Professional Documents
Culture Documents
The Leadership Advantage
The Leadership Advantage
Advantage
Robert M. Fulmer
Jared L. Bleak
Preface vii
Notes 247
References 251
Index 255
vii
Study Scope
The objectives of this study were to:
PAGE viii
P R E FA C E ix
Acknowledgments
We express our appreciation to the best-practice partner organiza-
tions and the specific individuals from each organization who were
part of the study, including:
PAGE ix
x P R E FA C E
tion and Power Control Division; Mary Seely, human resource man-
ager, North American Commercial Division.
Cisco Systems: Lisa Cavallaro, manager, WW Leadership Devel-
opment; Beryl Fajardo, manager, WW Leadership Development; Pat
Keating, director, WW Leadership Development; Patrick Tse, man-
ager, WW Leadership Development, who also reviewed Ciscos mate-
rial for this book.
PepsiCo: Allan Church, vice president, Organization & Manage-
ment Development; Paul Russell, vice president, Executive Learning &
Development.
PricewaterhouseCoopers: Jim Klee, chief operating officer,
Learning & Education; Kathryn Kavanagh, managing director, Partner
Leadership Development, Learning & Education; Dan Goepp, manag-
ing director, Assurance Practice, Learning & Education; Luciana Du-
arte, director, Learning and Education.
Washington Group International: Jennifer A. Large, vice presi-
dent, Integrated Staffing and Talent Management; Stephen P. Muller,
director, Employee Development; Larry L. Myers, senior vice presi-
dent, Human Resources.
Leadership Development as
a Strategic Force
Great leaders deliver great results. This is perhaps the most profound
finding from research on leadership development over the past dec-
ade. This phenomenon has been clearly articulated by astute gurus
and seen by forward-thinking CEOs as key to developing true competi-
tive advantage. Truly, organizations with strong leaders and superior
leadership-development strategies deliver better results. In short, de-
veloping great leaders delivers great results and is a key determinant
of business success.
Of course, leadership has never been a simple proposition. Ob-
servers have, throughout history, wondered if there were enough
capable leaders to manage the challenges facing all types of organiza-
tions. Today, business and government organizations face something
of a perfect storm of problems that has profound implications for
current and future leaders. Some of these problems are:
taught by and following the example of leaders who were role mod-
els, mentors, and teachers.
These findings have been confirmed across different dimensions
of leadership development. (See Figure 1.1 for a list of significant
studies on strategic leadership development that also appear in the
references section.) For instance, in 2004, the Corporate Leadership
Council found that organizations with strong leadership bench
strength have approximately 10 percent higher total shareholder re-
turn than their weaker peers. Similarly, companies with above-average
for identifying and then developing high potentials. In the top quart-
ile of leadership-development companies identified by Hewitt Associ-
ates, a human resources consulting company, metrics were integrated
with succession planning 71 percent of the time, versus only 45 per-
cent of the time in companies in the bottom quartile. These top com-
panies also more fully integrated competency measures into formulas
for base pay (60 percent vs. 30 percent), annual incentives (60 per-
cent vs. 31 percent), and long-term incentives (65 percent vs. 23 per-
cent).
Top leadership-development companies also use competencies as
metrics in the performance-management processes. These competen-
cies are established as behavioral standards for leaders and managers.
Pay is influenced according to performance against these standards.
Of course, in order to be useful, competencies must be clear, easily
understandable, and readily observable.
Many companies do not measure the impact of learning and de-
velopment as they should. In one 2004 study, 63 percent of European
multinational organizations reported never measuring return on in-
vestment in learning and development, even though these same firms
reported that the importance being placed on learning and develop-
ment within the organization was higher than ever before.8 There is
clearly more work to be done in holding people and organizations
accountable for learning and development results.
ple, at Washington Group, corporate leaders and its six business units
share responsibility for leadership development. The integrated
staffing and talent-management function is responsible for the design,
development, implementation, and maintenance of the programs,
while the office of the chairman reviews, approves, and provides feed-
back on moving forward with development. The fourteen-member
senior-executive leadership team meets regularly to discuss leader-
ship development.
As leadership development increases in importance, partnerships
with executives and HR will have to continue to be strengthened in
order for these efforts to succeed.
Strategic human resource development is a key part of the
corporate planning cycle. Another test for determining if develop-
ing leaders is a strategic priority for a company is to see if there is a
human resource development (HRD) component to the planning
cycle. The best-practice companies in this study make people plan-
ning, as well as succession planning, something that every key execu-
tive is expected to address in concert with his or her human resource
partners and the immediate supervisor. In other words, it makes
sense to consider which key players are expected to implement the
strategy and what assistance they will need to enhance the probability
of success.
For example, Washington Group leverages its annual strategic and
business planning sessions to discuss employee development and
leadership-development needs. Similarly, PepsiCos career-growth
model aligns with the organizations annual operating calendar.
These two examples lead to a strong conclusion that successful devel-
opment of leaders requires a strategic alignment of planning and all
human resource systems.
Human resource development can win the support of top
management by involving them in strategic learning initiatives
and by understanding the business. Most of the exemplars in this
study have a high degree of executive involvement in the delivery of
key corporate programs. Similarly, executive involvement in program
design can ensure that program content addresses topics of genuine
Leaders who teach are more effective than those who tell.
One of the surprising findings of this project was the degree to which
senior executives practice the concept of leading by teaching. At
PepsiCo, Paul Russell, vice president of executive learning & develop-
ment, speaks of the magic of leaders developing leaders. According
to Russell, the missing adult-learning principle is that people learn
best when they get to learn from someone they really want to learn
from. Russell notes that at PepsiCo, the teachers our executives
want to learn from are our own senior leaders. They are world class,
widely respected, and have proven that they can do it here!
At PepsiCo, senior executives are asked to share their personal
perspectives, as well as build participant confidence and skills while
demonstrating support for their growth. Of equal importance, senior
leaders elicit greater teamwork from participants and get to know key
young leaders while developing more loyalty, motivation, and pro-
ductivity among employees and creating greater alignment around
vision and key strategic initiatives. PepsiCo leaders are encouraged to
think of learning as an important arrow in their quiver for helping to
drive change. At PepsiCo, learning becomes something to live, not
just another thing to endorse.
cational program, but its CEO attends each of the major high-
potential programs and serves as the primary facilitator. Since the
CEO is intensely involved with program design and delivery, ratings
are less of a problem for her because of her familiarity with the pro-
gram and its participants. At the end of each program, each partici-
pant is asked to send her an e-mail indicating what he or she will be
doing differently as a result of attending the session. Participants are
also asked to send the CEO another e-mail six months later, reporting
on how thoroughly they have met their commitments.
Cisco collects both quantitative and qualitative measures of the
value of learning. The companys Worldwide Leadership Development
group has a formal system for measuring the outcomes of leadership-
development strategy. Examples of metrics include price range for
a one-week course, customer satisfaction scores, percentage of
program alumni who have used what they have learned in their jobs
and had a positive impact, and percentage of learners who stay
with the company. The team concentrates on metrics, showing the
application of learning to jobs and changes in business results. One
example of measurement is the retention percentage for employees
going through the programs as compared to the general employee
population. This retention percentage has been quite favorable for
Ciscoapproximately 93 percent across the organization.
Have you ever lived in a city that had failed to do adequate planning
for growth and development? With due respect to our friends at the
American Productivity and Quality Center (APQC), we feel that Hous-
ton may be a prime example of this sort of failure. Beautiful buildings
coexist with ramshackle structures. An upscale furniture store sits ad-
jacent to a used-car lot. The net effect, in our opinion, is that Houston
does not meet its potential for becoming a beautiful city. Although we
are admittedly biased, we believe Santa Barbara is an example of suc-
cess in urban development. The city took advantage of a 1925 earth-
quake to reinvent itself. With strong civic leadership provided by Pearl
Chase and downtown merchants, the city established and enforced
strong zoning requirements that demanded consistency in architec-
ture and created a harmonious appearance in the business areas of
the city.
25
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M A K I N G L E A D E R S H I P D E V E L O P M E N T A S T R AT E G I C L E V E R 27
PAGE 27
28 L E A D E R S H I P D E V E L O P M E N T A S A S T R AT E G I C F O R C E
tal experiences that help individuals move through their careers while
also moving the organization toward its strategic goals. However chal-
lenging, creating an integrated approach is critical to an organiza-
tions success in developing its people.
3. Think about building organizational capability, as well as
individual leaders. We believe that management development is
dead among leading firms. Obviously, there is still a strategic need to
develop individual leaders, but focusing on individual development
apart from organizational strategy is simply providing competitors
and headhunters with better people for recruitment. Action learning
designed to address key organizational challenges can often provide
solutions just as insightful and pragmatic as can outside consultants
and it also contributes to the development of both the individual and
the organization. Most important, however, is the capability that your
best and brightest will have developed through the experience, and
that you will have established the connection between individual and
organizational development.
4. Teach people to master (business) challenges, not competen-
cies. Competency models are important, but only if they address cur-
rent and anticipated business issues. The key is for leaders to
understand and master the business and for the competencies to align
with that business.
5. Measure outcomes and organizational impact regularly.
Chapter 6 addresses the challenge of assessment in greater detail. At
this point, we simply want to emphasize that the plan for measure-
ment of impact should be built into the original design of the business
strategy.
6. Request extensive C-suite and board participation. Senior ex-
ecutives may believe that they are too busy for detailed participation
in corporate learning initiatives. This study and previous research in-
dicate that truly great leaders understand that there are few ways of
leveraging their efforts and that sharing their visions is more effective
than discussing their teachable point of view with the next generation
of leaders.
What does your competition look like? How does this competi-
tion impact your need for change?
Can you tell us about your companys, and top leaders, busi-
ness challenges?
What else would you add to our discussion that keeps you up
at night?
VISION
2020
STRATEGIC PROFILE
Engagement Index 90%
STRATEGIC GOALS
by 2010
People Performance Profitable Growth
Product & Process
Leadership Index 80%
CRITICAL SUCCESS FACTORS
by 2010
PEOPLE QUALITY PRODUCT VELOCITY DISTRIBUTION CHINA TROUGH
ENTERPRISE Order-to-Delivery
STRATEGIC Encoding 6 Sigma
AREAS
Sustainable Development
OF IMPROVEMENT
Growth Beyond Core
business strategy can provide great benefit to the organization and its
employees. Organizations that realize the importance of this link estab-
lish a leadership-development philosophy that permeates all organiza-
tional levels and is applicable to all employees. This alignment embeds
strategic leadership development in the DNA of the organization.
All of the studys partners indicated that leadership development
is tied to their corporate planning process, yet this was true of only
a third of the study sponsors, as shown in Figure 2.4. Indeed, the
development and articulation of a leadership philosophy linking lead-
ership to business strategy is a foundation of best practice and an
important predictor of success. In our research, we found that align-
ment of strategies is key to ensuring that the leadership-development
strategy is relevant to each business unit and, more important, to the
overall business strategy.
Recently, Caterpillar realized that learning had to be linked to cor-
porate strategy and critical success factors. At Caterpillar, alignment is
achieved by receiving input from the executive office, business units,
Figure 2.4. To what extent are leadership-development programs at various
levels aligned with the corporate/business strategy, with the desired corporate
culture, and with each other?*
18.8%
Aligned with
corporate/business strategy (4)
0.0%
25.0%
Aligned with
corporate/business strategy (2)
40.0%
18.8%
Aligned with
corporate/business strategy (4)
0.0%
25.0%
Aligned with
corporate/business strategy (2)
40.0%
75.0%
Aligned with each other (4)
100.0%
31.3%
Aligned with each other (2)
60.0%
*Responses do not always add up to 100% as respondents were asked to check all that apply.
and process owners of the critical success factors; however, the foun-
dation of the alignment is the Enterprise Strategy (see Figure 2.2.).
At Caterpillar, stakeholder inputs tie learning to business goals that
eventually become the part of the Enterprise Learning Plan for the
year. (See also the Caterpillar case study in Part II of this book.) To
further embed leadership development in the business strategy, the
company established metrics to connect leadership behavior to busi-
ness success.
PricewaterhouseCoopers (PwC)s leadership-development strat-
egy is directly related to its distinctive firm strategy, which has busi-
ness goals in three areas: client service, employee development, and
quality work. These business goals and corporate strategy became the
framework for the leadership strategy for PwC in North America. As
a consequence, corporate and leadership strategies are linked. The
leadership-development programs reinforce the corporate strategy
and ensure success. Senior line executives sponsor the programs.
Their sense of a programs value in achieving the firms goals is a key
factor in program success.
