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A paper by the Economist Intelligence Unit in co-operation with Development Dimensions International (DDI)

The CEO’s role in talent managementHow top executives from ten countriesare nurturing the leaders of tomorrow

For a PDF version of this report and individual CEO interviewsynopses, please go to www.ddiworld.com/EconomistCEO

*NIBQ*NIBQ

ddi2639j 5/24/06 3:35 PM

© The Economist Intelligence Unit 2006 3

The CEO’s role in talent managementHow top executives from ten countries are nurturing the leaders of tomorrow

The CEO’s personal priorityThe management of a company’s pool of talent is nowtoo important to be left to the human resources (HR)department alone and has become the responsibilityof the top executive. This is the main finding of a studyby the Economist Intelligence Unit in co-operationwith Development Dimensions International (DDI).The study consists of interviews with 20 corporateleaders. All 20 corporate leaders interviewed for thestudy said that talent management is theirresponsibility. Of the 18 chief executive officers (CEOs)and two chief operating officers (COOs) interviewed,seven say they spend 30–50% of their working time ontalent management, and a further seven executivesestimate their time commitment to be about 20%, asubstantial percentage, given a top executive’scrowded agenda.

The remaining executives say it is a priority andeither spend 5-15% of their time on talentmanagement or could not provide a time estimate. Inthe words of Tom Wilson, the COO of Allstate Corp.:“The most important thing I have to worry about ispeople.” And John Swainson, the CEO of CA Inc., says:“I would say on a long-term basis, as the CEO, I haveprimary responsibility for the issue of organisationalhealth and ensuring that the management teamremains vital, relevant and refreshed, and that wecreate a process to nurture and facilitate our ownsuccession. That is one of the two or three mostimportant things that a CEO must do.”

Almost all the companies whose senior executiveswere interviewed generate at least US$1bn in annualrevenue and possess strong brand recognition. Theycover a broad cross-section of industries, including

retail, manufacturing, financial services, energy,technology, consumer goods, real estate, consulting,pharmaceuticals and medical devices. The 20 corporateleaders interviewed are located in ten major industrialcountries, including the US, the UK, Japan, Australiaand India. The firms include CA (formerly ComputerAssociates) of the US, which was founded just 30 yearsago, and the Co-operative Group, a UK-basedconglomerate with roots in the mid-19th century. Onecompany, Johnson & Johnson China, is a subsidiary ofthe New Jersey-based pharmaceuticals giant. Two

Executive summary

The main points ● Chief executive officers (CEOs) are increasingly responsible for, andinvolved in, talent management.The heads of human resources departmentsplay an important, supporting role in executing talent strategy.

● CEOs spend a large amount of their time—often more than 20%—on tal-ent management. However, this effort is not typically guided by a formal tal-ent strategy explicitly linked to the company’s overarching goals orembedded in the business planning process. Rather, CEOs engage inselected supporting activities where they believe they add value.

● Talent management has become more important because of a growingrecognition that it helps to drive corporate performance, even though theexact impact is hard to quantify.

● Good talent management is not undertaken in a piecemeal fashion butconsists of comprehensive development programmes. These include theidentification of leadership potential, performance evaluations, targeteddevelopment activities and job experience.

● Many CEOs mentor executives in their organisations—an additional andimportant part of the programme. They regard the development of the nextgeneration of leaders as one of the best ways of leaving a strong legacy.

2 © The Economist Intelligence Unit 2006


The CEO’s role in talent management: how topexecutives in ten countries are nurturing the leaders oftomorrow is an Economist Intelligence Unit whitepaper, in co-operation with Development DimensionsInternational. DDI is a global human resourcesconsulting firm specialising in helping multinationalorganisations identify and develop exceptionalleadership talent.

The Economist Intelligence Unit bears soleresponsibility for this report. The EconomistIntelligence Unit’s editorial team conducted theinterviews, wrote and edited the report. The findingsand views expressed in this report do not necessarilyreflect the views of the sponsor. James P. Rubin is theauthor of the report.

Our research drew on desk research and in-depthinterviews with CEOs and COOs across a range ofindustries. Our sincere thanks are due to theinterviewees for their time and insights. We would alsolike to thank Lucy McGee and her team at DDI for theirsupport during the research process.

