes article; “Great Leaders Can Double Profits, Research Shows”, Jack Zenger states: “In summary, good leaders create more economic value than poor leaders and extraordinary leaders create far more value than good ones. Clearly, few investments will pay off as handsomely as the choice to develop great leaders within your organization.” To see the company’s data go to Zenger Folkman’s website and read the white paper on “How Extraordinary Leaders Double Profits”: https://zengerfolkman.com/wp-content/uploads/2019/08/How-Extraordinary-Leaders-Double-Profit_WP-2019.pdf

Having consulted with one of the best companies in the U.S. at developing leaders for over 15 years, I have learned that there are 3 ‘simple but hard’ things that they do that others don’t.  Any company can do these things, but most don’t.  I’m not exactly sure why they don’t do them, but I believe it is primarily because they don’t fully understand the value of having outstanding leaders and/or they don’t see that their current problems/challenges can be solved with outstanding leaders.

#1. Investigate why developing leaders systematically makes sense for your business.  Don’t take my word for it.  Building a system to create great leaders makes good business sense and helps you create better results.  Ken Allen turned around DHL Express in 2008 with a “focus strategy” that had a “four-link chain”: motivated employees (1) will provide great service (2) and create loyal customers (3) and ultimately generate a profitable network (4).  He knew for the turnaround to work and employees to “feel engaged, they would need to believe in the company, feel valued and see that their managers are role models for passion and commitment.”  (DHL Express went from a loss of over $3 billion in ’08 to a profit of $.5 billion in ’10 and in ’18 an EBIT of more than $2 billion.)

#2. If you run the business, it is your responsibility to ensure a process of developing leaders is successfully designed and implemented.  You will need a specific process that is measureable and includes an integrated approach of training & developing leaders.  Back in the days when P&G was ranked the # 1 company in the US for the Best Companies for Leaders by Chief Executive magazine, Bob McDonald, who at the time was the current CEO of P&G said: “To tap the full potential of our employees, we have developed a rigorous and disciplined approach to leadership development at every level of the company”.

#3.  Own the program like it is your own program.  Kick it off, invite people personally, let others know why it’s important to you and what results you expect to see.  Get personally involved in some form, either through a personal coach or some other form of participation.  Ken Allen believes; “most engagement programs fail because of a lack of ownership at the top”.

Model the full engagement you want and participate in the process.  When A.G. Lafley returned to P&G as CEO for the second time, he fully embraced the responsibility of the leadership development process and ensured that senior leaders were evaluated on their ability to develop leaders who reported to them and he consistently monitored the top 300 leaders. Additionally, he mentored high performers at several levels in the company.

Leadership development is a process, not a program. It must be led to be successful. Leaders must be rewarded not for completion of the process but for changing their behaviors. And the subsequent changes must be measured in terms of enhanced leadership effectiveness. The best companies determine how much the improved leadership effectiveness resulted in an impact on key performance indicators.

How’s your leadership development process?  If you have one, is it generating the business results that it could?  How engaged are you in the process?  If you don’t have a leadership development process, why not?

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