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 / Autumn 2008 / Issue 52(originally published by Booz & Company)


A Talent for Talent

Some companies look exter­nally for great leadership talent. That makes sense when speed and culture change demand it. Thus, Kraft Foods Inc., newly in­de­pen­dent in 2007 after decades as a subsidiary of Altria Group Inc., shifted its leadership development strategy along with its business strategy. “In the past, we always tried to build all our talent,” says Executive Vice President of Global Human Re­sources Karen May. “But our focus on growth means we don’t always have time to do that. So ramping up our talent buying skills has become an urgent matter.”

For many companies, the battle for talent is won or lost in the field of internal leadership development. And the prevailing view of leadership is evolving away from the headhunter mind-set of the past, in which effective executives were hired from outside, not mentored and fostered from within. The habit of seeking outsiders, warns Jay Conger, senior research scientist at the Center for Effective Organizations and professor of leadership studies at Claremont McKenna College, can “undermine development…. It sends a powerful message to promising junior leaders about the lack of future opportunities.”

This is why leading organizations are designing rigorous development processes to ensure depth on their executive and managerial benches. ThyssenKrupp, for example, defined seven key management competencies and built a standardized appraisal process to create cross-segment transparency and consistency. It also created a central placement process for its top 300 managers to promote mobility among its five business segments, and to accelerate the development of leaders no matter where they might emerge in the organization.

The goal is to create a virtuous circle: Sound human capital development attracts high-potential leadership candidates, who deliver the consistently superior business performance that generates the profits needed to invest in better leaders.

Rethinking the connection between learning and strategic goals. It has been clear for decades that an organization’s competitive advantage depends on its ability to adapt new practices and innovations into ingrained, habitual activ­ity. Nonetheless, several decades after the concept of a learning organization became widely known, many companies still struggle to embed learning in their organizations. The practice is much more difficult than the theory.

The first mistake is to direct learning initiatives toward training individuals and building job skills, rather than toward developing team and organizational capabilities. The value of human capital, as Prahalad says, is in building “the capacity to work together toward common tasks on a programmatic basis.” That is also the most productive focus for organizational learning.

Another common mistake is positioning learning as a stand-alone function, with the proof of success being the establishment of the function itself, rather than results in the form of business outcomes. There are still many workplaces where corporate learning programs have ambiguous ownership (in other words, it’s unclear which sponsors are committed to them) and an underdeveloped support base of internal clients. In many com­panies, the spending accountability for training is fragmented, costs are not managed tightly, and business outcomes go unmeasured. And attendees at many learning programs sign up simply so they can check off the relevant box on their appraisal forms the following year. As a result, the value of the investment, in terms of greater skills and capabilities that can be put into practice, is lost.

The cure is closer integration with the business. At Novartis, for example, business units drive the content of learning programs to en­sure alignment with strategic objectives. Through linkages like these, the learning function itself becomes more like a sophisticated adult-­education enterprise, focusing on efficient and cost-effective delivery of learning services to a segmented audience, with measured outcomes and ROI.

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