Washington Group also formally links its business strategy with its
leadership-development strategy. It holds a series of strategic plan-
ning sessions during the year that encompass both the corporate
strategy and the human resources strategy as they relate to business
objectives. In these sessions, the organizations business strategy is
reviewed and refined, and it becomes the basis for formal employee-
development plans. In fact, all of these strategies guide leadership
development. At Washington Group, the direct connection between
business strategy and leadership-development strategy allows for em-
ployee development with near- and long-term action plans that en-
sure success in providing the leaders needed to confront future
challenges.
PepsiCos leadership-development strategy is grounded in the be-
lief that strong leaders are needed to be successful in the marketplace.
This belief is fundamental to PepsiCos two-pronged HR approach,
which includes a career-growth model and a talent-management
model for leadership development. (See the PepsiCo case study in
Part II.) This two-pronged HR approach aligns with corporate strate-
Key Finding 4. Lean competency models and values are the foundation
of strategic leadership development.
1. Thinking Skills
SETTING
SETTING Planning 2. Innovation
SETTING 3. Strategic Focus
T HE
THE
A GENDA
AGENDA 4. Establishes Priorities
Execution
5. Drives for Results
6. Change Leadership
Courageous Leadership 7. Motivates Others
8. Collaboration Focus
TAKING for
9. Builds Talent 360-degree
OTHERS People Development 10. Inclusion
WITH Feedback
11. Supports Others
YOU Process
Our Values
Innovation
Learning
Agility
The best solutions We lead with
come from working clients, people,
togetherwith Relationships Courage and thought.
Respect Vision
colleagues and clients. Sharing Integrity
Make Strategic/
Fuel Business Growth Cultural Change
(not enough current leaders (current leaders represent
to support future expansion goals) what the business needed in
the past, not the future)
45
Business Strategy
Vision Challenges Execution
Whats big and new? What is the scale and Which key challenges Which capabilities do Which interventions
Which pressures are scope of change that are you facing? you need to develop? make most sense for
you facing? you are facing? Which organizational Which offer the highest developing your people?
capabilities do you leverage for business What is the map?
External forces Business Consistency: need to build? impact?
for change E.g.: challenges of Examples include:
Environment cost containment, Examples: New Competencies On-boarding
Competition quality, efficiency Global expansion Key Managerial Levels Job rotations
Industry evolution Mind-set change from Transitions Secondments
Demographics Business Evolution: cost cutting to creating Promotions Mentoring
Regulation E.g., challenges of value Moving to new Business-advisory
divergence/convergence, From passive to active geographies/ coaching
Internal forces for change new and unexpected selling cross-cultural Leadership coaching
Current change competition, adjustments Collaboration for Same function but Assessment
initiatives in the value chain cross-sell, up-sell different business Action learning
Employee satisfaction Shared services Same place, same Consortia
levels Business Revolution: integration for business but different E-learning
Turnover E.g. challenges of efficiency work External board
Recruitment discontinuity, evolution Sustaining rapid participation
difficulties of entirely new business growth CEO conferences
Outsourcing model, long-term Innovation to stay Leaders teaching
Off-shoring players sudden demise ahead leaders
Metrics
t s
Figure 3.2. How high a priority does your organizations senior management
give to leadership development?
25.0 %
Very high priority
60.0 %
37.5 %
High priority
40.0 %
12.5 %
Low priority
0.0 %
0.0 %
Not a priority
0.0 %
a
igm
6S Selection Integrate leadership competencies into
targeted selection process
a
Career igm
6S Development
Management
Legacy competencies Core Programs: MGL,
integrated into new career Caterpillar SiS, etc.
dev process training and
materials
Leadership Supervisor curriculum
MGL re-assessment
Framework EOS action planning
a a
igm igm Performance
6S Succession 6S
Management Management
New global succession mgmt process Integrate leadership competencies in
includes discussion on leadership Performance Summary document
competencies and 3-year EOS leadership
index trend (Dept Hdlevel only)
Functional Gameplans
<
Functional Gameplans
PepsiCo Career
SeptemberOctober Growth Model &
Talent Management Model
360 Admin & Results (off -cycle)
360 Admin & Results (off -cycle)
Mid-Year Review Development Action Plans Finalized
Development Action Plans Finalized
Discussion with manager
Discussion with manager
regarding progress on MarchApril
regarding progress on
objectives, development
objectives, development
plans, career interests, and
plans, career interests, and
other related topics
other related topics
People Planning
JulyAugust < Organization
Organization and
assess
assessbench
and individual
individual talent
benchstrength,
talent review;
strength,potential
review:
potentialmoves,
moves,
diversity
diversityscorecard,
scorecard,career
careerinterests,
interests,
360 Feedback Admin (on -cycle) leadership
leadershipand andfunctional
functionalexcellence,
excellence,
360 Feedback Admin (on -cycle) critical
Org Health Survey Admin criticalexperiences
experiences
Org Health Survey Admin
JuneJuly AprilJune
ing & Education, HR, the U.S. Leadership Team, and Partner Affairs.
For example, the Learning & Education team works with vendors
such as Duke CE along with the U.S. firms management committee
to develop and deploy the PwC University program. Additionally, the
firms leaders work with the Learning & Education team to deliver
PwCs SOAR program (described in detail in the PwC case study).
Finally, in the PwC University 2 experience, the Learning & Education
team works with local-area partners and managers to ensure their
business-area needs were met.
At Washington Group, corporate and the business units share re-
sponsibility for leadership development. The integrated Strategic
Staffing and Talent Management group is responsible for the design,
development, implementation, and maintenance of the programs,
and the office of the chairman reviews, approves, and provides feed-
back on moving forward with developmental proposals. The fourteen-
member senior-executive leadership team meets regularly to discuss
leadership development.
One way to ensure that something gets done in an organization is
to embed the process or job in the workflow. As the next section will
show, this has been accomplished with strategic leadership develop-
ment at the partner organizations by linking people-development
processes to the corporate calendar.
Key Finding 7. HRD can win the support of top management by involving
it in strategic learning initiatives and by understanding
the business.
80.0 %
Shared between corporate and
business units
60.0 %
6.7 %
Sponsors N=15
Business unit
Partners N=5
0.0 %
13.3 %
Corporate
40.0 %
ing for the participants. Also, program participants often learn best
from people they know, admire, and respect. Figure 3.6 suggests that
best-practice firms are much more likely to have top management in-
volved in the governance and delivery of leadership development
than are the comparison firms.
When asked to approximate the percentage of the CEOs time
spent on issues associated with leadership development, three of the
five study partners indicated that their CEOs spend anywhere from 11
to 50 percent of their time on such issues. This is a huge commitment
and shows just how strongly these organizations feel about leadership
development. These results mirror a 2005 study of top firms for lead-
COO/CFO/CIO 100 25 0 19 60 19 0 25
Divisional
Executives 100 57 0 19 80 44 0 25
ers (Salob and Greenslade), in which all of the top twenty companies
cited reported strong CEO involvement and sponsorship for leader-
ship development. This is compared to 65 percent of the comparison
firms.
Our study also confirms the findings of a 2004 survey of the execu-
tive education practices in twenty-eight global organizations (Saslow).
This study found that aligning development and corporate goals
was a key priority of the best-performing companies. Firms that had
previously practiced a bottom-up approach, which starts with individ-
uals and the skills they need, shifted their emphasis to building pro-
grams around corporate goals and current initiatives.
At Cisco, each program has an established cross-functional execu-
tive-steering committee that tightens the link between the program
and the business. The business leaders on the steering committees
help drive the design of the programs and recruit appropriate execu-
tives for the classrooms. In addition, they play the roles of coach and
facilitator and host networking events in the program. The programs
typically employ executive faculty, or internal leaders who bring parti-
cipants a strategic perspective.
A board of governors for Caterpillar University, which includes the
CEO and senior executives, approves learning budgets and priorities
and also determines policy. An advisory board for each college in-
cludes senior leaders from business or user groups. This group is
diverse in terms of geography and subject-matter expertise and has
members from most of Caterpillars business units.
Before each leadership-development program is rolled out, PwCs
design team consults with a committee of designated leader-partners
who serve as a strategic sounding board to ensure alignment. The
U.S. businesss management committee, the organizations highest
leadership team, is highly involved in all decisions regarding partner
leadership development. Members of this committee attend key part-
ner programs where they speak or lead and engage in discussions.
They may also participate in the program alongside other partners
and participants.
A meeting between Washington Groups HR team and the office
of the chairman led to the development of the organizations LEAP
(Leadership Excellence and Performance) program. (For more de-
tails on this program, see the case study in Part II.) Members of the
senior leadership team also serve as instructors in Washington
Groups Leaders Forum. Key officers design and deliver the material
for the forum. For example, the CFO designed a method to help
participants better understand financial matters using an electronic
board game patterned after the popular television program Jeop-
ardy!
Although it is important to involve line executives who have a
deep understanding of the business challenges facing an organization
in key leadership-development decisions, this involvement is not suf-
ficient to ensure program success. HRD partners must understand the
business as well as cutting-edge leadership concepts in order to focus
executive interests on ways of leadership development that incorpo-
rate internal challenges and external best practices. In this study, the
partners HRD staffs are keenly aware of what is happening outside
the enterprise, especially in the arena of leadership development.
Most use outside specialists to supplement their understanding of the
latest thinking in the external world. All of the best-practice partners
emphasized the importance of understanding both the business and
the strategy of their companies.
Key Finding 8. Leaders who teach are more effective than those who
tell.
Figure 3.7. Are current leaders used as coaches and/or mentors in the
leadership-development programs?
18.8 %
Neither
20.0 %
31.3 %
Both
60.0 %
Sponsors N=16
Partners N=5
37.5 %
Used as mentors
20.0 %
12.5 %
Used as coaches
0.0 %
ment arena, which serves to transfer knowledge and mentor this up-
and-coming group of leaders.
63
Execute Dynamic
talent plans
What actions are and measure Process
necessary to impact Analyze _ Who are our stars?
implement the plan? individual and
Are we getting the portfolio Our blockers?
results we wanted? strengths and Where do we have gaps in
weaknesses our overall leadership-talent
Conduct action- portfolio?
oriented talent
reviews
As a result of this project, we will have in place a core business process that
ensures it has the right type and quality of leaders to implement its strategy.
Figure 4.2. Five conversations to build and implement your leadership strategy.
What is our shared What is the leadership What is the existing What processes, What does success look
vision? philosophy/principles? portfolio of development supports, routines, and like?
What leadership skills What are the organization programs and experiences, technology are needed What will the audience
are important in our capabilities required to (eg., current reality)? to support the new know/do/believe
organization? drive future business What is the new leadership
What is the competitive success? roadmap? leadership strategy and differently?
environment? What specific leadership What is the development architecture? How can you quantify and
What are the business practices and behaviors curriculum by level and What capabilities are verify that youve reached
challenges? are required? (eg., role? required? your destination?
How will we know competencies or What do the development What is the
when we achieve our leadership framework) solutions look like for on- implementation plan?
vision? (What are the What is the existing job and off-job What is the
results, e.g., talent, portfolio of development opportunities? communication plan?
organization, financial?) planning and key What aspects of the
experiences? roadmap are urgent
What is the state of the priority, midterm, and low
leadership pipeline? priorities?
Leadership
Shared vision High-level roadmap Infrastructure analysis Gap analysis of
principles and core
w/results Identification of leadership Implementation plan leadership pipeline
messages
Map of strategic pipeline Communication plan and Analysis of development
Leadership
imperatives Prioritization of all initiatives key stakeholders curriculum
capabilities
Business challenges Leverage points Line leader validation Line leader validation
Leader pipeline gap
Line leader validation Line leader validation
analysis
Line leader
validation
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I M P L E M E N T I N G S U C C E S S F U L S T R AT E G I C L E A D E R S H I P D E V E L O P M E N T 67
view of the desired future of the organization, along with some spe-
cific ways of recognizing success. In some instances, an overview of
strategic imperatives is developed along with an articulation of sup-
porting business challenges. Involving line leadership in this process
to validate the assumptions created as a result of this conversation is
also quite important.
2. Define guiding principles and current reality. The major
thrust of the second conversation topic is to identify the values or
principles that define the organizations culture. This conversation
also includes an audit of current reality, so as to identify any gap be-
tween vision and reality. Closing this gap then becomes the target of
subsequent activities.
3. Create the new leadership blueprint. The third conversation
topic looks at the organizations existing portfolio of programs and its
experiences and then compares that with the proposed leadership
design. This step begins the process of creating a new curriculum, as
well as adjusting existing aspects of the talent-management process.
Figure 4.3 depicts a blueprint for developing this leadership strategy,
with the gaps between vision and solutions that need to be bridged.
4. Review and align the infrastructure. The fourth conversation
topic involves reviewing, adjusting, and aligning the infrastructure re-
quired to support the new leadership-development strategy. At this
point, an implementation plan is created and responsibilities are as-
signed for achieving specific targets, as well as a process is started for
communicating the new realities to all involved, whether program
sponsors or participants.