May 2006

Preface

ddi2639j 5/24/06 3:35 PM Page 3



The CEO’s personal priorityThe management of a company’s pool of talent is nowtoo important to be left to the human resources (HR)department alone and has become the responsibilityof the top executive. This is the main finding of a studyby the Economist Intelligence Unit in co-operationwith Development Dimensions International (DDI).The study consists of interviews with 20 corporateleaders. All 20 corporate leaders interviewed for thestudy said that talent management is theirresponsibility. Of the 18 chief executive officers (CEOs)and two chief operating officers (COOs) interviewed,seven say they spend 30–50% of their working time ontalent management, and a further seven executivesestimate their time commitment to be about 20%, asubstantial percentage, given a top executive’scrowded agenda.

The remaining executives say it is a priority andeither spend 5-15% of their time on talentmanagement or could not provide a time estimate. Inthe words of Tom Wilson, the COO of Allstate Corp.:“The most important thing I have to worry about ispeople.” And John Swainson, the CEO of CA Inc., says:“I would say on a long-term basis, as the CEO, I haveprimary responsibility for the issue of organisationalhealth and ensuring that the management teamremains vital, relevant and refreshed, and that wecreate a process to nurture and facilitate our ownsuccession. That is one of the two or three mostimportant things that a CEO must do.”

Almost all the companies whose senior executiveswere interviewed generate at least US$1bn in annualrevenue and possess strong brand recognition. Theycover a broad cross-section of industries, including

retail, manufacturing, financial services, energy,technology, consumer goods, real estate, consulting,pharmaceuticals and medical devices. The 20 corporateleaders interviewed are located in ten major industrialcountries, including the US, the UK, Japan, Australiaand India. The firms include CA (formerly ComputerAssociates) of the US, which was founded just 30 yearsago, and the Co-operative Group, a UK-basedconglomerate with roots in the mid-19th century. Onecompany, Johnson & Johnson China, is a subsidiary ofthe New Jersey-based pharmaceuticals giant. Two

Executive summary

The main points ● Chief executive officers (CEOs) are increasingly responsible for, andinvolved in, talent management.The heads of human resources departmentsplay an important, supporting role in executing talent strategy.

● CEOs spend a large amount of their time—often more than 20%—on tal-ent management. However, this effort is not typically guided by a formal tal-ent strategy explicitly linked to the company’s overarching goals orembedded in the business planning process. Rather, CEOs engage inselected supporting activities where they believe they add value.

● Talent management has become more important because of a growingrecognition that it helps to drive corporate performance, even though theexact impact is hard to quantify.

● Good talent management is not undertaken in a piecemeal fashion butconsists of comprehensive development programmes. These include theidentification of leadership potential, performance evaluations, targeteddevelopment activities and job experience.

● Many CEOs mentor executives in their organisations—an additional andimportant part of the programme. They regard the development of the nextgeneration of leaders as one of the best ways of leaving a strong legacy.



The CEO’s role in talent management: how topexecutives in ten countries are nurturing the leaders oftomorrow is an Economist Intelligence Unit whitepaper, in co-operation with Development DimensionsInternational. DDI is a global human resourcesconsulting firm specialising in helping multinationalorganisations identify and develop exceptionalleadership talent.

The Economist Intelligence Unit bears soleresponsibility for this report. The EconomistIntelligence Unit’s editorial team conducted theinterviews, wrote and edited the report. The findingsand views expressed in this report do not necessarilyreflect the views of the sponsor. James P. Rubin is theauthor of the report.

Our research drew on desk research and in-depthinterviews with CEOs and COOs across a range ofindustries. Our sincere thanks are due to theinterviewees for their time and insights. We would alsolike to thank Lucy McGee and her team at DDI for theirsupport during the research process.

May 2006

Preface

ddi2639j 5/24/06 3:35 PM



concepts, procedures, policies to develop theirworkforce all the way through the organisation. It isone of the most important things that I can do.”

Driving competitive advantage The leaders in this paper say, in a nutshell, that talentmanagement is a source of competitive advantage.They find that talented executives plan and executestrategy better and create a positive workenvironment. They believe that good talentmanagement leads to greater productivity, and evenfaster revenue growth, although the exact impact ishard to quantify. “We’ve been able to show thatthere’s a definite correlation between high leadershipscores on our leadership scoring process and success,”explains Ken Glass, the CEO of First Horizon NationalCorporation. “We have a whole lot of confidence thatthat’s just not soft and fuzzy stuff. It’s performancerelated.”

Mr Zesbaugh backs this up: “Our ability to execute isa direct function of a performance culture that we havein place.”

According to the interviewees, developing theirmost senior executives is especially important. If theseleaders have the right skills and experience, theirdirect reports and middle managers below them willthrive.

