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CORPORATE LEADERSHIP COUNCIL

CORPORATE EXECUTIVE BOARD

CORPORATE LEADERSHIP COUNCIL®

Managing Leadership Performance Risks

Webinar

February 2010

COPIES AND COPYRIGHT

As always, members are welcome to an unlimited number of copies of the materials contained within this handout. Furthermore, members may copy any graphic herein for their own internal purpose. The Corporate Executive Board Company requests only that members retain the copyright mark on all pages produced. Please contact your Member Support Center at +1-866-913-6447 for any help we may provide.

The pages herein are the property of The Corporate Executive Board Company. Beyond the membership, no copyrighted materials of The Corporate Executive Board Company may be reproduced without prior approval.

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.

3

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

© 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



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 PerformancePercentage Change 1999–2010 (NYSE, Tokyo Stock Exchange, and EURONEXT)

(4)

(2)

0

2

4

6

8

10

199

9

200

0

200

1

200

3

200

5

200

7

200

2

200

4

200

6

200

9

200

8

Jan

. 99

Jan

. 00

Jan

. 01

Jan

. 03

Jan

. 05

Jan

. 07

Jan

. 02

Jan

. 04

Jan

. 06

Jan

. 08

Jan

. 09

July

99

July

00

July

01

July

03

July

05

July

07

July

02

July

04

July

06

July

08

Jan

. 10

July

09

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



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



LEADERSHIP PERFORMANCE HIGHLY VARIABLE ACROSS AND WITHIN ORGANIZATIONS

Ind

exed

Per

cent

age

of

Lead

ers

E

xcee

din

g B

usin

ess

Targ

ets

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



PARTICIPANTS IN LEADERSHIP STUDY

Partial List of Participating Organizations

8



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 Restructuring2009

Percentage of Business Units Making Major Leadership Team Changes2009

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

9



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

Lead

er C

om

pet

ence

Time Since Development Experience

Hig

h 1

0L

ow

1

2 Years

1 Year

18 Months

6 Months

Percentage of Leaders Who Exceeded Business Targets

Did Not Have Leadership Team Change

Did Not Havea Leadership

Bench Change

Had aLeadership

Bench Change

39%

16%

Had Leadership Team Change

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

2009 2009

321

10



Did Not HaveOrganizational

Change

Had OrganizationalChange

32%

21%

ORGANIZATIONAL RESTRUCTURING FAILS TO IMPROVE LEADERSHIP PERFORMANCE

Three Reasons Why Organizational Restructuring Fails


Change

HadOrganizational

Change

67%55%


Change

HadOrganizational

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 Down

Percentage of Leaders with Clear, Planned Goals

Leaders Are Confused About Their Roles


Change

HadOrganizational

Change

79%68%

Did Not Have Organizational Restructuring



Percentage of Leaders Who Exceeded Business Targets

Had Organizational Restructuring



321



11



INTERACTION AMONG LEADERS, ORGANIZATION, AND MARKET SITUATION DETERMINES LEADER PERFORMANCE

CLC Leadership Performance Model

MARKETSITUATION

LEADER ORGANIZATION

Leadership Performance DefinedRefers to having the appropriate organization and leaders for a given market situation.

Leader DefinedRefers to an individual business leader who has profit and loss responsibility (or equivalent).

Organization DefinedRefers to the organizational structure within which the individual leader works.

Market Situation DefinedRefers to external market situations (e.g., strength and depth of competition, consumer behaviors).

12



ChallengeMarket situation changes, but leaders do not

Market situation changes, but organization does not

Market situation changes, but organization and leaders do not

What Most Organizations Do

Focus on competency “buy” or “build” strategies

Focus on organizational restructuring

React to situational changes with leader and organizational changes

What the Best Organizations Do

Focus leaders on application of the right competencies

Surface and address organizational and talent barriers to short- and long-term strategies

Proactively enable role and leader evolution in support of future business strategy

ImpactImprove percentage of leaders exceeding business targets by 9%

Improve percentage of leaders exceeding business targets by 8%

Improve percentage of leaders exceeding business targets by 30%

Profiled Cases

ORGANIZATIONS MUST MANAGE THREE CRITICAL RISKS TO LEADERSHIP PERFORMANCE

RISK #1“LEGACY LEADER”

