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Are conflicts of interest undermining Leadership Development?

More Boomerang Leaders

More Boomerang Leaders

The last few weeks have seen former leaders being reappointed at Proctor and Gamble, J.C. Penney, Infosys and Chelsea Football Club. Whilst Mr Lafley, Mr Ullman, Mr NR Narayana Murphy and Mr Mourinho have previously demonstrated their competence for the roles and may therefore be considered to be “low risk”, I am saddened by these back-to-the-future tactics. My sense is that they demonstrate:

a. A lack of ambition – are yesterdays leaders really the best equipped to provide the strategic and operational direction needed in our ever more agile business world?
b. Insufficient attention and focus on developing managerial talent within the enterprise. Would football team managers in the UK have longer periods in their appointments if they had “grown the managerial skills” at the respective club prior to being appointed to the Manager role?

I will focus on the second point in this blog.

As a junior Director, I had the privilege of working briefly with Noel Tichy on the early thinking for a new Leadership Development initiative. I recall the great insights he brought us from his work at GE with Jack Welch. In particular:

• “The most important task as CEO and Chairman was developing people”
• “People first, strategy second”
• “Pick and develop the right leaders – up to them to develop the strategy for their units”
• Institutionalized Teachable Points of View that helped “Leaders teach Leaders”

This is not just a Welch thing …… I sense that the Andy Grove approach at Intel of discussing the role of Managers in detecting and navigating turbulent industries is ever more relevant now that rapid change is the “normal” state of affairs. The seminars he had with his managers several times a year encouraged Managers to spot trends and have the courage to act. I also like the following quote from Larry Bossidy – former CEO of Honeywell:

“When you retire, you won’t remember what you did in the first quarter of 20XX, or the third. You’ll remember how many people you developed – how many you helped have a better career because of your interest and dedication to their development. When you’re confused about how you’re doing as a leader, find out how the people you lead are doing. “

I believe strongly that enterprises, their people and their shareholders will all benefit from more effort being focussed on developing their people so that there is a “bench” of well prepared internal “candidates” for vacancies when they arise. By all means consider external alternatives – both former employees and individuals from elsewhere; however, my strong belief is that with the correct development processes the internal candidates should be a better option. Consequently investment in staff development rather than Head Hunters’ fees should generate a better return!

The recent reappointments of Lafley, Ullman and Murthy have generated press interest in the likes of the Economist,  Financial Times and the Harvard Business Review blog has reminded us of the triumphant returns of Steve Jobs to Apple and Howard Schultz to Starbucks. This blog also pointed out that reappointing former CEOs is surprisingly common and highlighted Rüdiger Fahlenbrach study of 275 publicly traded American firms whose CEOs had stayed on the board after retirement “The Market for Comeback CEOs” – approximately 25% of them rehired the old CEO when the vacancy needed to be filled again.

So why?

My hypothesis is that a conflict of interest exists. The current C suite are incentivised to minimise the “threats” from next generation leaders. With less prepared subordinates they are better placed in remuneration discussions and are more likely to have longer in post!

So What?

As part of setting “The Tone From the Top” Boards should be more robust in ensuring that organisational values reinforce the development of talent – at all levels – and that senior executives are expected to “teach” the next generation of leaders. I would be delighted to help you!

 

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