“Our ultimate financial results are a reflection ofthe success or lack thereof of our developmentprogramme,” admits William Hawkins, the COO ofMedtronic. “At the end of the day, what differentiatesus from some of our competitors is the quality andcapabilities of our people.” Medtronic’s sales haveincreased from US$6.4bn to US$10bn between 2002and 2005, and net income has almost doubled fromUS$984m to US$1.8bn.

The executives interviewed say that good talentmanagement increases job satisfaction and improvesretention rates. The latter is particularly challengingin Asia where, according to regional CEOs, competitionfor strong managers is fierce.

It is expensive to recruit and train new executivesand estimates of the cost vary widely. Wayne Cascio,the U.S. Bank Term Professor of Management at theUniversity of Colorado, Denver, says the cost of hiringand training an executive is about twice the recruit’sannual pay. Some executiverecruiting firms believe the cost iscloser to 150%. Others estimatethat it is even higher. Theseestimates include the cost of lostproductivity while positions gounstaffed and new executives learntheir jobs—which may take up to ayear. Mr Swainson explains:“Companies that have strongmanagement development andsuccession processes in place tendto have smoother transitions. When executives moveon to other roles or leave the business altogether, thatultimately has a cost. Companies with sound talentmanagement don’t wind up paying headhunters. Butbusiness continuity is the most important reason forstrong talent management. The fact that people areprepared to move into positions rapidly and canassume those positions is an important thing.”

Yet it is becoming more difficult to keep people —this is the response of all 20 corporate leadersinterviewed for this study. Employees who feel thattheir career path is blocked are more likely to leaveand these employees have an increasing number ofcompanies from which to choose. “People need to belifelong learners,” says Scott Erker, the senior vice-president of selection solutions for DDI. “Companieshave to provide them with opportunities to learn anddevelop and to further their careers withoutorganisation-hopping. It is important for creating apositive work environment and full engagement.”Meanwhile, increased pressure to deliver results isalready shortening tenures. “The one thing that Iprobably underestimated was the short-term focusthat public companies now have to deal with in terms

“We’ve been able to show thatthere’s a definite correlationbetween high leadership scores onour leadership scoring process andsuccess. We have a whole lot ofconfidence that that’s just not softand fuzzy stuff. It’s performancerelated.”Ken Glass, the CEO of First Horizon NationalCorporation.



others are respectively units of the Swiss-basedBossard Group, a maker of fasteners, and US-basedDelphi Corp., a provider of mobile electronics,technology and transport components (see corporateleaders’ profile box).

The executives come from diverse backgrounds.Mark Zesbaugh, a former chief financial officer andaccountant, was just 37 in 2001 when he became CEOof Allianz Life Insurance Company of North America, adivision of Germany’s Allianz Group. Shiv Nadarfounded the Indian company he leads, HCLTechnologies, in 1991. Lars Josefsson of Vattenfall ofSweden had previous CEO experience and was anengineer by training. Cindy Lau, the only woman in thegroup, became the managing director of Johnson &Johnson China a year ago, after 11 years as head ofmarketing at her company.

Key features of CEO-led talentmanagement Despite the variety of backgrounds, all theinterviewees share a similar understanding of theimportance of talent management in identifying andgrooming employees at all levels of the company so

that they can rise faster up thecorporate ladder. Talentmanagement consists of manyelements including performanceevaluations to identify potential;psychological testing andassessment centres to determine

capability gaps; training and developmentprogrammes, relocations, project work and jobexperience to accelerate development.

However, few of the executives appear to have astrategic approach to talent management of the samerigour as other business planning processes. One whodoes is Martin Beaumont, the CEO of the Co-operativeGroup, who sets clear targets. The Co-op wants togenerate about 70% of its promotions from internalcandidates; at present, the company uses headhunters

to find about 80% of its executives. All of the firms evaluate executives annually or

more frequently using scores and documenting theoutcomes. CEOs hold follow-up meetings to discussresults and determine what programmes and jobexperience their subordinates need to improve theirweaknesses. HR advises on what programming is mostappropriate from a range of options, including off-siteretreats, classroom and Internet learning, executivecoaching and formal mentoring. Most of theexecutives mentor their direct reports and others on amore informal basis.

Good talent management promotes people basednot only on their performance but also on the mannerin which they have made their mark. “If I have a leaderwho’s getting results but is damaging the organisationbecause of the way they’ve achieved results, that’s notokay,” says Mr Zesbaugh. And Robert Care, the CEO ofArup Australasia, a division of Arup Group, remarks: “Iftheir [employees’] attitude isn’t strong about theculture, ultimately that will undo you.”