RISK #2“ORGANIZATIONAL

OBSTRUCTION”

RISK #3“STATIC SYSTEM”

Integrated Talent and Organizational Review

Leadership Behavior Transformation

Future-Focused Leadership Deployment Strategy

13



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

ORGANIZATIONS THAT MANAGE LEADERSHIP PERFORMANCE RISKS HAVE MORE SUCCESSFUL LEADERS

Percentage of Leaders Who Exceeded Business Targets1

By Organization’s Success at Managing Leadership Performance Risks

49%

17%

Organizations That Ensure Right Organization and Leaders

for Given Market Situation

Organizations That Don’t Ensure Right Organization and Leaders

for Given Market Situation

14






Council Resources

15



COMPETENCIES VARY ACROSS ORGANIZATIONS

Impact of Leadership Competencies on Achieving Business Targets Within Individual Organizations

Company A Company B Company C Company D

Industry A Industry B Industry C Industry D

Commonly Cited Leadership Competencies

Inspiring Others 33% 25% 34% 16%

Decision Making 31% 24% 32% 13%

Creativity 29% 23% 34% 11%

Vision 26% 22% 35% 8%

Business Acumen 22% 16% 26% 1%

Note: The maximum impact on business targets is calculated by comparing two statistical estimates: the predicted impact when a leader scores relatively “high” on a driver and the predicted impact when a leader scores “low” on a driver. The effects of all drivers are modeled using a variety of multivariate regressions with controls.

16



LEADERS HAVE COMPETENCIES BUT ORGANIZATION FAILS TO HELP LEADERS APPLY THEMLeader Effectiveness Across the Most Important Competencies

My Organization Teaches Me How to Get Things Done My Organization Teaches Me How to Succeed at My Organization

2008 2009

48%

36%

2008 2009

37%

26%

Ineffective

Neutral

Effective

Inspiring Skills Decision Making Creativity Vision Business Acumen

50%

47%

3%

65%

34%

1%

48%

50%

2%

58%

41%

1%

59%

39%

2%

17



REDIRECT LEADER BEHAVIORS TO MEET CHANGING BUSINESS NEEDS

Cisco’s Solutions to Drive Leader Behavior Change

Focus on Competitively Differentiated Competencies Based on Organizational Strategy

Validate Progress on Competencies to Ensure Ongoing Relevance to Changing Business Priorities

Increase Self-Awareness of Changing Expectations Through Behavioral Markers

“Tropicalize” Expectations to Ensure Applicability to Different Functions and Regions

Increase Relevance of New Expectations During Change (Get Leaders to Buy-In)

Activate Application of Competencies (Get Leaders to Execute)

18



Objectives (What is the organization trying to accomplish?)

Network as the Platform…Experience

Cisco = Leader of Next-Generation Communication and IT

Customer Partner Status

Business and Technology Architectural Leadership

Building Major Investments…#1 or #2 Position

Leader in Financial Performance, Integrity

Systems/Solutions/Innovation, Quality, Security, Manageability

Organizational Evolution…Built to Lead/Last

ALIGN BEHAVIORS TO CURRENT AND FUTURE STRATEGIC IMPERATIVES

Leader Interview Questions

1. What major challenges do you believe leaders will face given the long-term strategy of the business?

2. Given the business context and objectives, which competencies will differentiate the successful leaders?

3. Given that context, which competencies will be non-negotiable for executives?

C ollaborate

L earn

E xecute

A ccelerate

D isrupt

Cisco’s C-LEAD Model

“It was important to interview the right group of leaders who could think strategically about the new direction Cisco needed to pursue. That way, we weren’t simply cloning the leaders we already had.”

Kristie WrightTalent Management DirectorCisco

Set Future Strategic Context for Leaders to Identify Relevant Leadership Competencies

Interview Key Leaders to Surface Future-Focused Competencies

Challenges (What challenges—internal or external—will leaders face?)

Managing talent: Labor market is becoming a “seller’s market;” it will become more difficult to find people with specialized, as well as more general, skills.

Managing multiple economic and geopolitical factors that influence the business; many we can influence, many we cannot.

