Identifying and nurturing talent is gaining ground as the best way to attract aspiring leaders

Story highlights

Organizations need talented people more than talented people need organizations

Identifying and nurturing talent is gaining ground as the best way to keep aspiring leaders

Finding top talent can be difficult and it is preferable to promote internally

Company leaders need to be actively and passionately involved in grooming talent

CNN  — 

Organizations need talented people more than talented people need organizations. So – in these times when top talent is hard to find and staff are less loyal to employers – successful businesses are focused on building great leaders.

Robert P. Gandossy, the founder of the annual Top Companies For Leaders’ study – the largest of its kind ever undertaken – says there is a distinct difference in focus on leadership training between average and top companies.

Gandossy, considered one of the world’s foremost experts on developing talent and leadership, created the study with Fortune, in conjunction with Aon Hewitt and the RBL group. This year’s survey comes out next month.

The studies show leadership is the single largest determinant of competitiveness in business. And the evidence is plentiful. A company like Hindustan Unilever, sometimes referred to as the “CEO factory,” has contributed more than 400 CEOs within Unilever and externally. Procter and Gamble leaders include CEOs of Microsoft, eBay, GE and others.

Identifying and nurturing talent – through developmental assignments, to leadership programs, to mentoring – is gaining ground as the best way to attract and keep aspiring leaders.

“There used to just be a few companies doing this,” says Gandossy. “Now, it’s becoming a normal approach that most of the really good large and medium sized companies take.”

The process begins early, with the assessment of a candidate’s potential through personality, intelligence, leadership ability, and other initial testing. “If you look at a company like Proctor and Gamble,” says Gandossy, “they know exactly what profiles they are looking for. They look for it all over the world, and typically straight out of school. And once they’re in house, they have a good sense how to develop them.”

So, is there a bottled formula for the development of great leaders once talent is hired?

Yes and no, says Gandossy. “What companies do is try to increase the probability of success. It’s not formulaic yet, but we know from talking to executives what made a difference to them.”

Two themes emerge, says Gandossy. “One is that they had a very tough challenge or complex assignment early on in their career, the other is that they had a very strong mentor and a coach. So, in a sense, by building these keystones into their career path, companies can accelerate the development of their talent.”

IBM is considered one of the poster children for the development of great leaders, and incorporate both of these keystones into their approach. “Once talent is identified, we assess it, we identify any gaps, and we work to develop that leadership potential”, says Randy MacDonald, IBM’s Senior Vice President of Human Resources. “And in that process, we match them up with people already in relevant leadership roles.”

They also target potential leaders with specific complex assignments. For example, the company’s 90-strong “Global Enablement Teams” are focused on mentoring local managers in emerging or growth market countries. Conversely, the local managers help IBM’s senior mentors better understand those markets.

“There used to be a rule of thumb,” says Gandossy, “that most of someone’s development is 60% to 70% on the job experience; another 20% is education, and the final 10% coaching and mentoring. We like to add another 10% to 20% as external community experience. The best companies are looking at an array of experiences to develop talent.”

MacDonald agrees, “These types of experiences are really important. While you may be the citizen of a country, you’re a global executive.”

And it’s not so easy to just go and buy talent, Gandossy says. It’s not readily there, and it’s preferable to put a succession plan in place. “You want people in your leadership pipeline in case there is a succession decision. It’s far less costly and disruptive if you can do that.”

Plus, employees these days are disengaged, he says. “Why? Because organizations are not developing them, and the more enlightened companies use workplace practices to invest in their employees.”

Flemming Poulfeldt, professor of management at the Copenhagen Business School, agrees. “People leave managers, not companies,” he says. “Keeping people on staff is important, especially if you have identified great talent. The demand on leaders is greater than it’s ever been, and they have to be able to handle incredibly complex situations and dilemmas.”

So, what are the key lessons from top companies wanting to groom their future CEOs?

“Three things,” says Gandossy. “One, the top leadership needs to be actively and passionately involved in grooming talent. Two, they need a small number of practices that identify and develop talent. And three, they need to be maniacally focused on it. They need to believe they’re turning over every rock to identify and develop great talent.”