Talent management was traditionally the domain ofHR and the role of the CEO and COO was intermittentand distant. Two factors largely account for increasedCEO involvement in the past few years: the shift infocus towards intangible assets such as talent, andincreased board scrutiny in relation to both ethics andperformance. Now it is a strategic necessity for theseexecutives not only to keep abreast of the latestdevelopments in the company’s talent programme butalso to plot strategy, own associated initiatives andregularly participate in events related to talentmanagement.

“The competitive advantage of any company comesfrom excellent execution,” notes Maarten Hulshoff,the CEO of Rodamco Europe. “The execution ofstrategy is driven by the behaviour of the leaders.”Says Thierry Porte, the CEO of Shinsei Bank in Japan:“Very specifically [my responsibility] is to be workingwith the senior team in developing their capabilitiesbut also to assist them in coming up with ideas,

“If their [employees’] attitude isn’tstrong about the culture,ultimately that will undo you.”Robert Care, the CEO of Arup Australasia, adivision of Arup Group.

ddi2639j 5/24/06 3:35 PM Page 5



concepts, procedures, policies to develop theirworkforce all the way through the organisation. It isone of the most important things that I can do.”

Driving competitive advantage The leaders in this paper say, in a nutshell, that talentmanagement is a source of competitive advantage.They find that talented executives plan and executestrategy better and create a positive workenvironment. They believe that good talentmanagement leads to greater productivity, and evenfaster revenue growth, although the exact impact ishard to quantify. “We’ve been able to show thatthere’s a definite correlation between high leadershipscores on our leadership scoring process and success,”explains Ken Glass, the CEO of First Horizon NationalCorporation. “We have a whole lot of confidence thatthat’s just not soft and fuzzy stuff. It’s performancerelated.”

Mr Zesbaugh backs this up: “Our ability to execute isa direct function of a performance culture that we havein place.”

According to the interviewees, developing theirmost senior executives is especially important. If theseleaders have the right skills and experience, theirdirect reports and middle managers below them willthrive.

“Our ultimate financial results are a reflection ofthe success or lack thereof of our developmentprogramme,” admits William Hawkins, the COO ofMedtronic. “At the end of the day, what differentiatesus from some of our competitors is the quality andcapabilities of our people.” Medtronic’s sales haveincreased from US$6.4bn to US$10bn between 2002and 2005, and net income has almost doubled fromUS$984m to US$1.8bn.

The executives interviewed say that good talentmanagement increases job satisfaction and improvesretention rates. The latter is particularly challengingin Asia where, according to regional CEOs, competitionfor strong managers is fierce.

It is expensive to recruit and train new executivesand estimates of the cost vary widely. Wayne Cascio,the U.S. Bank Term Professor of Management at theUniversity of Colorado, Denver, says the cost of hiringand training an executive is about twice the recruit’sannual pay. Some executiverecruiting firms believe the cost iscloser to 150%. Others estimatethat it is even higher. Theseestimates include the cost of lostproductivity while positions gounstaffed and new executives learntheir jobs—which may take up to ayear. Mr Swainson explains:“Companies that have strongmanagement development andsuccession processes in place tendto have smoother transitions. When executives moveon to other roles or leave the business altogether, thatultimately has a cost. Companies with sound talentmanagement don’t wind up paying headhunters. Butbusiness continuity is the most important reason forstrong talent management. The fact that people areprepared to move into positions rapidly and canassume those positions is an important thing.”

Yet it is becoming more difficult to keep people —this is the response of all 20 corporate leadersinterviewed for this study. Employees who feel thattheir career path is blocked are more likely to leaveand these employees have an increasing number ofcompanies from which to choose. “People need to belifelong learners,” says Scott Erker, the senior vice-president of selection solutions for DDI. “Companieshave to provide them with opportunities to learn anddevelop and to further their careers withoutorganisation-hopping. It is important for creating apositive work environment and full engagement.”Meanwhile, increased pressure to deliver results isalready shortening tenures. “The one thing that Iprobably underestimated was the short-term focusthat public companies now have to deal with in terms

“We’ve been able to show thatthere’s a definite correlationbetween high leadership scores onour leadership scoring process andsuccess. We have a whole lot ofconfidence that that’s just not softand fuzzy stuff. It’s performancerelated.”Ken Glass, the CEO of First Horizon NationalCorporation.



others are respectively units of the Swiss-basedBossard Group, a maker of fasteners, and US-basedDelphi Corp., a provider of mobile electronics,technology and transport components (see corporateleaders’ profile box).