Reinforcing Cisco’s culture while also striking an appropriate balance between innovation/growth and risk management/operational excellence.

21

19



CONTINUOUSLY VALIDATE MODEL TO ASSESS PROGRESS YEAR-OVER-YEAR

Key Questions to Assess Progress on C-LEAD Behaviors ■ Do leaders who consistently achieve great talent and business results have high C-LEAD

scores? ■ Is the histogram of leaders’ C-LEAD capabilities becoming more balanced over time?

Annual

Competency

Validation

RESEARCH QUESTIONS VALIDATING C-LEAD

1. How does C-LEAD correlate with overall effectiveness, job performance, and rewards?

2. Which C-LEAD themes and competencies best differentiate performance outcomes?

3. Does demonstration of C-LEAD behaviors accurately predict potential for further advancement in leadership roles?

4. Does a leader’s C-LEAD capability correlate with his or her organization’s satisfaction and engagement?

5. Are the patterns of results consistent with what we know about our leaders and culture?

INPUTS TO C-LEAD VALIDATION

C-LEAD assessments and multirater 360 feedback

Objectives and performance outcomes

Performance appraisals

Performance-potential 9-box assessments

Employee engagement scores from leaders’ business units

2

3

1

Note: See appendix for more detailed information on competency validation.

20



C-LEAD Model of “Differentiator Competencies”

Legacy Leadership(Past)

Leadership for Today(Present)

Horizon Leadership(Future)

Collaborate

Maintains primary focus on functional success

Collaborates cross-functionally by informing others of solutions and approaches

Collaborates across functions to develop solutions that benefit function, region, and enterprise

LearnBuilds deep expertise within functional area

Pursues development outside of function and area of expertise

Challenges self to look at and do things differently

ExecuteDemonstrates intense focus on flawless execution

Shows passion for execution as well as broad objectives of the business

Build passion in others for long-term goals and enterprise objectives

Accelerate

Implements the strategy as given

Participates in the development of strategy

Adapts to market and global conditions to evolve and develop a new strategy

Disrupt

Fixes problems to proven processes and strategies as issues arise

Makes innovation a part of day to day execution, prioritizing, teamwork and planning

Continually challenges and sets new standards for the status quo

INCREASE SELF-AWARENESS OF BEHAVIORAL MISALIGNMENT USING BEHAVIORAL MARKERS

John Smith: 360 Assessment of C-LEAD Behaviors

Summary Superiors Peers Directs

Collaborate

Working Across Boundaries

Engaging Others

Earning Trust

LearnDeveloping Self × × ×Developing Others

Execute

Demonstrating Passion ×Empowering Teams

Achieving Results

AccelerateShaping Strategy

Building Capability × × ×

DisruptPromoting Innovation

Leading Change

× Legacy Leadership Leadership for Today Horizon Leadership

Define Temporal Differentiation—Cisco delineates the difference among past, present, and future demonstration of C-LEAD behaviors to help leaders make distinct behavioral changes.

Build Self-Awareness—Assessments build leaders’ self-awareness of whether they are demonstrating the transition from Legacy Leadership to Cisco’s Horizon Leadership.

21



PRIORITIZE AND “TROPICALIZE” COMPETENCIES TO ACTIVATE APPLICATION

PRIORITIZE

1 What are the business objectivesfor your business group?

2 What do business leaders needto do to achieve those objectives?

3 Which C-LEAD competencies are most important to execute those activities effectively?

TRANSLATE

4 How would you operationalize C-LEAD’s language for those competencies to ensure relevance to your leaders’ activities?

C-LEAD FOR TECHNOLOGY FUNCTION

IT Prioritizationobjective for IT leaders?

Support business needs through technology.

■ IT Translation: How can IT leaders win business in these markets?Obtain key information about customers’ technology needs.

■ IT Translation: Which C-LEAD competency can help IT leaders obtain key information about their internal customers?LEARN: Continue to develop the leadership and technical/functional capabilities needed to achieve results.

■ IT Translation: How can “Learn” be applied to IT leaders?LEARN: Develop deep knowledge in the IT team about internal customers’ business objectives and technology needs.

