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Making Leadership Development a Source of Competitive Advantage October, 2007 Robert M. Fulmer. Session Overview. • Highlights of Previous Studies • Action Principles From Research on Trends and Best Practices • Linking The Growth of Leaders to Business Growth and Profitability

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making leadership development a source of competitive advantage october 2007 robert m fulmer

Making Leadership Development a Source of Competitive AdvantageOctober, 2007Robert M. Fulmer

session overview
Session Overview

• Highlights of Previous Studies

• Action Principles From Research on Trends and Best Practices

• Linking The Growth of Leaders to Business Growth and Profitability

• The ABC’s

growing great leaders delivers great results
Growing Great Leaders Delivers Great Results!
  • Organizations with strong leadership bench strength have approximately 10% higher total shareholder return than their weaker peers (Corporate Leadership Council, 2003)
  • Companies with above average financial returns have more comprehensive succession planning processes and are committed to developing future leaders (Hewitt, 2003)
  • Employees with strong leaders are more satisfied, engaged, and loyal than employees with weak leaders (DDI, 2003)
  • A conscious partnership between line execs and HR drives strategic leadership success (APQC 2005)
  • Accelerated development for global high potentials can be a powerful lever to develop, communicate and implement strategy (Fulmer & Bleak, 2007, Hewitt, 2007
slide4
Five Principles That Can Streamline Your Organization’s Success in Growing Leaders—and the Bottom Line!

# 1: Start with the top

  • Build C level commitment and passion for leader development through partnership and results
  • Engage senior management as champions, role models, and faculty

#2: Directly link to the business --- and deliver results

  • Integrate and align leader development practices with business strategy & priorities
  • Demonstrate value in business terms and develop metrics that reflect business goals

#3: Build an integrated leadership strategy

  • Create a compelling vision, business case, and strategy for leader development
  • Design a mosaic of the “targeted” programs and development solutions for maximum impact

#4: Drive consistency in the execution of leadership programs and practices

' Cascade programs to improve reception and drive cultural & strategic change

• Customize solutions for business units to win strong senior management buy–in • Leverage key career transition points—’teachable moments’—especially for HiPos

#5: Hold leaders accountable for results—development and business results

  • Differentiate and actively manage the development of high potential talent
  • Anchor all talent and performance management practices with a lean competency model linked to strategic, reward and performance systems

Source: Adapted from: Duke Corporate Education, “Leadership Strategy Project” (2005); Hewitt, “The Top Companies for Leaders – (2005, 2007); : ExecSight, “Current Challenges in Leadership Development” (2004), Growing Your Company’s Leaders, 2004, The Leadership Advantage, 2007

how well does your organization follow each key principle
How Well Does Your Organization Follow Each Key Principle?
  • Idea # 1: Start at the top
  • Idea #2: Directly link to the business – and deliver results
  • Idea #3: Build an integrated leadership strategy
  • Idea #4: Drive consistency in execution of leadership programs and practices
  • Idea #5: Hold leaders accountable for results including development

4We are a benchmark in this area

3We execute elements of this guiding idea well

2We are beginning to introduce elements of this guiding idea

1We would like to follow this guiding idea

ceo level involvement and sponsorship is absolute in top companies
CEO Level Involvement and Sponsorship Is Absolute In Top Companies

Principle 1

Source: The Top Companies for Leaders – Hewitt

it all begins and ends with the business
It All Begins… And Ends With the Business

Principle 2

All of the “Best Practice” Companies Have:

  • Leader development strategies that are closely linked to their business strategies, rather than popular “best practices”
  • Strategies for selecting, developing and rewarding leaders, most of which are anchored by a lean competency model

Source: The Top Companies for Leaders – Hewitt, The Leadership Advantage

there are some solid measures of business impact available
There Are Some Solid Measures Of Business Impact Available…

Guiding Idea 2

Source: Corporate University XChange 6th Annual Benchmarking Report, 2005

developing an integrated leadership strategy is a top priority yet many challenges exist
Developing an Integrated Leadership Strategy is a Top Priority --- Yet Many Challenges Exist

Principle 3

Top Priorities for Leading L&D Organizations

EDA’s 2000 study reported the same No. 1 priority with the caveat that it is difficult to achieve !

Source: Executive Development Trends; EDA Inc.

high potentials can leverage developmental efforts
High Potentials Can Leverage Developmental Efforts

Principle 4

Key Objectives of Executive Development Activities in Next 2-3 Years

Source: Executive Development Trends EDA Inc.

yet most companies worry about identifying and helping high potentials
Yet, Most Companies Worry About Identifying and Helping High Potentials

Guiding Idea 4

  • 46% of companies have no systemic process for identifying and developing candidates for key leadership positions
  • Half the candidates selected internally for leadership positions fail when there is no succession management system

Source: Leadership Forecast: A Benchmarking Study 2003; DDI; Growing Your Company’s Leaders, 2004, Leadership Advantage, 2007

if you can identify your high potentials what do you communicate
If You Can Identify Your High Potentials, What Do You Communicate?

