Hewitt: Most Companies Give Poor Marks to Development Programs

The lack of leadership development leads many companies to look elsewhere for the captain of the ship. Less than half (44%) of the sample in the Hewitt Associates Top 20 Companies for Leaders report identifying their high-potential leaders through their performance management process and a similar 43% track their high-potential leaders’ turnover.

Perhaps most telling are that less than half (40%) of the 300 companies surveyed link pay to a leader’s potential to advance and that only 64% look internally for their executives.

The practice does take on an added measure of importance for some companies, particularly IBM and Johnson & Johnson, which tied for the top spot in the Top 20 Companies for Leaders board. A mix of old stalwarts and newer technology companies that included the likes of General Electric Company, Colgate-Palmolive Company, Dell Computer Corporation, United Parcel Service, Inc. and Medtronic followed the top two. Rounding out the top 10 were The Proctor & Gamble Company, PepsiCo, Inc. and Southwest Airlines Co.

Compared with the total sample,85% of the Top 20 responded to having a process in place for leadership development. Further, nearly all (95%) of top quintile said leaders are held accountable for developing leadership talent, compared to 43% of leaders from the other organizations. Other disparities were noted in 74% of this groupidentify their high-potential leaders through their performance management process, 68% linking pay to a leader’s potential to advance and more than nine out 10 (95%) of the Top 20 souring their CEO internally.

Class Separation

Separating the cream from the crop were three particular areas Hewitt found the top 20 leader develop firms were executing at a much higher rates of success compared to the rest:

• effective leadership programs
• high potential leadership development
• senior-level support.

For example, where only six in 10 (61%) of the entire pool said they have an approach for building their leadership tactics, 100% of the Top 20 said such a strategy was in place. Also, o nly 57% of organizations have a strategy for selecting, developing and rewarding leaders, versus 88% of top companies. It is not surprising then to find only 29% of the whole measure their leadership programs’ effectiveness, compared with nearly eight out of 10 (79%) Top 20 firms.

“The bottom line is that most companies aren’t executing their leadership programs effectively in one, or in some cases, all of these three key areas,” said Marc Effron, global practice leader, Leadership Consulting at Hewitt Associates, in a statement. “Great leadership is critical, given the ever-changing nature of today’s corporate environment. Now more than ever, companies need to focus on leadership development by aligning their initiatives to business goals, identifying and developing future leaders, and eliciting support from senior management.”

Effective leadership development could also be tied to senior management’s involvement. While 95% of the Top 20 said their CEO is actively involved in developing leadership talent, only two-thirds of the other companies said the same. Additionally, the same number of the top group’s leaders are held accountable, through performance management processes, for developing leadership talent, compared to 43% of leaders from the other organizations.

Hewitt’s Top Companies for Leaders study will be featured in an upcoming book, Leading the Way: Three Truths from The Top Companies for Leaders. More information about the book and the Top Companies for Leaders study is available at www.hewitt.com .