5. Measure. The final topic focuses conversation on determining
how success will be measured, what specific results are expected, and
which behaviors should be changed. This topic is discussed in signifi-
cantly greater detail in Chapter 6.
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68 L E A D E R S H I P D E V E L O P M E N T A S A S T R AT E G I C F O R C E
THE
DESIRED VISION?
THE GAPS LEADERSHIP
DEVELOPMENT
FUTURE
Gaps in vision? SOLUTION
DESTINATION?
Content
CHALLENGES? Learning Methods
Gaps in how
challenges are
Sequence
addressed? Links to Other HR Systems
STRATEGY? Building Buy-In
CURRENT Gaps in the
strategy?
Evaluation
REALITY?
HUMAN
Gaps in the human
CAPITAL
capital systems?
SYSTEM?
Gaps in the cultural
CULTURAL system?
SYSTEMS?
Gaps in work
structures & processes?
WORK
STRUCTURES &
PROCESSES?
Key Finding 9. HRD owns the process and maintains strategic control.
62.5%
Take into account different
business challenges (Yes)
100.0%
56.3%
Take into account cultural
differences (Yes)
100.0%
Sponsors N=16
Partners N=5
75.0%
Allow for variations across the
organization (Yes)
100.0%
43.8%
Flow consistently across the
organization (Yes)
100.0%
25.0%
Third-party vendor/consultant
80.0%
68.8%
Learning and development
100.0%
75.0%
Human resources
60.0%
62.5%
Senior management
40.0%
18.8%
COO/CFO/CIO
20.0%
37.5%
CEO
40.0%
18.8%
Board of directors
0.0%
The HRD leaders in the study maintained tight control of their programs
while leveraging their time and skills via selective partnerships with out-
side specialists, as well as with other human resource colleagues within
the company. As just mentioned, perhaps because of their emphasis on
knowing the business and on lean staffing, most of the best-practice
partners involve outside firms or specialists in both the design and deliv-
ery of their learning initiatives. They expect these outsiders to bring
specialized talent to the table, plus learn and understand the clients
business. However, no matter how busy they are, these professionals
never entirely relinquish the tasks of program design and delivery.
PricewaterhouseCoopers probably delegates more of its educa-
tion function to outside providers than do the other firms studied. As
mentioned, the firm believes it is better served by letting its partners
focus on their own professional expertise (which generates revenues
for the firm) while hiring others to handle program design and deliv-
ery. Still, PwCs partners remain involved in every aspect of the proc-
ess, using their internal access to ensure that activities address
genuine business challenges. Washington Group, as we have seen,
uses recently retired executives as an adjunct to its limited staff. Cater-
pillar, on the other hand, develops a few long-term relationships with
outside consultants to provide an external perspective on its leaders-
as-teachers approach.
The power of partnerships in the leadership-development process
is important. We revisit that topic at the end of this chapter, along
with providing some suggestions for making these partnerships suc-
cessful.
Figure 4.6. How closely is leadership development integrated with other talent-
management systems such as succession planning and/or performance
management?*
43.8%
High integration
60.0%
25.0%
Separate, but shared objectives Sponsors N=16
and goals Partners N=5
40.0%
25.0%
Low integration
0.0%
*Responses do not always add up to 100% as respondents were asked to check all that apply.
Figure 4.7. How closely are executive coaching activities and other leadership-
development programs aligned with each other?
13.3%
High alignment
60.0%
53.3%
Separate practices but shared Sponsors N=15
objectives Partners N=5
40.0%
33.3%
Low alignment
0.0%
future. Each should clearly lead to actions that align with the com-
panys overall strategy.
What role should outsiders play in this multilayered drama? Quite
simply, outside providers become their clients business partners. As
partners, both parties have a stake in the successful development of
the organizations leaders over time. But forming a business partner-
ship is easier said than done. Forging balanced partnerships requires
a long-term viewand long-term relationships. Yet as partners, out-
siders will get to know their clients very well over time; they will learn
the industry and understand the organization and its leaders.
Consultants will work as business partners to link their efforts
to their clients human resource and development activities. Theyll
understand the hiring, development, and promotion philosophies of
the firm, and they collaborate, when appropriate, on assessment, eval-
uation, and succession planning. They ensure that all of the efforts
undertaken by the company are consistent with and linked as directly
as possible to all other developmental activities.
True consultant-partners strive to become members of the
leadership-development team, working closely to supply creative
ideas, solutions, and support that will help the team meet its goals.
Theyll do more than simply bring an outside perspective to the table;
theyll also share best practices from across the management and ex-
ecutive-development industry to ensure that their clients are leaders
in the field.
Effective partnerships with outsiders extend beyond the parties
involved. Indeed, a critical test of an outside consultant is the degree
to which the firm will work directly (and cooperatively) with other
client partners or providers. Here, they can be judged by both their
words and their deeds. Rather than look for ways to criticize other
providers, true consultant-partners welcome the opportunity to link
those activities with theirs in order to create a seamless development
strategy for the client.
Partnering is a natural outgrowth of the increasing emphasis on
custom development of executive education. Understanding a com-
pany and its executives enough to deliver a customized program pro-
motes increased efficiency and effectiveness for the organization,
also show how a successful leadership strategy impacts not only the
human side of the business equation but also the business strategy
and vision. But first, Chapter 5 looks at the special challenges and
opportunities associated with leadership-developmental activities
aimed at high potentialsand the potential these programs have to
provide leverage for strategy.
83
competencies does the organization currently have? What are the cur-
rent gaps in the leadership competency continuum? What will be the
future gaps? How do we attract, develop, and retain people to close
these gaps?
It is this last question that defines each organizations leadership-
development challenge. Intentions to hire the best and the bright-
est or seek out and hire only the best corporate athletes may do
little to actually enhance the talent pooleven if an organization is
successful in realizing these intentionsif talent selection and devel-
opment do not fill the organizations competency gaps. This would
be akin to hiring the best gymnast for a race.
Effective talent selection is not the sole success factor for busi-
nesses of the future. Caterpillars succession-planning process begins
with a definition of a future leader. This definition is based on the
identification of twelve leadership competences, each grouped as per-
taining to vision, execution, or legacy. In addition to using a compe-
tency model to govern the succession-planning process, Caterpillar
requires that candidates for senior positions demonstrate the follow-
ing characteristics: performance, diversity and inclusion, values in ac-
tion, employee engagement, cross-functional experience, Six Sigma
experience, global experience, and external experience (when appli-
cable).
Although the aforementioned ideas are not new, they are not
widely practiced. Integrating these techniques with business strategy
makes a firm best-in-class achievement.
global job rotations. These late-stage high potentials are among the
top 5 to 10 percent of an organization. Significant costs are incurred
to prepare them for the next level of executive challenges.
Most leadership-development programs support the need for
leaders to obtain feedback from others on their skills (e.g., 360-degree
assessments, decisions, and outcomes resulting from those deci-
sions).11 Obtaining such assessments and feedback in a timely and
productive manner is becoming increasingly important to talent as-
sessment. More often than not, only limited stakeholder feedback is
solicited by leaders or their organizations. Unsolicited feedback is fre-
quently viewed as critical rather than developmental. Such feedback
can lead employees to be defensive and resistant to learning and pro-
fessional development. To preclude defensiveness and enhance em-
ployees openness to learning, senior leaders must be proactively
involved with their key stakeholders in the discussion of talent devel-
opment.12
100%
Succession Planning 78%
60%
Annual Incentive
Leader competencies 31%
65%
Long-Term Incentive 23%
100%
90%
Internal Training
51%
Developmental 89%
Assignments 43%
Mentoring or 58%
coaching 24%
SOURCE: Michelle Salob and Shelli Greenslade, How the Top 20 Companies Grow Great Leaders
(Hewitt Associates, 2005).
SOURCE: Based on Robert M. Fulmer, Survey of Conference Board CLO Council, internal document,
2005.
ees with less potential. Organizations are looking for talented people
who demonstrate global thinking, cross-cultural awareness, ability to
build alliances and partnerships, technological savvy, and belief in
leadership sharing or people partnerships. Leaders who display a high
level of energy, who show the ability to do what has to be done, and
who energize others are always in high demand. As this book has
shown, a company that truly understands the need for leadership
planning now will have the leaders it needs tomorrow to remain com-
petitive.
Most key corporate initiatives in this study focused on those indi-
viduals designated as high potentials within an organization. One rea-
son for this is that these individuals have shown themselves to be
open and receptive to these developmental programs. They are usu-
ally eager to take advantage of the opportunities given to them, recog-
nizing them as a sign by the organization that great things may be in
store for them. The knowledge and insights they gain are more likely
to have a multiplier effect throughout the organization. Programs
aimed at this constituency can provide a launching pad for major cor-
porate initiatives. The challenges of implementing a strategic leader-
ship effort will be explored in Chapter 6.
If a tree falls in the forest and no one is there to hear it, does it make
a sound? Many of us have considered this question philosophically;
however, it really is a question of measurement. If we dont see, hear,
or measure the results of an event, how can we be sure it really hap-
pened? How can we determine if a program successfully reached its
intended outcome? The question of measuring the success of substan-
tial investments in leadership development and other human capital
development activities produces a great deal of concern and anxiety
in corporations.
Corporations spend millions of dollars on training and develop-
ment programs every year, including leadership-development pro-
grams. In fact, the best-practice partners in our study indicated that
they spend a median of $8 million annually on leadership develop-
ment. Of course, these organizations view this as an investment in
103
Moving Forward
Measuring the impact that strategic leadership development has on
the organization helps the human resource department understand if
it is spending its dollars in the right way (i.e., on the right learning
activities) and at the right time (i.e., at the appropriate career transi-
tion). Among our studys participants, the types of measures used and
the data collected varied from organization to organization. Some or-
ganizations calculated a return on investment (ROI) figure, while
Measuring Success
Figure 6.2. How often do you measure the results of your leadership-
development strategy?*
6.3%
Other
20.0%
12.5%
Annually
40.0%
0.0%
Semiannually
0.0%
Sponsors N=16
Partners N=5
6.3%
Quarterly
0.0%
0.0%
Monthly
0.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
*Responses do not add up to 100% as respondents were asked to check all that apply.
Figure 6.3. Which of the following are used to measure results of your
leadership-development strategy?
0.0%
Other
20.0%
6.3%
% of turnover
20.0%
6.3%
# of promotions
20.0%
18.8%
Follow-up 360-degree surveys
40.0%
12.5%
Organizational/business impact
80.0%
12.5%
Behavior change
80.0%
6.3%
Knowledge gain
60.0%
tions, which have not yet determined the best way to evaluate the
success of their leadership-development programs.
Why are the aforementioned outcomes so important to the best-
practice partners? It is important to understand the kind of impact
that participation in these programs has on the individual and on the
organization in order to better understand the following:
Figure 6.4 notes some of the ways the studys best-practice partners
calculated and collected these measures.
As we noted earlier, the types of measures used and how they are
calculated vary from organization to organization. For some, Kirkpat-
ricks level I and level II measures suffice.5 For others, a more thor-
ough analysis (e.g., Brinkerhoffs Success Case Method) of the
programs impact on the individual and his or her ability to be suc-
cessful (and therefore make the organization successful) is required.6
The decision as to what type of measure was used and what data were
collected was connected to the organizations culture, as well as to
the desires of top management.
Measurement
Type of Measure Used Calculation Collection Method
Participant reaction Quantitative and Post-class
and satisfaction qualitative questionnaire
Averages Level 1 evaluations
Kirkpatrick Model Electronic survey
(level 1)
Self-determined scores E-mail questionnaire
of 15
20.0%
Improved cycle times 0.0%
0.0%
New compensation programs
6.3%
20.0%
L E A D E R S H I P D E V E L O P M E N T A S A S T R AT E G I C F O R C E
Increase in new customers 0.0%
0.0%
$CH6
Improved employee feedback about managers (e.g., 360-degree feedback, climate surveys) 50.0%
40.0%
PS
Increased innovation
18.8%
60.0%
Level
2 Did they learn?
Level
5 Whats the ROL?
Grow Self
Conducted a courageous
dialogue with someone
back at the office
Expanded and leveraged
the network created in
EmLP
Key Finding 15. Successful programs are a process rather than an event.
progress through each phase of the series. While the actual program
lasts only a week, participants are deeply involved in the learning
process for three to six months. The three phases of the series are as
follows:
The first two phases lead to application. All phases are designed
to focus on behavior change and business impact. The design team
understands the behaviors it expects to change or improve when it
designs the programs and tracks the impact of the programs accord-
ingly.
PricewaterhouseCoopers designs its leadership programs with ca-
reer progression in mind. Each program addresses a specific point in
an employees career journey or ladder. The foundation of each of
these programs is the firms values and strategy, leadership competen-
cies, and strategic links (i.e., coaching initiative, pulse survey, and
being a great place to work). This series of programs is called The
Backbone. Its focus on values and strategy provides continuity
among programs, creating a process rather than a series of indepen-
dent events.