The executives come from diverse backgrounds.Mark Zesbaugh, a former chief financial officer andaccountant, was just 37 in 2001 when he became CEOof Allianz Life Insurance Company of North America, adivision of Germany’s Allianz Group. Shiv Nadarfounded the Indian company he leads, HCLTechnologies, in 1991. Lars Josefsson of Vattenfall ofSweden had previous CEO experience and was anengineer by training. Cindy Lau, the only woman in thegroup, became the managing director of Johnson &Johnson China a year ago, after 11 years as head ofmarketing at her company.

Key features of CEO-led talentmanagement Despite the variety of backgrounds, all theinterviewees share a similar understanding of theimportance of talent management in identifying andgrooming employees at all levels of the company so

that they can rise faster up thecorporate ladder. Talentmanagement consists of manyelements including performanceevaluations to identify potential;psychological testing andassessment centres to determine

capability gaps; training and developmentprogrammes, relocations, project work and jobexperience to accelerate development.

However, few of the executives appear to have astrategic approach to talent management of the samerigour as other business planning processes. One whodoes is Martin Beaumont, the CEO of the Co-operativeGroup, who sets clear targets. The Co-op wants togenerate about 70% of its promotions from internalcandidates; at present, the company uses headhunters

to find about 80% of its executives. All of the firms evaluate executives annually or

more frequently using scores and documenting theoutcomes. CEOs hold follow-up meetings to discussresults and determine what programmes and jobexperience their subordinates need to improve theirweaknesses. HR advises on what programming is mostappropriate from a range of options, including off-siteretreats, classroom and Internet learning, executivecoaching and formal mentoring. Most of theexecutives mentor their direct reports and others on amore informal basis.

Good talent management promotes people basednot only on their performance but also on the mannerin which they have made their mark. “If I have a leaderwho’s getting results but is damaging the organisationbecause of the way they’ve achieved results, that’s notokay,” says Mr Zesbaugh. And Robert Care, the CEO ofArup Australasia, a division of Arup Group, remarks: “Iftheir [employees’] attitude isn’t strong about theculture, ultimately that will undo you.”

Talent management was traditionally the domain ofHR and the role of the CEO and COO was intermittentand distant. Two factors largely account for increasedCEO involvement in the past few years: the shift infocus towards intangible assets such as talent, andincreased board scrutiny in relation to both ethics andperformance. Now it is a strategic necessity for theseexecutives not only to keep abreast of the latestdevelopments in the company’s talent programme butalso to plot strategy, own associated initiatives andregularly participate in events related to talentmanagement.

“The competitive advantage of any company comesfrom excellent execution,” notes Maarten Hulshoff,the CEO of Rodamco Europe. “The execution ofstrategy is driven by the behaviour of the leaders.”Says Thierry Porte, the CEO of Shinsei Bank in Japan:“Very specifically [my responsibility] is to be workingwith the senior team in developing their capabilitiesbut also to assist them in coming up with ideas,

“If their [employees’] attitude isn’tstrong about the culture,ultimately that will undo you.”Robert Care, the CEO of Arup Australasia, adivision of Arup Group.

ddi2639j 5/24/06 3:35 PM



plans to teach a weekly leadership class that will run 8-12 weeks and would like other senior executives to dothe same. Michael Critelli, the CEO of Pitney Bowes,attends forums where employees of the provider ofbusiness machines ask executives to respond to eventhe most controversial topics. Mr Critelli says thesemeetings allow him to see how well his executivescommunicate with their employees.

Most of the interviewees acknowledge the rolementors play in the development of their own careers.All of them mentor subordinates one or more levelsdown the organisation. A number of executives helptheir subordinates to address pressing issues andprovide career advice. “With mentoring, I’m looking atthe people in terms of discussing their job content,discussing what to do next month and evaluating whatthey have done,” notes Mr Hulshoff.

In other cases, mentoring overarches immediatejob challenges and helps mentees navigate theorganisation. Ms Lau held two one-on-oneconversations late last year to persuade a talentedexecutive to remain with Johnson & Johnson. Theexecutive had received an offer at a higher salary fromanother firm before Ms Lau persuaded her that jobsatisfaction and opportunities for promotion weremore important. The executive is now in line to fill oneof Ms Lau’s seven senior jobs.