C-LEAD FOR SALES FUNCTION

Sales Prioritizationobjective for sales leaders?

Grow the business in key global markets.

1. Sales Translation: How can sales leaders win business in these markets?Obtain key information about prospective customers, their business models, their needs, and their challenges.

2. Sales Translation: Which C-LEAD competency can help sales leaders obtain key information about their prospective customers?LEARN: Continue to develop the leadership and technical/functional capabilities needed to achieve results.

3. Sales Translation: How can “Learn” be applied to Sales leaders?LEARN: Develop deep knowledge in the Sales team about customers in targeted vertical markets.

C-LEAD FOR PROCUREMENT FUNCTION

Procurement Prioritization

1 What is the business objectivefor procurement leaders?

Achieve the optimum balance of risk, innovation, control, and funding.

2 How can procurement leaders maintain cost savings and manage risks while supporting innovation?

Obtain key information about the ways new markets are structured and supply chains are managed.

3 Which C-LEAD competency can help procurement leaders obtain key information?

LEARN: Continue to develop the leadership and technical/functional capabilities needed to achieve results.

Procurement Translation

4 How can “Learn” be applied to procurement leaders? LEARN: Develop deep knowledge in the procurement team

about the operations involved in new market opportunities.

22



EFFECTIVE C-LEAD BEHAVIORS LEAD TO HIGHER REVENUE PERFORMANCE

Average Attainment of Revenue Goals for Leaders Demonstrating Different Leadership Behaviors

Protecting Legacy Leading for Today Horizon Leadership

101%108%

149%

Legacy Leadership Leadership for Today

Note: The data on this page is based on performance from leaders in the sales function, and is a sample of the types of relationships Cisco finds between C-LEAD and measures of performance.

23



KEY TAKEAWAYS FROM CISCO

■ Identify Relevant Leadership Behaviors Based on Strategic Context—Consider future objectives and potential internal and external challenges to determine behaviors and competencies that will enable leaders to make a strategic redirection.

■ Validate Competencies Against Business and Talent Outcomes—Correlate leadership competency evaluations against key business and talent metrics to assess year-over-year progress.

■ Increase Leader Self-Awareness of Changing Expectations Through Clear Behavioral Markers—Delineate past, present, and future leadership behaviors to enable leaders to self-correct behavioral misalignments.

■ Prioritize and “Tropicalize” Competencies to Ensure Applicability to Different Functions and Regions—Help leaders to prioritize the most relevant competencies and customize behaviors to their specific cultures, needs, and challenges.

24



COUNCIL RESOURCES TO ADDRESS THE “LEGACY LEADER” RISK

Corporate Leadership Council Resources

Best Practice: General Electric’s Leadership, Innovation and Growth (LIG) ProgramGeneral Electric accelerates innovation and growth through a four-day Leadership, Innovation, and Growth (LIG) Program that:

■ Convenes intact leadership teams to solve real business challenges ■ Helps team members build their innovation and growth competencies ■ Ensures real accountability for progress through the involvement of the Chairman

Action Toolkit: Creating and Updating Competency ModelsThis suite of ready-to-use tools enables organizations to create or maintain business-relevant competency models by analyzing the relevance and applicability of employee skills and behaviors and refining the model as necessary. Some of the resources in this toolkit include:

Competency Model Development ToolThis tool helps HR develop a clear understanding of current and future business strategy, identify the potential challenges in achieving objectives, and surface new skills required for future business success.

Competency Model Inventory 2.0This resource compiles member-provided competency models in an easy-to-use, searchable database. The inventory contains customizable models for leadership competencies, functional and industry-specific competencies, and role-specific competencies.

Cisco’s Competency Prioritization and Customization QuestionnaireThis questionnaire enables senior business leaders to customize the organization’s competencies to the needs and challenges of their business, function, or geography.

Competency Model Validation GuidelinesThis tool helps HR determine the validity of the organization’s competency model and ensure ongoing relevance to changing business priorities.