Caterpillars core leadership programs use key transition points
in its leaders careers. The programs occur as individuals move from
supervisor (i.e., frontline leader) to manager (leader of leaders) to
department head, and finally to executive. A persons movement
through these programs and transitions is part of his or her develop-
mental journey at Caterpillar. The core leadership programs also
build on one another in a building-block fashion (see Figure 6.9).
Underlying all of its programs is Caterpillars foundational Making
Great Leaders (MGL) program.
By envisioning and developing their programs as a part of a proc-
ess rather than as a series of disconnected events, and by focusing
on transition points in employees careers, the best-practice partners
leverage the key moments discussed in Chapter 1. Capitalizing on
these moments of peak receptivity with employees increases the like-
lihood that desired effects such as behavior change and business im-
pact will be achieved.
Executive
Dept. Head Development
Development AED Programs
Manager MGL
(Advanced Executive Dev.)
Development SRC
Supervisor (Leader of Leaders) SRC (Strategic Review Conference)
(Strategic Review Conference)
Curriculum MGL
(Frontline Leaders) Leadership Quest
Leadership Quest
MGL Manager Program
Pending Dept Hd Program
Succeeding in Pending
Supervision
multiple ways. First, they spend time with participants beyond the on-
site portion of the learning program. Typically, participants are as-
signed prework before arriving at the program site. They may be
asked to complete an online preparatory module to ensure they un-
derstand some portion of the actual program. Then, following the
program, they are likely to be asked to focus on a particular challenge,
meet with a coach, or report on their progress in fulfilling commit-
ments made during the program. Supplemented by pre- and post-
course work, programs become a process rather than a one-time
event.
Second, leading companies in leadership development design ed-
ucational programs around key transitions in a managers career, fur-
ther emphasizing the process nature of learning. These teachable
moments tend to occur when an individual is asked to change his or
her identity or mind-set in a new role: when an individual contributor
first becomes a supervisor, when he or she becomes a manager of
We know that great leaders deliver great results. Most important, com-
panies that develop great leaders maintain a competitive advantage
over those that do not. A company that can see into the future and
develop leaders to meet its strategic needs will have a seemingly in-
surmountable advantage over its competitors that cannot. By docu-
menting the leadership-development practices of some of the worlds
leading firms, we hope to have illuminated the connection between
establishment of a clear leadership strategy and business success.
What did we see as we studied these best-practice partners? We
saw organizations that embrace learning as essential to their business
strategies and as a means of maintaining competitive advantage. We
met leaders who understand the value of investing their time in teach-
ing and learning, and who serve as an example in both. These same
leaders are essential in establishing the value their organizations place
123
The Future
It is important to look ahead to the future of strategic human-capital
development. As a popular proverb suggests, It is difficult to make
predictionsespecially about the future. Although it is impossible
to predict the future conclusively, it is safe to assume that organiza-
tions that focus on leadership development will be more successful
than those that do not. We will continue to see companies that oper-
ate with lean competency models and activate these competencies
in the daily work of individuals through real-time feedback, effective
coaching, and evaluations that fuel development. These competen-
cies will be visible and actionable for leaders and managers who are
working as teachers and coaches with their employees and col-
leagues. But in the future, we will also see teams with built-in routines
and processes that enable learning in the course of work rather than
as a sideline, detached from the normal workday.
What do the aforementioned actions and philosophies suggest?
We think they herald a return to the learning organization or, better
yet, the teaching organization. In this type of organization, teaching
and learning are valued and expected. In a teaching organization,
leaders are actively involved in and lead the instruction through ac-
tion and example rather than edict.
A learning culture can be described in a variety of ways, but generally
coexists with a high-performance culture and accelerated develop-
ment of human capital to maximize performance and drive sustain-
ability. Establishing a learning culture will be the key to sustaining
leadership development in the successful companies of the future.
The learning cultureor teaching organizationwill exhibit four key
characteristics:
Organization Overview
Established in 1925 by Daniel Best and Benjamin Holt, Caterpillar is
a global Fortune 100 organization with more than half of its sales
131
PAGE 131
132 D E TA I L E D C A S E S T U D I E S O F B E S T - P R AC T I C E C O M PA N I E S
VISION
2020
STRATEGIC PROFILE
Engagement Index 90%
STRATEGIC GOALS
by 2010
People Performance Profitable Growth
Product & Process
Leadership Index 80%
CRITICAL SUCCESS FACTORS
by 2010
PEOPLE QUALITY PRODUCT VELOCITY DISTRIBUTION CHINA TROUGH
ENTERPRISE Order-to-Delivery
STRATEGIC Encoding 6 Sigma
AREAS
Sustainable Development
OF IMPROVEMENT
Growth Beyond Core
a
igm
6S Selection Integrate leadership competencies into
targeted selection process
a
Career igm
6S Development
Management
Legacy competencies Core Programs: MGL,
integrated into new career Caterpillar SiS, etc.
dev process training and
materials
Leadership Supervisor curriculum
MGL re-assessment
Framework EOS action planning
a a
igm igm Performance
6S Succession 6S
Management Management
New global succession mgmt process Integrate leadership competencies in
includes discussion on leadership Performance Summary document
competencies and 3-year EOS leadership
index trend (Dept Hdlevel only)
PAGE 136
C AT E R P I L L A R U N I V E R S I T Y C O L L E G E O F L E A D E R S H I P 137
ing initiatives take into account and are built around developmental
needs associated with Caterpillars leadership competencies. Working
with an outside partner, Caterpillar collected information from lead-
ers in the organization regarding the anticipated requirements for fu-
ture success. Expert panels and strategic interviews were connected
along with a benchmarking review of executive competences used by
other organizations. After analyzing the collected data, a set of compe-
tencies reflecting the Caterpillar organization was developed. These
are shown in Figure A.4. On the left side of this chart, competencies
associated with managers and supervisors are outlined, while the
right side features executive leadership. Although many leaders might
have trouble reciting all of the competencies, almost every manager
in the organization would know the importance of having vision, the
means for execution, and leaving a legacy.
Supervisor/Manager Executive
Vision Vision
Creative Problem Solving Outstanding leadership Innovative Thinking
Business Improvement characteristics Strategic Achievement
Customer Insight Customer and Market Insight
Execute Execute
Influencing Others Influencing Others
Team Leadership Leading Change
Self-Confidence Self-Confidence
Organizational Cooperation Building Organizational Capability
Enterprise Focus
Legacy
Developing Others Legacy
Managing Performance Developing Others
Interpersonal Understanding Managing Performance
Leveraging Differences Interpersonal Understanding
Leveraging Differences
PAGE 137
138 D E TA I L E D C A S E S T U D I E S O F B E S T - P R AC T I C E C O M PA N I E S
Executive
Dept. Head Development
Development AED Programs
Manager MGL
(Advanced Executive Dev.)
Development SRC
Supervisor (Leader of Leaders) SRC (Strategic Review Conference)
(Strategic Review Conference)
Curriculum MGL
(Frontline Leaders) Leadership Quest
Leadership Quest
MGL Manager Program
Pending Dept Hd Program
Succeeding in Pending
Supervision
Succession Planning
The succession-planning group works closely with the COL in sup-
port of leadership development. Both groups believe that what they
do must link closely to enterprise strategy. One of the big challenges
currently facing Caterpillar is that it is experiencing rapidly changing
demographics. As is true for many global organizations, Caterpillars
greatest growth is coming from the Asia-Pacific region, South America,
and Eastern Europe. With the retirement of baby boomers already
beginning and with growth outside the United States, the leadership
team will be much more diverse than it is today.
Caterpillars global succession-planning process is a robust,
technology-enabled process for identifying and developing talent. It
engages the entire Caterpillar leadership team to manage and opti-
mize talent requirements over time. And it provides future leaders
and technical experts with the experiences necessary to lead Caterpil-
lar into the future. Some of the most significant aspects of the organi-
zations succession-planning process are:
Career
Experiences Experiences Role Models &
Coaching
70% 20%
6 Sigma
Performance Mgmt Experience
Coaching
Global
Experience
Continuing
Education
Continual
Learning
Mentoring Outside
Experience
Leaders Teaching Leaders
Cross-Functional
Experiences
Education &
Training
10%
tive office. For midlevel and lower grades, the consensus process in-
volves the employees manager, the business-unit leadership team,
and the functional succession-planning groups. This group validates
the employees longer-term potential and his or her career-develop-
ment plan. This process is outlined in Figure A.7.
During the detailed (career planning) discussions, supervisors and
managers are encouraged to speak openly about the employees longer-
term potential without revealing the actual indicator to the employee.
They do give high potentials certain indicators that should tell them
they are on that track, such as having them participate in the Leadership
Quest program or offering them additional incentive compensation.
Caterpillars succession-planning group built its online career-
planning tool with the help of third-party vendor Authoria. Employees
fill out work history on a previous-experience tab and revise their
credentials at least annually. This information is regularly reviewed,
as Caterpillar strives to give employees the best developmental expe-
riences.
Caterpillar proactively moves employees using the succession-
planning move matrix. They review those employees who are ready
to move, looking at their recommended next positions and career
Employees
Employees
Update
Update
Datasheets
Datasheets
Supervisors
Supervisors
Consensus
Consensus Update
updateDatasheets
Process
Process Annual Datasheets
(Career-Planning
(Career PlanningTab)
Tab)
Succession-
Planning
Process
Supervisors
Supervisors Datasheet
Datasheet
Assess
AssessPotential
Potential Discussions
Discussions
experiences, then run that against open positions to see if they find a
match. Each one of the functional succession-planning groups has
access to the talent-management system and uses it to generate candi-
date lists for openings as they occur.
A final aspect of the succession-management process is ongoing
candidate selection. Although hiring managers are not told whom
they should select, they are expected to seek input from HR represen-
tatives in the business unit and succession management. For lower-
level management, the hiring manager posts a job and contacts local
HR and functional succession-planning groups for candidate lists.
Someone from HR will run a search from the succession-planning
database and give the hiring manager a list of candidates who may not
have seen the posting but are potentially qualified candidates. For
midlevel manager positions, the appropriate functional succession-
planning group provides the hiring manager with a list of candidates.
The hiring manager then determines his or her short list and then
presents it to the succession-planning group for its approval/support.
For higher salary grades, the executive office makes the final hiring
decision with input from the respective VP and global succession-
management office. At this level, the vice president of the business
unit requests a list of qualified candidates from global succession
management, identifies a short list of three candidates, and then cre-
ates a write-up about the strategic and tactical leadership challenges
the position will be expected to face over the next three to five years.
This write-up goes in a binder to the executive office. The succession-
planning group meets monthly with the group presidents and the
CEO to review candidates and make decisions about open positions
at senior levels. A key point is that one global process coordinates the
development of approximately 400 key leaders.
Succession planning believes that most of Caterpillars low- and
mid-level management employees have upward mobility. Of the orga-
nizations senior management, approximately 72 percent have cross-
functional experience, and approximately 75 percent have global ex-
perience.
Projects underway for enhancing the firms succession planning
include:
Evaluating Success
The economic recession of 20012002 elevated Caterpillar Universi-
tys need to establish the value proposition for organizational learn-
ing. Each college was expected to develop a value proposition for
each of its key initiatives based on net benefits, ROI, and other data.
The group produced a 161-page document titled The Business of
Learning, which discussed the state of learning at Caterpillar, articu-
lated the value propositions, and estimated that the ROI for Caterpil-
lar University exceeded 50 percent in 2003.
This effort was followed by seven detailed ROI studies that in-
volved focus groups, surveys, in-depth discussion with participants to
identify dollar benefits, cost, net benefits and improvements in pro-
ductivity, quality, or reductions in cost. Chris Arvin, who was trained
as an accountant, and Merrill Anderson, of MetrixGlobal, provided
leadership in the methodology used in these studies.
Over time, the COL has moved from a strict assessment of ROI to
an emphasis on return on learning (ROL). According to Arvin, it is
important to focus on the ROL to gain a deeper understanding of how
learning and development connect to business goals and objectives.
