Page 59 - Harvard Business Review (November-December, 2017)

FEATURE TURNING POTENTIAL INTO SUCCESS

The problem isn’t a lack of internal talent. At Egon curiosity, insight, engagement, and determination.
Zehnder we’ve been measuring executive potential (See the June 2014 HBR article “21st-Century Talent
for more than 30 years, and we’ve identified the pre- Spotting” for a primer on this.)
dictors that correlate strongly with competence at the • Third, by creating a growth map showing how a per-
top. The first is the right motivation. This generally son’s strengths in each of the hallmarks aligns with
means a fierce commitment to excel in the pursuit of the competencies required in various roles.
big, collective goals but, to a great extent, is contex- • Fourth, by giving high potentials the right develop-
tual. For example, the leaders of a large charity and of ment opportunities—including job rotations and
an investment bank will need different kinds of mo- promotions they might not seem completely qual-
tivation. This predictor can’t easily be rated or com- ified for but that fit their growth maps—as well as
pared meaningfully across individuals. However, the targeted coaching and support.
other predictors—curiosity, insight, engagement, and Companies like Japan Tobacco and Prudential PLC,
determination—can be measured and compared. And the British multinational life insurance and financial
when we look at how managers in our global database services group, have used this approach to enhance
(who come from thousands of companies in all sectors their talent development programs and boost their in-
and are mostly in the top three levels of the hierarchy) ternal leadership pipelines. Following it requires deep
score on those four key hallmarks, we find that 72% of commitment from senior executives and some invest-
them demonstrate the potential to grow into C-suite ment in the human resources function. But the cost of
roles. In addition, 9% have what it takes to become inaction is greater: As competition for smart and able
competent CEOs. managers heats up around the world, organizations
Unfortunately, many organizations haven’t fig-
ured out how to fully develop their prospective can’t keep ignoring and demoralizing internal talent
while filling their C-suites with expensive external
leaders. That limits these people’s advancement and hires. They must learn to grow their own leaders.
IN BRIEF eventually their engagement and, ultimately, leads
to turnover. Recent research from Gallup shows
THE PROBLEM that 51% of U.S. managers feel disconnected from
Corporate leadership their jobs and companies, while 55% are looking for GETTING A READ ON NEEDS AND SKILLS
development programs outside opportunities. And the problem cascades Before an organization can begin mapping manag-
aren’t working. Less than down: According to two comprehensive studies from ers’ potential to required competencies, it must de-
a quarter of executives at Indeed.com, the most popular U.S. job-search web- termine what exactly it needs. That will vary from
the organizations that have
them think they’re effective. site, 71% of employees are either actively hunting for business to business. A company recently acquired
or open to a new job, while 58% review postings at by a private equity firm would probably want to make
THE ANALYSIS least monthly. The average rate of employee turn- results orientation a priority, while the management
Evaluations of managers at over (of which about three-quarters is voluntary) has of an old-fashioned bank trying to stay relevant in a
thousands of corporations been growing steadily for the past six years. In 2016 it digital age might need keen market understanding
suggest that 72% have what hit a new high of 20.3% in the United States, and it’s and a strategic orientation.
it takes to grow into C-suite
roles. How can we bridge the much higher in the most attractive sectors. The stats Requirements will vary from role to role within
gap between this raw talent in other countries are comparable. firms as well. Let’s consider the competencies that
and executive success? Low engagement and high turnover are extremely the board of one pharmaceutical company we worked
costly for organizations, especially if the people with projected that its CEO, CFO (who was also the
THE SOLUTION jumping ship are high potentials in whom much has chief strategy officer), and business unit heads would
By following four steps: already been invested. How can companies prevent need three years down the road, given its midterm
• Determine the most
important competencies this massive waste of talent and create more-effective strategy. Like all chief executives, the CEO had to
for leadership roles in development programs? have strong strategic and results orientations. But
your organization. • First, by determining the most important compe- this particular company was trying to adapt to the
• Assess employees’ tencies for leadership roles at their organizations. In digital era and to become more diverse in its people
potential by looking our leadership advisory services at Egon Zehnder, and more flexible in its way of working, so the board
at the five predictors we’ve identified seven that we believe are crucial also highlighted inclusiveness and team and change
associated with success—
motivation, curiosity, for most executive positions at large companies: re- leadership as priorities. For the CFO—who would be
insight, engagement, and sults orientation, strategic orientation, collaboration tasked with overseeing the implementation of the
determination. and influence, team leadership, developing organi- new strategies—collaboration and influence, change
• Map people’s potential to zational capabilities, change leadership, and market leadership, and strategic orientation were deemed
the competencies required understanding. In addition, many leading compa- must-haves. And for the unit heads, who would be
in various roles. nies are finding that an eighth—inclusiveness—is on the front lines of strategic and cultural change
• Give emerging leaders the essential to executive performance. and also responsible for hitting demanding budgets,
opportunities, coaching, • Second, by rigorously assessing the potential of as- the key competencies were results orientation, devel-
and support they need
to strengthen the critical piring managers: checking their motivational fit and oping organizational capabilities, team leadership,
competencies. carefully rating them on the four key hallmarks— and inclusiveness.

88 HARVARD BUSINESS REVIEW NOVEMBER–DECEMBER 2017