But much of the involvement of top executives intalent management occurs on an ad hoc basis. All ofthe interviewees say they are available to their directreports and executives well below that rank for casualcoaching conversations about business issues andcareer decisions. At Pitney Bowes, Mr Critelli takesquestions at his company’s forums. Executives at HCLTechnologies occasionally stop by Mr Nadar’s office toconfer with him about business problems. At Delphi,Mr Abulaban uses a conference room as an office so hecan meet with groups more easily. Mr Care at Arupholds question-and-answer sessions at his company’seight offices and meets managers individually. “A lot Iwould characterise as me sitting with individuals, the

people that report to me in a wider leadership groupand talking to them about how things are done,matters they’re dealing with and how they mightaddress them, do better,” he explains. “To me that isall part of leadership training.” Mr Glass of FirstHorizon answers e-mails from executives seekingcareer advice. Mr Hulshoff at Rodamco Europe likes toshare ideas with executives and outside leadershipconsultants over a glass of wine.

Tying talent to overall strategyThe interviewees say talent management must beaimed at supporting their overall business strategy.Rodamco Europe recruits and develops executives whocan manage rapid growth. The company has beenaggressively acquiring shopping centres in majorEuropean cities. Gaylord and Allianz seek to promotepeople obsessed with customer service. First Horizonrequires managers to be strong at execution. “A lot ofpeople have the same strategies we have but we dobetter in some businesses than ourcompetition because our managersare very good at execution,” statesMr Glass. Inchcape, a UK-basedautomotive distributor, hasdifferent leadership strengths indifferent countries.

The trend is that CEOs realisethat one constant style ofleadership does not meet all necessities. The type oftalent must align with the direction in which thebusiness is heading. In a few cases, executives help todesign and drive a strategic approach to talentmanagement which links to the wider goals of thebusiness. Johnson & Johnson’s method is among themost systematic, designed to support rapid expansion,and starting with selecting the best recruits: “The J&Jstrategy includes first how we expand the pool oftalent from recruitment, second how we can expandthe competency of the existing talent, and third is theretention of talent,” explains Ms Lau.

“With mentoring, I’m looking atthe people in terms of discussingtheir job content, discussing whatto do next month and evaluatingwhat they have done,” Maarten Hulshoff, the CEO of RodamcoEurope.



of Wall Street,” admits Bill Zollars, the CEO of YRCWorldwide. “I knew it was crazy, but I had no idea howcrazy it actually is. It’s really gotten to the point wherelong term to most analysts is next week.”

The result is that organisations are paying closerattention to training and jobassignments, creative changes inresponsibility or an acceleratedcareer track that may keep aspiringor existing executives in theirpositions longer. “If you’redeveloping a leader pipeline, you

are helping to empower the individual,” replies SharonAllen, the chairman of Deloitte & Touche USA. “In theend, it helps retention.”

In fact, talent management is so important thatsome firms are even tying compensation to it. At leastone-half of the firms interviewed cover employeedevelopment in annual performance reviews thatdetermine pay increases. First Horizon NationalCorporation, for example, calculates part of its seniorleaders’ bonuses on their ability to meet certaindevelopment goals. They must provide training andassignments for their most promising managers andreport to the board on their progress.

The hands-on CEOIn the wake of legislation over the past five yearsrequiring board members to scrutinise theircompanies more carefully, boards themselves havebecome involved in talent management. In most of thecompanies in the study, directors expected the CEO orCOO to take charge of talent management and toupdate them regularly on individual executives. MrZollars has allocated as much as 40% of boardmeetings to talent management, and some of theexecutives wish they could spend more time on talentmanagement. Other executives regularly discusstalent management both at formal meetings and inmore casual settings. “People follow behaviour morethan they do strategy, and leadership is about

mobilising behavioural change,’’ says Mr Hulshoff.The CEOs and COOs interviewed oversee the

company’s talent management activities. They carveout specific times to discuss talent management withsenior staff and their boards but also refer to the topicat regular meetings. The amount of time they spend ontalent management can sometimes be considerable.Messrs Hawkins and Care say they spend about 50% oftheir time on talent management; Majdi Abulaban, themanaging director of Asia Pacific Delphi Packard,Electric Systems, and Mr Nadar and Mr Beaumont saythey allocate about one-third of their time to this.“[Talent management] is about making sure that youhave the right people in the right places for boththemselves and the organisation, and needing tomake sure that you as the chief executive are takingresponsibility for the development of your leadershiptalent,” adds Michael Wilkins, the CEO of Promina ofAustralia, an insurance company. “It’s one of the bestlegacies that you can leave any organisation.”

All of the interviewees regularly evaluate theirdirect reports as a basis for top-level talent decisions,often with written performance evaluations. Theircompanies conduct at least one lengthy formalassessment of top executives each year. The reviewscombine written feedback and a scored sectioncovering several leadership categories. Johnson &Johnson China measures people in several areas.Medtronic uses a similar rating system. Allstate asksemployees to assess their managers in a quarterlysurvey.

