CORPORATE LEADERSHIP COUNCIL

CORPORATE EXECUTIVE BOARD

CORPORATE LEADERSHIP COUNCIL®

Managing Leadership Performance Risks

Webinar

February 2010

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LEGAL CAVEAT

The Corporate Leadership Council has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and the Corporate Leadership Council cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Corporate Leadership Council is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither The Corporate Executive Board Company nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Corporate Leadership Council or its sources, or b) reliance upon any recommendation made by the Corporate Leadership Council.

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© 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

ROAD MAP FOR THE PRESENTATION

Managing Three Risks to Performance

Current State of Leadership Performance

Council Resources

4

From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

© 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

CONTINUOUS MARKET TURBULENCE

World GDP Growth Percentage Change, 1999–2009

CBOE Volatility Index (VIX) 1999–2010

Note: Vix shows the market’s expectation of 30-day volatility and is a widely-used measure of market risk. Advanced economies are the G7 countries, the 16 members of the euro area, and the four newly industrialized Asian economies. Emerging are 149 countries not classified as “Advanced Economies.”

Source: IMF World Economic Report.

Global Stock Market Performance Percentage Change 1999–2010 (NYSE, Tokyo Stock Exchange, and EURONEXT)

(4)

(2)

0

2

4

6

8

10

19 9

9

20 0

0

20 0

1

20 0

3

20 0

5

20 0

7

20 0

2

20 0

4

20 0

6

20 0

9

20 0

8

Ja n

. 9 9

Ja n

. 0 0

Ja n

. 0 1

Ja n

. 0 3

Ja n

. 0 5

Ja n

. 0 7

Ja n

. 0 2

Ja n

. 0 4

Ja n

. 0 6

Ja n

. 0 8

Ja n

. 0 9

Ju ly

9 9

Ju ly

0 0

Ju ly

0 1

Ju ly

0 3

Ju ly

0 5

Ju ly

0 7

Ju ly

0 2

Ju ly

0 4

Ju ly

0 6

Ju ly

0 8

Ja n

. 1 0

Ju ly

0 9

0.00

10.00

20.00

30.00

40.00

50.00

60.00

1999 2000 2002 2004 2006 2008 2010

60%

40%

20%

0%

(20%)

(40%)

Tokyo Stock Exchange

New York Stock Exchange

EURONET

World

Advanced Economies

Emerging and Developed Economies

5

From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

© 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

27%  Confident They

Will Exceed Business Targets

30%

41% 49% 51%

LEADERS ARE UNDERPERFORMING

Percentage of Leaders Who Exceed Business Targets1 2008 Versus 2009

2008 2009

52%

29%

Percentage of Leaders Confident That They Will Exceed Business Targets in Next Six Months

Percentage of Leaders Who Agree They Have the Right Leadership Team at Their Organizations

1 Leaders rated 7 or above on a 9-point scale on achievement of revenue, profit, budget, and efficiency expectations.

These Are the Best Group of Leaders with

Whom I’ve Worked

Leaders Effectively Manage the Talent

of Our Business

Leaders Motivate the Organization to Higher Performance

Leaders Have a Strong Vision for the Future

6

From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

© 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

LEADERSHIP PERFORMANCE HIGHLY VARIABLE ACROSS AND WITHIN ORGANIZATIONS

In d

ex ed

P er

ce nt

ag e

o f

Le ad

er s

E

xc ee

d in

g B

us in

es s

Ta rg

et s

Surveyed Organizations

Leaders Exceeding Business Targets Across Surveyed Organizations

A

8.7x

B C D E F G H I J K L M N O P Q R

1.0x

Leaders at Company E performed relatively well despite coming from Financial Services.

7

From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

© 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

PARTICIPANTS IN LEADERSHIP STUDY

Partial List of Participating Organizations

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From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

© 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

ORGANIZATIONS TEND TO USE TWO STRATEGIES TO ADDRESS LEADERSHIP PERFORMANCE ISSUES

STRATEGY #2: FOCUS ON ORGANIZATION

62%  Made or Plan

to Make Major Leadership Team

Changes

61%  Restructured

or Plan to Restructure

39%  Did Not Restructure or Do Not Plan to Restructure

38%  Did Not Make or Do Not Plan to Make Major Leadership Team Changes

Percentage of Business Units Undergoing Major Restructuring 2009

Percentage of Business Units Making Major Leadership Team Changes 2009

STRATEGY #1: FOCUS ON LEADERSHIP TEAM

Leadership Team Examples

■ Layoffs to existing leadership team ■ Significant investment in new leaders ■ Redeploy leaders to other parts of the organization ■ Change leadership team responsibilities

Organization Examples

■ Significant business process transformation ■ New market strategy focus ■ Widespread pay/benefit reductions or freezes ■ Product or service redesign/reposition

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From the CORPORATE LEADERSHIP COUNCIL® www.clc.executiveboard.com

© 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

LEADERSHIP TEAM CHANGES FAIL TO ACHIEVE DESIRED RESULTS

Three Reasons Why Leadership Team Changes Fail

2008 2009

62% 63%

2006 2009

22%

38%

Percentage of Business Leaders Effective at Leadership Competencies

Percentage of Leaders Who Are Passive Candidates

Time to Leader Effectiveness at Competency

Leaders Are Strong at Most Competencies

Labor Market for Leaders Is Tighter Than You Think

Leadership Development Strategies Are Long Term

Le ad

er C

o m

p et

en ce

Time Since Development Experience

H ig

h 1

0 L

o w

1

2 Years

1 Year

18 Months

6 Months

Percentage of Leaders Who Exceeded Business Targets

Did Not Have Leadership Team Change

Did Not Have a Leadership

Bench Change

Had a Leadership

Bench Change

39%

16%

Had Leadership Team Change

Source: Recruiting Roundtable. Source: Learning and Development Roundtable.

2009 2009

321

10

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© 2010 The Corporate Executive Board Company. All Rights Reserved. CLC5517610SYN

Did Not Have Organizational

Change

Had Organizational Change

32%

21%

ORGANIZATIONAL RESTRUCTURING FAILS TO IMPROVE LEADERSHIP PERFORMANCE

Three Reasons Why Organizational Restructuring Fails

Did Not Have Organizational

Change

Had Organizational

Change

67% 55%

Did Not Have Organizational

Change

Had Organizational

Change

51% 46%

Percentage of Leaders with Clear Decision-Making Authority

Percentage of Leaders with Good Working Relationships

Decision-Making Authority Is Unclear

Workplace Networks Are Breaking D