25



LEADER PERFORMANCE DEPENDS ON BOTH AN EFFECTIVE LEADER AND AN EFFECTIVE ORGANIZATION

Percentage of Variation in Leaders Outperforming Business Target Expectations Explained by Leader1 and Organization

Percentage Explained by Leader Percentage Explained byManagement of Organizational Obstacles

60%

40%

1 Leader refers to the leader’s strength at leadership competencies.

Percentage Explained by Leader as Individual

Percentage Explained by Organization Factors

26



INTEGRATE ORGANIZATIONAL AND TALENT REVIEW TO IDENTIFY PERFORMANCE RISKS

Unilever’s Talent and Organizational Assessment Timeline

Strategy Planning and Budget Setting

Regional/Functional/Local Talent and Organizational Reviews

Performance Reviews

Objective: To assess and manage ongoing organizational and human capital risks to key projects and product launches

Objective: To identify talent and organizational requirements for medium- to long-term strategies

HR Business Partner

HR Executive

Business Leader

CEOGlobal

Product TeamRegional

Executives

Regional Deployment Gate Meetings1

Global Talent and Organizational Review1

1 Please see the appendix for a checklist of the items assessed in Unilever’s Global Talent and Organizational Review and Regional Deployment Gate Meeting.

Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.

27



ASSESS AND REMOVE “SOFT” AND “HARD” ORGANIZATIONAL BARRIERS TO SUCCESS

Organization-Focused Assessment Areas1

1A. ORGANIZATION CHART Q1 2010Are the Most Important Parts of the Business Linked closely to Strategic Senior Leaders?

“HARD” ORGANIZATIONAL BARRIERS

Lack of Strategic Oversight—Strategically important parts of the business are not linked closely to senior leadership levelsResource Misalignment—Resources are not aligned to areas with predicted importance for growth and market shareComplexity of Job Design—Jobs are overly complex or customized to the incumbent

“SOFT” ORGANIZATIONAL BARRIERS

Unhealthy Culture—High turnover is due to organizational, rather than individual, causesInterface Tensions —Tensions and asymmetric information among business units hinder business performanceBusiness Processes—Key business or functional processes are ineffective or outdated

1B. ORGANIZATION STRUCTUREDoes the Organization Design Support The Strategic and Financial Objectives?Highlight the key points thinking through the following prompts:

1C. ORGANIZATION HEADCOUNTCan You Afford Your Organization?

FUNCTION END07 END08 END09

General Management

1D. INTERFACE ASSESSMENTHow Well Do Handoffs with Other Business Units Work?

1E. ORGANIZATION HEALTH CHECK

How Healthy Is the Organization and How Well Is It Functioning?

1. How well aligned are your people to your strategy and objectives?

2. What are the key messages from your GPS (Global People Survey) results in terms of improving engagement and leadership effectiveness in your organization?

3. How effective are your key business or functional processes?

4. What are the current tensions in the organization?

1 Please visit the Council’s Web site for the complete set of templates for Unilever’s Talent and Organizational Reviews.

28



PINPOINT POTENTIALLY FLAWED INTERFACES BETWEEN BUSINESS UNITS

Interface Assessment to Identify Organizational Hand-Off Issues and Successes

1D. INTERFACE ASSESSMENT: EUROPE

1. How Well Do Handoffs with Other Business Units Work?

What Are the Main Interaction Points for Your Business Unit?

Consider: Where are the “docking points” between your business and other units with whom you partner (e.g., global innovation teams, manufacturing, marketing)?

2. Where Have You Experienced Failures or Significant Successes in Those Handoffs?Consider:• Communications• Processlengthandcomplexity• Alignmentofprioritieswithpartneringbusinessunits• Collaborationissues

3. What Are the Indicators?Consider:• Missedproductlaunches• Missedsalestargets• Missedmarketshare• Employeemoraleandjobsatisfaction

4. What Needs to Change to Improve Interactions?Consider:• Givefeedbackortrainingtoindividualmanningtheinterface• Movemoresuitedindividualintointerfacerole• Upskillincumbentwithatemporarymove• Arrangeacommunicationworkshop• Reducethenumberofindividualcontactsataninterfacetostreamlinecommunication• Instigatefrequentdiscussionstoalignplansandresources• Reviewprocessandidentifyareasforimprovement

Interface tensions occur where parts of the organization join up and processes and products are handed off to different business units, potentially leading to business failures.