Through an ROL study, the College of Leadership attempts to under-
stand the costs and benefits, ensure benefits are greater than costs,
ensure ROL percent exceeds corporate hurdle rates and compares
favorably with the other investments, learn how to reduce costs and
increase benefits, focus process owners and leaders on the impor-
tance of participation and application, manage the deployment for
success (achieve the target ROL), take a three-stage approach to ROL
Participant reaction
Knowledge gain
Behavior change
Organizational impact
Return-on-investment studies
360-degree surveys
Innovative Practice
The College of Leadership achieves program excellence through the
consistent use of its leaders-as-teachers concept. The concept is a key
element in the following College of Leadership programs:
Lessons Learned
One key lesson learned for COL is the need to sustain the gains. In
other words, success can be fleeting unless there is a constant effort
to adapt and improve. Despite internal and external recognition, the
College of Leadership does not rest on its laurels. After receiving pro-
gram evaluations with extremely high rankings, the team immediately
begins considering what can be improved for the next iteration. Ac-
countability and changed behaviors are key objectives of all develop-
Organization Overview
Cisco Systems (Cisco) was founded in 1984 by a group of scientists
from Stanford University. It is a worldwide leader in networking for
the Internet with core technologies in routing and switching, and ad-
vanced technologies including VoIP, security, mobility, and video.
Cisco has 48,296 employees and achieved $34.6 billion in annual rev-
enues in its 2006 fiscal year. In 2004, the company was number two in
its industry on Fortune magazines Americas Most Admired Compa-
149
nies list and in 2007 it was ranked number eleven on the magazines
list of the 100 Best Companies to Work For.
Over the years, Ciscos name has become synonymous with tech-
nology innovation. Additionally, the organization has a culture of
giving back to the community. The organization implemented its Net-
working Academies in more than 160 countries, and many of the
academies partner with schools and community colleges.
Ciscos mission is Changing the way we work, live, play, and
learn. According to Pat Keating, director of WW Leadership Develop-
ment, change is baked into the way that Ciscos employees work,
and that integration plays a key role in leadership at Cisco.
Before 2001, company revenue was gained primarily though
growth. The company now emphasizes the balance between growth
and productivity; everyone, from the CEO to the front-line manager,
has a responsibility to increase productivity. Through leadership de-
velopment, managers learn to be productive through growth and bet-
ter processes.
When Cisco was experiencing its rapid growth, time to market was
the most important metric. The company organized itself functionally
in business units. Certain businesses would produce, engineer, de-
velop/design, and market their own products under the Cisco umbrella.
The functional organization had the downsides of redundancy and
competition within the organization. As the company has matured, its
leaders have realized the necessity of collaboration and cross-functional
teamwork. Collaboration has become a major business strategyit is
included in all programs and corporate culture initiatives.
The CEO believes that executives have a deep responsibility to
develop internal employees across the organization. All employees
are encouraged to both teach and take. Teams and individuals at all
levels are rewarded and compensated on how well they collaborate.
One of four main factors in the annual bonus plan is teamwork and
collaboration.
Leadership-Development Philosophy
Build to lead, build to last.
J ohn C hambers, C EO, C isco Sy s t e m s
1. The leader role must shift from achieving technical and business
results to achieving excellence in leading people and developing
talent through experience, exposure, and education.
2. Learning must shift from the production of education events to a
holistic view of development.
3. Individual effort must be enhanced by teamwork and collabora-
tion.
1. The Grow Model. Grow the business; Grow our team; Grow
yourself. The model includes 360-degree assessments, and all com-
petency work is built around the model. Approximately 20 percent of
the companys employees are targeted as high potential. Of those, a
small percentage receive an average of twelve months of coaching
performed by an external organization. The goal of the coaching is to
help the leaders grow their teams.
2. The 3E Model. Experience, Education, and Exposure. The
model helps employees develop through on-the-job experience. Edu-
cation plays a role in preparing people for the experience. Then, em-
ployees are exposed to a 360-degree view of the business and their
roles in it. The Cisco Leadership Series is the education portion of
that framework.
Alignment
Alignment of Ciscos leadership-development programs and business
strategy occurs through the executive committees. WW Leadership
Development aligns with a broader talent-management process
through the 3E model described in the previous section. The basic
leadership model involves a 360-degree process at the functional
level; each functional lead has a talent review with the head of HR,
who owns the talent-management process. As the functions go
through the process and review top talent with HR, their decisions
flow up to the board.
Cisco currently does not have formal succession planning. Vice
presidents in business units work with HR to review their own top
talent and critical positions.
Selection & Logistics Translate Ciscos Demonstrate the behaviors and Increased focus on Customer
global priorities into mind-sets required for successful global mind-set as Satisfaction
By Nomination Only organizational goals global leadership demonstrated by my
selection determined by Drive innovative Apply the principles of global actions and Growth
your business groups global business strategy at Cisco interactions Market
senior leadership team practices by Leverage your own cultural Share
and Leadership leveraging local intelligence to inspire and lead An active role in
Education competencies and global teams driving global strategy Profitability
culture and global Apply the critical elements of
Global Participation & relationships and Improved team
global teaming to increase team
Cross-Functional networks communications and
performance
Representation Inspire others to act increased team
Build and strengthen your productivity
as global leaders informal global network
Program delivered
Build a culture of
outside of San Jose Improved
trust and mutual collaboration with
accountability
Cost: $7,500 others outside my
Participant (Excludes Create high- country
T&E) performance global
teams by enrolling
Cohort Size: 40 people in a shared
and aspirational
purpose
what they have done. Employees should be able to tie what they have
learned directly to their annual employee reviews.
When the Emerging Leader Program was developed, it consisted
of a two-week, event-based course delivery and a subsequent evalua-
tion, which was considered the finish line for learning. The program
has since transitioned to the three-phase structure common to all pro-
grams in the Cisco Leadership Series; it is a thirteen-week blended
learning program. The finish line now occurs after a period of transfer
and application of knowledge. Participants reach the finish line when
they demonstrate workplace performance results such as growth and
increased market share.
Participants and their managers are much more satisfied with the
redesigned program. Advantages include innovative blended modal-
ities, a focus on interactions rather than transactions, management
and executive engagement, professional coaching through all phases,
assessments and insight, development and impact trackers that re-
cord experiences throughout the program, and essential-shifts assess-
ment.
The assessment of the Emerging Leader Program is built around
the three essential shifts described in the first section of this case
study. A preassessment is conducted in week one of phase one of the
program and is repeated in week eleven of the program. Results of
the assessment demonstrate that participants progress significantly
across all shifts, and the pattern of shifts continues through postas-
sessment. Participants show the greatest change in shifting from suc-
cess in achieving technical and business results to excellence in
leading people and developing talent through experience, exposure,
and education.
Approximately 85 percent of learning in the Emerging Leader Pro-
gram is done with small-group interaction and collaboration. Phase
1 involves six weeks of self-directed learning supported by faculty,
executives, and a program office. The program begins with a virtual
kickoff meeting and assessments for development. Each participant
receives three hours of individualized consultation by a certified coach.
In week four, the participants form cohorts, which are virtual simula-
tion teams comprising approximately twenty-five cross-functional indi-
High Potentials
Cisco identifies high-potential employees by using a nine-box grid.
Along one axis are three levels of potential and on the other are three
levels of performance. (The word potential is similar to promotabil-
ity.) Decisions are made by the vice president of the business unit;
there are no formal corporation-wide criteria.
Evaluating Success
WW Leadership Development uses a formal system for measuring the
outcomes of its leadership-development strategy. Leadership evalua-
tion and measurement focus on the value of the investment. The com-
pany collects both quantitative and qualitative measures. Examples of
metrics include price range for a one-week course, customer satisfac-
tion scores, percentage of class graduates who have used what they
have learned in their jobs and had a positive impact, and percentage
of learners who stay with the company. Management celebrates cases
in which satisfaction is high and costs are down; however, it realizes
that participants could be satisfied, but the courses could have no
business impact. The team concentrates on metrics showing the applica-
tion of learning to jobs and changes in business results. The percent-
age of employee retention for those going through the programs
compared to the general employee population is favorable
approximately 93 percent across the organization.
For the past two years, WW Leadership Development has used the
Robert Brinkerhoff Success Case Method to measure the impact of its
various programs. The group chose the method because it is simple,
elegant, and easy to implement. The method uses case examples and
success stories to describe the best (and worst) that the training is
providing; it identifies what the training is doing and what it is not
doing. Results are also shared with HR and sent up the management
chain so they can see the value that is provided by the programs and
pursue external awards.
The method begins with the creation of an impact map (see Figure
B.2 for an example) that is designed to show what the organization
needs to improve through leadership training: customer satisfaction,
growth, market share, and profitability. The map has four columns:
Key Content, Key Behaviors, Results, and Impact. According to Lisa
Cavallaro, manager of leadership development, Results are what we
back into from impacts. We ask ourselves, To get [a stated level] of
impact, what do we have to do relative to the programs we are work-
ing with? We think strategically about how the program will drive the
behaviors to achieve the impact.
All programs are designed to shift employees mind-sets because
only a transformed mind-set is likely to lead to changes in behavior.
Behavioral shifts have three aspects: (1) shifting mind-sets regarding
the leaders role in shaping and executing strategy, (2) providing tool
sets to enable skillful application, and (3) building skill sets to meet
critical strategy-execution challenges. Shifting mind-sets means re-
framing leaders roles.
For the Emerging Leader Program, the team assesses the results
of its programs using a simple survey of five to eight behavior-based
questions that were developed in consultation with the Brinkerhoff
team. The survey is administered both before the training and six to
nine months after the training ends.
WW Leadership Development surveyed 173 out of 298 partici-
pants, with 133 completing the survey for a 77 percent response rate.
Ninety-eight percent of the respondents say the program had a deliv-
erable, measurable, concrete business impact. Results are corrobo-
rated with interviews with the participants managers. Results include:
Participants stay in touch with each other and ask each other for ad-
vice on various issues; they compete in their own roles to demon-
strate the value of what they have learned.
Leadership development improves teamwork and collaboration
by giving managers the tools and skills they need to:
were able to put their new skills and capabilities to work immediately
were most successful.
3. Total Commitment. Participants were engaged throughout the
process, from before the workshops to after they end. They experi-
enced a high level of interaction with managers, sponsors, and fellow
participants.
Communicating Success
The results for the 2005 and 2006 Cisco Leadership Series are in.
Participants told WW Leadership Development how they were helped
by the programs. Graduates said that the networking opportunities
were invaluable. They also recounted specific cases regarding how
they were helped. The following examples of the impact on partici-
pants from each of the four programs in place during 2005 and 2006
are typical.
Innovative Aspects
Among the WW Leadership Development groups innovative practices
are:
Organization Overview
PepsiCo Inc. (PepsiCo) is a world leader in convenient foods and bev-
erages, with more than 167,000 employees and 2006 revenues of
more than $35 billion. PepsiCo brands are available in nearly 200
countries and territories. In addition to the corporate entity, which
consists of several shared services functions (e.g., finance, legal, IT),
the organization features two operating divisions: (1) PepsiCo North
America, which includes Frito-Lay North America; PepsiCola North
America; and Quaker, Tropicana, Gatorade North America; and (2)
PepsiCo International.
175
and tools and how to apply them within the context and culture of
PepsiCo. Finally, PepsiCos own demographics show that a significant
percentage of its senior executives will be eligible for retirement in
the next several years.
With all of these drivers, human resources (HR) plays a critical
role. HR has a special accountability entrusted to it to nurture and
develop the investment the organization makes in talent and ensure
the organizations human assets are optimized. HRs challenge is to
continue to build organizational capability around identifying Pep-
siCos future leaders, retaining them, and developing their experi-
ences and mind-sets to take on and succeed in roles as general
managers and functional leaders.
However, PepsiCos HR group is not starting from scratch with its
talent pool. The organization has made several improvements to the
talent-development infrastructure since 2001, including:
PepsiCo does not have a singular head to oversee all talent devel-
opment. The organization is set up in a divisional structure, and each
division has its own organization-development-and-training group
that is responsible for the training, design, and delivery in that divi-
sion. At the time of our site visit, Paul Russell was the corporate vice
president of executive learning; he oversaw the core leadership cur-
riculum across all divisions. Another individual in corporate, Allan
Church (vice president of organization and management develop-
ment), oversees the core HR-related processes that cross all divisions
(including the talent-management process).
HRs mission and vision is to make PepsiCo a place where people
want to work and to ensure the company enables talented people to
make that happen. The organization requires strong leaders to suc-
ceed in the marketplace. This leadership capability increases in im-
portance in more senior roles. To attract and retain the best people,
PepsiCo needs leaders who can take others with them. Doing this
requires systems and processes, insights (about the business and peo-
ple), talent management, work and organization design (HR general-
ists are empowered and can design their organizations the way they
need them to work), and culture and values. These are HRs strategic
planks.
PepsiCos HR organization uses a two-pronged approach to build-
ing talent. The first is the PepsiCo Career Growth Model (described
in the next section), which provides tools, processes, and training to
drive a broad-based development culture. The second prong is its
talent-management model (described beginning on page 191), which
provides talent segmentation and aggressive bench building to deliver
growth. The key supporting principles underlying this two-pronged
approach are: (1) all employees should have access to development;
(2) differentiation regarding how PepsiCo manages talent is critical to
the business; and (3) a focus on triangulation (data should be treated
as a source of input). The HR organization grounds the approach and
principles in the following insights:
Proven Results
PepsiCo requires that its employees demonstrate consistent and
proven business and people results in order to be considered for fu-
ture growth opportunities. They look for a track record of sustained
successes as well as results that create a lasting impact. People results
are also important and are a significant part of performance expecta-
tions. Managers are expected to attract, develop, and retain talent.