Principle 4

For Your High Potential Population, Do You:

Source: The Top Companies for Leaders ; Hewitt

how to develop them
…How To Develop Them

Guiding Idea 4

Developmental Techniques Used To Develop High Potentials:

All of the Top 20 Companies also link compensation to a leader’s future potential

Source: Top Companies for Leaders –; Hewitt

slide14
Best Practice Firms Anchor Their Leadership Development With A Lean Competency Model Tied to Performance and Reward Systems

Principle 5

Leader competencies are integrated into:

NotIntegrated

Metrics Integrated

NotIntegrated

Metrics from performance management process are integrated into succession planning

Metrics Integrated

Top Quartile

Bottom Quartile

Source: The Top Companies for Leaders – ; Hewitt

i developing a strategic hr architecture
Organizations have teachable moments, too.

Leadership development can be a powerful tool to help formulate, translate, and communicate strategy.

Linking corporate strategy & leadership development strategy creates winners.

Lean competency models and values

are the foundations of strategic HR & leadership development.

I. Developing a Strategic HR Architecture
slide16

MAKING PROGRESS POSSIBLE

VISION 2020

STRATEGIC PROFILE

STRATEGIC GOALS

Profitable Growth

People

Performance Product & Process

CRITICAL SUCCESS FACTORSPEOPLE QUALITY PRODUCT VELOCITY DISTRIBUTION CHINA TROUGH

New Product Introduction

Order-to-Delivery Encoding 6 SigmaSustainable Development Growth Beyond Core

ENTERPRISE STRATEGIC AREAS OF IMPROVEMENT

Our Values in Action – INTEGRITY, EXCELLENCE, TEAMWORK, COMMITMENT

WORLDWIDE CODE OF CONDUCT

Caterpillar’s New Strategy

Engagement Index 90% by 2010

Leadership Index 80% by 2010

slide17

II. Aligning Strategic HR Systems

  • Strategic HR is a partnership between senior line executives and multiple human resource systems.
  • Strategic HR (especially HRD) is a key part of the corporate planning cycle.
  • HR can win the support of top management by involving them in strategic learning initiatives and by knowing and advancing the mission.
  • Leaders who teach are more effective than those who tell.
  • Strategic leverage comes from a focus on high potentials.
slide18

III. Implementing a Successful HR Strategy

  • Leaders in HR maintain control of custom design and delivery of their programs.
  • Lean HR groups leverage their talents with the judicious use of consultants and outside service providers.
  • Integration of leadership development with other talent management systems creates alignment and synergies within the HR function.
slide19

IV. Assessing Success in Strategic HR

  • Developing people is a growing measure of executive success.
  • Return on learning (ROL) is increasingly measured by corporate success rather than individual performance.
  • Successful programs are a process rather than an event.
slide20

Success Factors for Future Leadership in Strategic Human Resources: The ABCs

  • Alignment
  • Business Focus
  • Collaboration
leadership best practices dialogue
Leadership Best Practices Dialogue

Task

Reflect on the best practices/principles you just heard about and then discuss

  • What best practice or principle is most important for the overall success of leadership strategy? What will be most important in 2010?
  • What is the one additional question you would most like to ask of Best Practice partners?

Process

  • Individual Review (1’) – write on post –it or notebook
  • Small Group (5 – 7”) – develop list for your group
  • Large Group (5”): Report out
referenced reports
Referenced Reports
  • James Bolt, "Executive Development Trends 2004: Filling the Talent Gap,” (survey of 101 global companies) Executive Development Associates (EDA) Inc.
  • Corporate Executive Board: Driving Performance and Retention Through Employee Engagement (September 2004)
  • Corporate University XChange 6th Annual Benchmarking Report, 2005
  • Robert M. Fulmer & Jay A. Conger, Growing Your Company’s Leaders, AMACOM, 2004
  • Robert M. Fulmer & Marshall Goldsmith, The Leadership Investment, AMACOM, 2001
  • Robert M. Fulmer SME, “Next Generation HR Practices,” APQC, 2005
  • Robert M. Fulmer & Jared Bleak, “The Leadership Advantage, 2007
  • Hewitt & Associates, “The Top Companies for Leaders,”2005, 2007
  • Andre Martin, “Differences in the Development Needs of Managers at Multiple Levels,” Center for Creative Leadership, 2005.
  • Mark Nevins and Stephen Stumpf, “21st Century Leadership: Redefining Management Education,” Business & Strategy, 1999.
  • Scott Saslow, “Transforming Corporate Leadership: Best Practices in Executive Education,” ExecSight, (April 2004).
  • Training Magazine’s 2005 Survey of Top 100 Companies
  • Training Magazine’s Annual Comprehensive Analysis of Employer-Sponsored Training in the US , October 2004
  • Watson Wyatt," Maximizing the Return on Your Human Capital Investment”2005
key takeways from skil
Key Takeways from Skil
  • Create a (simple) Formal Pocess
  • Involve a Multi-Functional Team
  • (Over) Communicate the Strategy
  • Be Consistent Over Time
  • Establish Balanced Measure
  • Review Strategy Regularly