Leaders — Find ’em, train ’em, pay ’em

Does your company have a process for developing leaders? Of course. Is it effective? Probably not — unless you work at a place like IBM or Johnson & Johnson or General Electric.

Dave Murphy San Francisco Chronicle

The companies that are best at developing leaders operate far differently from the rest of the pack, according to a new study by Hewitt Associates, the large human resources consulting firm. Hewitt analyzed leadership initiatives from 300 U.S. businesses and compared them with the "Top 20 Companies for Leaders" listed in this month’s issue of Chief Executive magazine.

Among the findings:

Only 32 percent of the people surveyed at the typical companies believe that their process for developing leaders is effective. At the top 20 companies, 85 percent feel that way.

All the top companies have a strategy for building their leadership. Only 61 percent of the typical companies do.

Only 29 percent of the 300 businesses measure their leadership programs’ effectiveness, but 79 percent of the top 20 do.

At 95 percent of the top 20 companies, the chief executive officer is actively involved in developing leaders; only about two-thirds of the other companies do that. It shouldn’t be a surprise, then, that those are almost exactly the same ratios for how often the CEOs are hired from within, rather than companies having to lure talent away from competitors.

IBM and Johnson & Johnson tied for first place on the magazine’s list, followed by GE, Colgate-Palmolive and Dell Computer. Bay Area companies making the list were Cisco Systems (No, 13); Wells Fargo (No. 14); and Intel (No. 19).

Hewitt’s study shows that almost all the top companies use mentoring and external training, but they also develop the leaders through assignments, rotating them among tasks so that they can cultivate different skills.

Those might seem like obvious solutions, but only about one-third of the 300 other companies offer mentoring and rotational assignments.

But maybe the most telling statistics are how much effort the top companies put into identifying potential leaders and making sure they don’t bolt to other companies.

Obviously when you select any potential leaders, the also-rans can complain about politics, but Hewitt found that 74 percent of the top companies identify the leaders through the performance management process, basing it on how well they already perform and what skills they show. Only 44 percent of the other companies do that.

Similar percentages apply when it comes to keeping track of turnover among those potential leaders. Top companies know why they lose good people and try to prevent it; other companies are more likely to be oblivious.

One way the top companies try to keep those good workers is with pay. Yes,

I know that fits into the "well, duh" category, but Hewitt found that two- thirds of those top 20 companies link pay to leadership potential. Only 40 percent of the other companies do that.

On the Fringe runs Saturdays. E-mail Dave Murphy at [email protected].

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