How results are achieved is important to PepsiCo. The importance of
this is driven by the organizations people processes. The performance-
management process determines managers compensation. Pre-
viously, business results accounted for 66 percent and people results
for 34 percent of an individuals compensation. In 2007, that ratio
changed to an even 50/50 split.
Leadership Capability
The demand for strong leaders in one of the major reasons the com-
pany has recently reviewed and enhanced its leadership model. Lead-
ership competencies form the basis for the 360-degree feedback
process and provide a reference point for measuring people results.
More important, however, they also provide a framework to deter-
mine an executives contributions to the organization as a leader over
time.
When coaching an executive on his or her leadership skills/capabili-
ties, PepsiCo considers such elements as:
Functional Excellence
Functional excellence is an important part of career growth at
PepsiCo. PepsiCo expects its employees and managers to commit to
developing their functional expertise. They need to develop an in-
depth understanding of their own functions as well as learn how the
Critical Experiences
The next component of the organizations Career Growth Model
is critical experiences. Discussions of potential career moves at
PepsiCo include an assessment of critical experiences (those that the
individual already has, those that he or she could benefit from, and
those that are needed in a potential role). Focusing on experiences
provides a richer forum for discussions than focusing on positions or
titles. Depth and breadth of experience become more important in
more senior roles.
PepsiCo has identified a number of critical experiences to help
its leaders become more well-rounded in their skills and capabilities.
These eighteen experiences fall into three broad categories:
PepsiCo does not expect its people to have all of these experi-
ences; it uses them as a framework to understand what individuals
have done so that they can leverage their current capabilities and plan
for new experiences in future assignments.
A key component of this part of the model is an emphasis on
building relationships with others throughout the organization (e.g.,
functionally, cross-functionally, and cross-divisionally). Sharing expe-
riences with others increases an individuals in-depth knowledge of
the organization, benefiting him or her across all aspects of the Career
Growth Model.
Opportunities
If PepsiCos employees are responsible for their own development,
the organization is responsible for providing them with opportunities
for development and growth. Managers are held accountable for the
development of their people. PepsiCo provides the following guide-
lines for individuals and managers when considering potential oppor-
tunities.
To attract and retain the best people, the organization needs leaders
who can take others with them. PepsiCos leadership model outlines
the competencies and behaviors needed to be successful. Inputs into
the model include the 360-degree feedback process and the organiza-
tional health survey. These provide input into the people objectives
and results. Capabilities in certain areas influence decisions about tak-
ing on larger roles.
The organizations leadership imperatives have remained consis-
tent for the past fifteen years, though the content of the behaviors
that measure these do change from time to time. The three major
imperatives are setting the agenda, taking others with you, and doing
it the right way. These are supported by various success factors and
seventeen related competencies. The success factors are planning, ex-
ecution, courageous leadership, people development, savvy commu-
nication, integrity, and operational excellence. The success factors
and leadership competencies form the foundation of the organiza-
tions 360-degree feedback process. Every two years, approximately
10,000 managers and executives (including all of the division presi-
dents) receive individualized feedback on the model.
PepsiCo periodically reviews its success factors and leadership
competencies to ensure alignment with strategic direction and inte-
gration with PepsiCos values. The reviews also serve to reinforce the
importance of manager quality for the future of the organization, en-
hance focus on demonstrating inclusive behaviors, ensure managers
are engaging with employees on key cultural areas (e.g., careers,
work/life balance, an inclusive work place), and create a tighter link-
age to living the PepsiCo values.
For example, the organization recently launched an effort to en-
hance its leadership-competency model. The purpose of the enhance-
ment project is to provide greater differentiation regarding what
leadership looks like at different levels in the organization and to up-
date the model to reflect current cultural and strategic business priori-
ties. According to Church, every model (particularly if it is a custom-
created model) needs to shift with the organization as its priorities
change.
Key Issues
Key topics or issues emphasized in PepsiCos development programs
include the leadership-competency model, mind-set, change leader-
ship, knowing the business, and personal leadership (via the Corpo-
rate Athlete concept). Developed by Jim Loehr and Tony Schwartz,
the Corporate Athlete concept posits that the key to sustained per-
formance is to consider the person as a whole. Executives, therefore,
are corporate athletes, and if they are to perform at high levels over
long periods of time, they must train in the same systematic way that
conventional athletes do. This concept addresses integration of the
body, emotions, mind, and spirit through a performance pyramid.
Each level of the pyramid influences others, and all must be consid-
ered in order to achieve optimal performance.
Other topics include building self-awareness (how can I impact
the organization and my people?), diversity and inclusion, ethics, spe-
cific business issues (strategic imperatives), globalization, strategic plan-
High Potentials
In order to deliver on its model for sustainable advantage (Figure
C.1), PepsiCo needs a talent-management process that supports its
two-pronged approach to building leadership capability: (1) broad-
based tools that empower people to drive individual development in
an inclusive and flexible work environment; and (2) aggressively build
bench strength through experience planning for its future leaders.
Over the next five years, a significant number of PepsiCos current
executives across several different levels will be eligible for retire-
ment. According to Church, the organization has a long and strong
history of developing and promoting talent from within, but its bench
strength is never as deep as it would like. It has a goal of having a two-
deep bench for all critical roles, which is sufficient to consistently fill
the majority of senior positions from within despite aggressive
poaching from other organizations. However, PepsiCos senior
leaders and HR organization realize they must build bench now to
sustain their growth. They want to develop flexible talent that is
learning agile and can deal with the unexpected. This means main-
taining high standards for both business results and people leader-
ship. The People Planning and Game Planning processes are the
primary means for building bench strength.
The HR organization established some core principles around the
From: To:
Filling open jobs as needed Creating thoughtful developmental
opportunities to build bench
Promoting people to avoid Stretching the very best talent by
turnover giving people the experiences they
need
Working with fair and predictable Talent differentiation and
timelines accelerated development where it
makes sense
Keeping the best in your own Facilitating cross-divisional and
backyard cross-functional moves to ensure
well-rounded future leaders
Stretching the best talent via piling Ensuring appropriate support and
on more work and fewer resources strong teams to ensure success for
the business and the individual
Evaluating Success
PepsiCo does not use a formal measurement system to evaluate the
success of its leader programs. It does not perform many program
evaluations outside of an on-site reaction sheet. One major exception,
however, is for the CEOs Executive Leadership Program, where parti-
cipants are required to send an e-mail to the CEO one month follow-
ing the program outlining what they intend to do differently on their
jobs and in their personal lives as a result of having attended the
program. Then, at the six-month point, they must write a second
e-mail describing what they have actually done differently. The CEO
personally reads all of these follow-up e-mails and hosts a conference
call to discuss themes with the group and address any common barri-
ers that the participants report having faced in achieving the changes
and results they had planned. These personal reports of the impact
the program has had on the participants jobs, careers, and even on
their personal lives carry far more weight with the CEO than any par-
ticipant-reaction forms collected at the end of the program could ever
have.
Executive learning is not required to quantify any type of ROI for
the leadership-development programs; however, it can point to sev-
eral changes or improvements in the organization that can be tied to
leader-development programs and strategy. These include:
Increased innovation
Communicating Success
Past program participants and the leaders doing the actual teaching
of sessions serve as enthusiastic advocates of the programs and their
impact. The programs are widely known internally to be very engag-
ing, and there is a significant level of pull from clients in the divisions.
Innovative Aspects
According to Russell, one of the more innovative practices that PepsiCo
has implemented is the corporate athlete concept. Another innovative
practice is the Music Paradigm. Due to PepsiCos global nature, it has
to be careful not to bring in anything that is uniquely American in
nature.
Lessons Learned
Russell and Church shared the following lessons learned regarding
leadership development:
Organization Overview
PricewaterhouseCoopers (PwC) is a professional services firm that
provides industry-focused assurance, tax, and advisory services to 85
percent of the Financial Times Global 500 organizations. PwC em-
ploys more than 130,000 people and operates in 771 cities in 148
countries around the world. In fiscal year 2006, it reported revenue
of more than $22 billion.
Unlike a corporation, in which a CEO and leadership team man-
197
the client. According to Klee, client time is king at the firm: When
prioritizing their work, people always put the client first. This mind-
set is the correct one, but it affects the Learning & Education groups
ability to deliver traininganything that takes the PwC professional
away from client work must be world-class, worth the investment, and
worthy of taking people away from the client focus. Training must
directly result in a persons ability to serve the client better. Klee adds,
Basically we produce ideas, and it is the relationship with other peo-
ple internally and externally that really matters to us.
PwCs employees must be client-focused problem solvers who are
innovators, continuous learners, team players, initiative takers, and
knowledgeable and skilled advisers. According to Kathryn Kavanagh,
managing director, Learning & Education, the accounting world is
becoming increasingly regulated, and finding the right balance be-
tween innovation and risk taking is increasingly important. PwC is
training its leaders to take calculated risks that will not be the wrong
kinds of risks but will keep them a creative and evolving organization.
In 1998, PwC was created by the merger of two professional ser-
vices firms (Coopers & Lybrand and Price Waterhouse). In order to
bring the two cultures together, leaders brought employees from
both entities together to create a set of values that represented both
legacy firms. The values have become embedded in the PwC culture,
and employees use them in decision making. The values are shared
and promoted with new hires (numbering 8,000 annually), many of
whom are recent college graduates. They help these individuals un-
derstand the culture of the firm, which is fast-paced; competitive;
deadline-driven; professional; team-oriented; increasingly diverse;
and local, national, and global.
PwC has an incredible need for knowledge. Clients expect that
the firms employees know more about the business and profession
than they do. Legislative and technical changes happen rapidly, and
firm leaders, partners, and staff need to sift through information, se-
lect what is important, and understand the changes and their implica-
tions to ensure they are always current. The firms client-service
philosophy is clearly articulated in its values, which are built on trust,
quality, and pride. They include:
Leadership-Development Philosophy
The strength of PwCs partnership culture and the firm values are
the central drivers of the firms leadership-development strategy. PwC
views all of its partners as leaders, even those who are not in leader-
ship roles. Leadership-development investments have been strategi-
cally focused in two areas: (1) at the partner level, and (2) at key
milestones (for example, a program for new managers). The long-
term vision is that every key milestone will include a significant lead-
ership experience.
Coaching is fundamentally embedded into all of PwCs leadership-
development opportunities. Effective coaching is a broad initiative
across the firm at all levels and is part of the culture that is integrated
into every process and activity point across the organization. Anyone
in the firm is encouraged to give anyone else feedback through the
feedback program. At the partner level, it is the responsibility of the
primary reporting partner (PRP) to synthesize all of the feedback and
performance accomplishments and to balance that with personal
knowledge of the partner for whom he or she is a coach to ensure it
is meaningful and constructive. Each partner has a primary reporting
partner who is responsible for helping develop, support, evaluate,
and coach the partner. Each partner receives direction and priorities
from his or her line of service leadership and office leadership
through what is referred to as an office managing partner (OMP), who
resides in the local office and manages office and local market activi-
ties. Partners receive feedback from a secondary reporting partner
and other commenting partners. The partner also is responsible for
serving the needs of a connectivity group (a group of staff members
who are assigned to the partner), regulators, and clients. All of these
people have an impact on what it means for a partner to be a leader.
The philosophy of leadership development has been to align lead-
ers around the strategic direction of PwC in the United States and
enable them to be agile learners who can effectively operate in a con-
stantly changing environment. The firm wants to be known as distinc-
tive, a quality that it believes will lead to profitable growth. So that
people will be able to distinguish the firm from its competition, PwC
must provide high-quality services and what it terms a unique people
experience and a unique client experience. All of the work in the
leadership area is connected to becoming distinctive.
zation and the process of developing partners who are leaders in busi-
ness, leaders with their people, and leaders with their clients.
PwC University
In 2001, partner development was top-of-mind for PwCs manage-
ment committee. The firm had undergone tremendous change due to
the merger, and a specific PwC culture had not been developed. To
address this, the U.S. Management Committee and the Learning &
Education group developed the concept of PwC University.
After reviewing several options, the team commissioned Duke
Corporate Education (Duke CE), rated highly for worldwide custo-
mized learning, to help in program development. PwCs leadership
training had to be customized and had to address the issues in the
organization. It could not be off the shelf. Together, the two organi-
zations developed key themes that would drive content and design.