29



KEY TAKEAWAYS FROM UNILEVER

■ Integrate Organizational and Talent Reviews to Surface All Barriers to Leadership Performance—Since organizational factors are as important to leader performanceas individual capability gaps, organizations should assess organizational barriers as part of the ongoing talent review process.

■ Assess Organizational and Talent Risks to Both Short- and Long-Term Business Objectives—While most organizations assess talent needs and capabilities based on their long-term strategic priorities, few assess talent and organizational risks to specific product launches and business projects.

■ Evaluate “Hard” and “Soft” Organizational Barriers to Success—Assess both “hard” (structural, resource) barriers to leadership performance and “soft” (cultural, process, interface) barriers to leadership performance during business-led reviews.

■ Identify and Address Potentially Flawed Interfaces Between Business Units—Examine handoffs across business units to identify potential barriers to leadership effectiveness and business project success.

30



COUNCIL RESOURCES TO ADDRESS THE “ORGANIZATIONAL OBSTRUCTION” RISK


Talent SWOT Analysis and Action Planning Workbook This Excel-based workbook helps business leaders and their HR Business Partners/Generalists to summarize the business context and strategy of their unit, identify related talent concerns based on analysis of their business unit’s strengths, weaknesses, opportunities, and threats (SWOT), and create an action plan to address strengths, weaknesses, opportunities, and threats.

Talent SWOT Presentation Tool Business leaders can use this PowerPoint to present their talent action plan to central HR and senior leaders to ensure alignment with overall organizational strategy.

Action Toolkit: Conducting Organizational and Talent ReviewsThis toolkit enables HR to engage business leaders in the talent review process and assess both talent and organizational factors that impact their specific business strategies. Some of the tools in this toolkit include:

Best Practice: John Deere’s Inter-Accountability MatrixTo overcome decision-making stalls that often arise during periods of change, John Deere clearly defines and publicizes accountabilities for key roles.

Best Practice: Beta Company’s Organizational Design Scenario PlanningOrganizations struggle to identify clear design criteria to ensure fit with long-term strategic goals. To overcome this challenge, Beta Company aligns design criteria with its three– and five-year business scenario planning process to ensure alignment with its long-term strategic goals.

1

Best Practice: EB Games’ Frontline Decision-Making EmpowermentTo enable its mid-level decision makers to make judgment calls with confidence, EB Games pushed decision-making authority down to frontline managers and improved decision quality at all levels.

1 Pseudonym.

31



39%

26%

Organizations Primarily Making Proactive Decisions

Average Impact of Proactive Decision Making on Talent

Outcomes

Average Impact of Reactive Decision Making on Talent

Outcomes

Organizations Primarily Making Reactive Decisions

MAKE DECISIONS IN ANTICIPATION OF CHANGE—ESPECIALLY ON TALENT

Maximum Impact of Reactive and Proactive Decision Making on Talent Outcomes

Percentage of Leaders Who Outperformed Business Targets

Proactive Decisions Defined:

Making strategic decisions in anticipation of change

Reactive Decisions Defined:

Making strategic decisions in reaction to change

13%

3%

32



ASSESS CURRENT AND FUTURE TALENT AND BUSINESS NEEDS

Inputs to Talent Deployment Discussion

Australia Post’s Talent Council Discussion to Enable Better Deployment of Talent

Experie

nce

Competencies

Perso

nal

Attrib

utes

CognitiveCapabilities

Knowledge

Future-Focused Leader Profiles

Key Questions Addressed

■ Given long-term business needs, how will role requirements change?

■ Do we have the current and future capabilities needed for success, and what roles and capabilities do we need to create?

■ Given short- and long-term business strategy changes, are capabilities aligned with role needs?

■ What opportunities do we need to create in order to grow our talent?

External Calibration of Expectations

An external CEO sits on the Talent Council to provide an unbiased, external perspective and ensure that talent decisions are made without personal or political prejudices.

