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
• The ABC’s
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Growing Great Leaders Delivers Great Results!
09.12.05.WachoviaLeadershipBenchmarkingv1

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
3
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
09.12.05.WachoviaLeadershipBenchmarkingv1
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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
4
We are a
benchmark in
this area
3
We execute
elements of
this guiding
idea well
2
We are beginning
to introduce
elements of this
guiding idea
1
We would like
to follow this
guiding idea
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CEO Level Involvement and Sponsorship Is Absolute In Top Companies
Principle 1
120%
100%
100%
80%
65%
65%
60%
40%
31%
20%
0%
Board Involved
CEO Involved
Non Top Companies
Top Companies
Source: The Top Companies for Leaders – Hewitt
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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
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There Are Some Solid Measures Of Business Impact Available…
Guiding Idea 2
Measures of Business Impact
Improved product/service quality
70%
Improved customer service
70%
Reduced operating costs
59%
Increased revenues
51%
Improved sales efficiency
49%
Increased profits
48%
Source: Corporate University XChange 6th Annual Benchmarking Report, 2005
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Developing an Integrated Leadership Strategy is a Top Priority --- Yet
Many Challenges Exist
Principle 3
Top Priorities for Leading L&D Organizations
% Respondents
0
10
20
30
40
50
60
Creation of an integrated strategy
& system for all executive
development
80
69
Use of systematic
measurement/evaluation to
measure impact of efforts
52
Creation of an integrated strategy
& system for all HR activities
52
Creation of core corporate
curriculum (required courses)
Creation of milestone/transition
system for right learning for
career progression
70
50
41
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.
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High Potentials Can Leverage Developmental Efforts
Principle 4
Key Objectives of Executive Development Activities in Next 2-3 Years
% Respondents
0
10
20
30
40
50
60
70
Increase bench strength/ensure
replacements for key jobs
90
79
Accelerate development of highpotentials
62
Communicate vision and strategy
and create alignment
61
Support organizational
change/transformation
56
Develop the capabilties of
individual leaders
Address key business
issues/challenges
80
53
48
Source: Executive Development Trends EDA Inc.
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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
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If You Can Identify Your High Potentials, What Do You Communicate?
Principle 4
For Your High Potential Population, Do You:
100
95%
80
77%
60
72%
68%
40
60%
53%
20
0
Identify High Potentials Tell them of their status
Non-Top Companies
Track Their Turnover
Top Companies
Source: The Top Companies for Leaders ; Hewitt
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…How To Develop Them
Guiding Idea 4
Developmental Techniques Used To Develop High Potentials:
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
95%
90%
89%
Non Top Companies
Top Companies
45%
51%
58%
43%
24%
Increased
Access To Sr.
Leaders
Internal
Training
Developmental
Assignments
Mentoring or
Coaching
All of the Top 20 Companies also link compensation to a leader’s future potential
Source: Top Companies for Leaders –; Hewitt
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Best Practice Firms Anchor Their Leadership Development With A Lean
Competency Model Tied to Performance and Reward Systems
Principle 5
120%
100%
80%
Leader competencies
are integrated into:
Non Top Companies
100%
Top Companies
78%
60%
60%
40%
30%
65%
60%
31%
23%
20%
0%
Succession
Planning
Base Pay
Not
Integrated
Metrics from performance
management process are
integrated into succession
planning
71%
29%
Metrics
Integrated
Top Quartile
Source: The Top Companies for Leaders – ; Hewitt
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Annual
Incentive
Long Term
Incentive
Metrics
Integrated
45%
Not
Integrated
55%
Bottom Quartile
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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.
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Caterpillar’s New Strategy
MAKING PROGRESS POSSIBLE
VISION
2020
STRATEGIC PROFILE
Engagement Index 90%
by 2010
People
Leadership Index 80%
by 2010
PEOPLE
STRATEGIC GOALS
Performance
Product & Process
Profitable Growth
CRITICAL SUCCESS FACTORS
QUALITY
PRODUCT
VELOCITY
DISTRIBUTION
CHINA
TROUGH
New Product Introduction
ENTERPRISE
STRATEGIC
AREAS
OF IMPROVEMENT
Order-to-Delivery
Encoding 6 Sigma
Sustainable Development
Growth Beyond Core
Our Values in Action – INTEGRITY, EXCELLENCE, TEAMWORK, COMMITMENT
WORLDWIDE CODE OF CONDUCT
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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.
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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.
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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.
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Success Factors for Future Leadership
in Strategic Human Resources: The ABCs

Alignment

Business Focus

Collaboration
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Leadership Best Practices Dialogue
Task
Process
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?



Individual Review (1’) – write on post –it or notebook
Small Group (5 – 7”) – develop list for your group
Large Group (5”): Report out
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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
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Key Takeaways From Skil
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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
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