Their challenge was to create a partner-development environment
that is:
Be a successful partnership
However, the Learning & Education team realized that the goals
could not be met through lectures; they had to be inculcated through
experiences. Having partners experience how it feels to meet the
goals became part of the delivery strategy.
The experience brought partners from both merged firms to-
gether to work through their legacy baggage. One way they accom-
plished this was through an experience of changing tires on a race car
where the partners acted as part of a NASCAR team and learned to
work the way teams do in a racing-pit crew. The debriefing that fol-
lowed allowed partners to relate the experience back to the consult-
ing world. The partners were fully engaged because it was fun and
out of the ordinary, and the experience was easily related to their
work experience
Another experience used judo to help the partners experience
professionalism, focusing on the moment, and working through is-
sues strategically and tactically. The pilot program was held at a cen-
tral site. It was successful, not because it was perfectly integrated but
because the 120 partners from across the country with different back-
grounds realized they were in business together. They ended the pilot
program with a debriefing in which they verbalized how the program
had changed their outlook. After the team had completed a few of
these PwC University programs, leadership development reached a
tipping point, and partners began to seek out places in the sessions.
The program was delivered seventeen times, each session composed
of approximately 150 partners each. Approximately 95 percent of the
partners attended this experience.
Since the inception of the PwC University experiences, the learn-
ing team has since delivered PwC University 2, another experience for
all U.S. partners that is described further in this case. The Learning &
Education group designed the sessions in partnership with Duke CE.
Approximately fifteen PwC staff were required to run a PwC University
1 session, and it required thirty additional external part-time faculty.
The development team knew that the sessions would be more
successful if senior management was deeply involved, and so the deci-
sion was made that the firms senior partner and two other U.S. Man-
agement Committee members would attend each session. On day
one, the session began with a welcome and introductions, a discus-
sion on firm strategy, Socratic dialogue, and Making It Happen. On
days two and three, the participants engaged in activities surrounding
either Becoming a Great Place to Work or World-Class Client Rela-
tionships. On day four, the session concluded with a Habitat for Hu-
manity experience and sessions called Teaming to Win and Power
of Story, as well as a closing dinner.
One offshoot of the PwC University program is the Extended Lead-
ership Team Experiences program. The program began in 2002 and
continues through today. The program consists of quarterly two-day
sessions that bring the top 100 leaders together. The program is based
on a specific leadership topic, and sessions have covered coaching,
diversity, aligning the partnership around strategic messages, and in-
volving others beyond the extended leadership team in the firm.
These topics are determined through a series of visioning sessions
conducted periodically with the firms top leadership.
In 2005 and 2006, a PwC University 2 experience was delivered.
Unlike University 1, which was conducted at a national level, PwC
University 2 is delivered in seventeen local markets (localities where
work is done). Each of the office managing partners plays a significant
leadership role in the University 2 experience. This allows the pro-
gram to target specific market needs while maintaining an overall con-
sistent framework. Prior to the session, work is done with each office/
market managing partner and a consultant to identify the key chal-
lenges that are keeping the market from becoming distinctive. Each
session has had a different tone, as dependent on the skill level of the
office managing partner, and helps participants determine the action
Quality Lens
The highly publicized corporate scandals that have occurred over the
past few years challenged many of the partners in PwC to question
whether they were still able to bring quality and trust to their client
relationships. For example, before the collapse of Enron, the industry
had become commoditized. Professionals were simply checking
boxes after they had completed auditing tasks, and jobs were given to
the low-cost provider. Enron taught clients that they needed to ask
the auditors not only whether they had the right numbers but also
how they knew they had the right numbers.
After Enron, PwCs leadership had to return to a focus on the
quality of both the audit and the conversations with the clients. Qual-
ity Lens 1 was created in 2002 by designers who understood that the
industry had six to nine months to prove it could still be noble and
clients could trust the audit and the auditor. Its purpose was to teach
participants to form a point of view, communicate difficult messages,
and increase trust in relationships.
Quality Lens focuses on assurance and quality practices. It was
created to help partners work together so that the company and indi-
viduals will not be faced with the corruption that can occur when
individuals act on their own. PwCs message is consult, consult, con-
sult. No matter how much pressure partners are under, they are
required as owners of the company to consult with one another di-
rectly.
Quality Lens is built on the PwC University 1 model. Its objective
is to develop technical expertise through metaphorical experiences.
For example, participants accompanied doctors on medical rounds.
They learned from doctors how to diagnose a patient and how to
deliver a difficult message to a person. The program included impro-
visation with professional actors and other metaphorical experiences.
During the first year of Quality Lens, it was paralleled by a pro-
gram called the New Manager Experience that helped managers ad-
dress the challenge of quality. Owing to the programs success, the
firm decided to bring partners and managers together for the second
version of Quality Lens (Quality Lens 2), which involved learning by
doing. Its purpose was to help participants learn how to conduct
process auditing and recognize fraud. The delivery team gave the par-
ticipants sample work papers and had them listen to interviews con-
ducted with CEOs (played by actors). By observing these simulations,
the participants determined what type of conversations they would
have to have with the clients to ensure that fraud was not occurring.
The Learning & Education team also developed innovative activi-
ties about detection and deception. In one exercise, one member of
a three-person team steals a $100 bill. The team is allowed to keep
the money if its members can survive an interview conducted by the
participants who try to detect who took the money. Participants learn
to focus not only on what is said, but also on how it is said.
Quality Lens 3, designed in 2004, was tactical; it focused on the
specifics of the audit methodology. The newer partners accepted the
training well, as did the veteran partners who were performing audits
in the 1970s. They were pleased that auditing was reverting to a holis-
tic approach. However, the Learning & Education team did discover
that partners in the middle bracket had a difficult time with the proc-
ess approach.
Over recent years, Quality Lens has grown more technical, and the
Learning & Education group has been asked to bring back some of
the nontechnical core behaviors such as diversity training, coaching
skills, and reinforcing culture.
Quality Lens works in conjunction with PwC University, reinforc-
ing its messages.
Preferred-Provider Program
Leadership training helps partners realize that, throughout their ca-
reers, they must learn and grow to meet the changing needs of the
environment. The fallout from Enron and the implementation of
Sarbanes-Oxley regulations required PwC and all accounting firms to
change their business models to a great degree. This affected many of
their partners, who found themselves having to learn how to work
differently. To help them in this transition and the redeployment of its
partners, PwCs Learning & Education group developed the Preferred
Provider Program.
PwC sees itself as having two channels of business now. Channel
one is defined as its traditional audit business. It is trying to grow
channel two, which involves a consulting relationship with a company
that does not use PwC for audits. Under the Preferred Provider Pro-
gram, some partners are now developing expertise in selling to and
serving channel two clients. The partners who remain in channel one
can focus extensively on the quality of the audit.
Ideally, a PRP will mentor and coach five to seven individuals; how-
ever, some primary reporting partners coach only one partner while
others serve ten to eleven partnersa larger number that creates chal-
lenges for that individual.
Through feedback from the first session of PwC University 1, the
firm learned that partners did not feel supported in their growth and
development. As a result, firm leaders began three initiatives: (1) a
critical review of the income system for the partners, (2) a redefinition
of the role of the primary reporting partners, and (3) an investment
in increasing the coaching skills of the primary reporting partners. In
2003 the firm offered a program called Coaching Skills for Primary
Reporting Partners to every PRP with five or more partners to coach.
The two-day program helped the primary reporting partners under-
stand their roles and practice their coaching skills. Each PRP was as-
signed an external executive coach who worked with him or her
during the session and was available for three months following the
session. The partners also engaged in role play with professional
actors to handle difficult partner-to-partner conversations. Here are
two examples:
other part of the program. Firm leaders are strong program support-
ers and allow themselves to participate and fail along with everyone
else. The program is required for all new primary reporting partners.
Currently, the firm asks that even PRPs with only a few partners to
coach go through the session. Developers of the program have seen
improvement in the scores that partners give their primary reporting
partners for the skill on which they are evaluated.
As of 2006, the original coaching-skill training for primary report-
ing partners has an extension, a coaching workshop. One hundred
partners recently participated in a four-hour workshop leading up
to the 2006 evaluation process. The partners presented the personal
challenges that they knew they would be dealing with in real life. They
practice writing and delivering the feedback. During the workshop,
the participants practice with each other, not with professional actors.
However, the team doubts that the participants would be able to role
play as well if they had not worked with the professional actors during
the main course. The proceedings of the workshop are confidential,
which helps the partners maintain trust and encourages experimenta-
tion.
ership messages and business shifts, and the PwC University Experi-
ence is different every three years. Leadership training follows a
systemic approach that is built incrementally year to year. Most pro-
grams are delivered nationally or regionally without variation because
the consistency of message is critical.
Governance
The Learning & Education group is part of PwCs human-capital orga-
nization and employs 250 individuals, a small subset of which focuses
only on leadership development. Learning & Education is affected
by PwCs matrix structure because it has to satisfy a wide range of
stakeholders. The complexity of the firm causes interesting organiza-
tional dynamics. Employees continually have to weigh and assess pri-
orities. One employee may be asked to devote his time, effort, and
energy to a line-of-service leader, an industry leader, and office-level
manager simultaneously.
Leadership-development teams include both internal and external
resources. The internal group develops the vision for the programs,
and external vendors do most of the design and delivery work. The
partnership with Duke Corporate Education is strong and has been
involved with many leadership projects.
Evaluating Success
Like many organizations, PwC is very measurement-oriented. Kava-
nagh says, We are masters of acting on the things that are mea-
sured. One measurement tool is the Pulse Survey, a biannual
employee opinion survey. The survey measures level of job satisfac-
tion, quality of programs, and behavior change (among other things).
The survey questions were developed internally and had not changed
substantially until a few new items were added in 2004. PwC tracks
the survey results over time. Top leaders focus on the survey results
and use them to prioritize improvements.
PwC has seen great progress at all staff levels in a wide range of
areas, and the percentage of the employees responding to the survey
increases each year. In fact one result of the survey and resulting ac-
tions taken by leaders has been a turnaround of negative perceptions
(lack of trust) on the part of employees who now see the commitment
from leadership to make changes in the firm.
All PwC learning programs are evaluated on the reaction level.
Annually, the learning-effectiveness team helps each group create a
plan for higher-level evaluations for certain programs. The team also
uses a success-case method in which it surveys the entire group and
conducts follow-up conversations with the high and low scorers.
A learning-effectiveness team resides in the Learning & Education
group. This team is responsible for identifying evaluation tools and
helping to create an evaluation or an assessment (a measure of knowl-
edge level) for every program at every level. The team consists of six
individuals with backgrounds in assessment, measurement, and statis-
tical analysis. Several have Ph.D.s in organizational psychology.
Communicating Success
Successes resulting from the leadership-development programs are
communicated in a variety of ways. For example, PwCs chairman and
senior partner has a weekly conversation with the firms partners, and
values are part of that communication. Additionally, theres a monthly
communication to the staff that includes values and actions to take
on survey results.
Innovative Aspects
According to members of the Learning & Education team, some of
PwCs innovative leadership-development practices include the SOAR
program, the primary reporting partner training, the use of metaphor-
Organization Overview
Washington Group International (Washington Group) provides engi-
neering, construction, and management solutions to businesses and
governments worldwide. Headquartered in Boise, Idaho, with more
than $3 billion in annual revenues, the organization employs approxi-
mately 24,000 people around the world and holds leading positions
in defense, energy and environment, industrial/process, infrastructure,
mining, and power markets. The organization engineers, constructs,
and manages industrial facilities, power plants, clean-air systems,
223
transmission and distribution systems, oil and gas plants, dams and
water-treatment facilities, roads, bridges, rail systems, airports, and
other infrastructure. It is making the world a safer place through its
environmental management and defense services, including operat-
ing national laboratories, managing hazardous waste, destroying
chemical and other weapons, and providing security systems for bor-
der and port security. The organization helps the world harness natu-
ral resources by mining everything from coal and precious metals to
zinc, phosphorus, bauxite, and other minerals.
Washington Groups main customers are government agencies
(including the U.S. Department of Defense, Department of Energy,
and state transportation departments) and businesses ranging from
power utilities and oil and gas companies to leading organizations
across industries including Caterpillar, Kraft, Monsanto, Amgen, and
General Motors. Other organizations in similar markets include Fluor,
Bechtel, Jacobs Engineering, Shaw Group, Parsons Corporation,
CH2M Hill, Parsons Brinckerhoff, and Granite Construction.
Washington Group was cited in 2005 by Hewitt and Associates as
one of the top twenty U.S. companies for developing leaders. Wash-
ington Group has two key priorities: safe operations throughout its
business and attracting, developing, and retaining top talent. The or-
ganization believes that investing in its people will create value for
shareholders. Talent planning and development has been a driving
element of the Washington Group philosophy for the last several
years.