External CEO

Manager of Talent

(Facilitator)

GM Corporate Development

GM Business A

Manager of HR Strategy and OD (Chair)

GM Business B

GM HR

Future-Focused Success Profiles

Talent Council’s Analysis of Role-Person Fit

“Underpinning the talent conversation with robust data on current and future business needs allows the organization to decide whether the best person right now is someone with all the attributes for the role, or someone with some of the attributes and the potential to grow into roles that will be

critical for the business’s future success.”Kirstin SchneiderManager of TalentAustralia Postal Corporation

33



CREATE CURRENT AND FUTURE SUCCESS PROFILES FOR KEY POSITIONS

Creation of Success Profiles

1. Interviews and focus groups with incumbents of key roles Unique Input: Compiles position incumbents’ unique perspectives on current and future role requirements based on their intimate knowledge of changing customer needs.

2. Internal surveys of role incumbents’ direct managers, peers, and direct reports Unique Input: Offers a secondary perspective of critical roles’ day-to-day activities and responsibilities from colleagues who work with role incumbent daily.

3. External benchmarking data Unique Input: Provides an alternate point of view on how other companies structure the role and shows performance gaps with competitors.

1 Illustrative: The data in the Sample Success Profile is based on a more comprehensive profile.

Cur

rent

Req

uire

men

ts

Future R

equirem

ents

CHIEF INFORMATION OFFICER SUCCESS PROFILEIllustrative1

ESSENTIAL EXPERIENCE CRITICAL KNOWLEDGEIndustry and Function

■ Enablement of business strategy through technology

Role Challenges ■ Led significant change

process

Market and Environment ■ Extensive knowledge

of key marketsTechnical and Professional

■ Methods/tools to conduct IT requirement analyses

COMPETENCIES PERSONAL STYLES ■ Business acumen ■ Change leadership ■ Reading the

environment

Enablers: Even tempered/calm in crisis; independent thinker/strong decision makerDerailers: Discomfort with ambiguity

LEVEL OF WORKStrategic Delivery

■ Turn strategic direction into operational reality through the design and development of new systems, products, and services that impact a major part of the organization

■ Maintain an emphasis on maximizing the value created in the marketplace

INTERNAL LEADERSHIP IMPERATIVES

Short Term ■ Manage/drive change ■ Enhance operational

excellence ■ Protect and grow core

product and customer assets

Long Term ■ Build depth and diversity of talent ■ Drive toward vision ■ Drive growth

LEADERSHIP RESULTS

Short Term ■ Manage risk across

the organization ■ Minimize legal problems ■ Prioritize organizational

needs during budgeting ■ Reduce costs

Long Term ■ Develop new products

and services ■ Enter a new market ■ Manage supplier and contractor

relationships ■ Prepare successors

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BUILD FUTURE-FOCUSED LEADER PROFILES

Steps to Build Current and Future People Profiles

1 Please see http://www.bioss.com/ for more information on MCPA.

Cognitive Capabilities

Knowledge

Personal

Attributes

Exper

ience

Compet

encie

s


Knowledge

Personal

Attributes

Exper

ience

Compet

encie

s


Knowledge

Personal

Attributes

Exper

ience

Compet

encie

s

STEP 1Surface Individual’s Experiences,

Knowledge, and Aspirations

STEP 3Evaluate Competencies

in Organizational Context

STEP 2Assess Cognitive Capabilities and Performance Trajectory

Inputs (Self-Evaluation): ■ Exploratory conversation ■ Self-assessment

questionnaire

Inputs (Internal Assessments): ■ Competency multirater ■ Current/past performance

reviews

Inputs (External Assessments): ■ Modified Career Path

Appreciation (MCPA) online tool and conversation1

■ Personality questionnaire (behavioral and motivational)

35



KEY TAKEAWAYS FROM AUSTRALIA POST

■ Balance Current and Future Role Needs with Leader’s Current Capabilities and Future Potential—Identify both current and future role needs as well as current leader capabilities and growth potential when deploying leaders to new roles.

■ Align Leader and Organizational Expectations for Leader’s Career Progression—Create two-way transparency between leader and organization on leader’s career potential and development needs and leader’s career aspirations.

■ Consider Changing Role Requirements with Evolving Business Situations—Build forward-looking success profiles for key roles by considering current role needs and potential future role needs as organization, industry, economic environment, and customer needs change.

