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Five Elements of a Successful Leadership Pipeline

Five Elements of a Successful Leadership Pipeline: Stories of Success from The Conference Board by Tacy M. Byham, Ph.D., VP, Executive Development, DDI

At The Conference Board 2011 Talent Management Strategies Conference, my colleagues and I had an opportunity to facilitate the pre-conference session on the Leadership Pipeline we were joined by over 25 global organizations who shared their thoughts around talent strategy, leadership strategy and execution strategy. Our goal was to shift the academic conversation about the Leadership Pipeline to practical, replicable, and benchmark-able best practices.

 

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Five elements of a successful Leadership Pipeline were discussed during the day and success stories were openly shared by the participants. For this article, we give you a window into our conversations and an opportunity for you, too, to learn from the wisdom of your peers.

  1. Align pipeline strategy with business driversYour business goals and strategies drive the quantity and quality of leadership talent you need. Can you and the leaders in your organization fill in these blanks: “Our business goals are ________, so we need leaders who can __________.” One online brokerage firm starts at the top. About a year ago, their CEO looked at engagement scores and recognized a key theme—not everyone at every level had a clear understanding of their organization’s strategy. This was a particularly hot issue due to a recent acquisition and the infusion of 40% new talent from the acquired organizations. The CEO remedied this by crafting a three-point strategic plan. He begins every town talk discussion articulating the 3 pillars of the plan—growth, innovation and customer focus—and regularly shares progress toward the goals. In turn, talent strategies are designed to link to these current and future strategic business needs. Each employee knows how their day-to-day activities link up to the plan, that what they do is important and contributes to their own success and that of the organization. So, clearly this creates clean alignment and execution of strategies, but at the same time it engages the heart. And, when business strategies and talent strategies are aligned, it pays off in dividends—literally. Total Shareholder Return (TSR) over 3 years is 14% when organizational competencies are tied to business strategies. TSR is only 10% when that link is not apparent, according to Watson Wyatt.

  2. Define success for leaders at all levelsCompetencies are critical, but they are only part of a comprehensive Success ProfileSM, which also includes knowledge, experience, and personal attributes. Our second success story comes from DaVita, one of the country's largest providers of outpatient dialysis centers. At the conference, DaVita shared how it developed a proprietary facility administrator selection tool to assess and select top facility administrators for its organization. The tool uses a complete competency profile to ensure the best leaders are selected to move forward in the process. As a result of this innovative approach, DaVita has reduced its turnover among facility administrators three-fold—truly remarkable! In fact, integration and simplification were key themes throughout the conference. In a participant poll, conference attendees said integrating their talent management strategies was their #1 challenge in 2011. One simple way to do this is to organize your core talent management processes—selection, development, performance management and succession management—around common success profiles.

  3. Develop leaders at all levelsYour leadership pipeline is only as strong as the weakest link. Effective organizations align development to role—current or future—and business expectations at each level. Our next success story comes from a pharmaceutical company in the middle of a significant business transformation. Accompanying this shift is a culture change from one that is hierarchical and slow moving to one that is fast, agile and innovative. Given these changes, the organization recognized it needed to strengthen its leadership pipeline and develop the skills required to achieve this shift.

    As such, this pharmaceutical company offers integrated programs at all levels of their leadership pipeline:

    • Key Transitions Programs such as a Manager Development Program and a New Executive Orientation Program for new employees, new leaders and those who have greater leadership responsibility.
    • Foundational Skills Programs such as one for Managers of Managers to develop core behaviors and leadership capabilities.
    • Leadership Skills Programs with courses on topics like change leadership, decision making and innovation to help transform culture, achieve strategy, and deliver on mission.
    • Targeted Programs such as Executive Leadership, General Managers and Business Unit Directors to provide learning and development for specific employee groups.

    The research shows the power of developing a talent pipeline at all levels. The Aberdeen Group reports that best-in-class organizations are 20 times more likely to use succession planning at all levels.We talk more about assessment and development at each pipeline level in our Optimizing Your Leadership Pipeline white paper series.

  4. Invest in high-potential leadersLeadership development is not a democracy. Organizations get the best returns when they identify promising individuals and provide them with differential focus and investment.

    Identifying potential means determining which individuals have the most growth promise. Who will take the best advantage of and respond positively to differential development opportunities? Who will support the organization’s values, and also be able to apply what is learned productively within the organization? If you can identify potential effectively, organizations can focus your investment on those individuals who will generate the highest ROI in terms of their ability to grow quickly and broadly.

    One organization at The Conference Board session took a unique approach to the development of their high-potential mid-level leaders. They have really taken the principle of learning from on-the-job experiences to heart. Their high potentials are engaged in four six-month rotational assignments around headquarters. These short-term assignments, rather than new positions, are highly visible with broad exposure to new technologies, organizations and people. In this way, “work is the way to development” and doesn’t compete with it. Another important learning is that when these high potentials are placed in their jobs, it is essential that the leader and their manager establish expectations up front and agree on planned outcomes. This encourages reflection from all parties as well as key insights and growth.

    This illustrates the power of clearly identifying high potentials and investing in them, which is another best practice strategy that pays off. According to the Aberdeen Group, 92% of best-in-class organizations have a high-potential process versus 57% of all others. Aberdeen’s 2008 report Succession Management: Addressing the Leadership Development Challenge shares more insights into best-in-class practices for succession management.

  5. Focus on executionPipeline success is more about the “how’s” than the “what’s.” Focusing on processes and creating “process tension” ensures sustainability over the long haul.

    Finally, it all comes down to execution. Our success story of execution comes from a large food and beverage manufacturing company. For them, the key is to have measurement as a core competency. Now, what makes them stand out is that the measurement done in the HR department rivals that often found in operations. Measurement—both lead and lag—ensures long-term sustainability and provides evidence of the impact of a pipeline initiative. Good metrics include things like:

Lead

Lag

  • Job Satisfaction and Engagement Ratings
  • Perception of Growth Opportunities
  • % of Hi Pos Completing Development Plan
  • % Participation in L&D Activities
  • Development Impact Measures
  • % High Potential Leader Retention
  • % Leadership Diversity
  • Performance to Strategic Goals
  • % External Hires for Key Positions
  • % Key Positions Without
  • Ready Successor
  • ROI from Action Learning Projects

DDI’s own Leadership Forecast found that measurement counts. Organizations with high quality programs are 20 times more likely to measure results versus those rated low or very low.

We hope you enjoyed hearing examples from these leading organizations. Like them, we are confident that these five best practices will ensure your organization builds a strong Leadership Pipeline.

About the Author

Tacy Byham, Ph.D., is the Vice President of Executive Development for DDI’s Executive Solutions Group. Tacy provides consulting on our clients’ strategic talent needs across the leadership pipeline. She manages Business Impact Leadership®, an action-oriented development solution that incorporates the best practices of 70/20/10 to align senior leaders to organizational business imperatives. Tacy has published a number of articles, white papers and book chapters, and is an energetic and thought-provoking presenter at industry conferences and events.

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