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WA S H I N G T O N G R O U P I N T E R N AT I O N A L 225
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226 D E TA I L E D C A S E S T U D I E S O F B E S T - P R AC T I C E C O M PA N I E S
BUSINESS UNITS
SERVICES
Power Industrial/Process Washington Services Strategic Staffing and
Talent Management
Louis E. Pardi Gary C. Baughman Stephen Marchetti
President President President Jennifer A. Large
Vice President
Mining Infrastructure
Employee Development
Robert W. Zaist Larry E. Shaw Washington Services
President President Eastern U.S. Stephen P. Muller
Director
Energy & Environment Defense
E. Preston Rahe Terri L. Marts Washington Services
President President Western U.S.
Rust Constructors
Chris L. Phillips
President Washington Services
Europe
ment, operations, and finance), the heads of the human resources and
legal departments, presidents of the six business units, and the heads
of Washington Services and Rust Constructors. The office of the chair-
man, as well as the entire executive team, routinely meets to discuss
leadership development during quarterly business reviews. The six
business units were intentionally created to serve specific markets but
act in a way that shares talent in a flexible manner designed to support
the business and employees professional growth.
LEAP
S
NT
CO
ME
Executive
AC
Roundtable*
GN
H
SI
/
AS
Leaders Forum
ME
IN
NT
G
OR
IN
/P
RN
EA
EE
R
Discover Washington Group*
L
AL
LE
AR
TI
NI
Peak
Negotiations* Performance* for Results*
RI
NG
PE
EX
Principles of Management*
STRETCH ASSIGNMENTS
*New in 2005 - 2006
COURSE OBJECTIVES
Develop the leadership
capability of our
company
Institutionalize the
company mission and
An intense, 50-plus hour course for high-potential managers and values as the way we
do business
professionals Understand the
Held at our world headquarters in Boise, Idaho companys capabilities,
First offering: February 2004Sunday evening through markets and
competitive
Friday noon discriminators
Fifteen sessions to date; ~350 participants Value people as a
Our senior-leadership team strategic resource
Is actively involved in the nomination and selection process Understand and fulfill
the role of leader in
Serves as instructors developing people
SUNDAY
EVENING MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY
Welcome The fundamentals: Delivering integrated The world of The importance Leadership
reception our mission, our solutions to a global businessfinance, of human expectations
values and our roles market; achieving a Wall Street, and the capital in the and challenges
as leaders balanced portfolio; stakeholder E&C industry
globalization community
Mission and Our markets Understanding 2010 and thewar Performance
values Steve internal and external financial results for talent characteristics of
Hanks view The view from Wall Attracting, hiring successful execs:
360-degree Strategic vision and Street and retaining top achieving a
leadership globalization Stakeholders and performers balanced life
assessment Developing and politics: how it Change Case study
Role of the leader: marketing works management and debrief with
translating mission integrated solutions Outside activity negotiation skills senior company
and values into Beyond race and Personal finances leaders
action and results gender: the diversity Evening case study
Tom Zarges challenge
Evening case Evening case study
study
which was first offered in February 2004. More than 400 participants
have attended one of the sixteen sessions to date. The course objec-
tives are:
doing business. Senior leaders are also personally involved in the de-
livery of course content. The chief financial officer, for example, uses
a Jeopardy!-like electronic board game to help participants under-
stand financial results. Although not intended to be a cultural change
intervention at its inception, the Leaders Forum has shifted the way
managers and others view the organization and their roles in leading
others.
3. Executive Roundtable. This program was designed to help
high-performing leaders develop strategic agility, or the ability to
think broadly and creatively and to adapt to ever-changing input and
environmental factors. The Roundtable uses a theme taken from
Lewis and Clarks remarkable journey to find the Northwest Passage
from Saint Louis to the Pacific Ocean. During their adventure, the
explorers faced daily opportunities to practice strategic agility. In the
first two and a half days, participants receive feedback on their leader-
ship styles and are then given a current organizational issue or prob-
lem to research or resolve. In the next 60 to 120 days, participants
analyze the issues, develop recommendations, and present their
findings to the organizations executive team. The use of this action-
learning technique has proved successful in helping the organization
find solutions to longstanding problems, as well as give participants
the opportunity to experience the inherent ambiguity in their roles
and to learn that executive-level problems often have more than one
correct solution.
Talent Bank
2
All high,
potential Top Talent
employees in
the company Pool
PROFILE
Mary Holleran, Operations Director
Date:
Pre pared by:
Org anization:
3
Johnston Atoll Chemical Agent Disposal System (Defense)
All high
Developed and implemented a worker health and Taught a leadership course to
to mid-level
mid-level managers
managers
safety
s afety program to support operations. Achieved
Achieved
over 900,000 worker hours without a lost workday
case as a result.
Received national award for excellence in
operations
potentials
Planned developmental activities (next 12 months)
Mobilize to train other startup
s tartup managers in demil
Job and career recommendations areas; develop systemization, operations
operations and
and
Startup/commissioning role in Power precommissioning plan for each
Job rotation to Infrastructure BU Participate in major procurement proposal for
Project management institute certification Power or Infrastructure
Rotational assignment in business development
function
f unction
Future positions
Director (1-2 years)
Vice president (2+ years)
Government
11
effective
NINE-BOX
Direct reports
of business- Le ss than
unit
effective
POSITION
Succession Planning
Leve l 1* 5
SUCCESSION
INCUMBENT
Ration ale, Strengths, Weaknesses (1)
POTENTIAL SUCCESSORS
PLAN
2
READY NOW
unit 1
2
READY IN 1 TO 2 YEARS
presidents
3 NEEDED DEVELOPMENTACTIVITIES
1 2 3
views with the office of the chairman twice a year, key organizational
leaders come together once a year for a formal roll-up that looks at
talent across the organization. These discussions often result in cross-
business-unit assignments to ensure that high potentials are exposed
to various segments of the business. The organizations board of di-
rectors also reviews key talent, especially those on succession plans
for key executives.
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WA S H I N G T O N G R O U P I N T E R N AT I O N A L 237
ing agility to help identify those who may be considered to have high
potential and uses stretch assignments to test the validity of the label.
In other words, if someone can step into an unfamiliar role and
quickly muster the resources to be successful, its likely that the per-
son has the ability to assume positions of more or different responsi-
bilities, thus fitting the definition of high potential.
As an example, a top finance and accounting individual went from
the highest level in finance and accounting in one business unit to an
operations position in another. It was a significant stretch for him,
but he wanted operations experience to round out his business ex-
pertise. In another case, two chemical engineers were removed from
their project-related work and tasked to develop the organizations
college rotation program.
A recurring theme at Washington Group is the development of
project-management talentowing, in part, to the fact that managing
projects is a large share of the organizations business portfolio. The
organization actively focuses on standardizing its project-management
approach under the term The Washington Way, which emphasizes
consistent, repeatable processes from its smallest to largest projects.
The organization is affiliated with both the Construction Industry In-
stitute, provider of best practices through research, related initiatives,
and industry alliances, and the Project Management Institute, which
provides training, benchmarking, and advice worldwide in the area of
project management. Part of the project-development initiative will
be to identify mastery-level skills that highly effective project manag-
ers possess, and then develop learning opportunities for those new
to the function so that they can also acquire the skills.
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238 D E TA I L E D C A S E S T U D I E S O F B E S T - P R AC T I C E C O M PA N I E S
Current leaders are used as coaches and mentors, and they are
expected to take this responsibility seriously and as part of the way
business is done in the organization. The organization offers class-
room training on the topic of coaching and also has online resources
available. This year, for the first time, developing and coaching oth-
ers will become a standard job expectation for managers in the De-
velopment Planner.
The organization looks at leaders as both teachers and learners
and routinely structures its formal development programs to include
opportunities to assume both roles. In the Leaders Forum, for exam-
ple, senior leaders take active roles in teaching topics during the
course. They also spend two or more hours on the final day soliciting
feedback about the organization and their leadership styles. Nearly
every business review (held quarterly) includes an instructional com-
ponent, and the yearly talent reviews almost always include outside
speakers. On a more individual level, the organization encourages its
managers to use the Development Planner as a tool to enhance their
own growth by soliciting feedback from employees. In addition, man-
agers often host or conduct lunch and learn sessions for their own
staffs. These sessions are generally open to people from different
areas within the organization to improve the learning experience.
Aligning coaching and mentoring with individual activities takes
place, in a structured manner, through the Development Planner
process and, in a less structured manner, during daily interactions
with employees. Managers are encouraged to understand the profes-
sional goals of their staff and to help them find the right development
means to achieve these. On the other hand, because employees are
primarily responsible for their own growth and development, it is
incumbent on them to solicit help from their manager. In a sense, this
checks and balances system holds both managers and employees
accountable to achieve organizational goals and to use these goals as
a means of developing professionally.
Because the senior leaders at Washington Group are closely
linked to leadership development, they usually find individually ful-
filling ways to become involved in programs. In the Executive Round-
table, for example, senior leaders are asked to sponsor one of the
High Potentials
High potentials are identified at Washington Group through a yearly
talent-review process conducted at the business-unit level and then
rolled up to the organization level. Those identified in this process
become part of a talent bank (Figure E.4) that contains resumes
and skills data on high-potential and other professional employees.
The talent bank is an online, Web-based application containing the
resumes, technical skills, and career interests of Washington Group
employees. Those flagged in the talent bank as top talent show
potential to move into more responsible or challenging assignments.
To date, about 1,200 employees are identified as top talent. Each
employees accomplishments are included as part of his or her pro-
file. The profile serves as a means of engaging reviewers in a discus-
sion of the individual and includes information on accomplishments
from the previous year, development completed plus development
planned, and potential future positions. Three of the components (ac-
complishments, development completed, and development planned)
originate in the Development Planner and are modified, as needed,
for use on the profile form. The nine-box performance-and-potential
form is completed for the business-unit presidents and their direct
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WA S H I N G T O N G R O U P I N T E R N AT I O N A L 241
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242 D E TA I L E D C A S E S T U D I E S O F B E S T - P R AC T I C E C O M PA N I E S
Governance
One and one-half full-time equivalents are dedicated to leadership-
development programs. There is no formal governing council for
leadership development. Rather, this is a shared responsibility among
stakeholders including the CEO and his staff, the integrated staffing
and career-development function, human resources, and the organi-
zations board of directors. (The board is knowledgeable and aware
of the organizations programs but does not participate in the man-
agement of them.)
The organization does not formally track the time line executives
invest in leadership development because it does not believe the
means of doing so would yield a meaningful measure. Instead, it en-
courages its managers to invest a minimum of 15 to 20 percent of
their time in people development. Because the organization is very
broad in how people development is defined, the actual time is
likely greater than that number. The organization does put 30 percent
of an executives pay at risk, related to developing employees.
Executive Investment
Although the organization places strong emphasis on the involvement
of its top executives, it is now working actively to push its leadership
influence deeper into the organization. The office of the chairman
remains heavily committed to the LEAP project, yet it now serves as an
advocate for participants, sharing the mentoring with previous LEAP
Evaluating Success
Washington Group President Steve Hanks says that, when it comes to
metrics, he doesnt want people getting too caught up in statistics.
Yet, he attributes the organizations strong financial performance di-
rectly to its focus on developing people. Since 2002, the organiza-
tions net income per employee has jumped 60 percent, and it is
exceeding its goal of 10 percent compound annual growth. Notwith-
standing Hankss counsel about metrics, the organization takes cer-
tain measures seriouslyespecially those related to its ability to
attract, develop, and retain employees. Because the organization uses
its developing people proposition to attract new employees, it
closely monitors the ratios between applications, interviews, and
hires among others, and uses these data to determine how effectively
it is attracting top talent. The organization also scrutinizes the devel-
opment of its high-potential pool by tracking completed development
activities, job progression, and retention. These metrics are reviewed
during the annual talent reviews. Participants in certain programs,
including LEAP, the Leaders Forum, and the Executive Roundtable,
are consistently surveyed for feedback on the programs effectiveness.
Data from these measures are factored into the organizations
leadership strategy, although they are more frequently used to make
midcourse corrections or small changes to the approach than to sig-
nificantly reshape programs. Washington Group does not attempt to
directly link individual outcomes from its leadership programs with
organizational performance, believing that there are far too many fac-
tors involved to establish a causal relationship. It does, however,
Communicating Success
Because Washington Group actively engages its management team in
the development process, it uses them to communicate program ex-
pectations and success. They (and employees) are provided organiza-
tion publications, such as The Washington Way, that routinely feature
articles on employee development. The Leaders Edge is a publication
for managers that features development ideas and is also used for
this purpose. Organization-wide meetings, held at major locations,
feature organization and local executives who speak to professional
development among other topics.
Innovative Aspects
Several features of Washington Groups approach have proved suc-
cessful for the organization and may have value to others. They in-
clude:
247
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