■ Incorporate External, Unbiased Perspective in Leader Deployment Discussions—Invite a senior-level, objective point of view into leader mobility discussion to ensure that talent decisions are made with an external focus and devoid of personal biases and organizational politics.

36



COUNCIL RESOURCES TO ADDRESS THE “STATIC SYSTEM” RISK


Tool: Australia Post’s Critical Role Success Profile Template This template helps organizations determine role responsibilities, necessary attributes, and critical capabilities for specific leadership positions. Use this template in tandem with Australia Post’s Person Profile Template to analyze role-fit.

Tool: Australia Post’s Person Profile Template This template helps organizations gather and summarize pertinent information regarding a leader’s successor potential. Use this template in tandem with Australia Post’s Critical Role Success Profile Template to analyze role-fit.

Tool: Australia Post’s Senior Stakeholder Questionnaire This template helps HR obtain feedback on current and future key attributes, objectives, and role needs for specific leadership positions. The information gained through this questionnaire should be incorporated into Australia Post’s Critical Role Success Profile Template.

Best Practice: Marriott International’s Strategic Human Capital ReviewMarriott’s Strategic Human Capital Review process expands on traditional succession management efforts by first expanding its scope to evaluate not only executive talent but also the environment within which executives operate. Furthermore, the company ensures disciplined evaluation of the organizational environment by providing line managers with tools to systemically evaluate organizational capability and identify areas for improvement. Finally, the company efficiently enhances organizational design and structures by using a centralized team of experts to partner with the line.

37



KEY INSIGHTS

Leaders Are Underperforming ■ Only 29% of leaders outperformed their business targets in 2009.

Two Traditional Strategies Are Ineffective at Minimizing Leader Performance Risks ■ Most organizations focus on either changing their leadership team or changing their organization,

neither of which provide substantial short-term improvements on leader performance.

Organizations Should Respond to Three Risks:

“LEGACY LEADER”

Market situation changes, but leaders do not

“ORGANIZATIONAL OBSTRUCTION”

Market situation changes, but organization does not

“STATIC SYSTEM”

Market situation changes, but organization and leaders do not

Solution: Focus leaders on applying the right competencies, rather than on developing or “buying” new competencies.

Solution: Surface and address organizational and talent barriers to short- and long-term strategies.

Solution: Proactively enable role and leader evaluation in support of future business strategies.

Leadership Behavior Transformation Integrated Talent and Organizational Reviews

Future-Focused Leadership Deployment Strategy

38






Council Resources

39



SUMMARY FINDINGS AND COUNCIL RESOURCES

What Most Organizations Do

Focus on competency “buy” or “build” strategies

Focus on organizational restructuring

React to situational changes with leader and organizational changes

What the Best Organizations Do

Focus leaders on applying the right competencies

Surface and address organizational and talent barriers to short- and long-term strategies

Proactively enable role and leader evaluation in support of future business strategy

CLC Supporting Resources

■ Cisco’s Leadership Behavior Transformation

■ Cisco’s Competency Continuum Template

■ Cisco’s Competency Prioritization and “Tropicalization” Questionnaire

■ Cisco’s Differentiated Competency Model Development Tool

■ General Electric’s Leadership, Innovation, and Growth (LIG) Program

■ CLC’s Action Toolkit: Creating and Updating Competency Models

■ Unilever’s Integrated Talent and Organizational Reviews

■ Unilever’s Talent and Organizational Review Templates

■ John Deere’s Inter-Accountability Matrix

■ Beta Company’s1 Organizational Design Scenario Planning

■ EB Games’ Frontline Decision-Making Empowerment

■ CLC’s Action Toolkit: Conducting Organizational and Talent Reviews

■ Australia Post’s Future-Focused Leadership Deployment Strategy

■ Australia Post’s Critical Role Success Profile Template

■ Australia Post’s Person Profile Template

■ Australia Post’s Senior Stakeholder Questionnaire

■ Marriott International’s Strategic Human Capital Review

“LEGACY LEADER” “ORGANIZATIONAL OBSTRUCTION” “STATIC SYSTEM”

1 Pseudonym.

CORPORATE LEADERSHIP COUNCIL

CORPORATE EXECUTIVE BOARD

CORPORATE LEADERSHIP COUNCIL®

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