All 20 executives interviewed for this studypersonally participate in at least one activity intendedto develop talent, including off-site retreats andleadership programmes. Colin Reed, the CEO ofGaylord Entertainment, addresses small groups ofincoming executives and meets them individually. MrHulshoff, facilitates group leadership exercises andspeaks on strategy at these events. Ms Lau signs one-year contracts to help three promising executives at atime. Mr Porte, who meets regularly with executives,

“Talent management is aboutmaking sure that you have the rightpeople in the right places for boththemselves and the organisation.”Michael Wilkins, the CEO of Promina.

ddi2639j 5/24/06 3:35 PM Page 7



plans to teach a weekly leadership class that will run 8-12 weeks and would like other senior executives to dothe same. Michael Critelli, the CEO of Pitney Bowes,attends forums where employees of the provider ofbusiness machines ask executives to respond to eventhe most controversial topics. Mr Critelli says thesemeetings allow him to see how well his executivescommunicate with their employees.

Most of the interviewees acknowledge the rolementors play in the development of their own careers.All of them mentor subordinates one or more levelsdown the organisation. A number of executives helptheir subordinates to address pressing issues andprovide career advice. “With mentoring, I’m looking atthe people in terms of discussing their job content,discussing what to do next month and evaluating whatthey have done,” notes Mr Hulshoff.

In other cases, mentoring overarches immediatejob challenges and helps mentees navigate theorganisation. Ms Lau held two one-on-oneconversations late last year to persuade a talentedexecutive to remain with Johnson & Johnson. Theexecutive had received an offer at a higher salary fromanother firm before Ms Lau persuaded her that jobsatisfaction and opportunities for promotion weremore important. The executive is now in line to fill oneof Ms Lau’s seven senior jobs.

But much of the involvement of top executives intalent management occurs on an ad hoc basis. All ofthe interviewees say they are available to their directreports and executives well below that rank for casualcoaching conversations about business issues andcareer decisions. At Pitney Bowes, Mr Critelli takesquestions at his company’s forums. Executives at HCLTechnologies occasionally stop by Mr Nadar’s office toconfer with him about business problems. At Delphi,Mr Abulaban uses a conference room as an office so hecan meet with groups more easily. Mr Care at Arupholds question-and-answer sessions at his company’seight offices and meets managers individually. “A lot Iwould characterise as me sitting with individuals, the

people that report to me in a wider leadership groupand talking to them about how things are done,matters they’re dealing with and how they mightaddress them, do better,” he explains. “To me that isall part of leadership training.” Mr Glass of FirstHorizon answers e-mails from executives seekingcareer advice. Mr Hulshoff at Rodamco Europe likes toshare ideas with executives and outside leadershipconsultants over a glass of wine.

Tying talent to overall strategyThe interviewees say talent management must beaimed at supporting their overall business strategy.Rodamco Europe recruits and develops executives whocan manage rapid growth. The company has beenaggressively acquiring shopping centres in majorEuropean cities. Gaylord and Allianz seek to promotepeople obsessed with customer service. First Horizonrequires managers to be strong at execution. “A lot ofpeople have the same strategies we have but we dobetter in some businesses than ourcompetition because our managersare very good at execution,” statesMr Glass. Inchcape, a UK-basedautomotive distributor, hasdifferent leadership strengths indifferent countries.

The trend is that CEOs realisethat one constant style ofleadership does not meet all necessities. The type oftalent must align with the direction in which thebusiness is heading. In a few cases, executives help todesign and drive a strategic approach to talentmanagement which links to the wider goals of thebusiness. Johnson & Johnson’s method is among themost systematic, designed to support rapid expansion,and starting with selecting the best recruits: “The J&Jstrategy includes first how we expand the pool oftalent from recruitment, second how we can expandthe competency of the existing talent, and third is theretention of talent,” explains Ms Lau.

“With mentoring, I’m looking atthe people in terms of discussingtheir job content, discussing whatto do next month and evaluatingwhat they have done,” Maarten Hulshoff, the CEO of RodamcoEurope.



of Wall Street,” admits Bill Zollars, the CEO of YRCWorldwide. “I knew it was crazy, but I had no idea howcrazy it actually is. It’s really gotten to the point wherelong term to most analysts is next week.”

The result is that organisations are paying closerattention to training and jobassignments, creative changes inresponsibility or an acceleratedcareer track that may keep aspiringor existing executives in theirpositions longer. “If you’redeveloping a leader pipeline, you

are helping to empower the individual,” replies SharonAllen, the chairman of Deloitte & Touche USA. “In theend, it helps retention.”

