The Leadership Crisis, a survey by Hay Group
The Leadership Crisis – Hay Group’s survey on the Best Companies for Leaders finds GE tops list, followed by P&G
The global talent shortage caused by the impending wave of baby boomer retirements could become even worse. The leadership drought in mature markets like UK and US plus the demand for new leaders in booming Asian economies like China and India require local organizations to take urgent action, according to global management consulting firm Hay Group.
Hay Group in conjunction with Chief Executive Magazine released the results of its survey "The Best Companies for Leaders". This showed that companies in Europe and North America are beginning to recognize the urgency of developing new leaders to compensate for a generation of baby boomer leaders exiting the workforce.
The annual survey of the "top 20 Best Companies for Leaders" considered almost 800 companies for ranking. In 2007 General Electric came out on top, followed by Procter & Gamble.
Table 1: The 2007 Top 20 Best Companies for Leaders
| 2007 Top 20 Best Companies for Leaders | 2006 Top 20 Best Companies for Leaders |
| 1. General Electric (1) | 1. General Electric |
| 2. Procter & Gamble (2) | 2. Procter & Gamble |
| 3. Johnson & Johnson (5) | 3. PepsiCo |
| 4. Unilever | 4. Citigroup |
| 5. Coca-Cola (10) | 5. Johnson & Johnson |
| 6. Siemens | 6. HSBC Holdings |
| 7. PepsiCo (3) | 7. BASF |
| 8. L’Oréal | 8. Home Depot |
| 9. Toyota Motor | 9. IBM |
| 10. Hewlett-Packard (19) | 10. Coca-Cola |
| 11. GlaxoSmithKline (17) | 11. Dell |
| 12. Novartis (13) | 12. Microsoft |
| 13. Pfizer | 13. Novartis |
| 14. HSBC Holdings (6) | 14. Verizon Communications |
| 15. 3M Company | 15. Nestlé |
| 16. Eli Lilly | 16. Lockheed Martin |
| 17. BASF (7) | 17. GlaxoSmithKline |
| 18. McDonald's Corporation | 18. Amgen |
| 19. Amgen (18) | 19. Hewlett-Packard |
| 20. Vodafone | 20. BAE Systems |
The survey showed that there are a clear set of practices to develop and retain the next generation of leaders. Investing in these key practices makes the most difference to organizations today.
Table 2: Best Practices
| 2007 Best Practices | 2006 Best Practices |
| 1. Leadership development opportunities are made available to managers. | 1. Having leaders at all levels who focus on creating a work climate that motivates employees to perform at their best. |
| 2. Managers are held accountable for creating a work climate that motivates employees to do their best. | 2. Ensuring that the company makes leadership development a top priority. |
| 3. Training and other activities intended to help leadership teams work together more effectively (e.g., team coaching, training programs for intact teams) are provided. | 3. Providing training and coaching to help intact leadership teams, as well as the individual leaders, work together more effectively. |
| 4. Talent management led by an in-depth analysis of the roles that need to be filled in the future. | 4. Rotational job assignments for high potentials. |
| 5. Leadership training and development opportunities intended to help leaders transition into a new roles. | 5. External leadership development programs for mid-level managers. |
| 6. Working abroad/international experiences. | 6. Web-based self study leadership modules for mid-level managers. |
| 7. External hires participating in formal orientation programs to prepare them for leadership positions. | 7. Executive MBA programs for midlevel managers. |
“There is no easy ‘tick the box’ solution, said Rick Lash, head of Hay Group’s Leadership and Talent practice for North America. “If organizations want to ensure they have the right leaders in the right roles to not only meet future talent shortages but also continue their growth in an increasingly volatile global economy, they will have to commit to major investments over the long haul,” Lash said.
“Organizations need to worry about the supply of future leaders, as well as about whether they really understand the future roles that will be critical to driving their business strategy,” he said.
In the study, 86.1% of respondents feel that, compared to a few years ago, the urgency to develop leaders in their organization has increased.
The survey identifies seven best practices that are most effective for leadership development. However, it is the top three practices in this list that drive the rest. If companies are willing to do the ‘heavy lifting’ in these three practices, they will greatly increase their chances of keeping their leadership pipeline full.
The top three of the seven best practices identified in 2007 account for 68% of the variance in leadership development outcomes. The best organizations for leaders have firmly established the conditions necessary for sustainable leadership. That includes three key elements – leadership development of all kinds is occurring at all levels in the organization, managers are held accountable for their leadership behavior and the work climates they create, and finally, development of teams is just as critical as development of individuals. Without these three practices firmly established, organizations waste time, effort and dollars with one-off events that cannot be sustained.
The last four leadership development practices combined bring the total explained variance in leadership development outcomes to 77%, i.e., combined they add 9% to the variance explained by the top three practices.
The annual survey of the "Top 20 Best Companies for Leaders" considered a total of 790 companies for the ranking. Of the companies in the study, 47.1% were headquartered in Europe, 31.2% in North America, 15.0% in Asia/Pacific, and the remainder in Middle East/Africa and South and Central America.
About Hay Group
Hay Group is a global consulting firm that works with leaders to turn strategies into reality. We develop talent, organize people to be more effective, and motivate them to perform at their best. With 87 offices in 47 countries, we work with more than 7,000 clients across the world. Our clients are from the public and private sector, across every major industry, and represent diverse business challenges. Our focus is on making change happen and helping organizations realize their potential.
For more information visit www.haygroup.com