In fact, talent management is so important thatsome firms are even tying compensation to it. At leastone-half of the firms interviewed cover employeedevelopment in annual performance reviews thatdetermine pay increases. First Horizon NationalCorporation, for example, calculates part of its seniorleaders’ bonuses on their ability to meet certaindevelopment goals. They must provide training andassignments for their most promising managers andreport to the board on their progress.

The hands-on CEOIn the wake of legislation over the past five yearsrequiring board members to scrutinise theircompanies more carefully, boards themselves havebecome involved in talent management. In most of thecompanies in the study, directors expected the CEO orCOO to take charge of talent management and toupdate them regularly on individual executives. MrZollars has allocated as much as 40% of boardmeetings to talent management, and some of theexecutives wish they could spend more time on talentmanagement. Other executives regularly discusstalent management both at formal meetings and inmore casual settings. “People follow behaviour morethan they do strategy, and leadership is about

mobilising behavioural change,’’ says Mr Hulshoff.The CEOs and COOs interviewed oversee the

company’s talent management activities. They carveout specific times to discuss talent management withsenior staff and their boards but also refer to the topicat regular meetings. The amount of time they spend ontalent management can sometimes be considerable.Messrs Hawkins and Care say they spend about 50% oftheir time on talent management; Majdi Abulaban, themanaging director of Asia Pacific Delphi Packard,Electric Systems, and Mr Nadar and Mr Beaumont saythey allocate about one-third of their time to this.“[Talent management] is about making sure that youhave the right people in the right places for boththemselves and the organisation, and needing tomake sure that you as the chief executive are takingresponsibility for the development of your leadershiptalent,” adds Michael Wilkins, the CEO of Promina ofAustralia, an insurance company. “It’s one of the bestlegacies that you can leave any organisation.”

All of the interviewees regularly evaluate theirdirect reports as a basis for top-level talent decisions,often with written performance evaluations. Theircompanies conduct at least one lengthy formalassessment of top executives each year. The reviewscombine written feedback and a scored sectioncovering several leadership categories. Johnson &Johnson China measures people in several areas.Medtronic uses a similar rating system. Allstate asksemployees to assess their managers in a quarterlysurvey.

All 20 executives interviewed for this studypersonally participate in at least one activity intendedto develop talent, including off-site retreats andleadership programmes. Colin Reed, the CEO ofGaylord Entertainment, addresses small groups ofincoming executives and meets them individually. MrHulshoff, facilitates group leadership exercises andspeaks on strategy at these events. Ms Lau signs one-year contracts to help three promising executives at atime. Mr Porte, who meets regularly with executives,

“Talent management is aboutmaking sure that you have the rightpeople in the right places for boththemselves and the organisation.”Michael Wilkins, the CEO of Promina.

ddi2639j 5/24/06 3:35 PM


Accelerating leaders’ development

The firms interviewed provide increasingly structuredopportunities for executives to improve theirleadership acumen through formal programmes, oftenoff-site. Pitney Bowes conducts week-long retreats forvice-presidents. The events cover strategy, executionand personnel issues. Inchcape has created aleadership academy with Loughborough University inthe UK. Executives may even pursue an MBA at theschool. Medtronic designs its own curriculum for two-and three-day training events. It will soon require itsleading executives to spend three separate weeks atdifferent business units each year.

Asia Pacific, Delphi Packard Electric Systems sendssenior executives to a two-week programme createdwith the University of Michigan and other shorterprogrammes. “As the executive progresses in theorganisation from one level to another we have themgo through specific leadership development training,”says Mr Abulaban

All of the companies use mentoring, executivecoaching or both. At Inchcape, Peter Johnson, theCEO, mentors his eight direct reports and fourexecutives below that level. Rodamco Europe usescoaches to help bring under-performers up to speed.Mr Nadar helps executives at HCL Technologies to pickthrough problems and tries to meet with them oftenoutside of work, “In a lot of ways, a CEO’s job is chiefmentor,” he says.

But many interviewees say that on-the-jobexperience is also critical. When choosing andpromoting managers, they prefer the person to have abroad background rather than expertise in one or twoareas. Their firms encourage executives to pursueopportunities in unfamiliar settings, includinginternational assignments and project work designedto hone new skills.

Mr Zollars recently named a rising star as US chiefintegration officer overseeing acquisitions and placedhim on the China development team. The company has

been looking to expand in China through a series ofjoint ventures. Mr Zollars believes the newassignments will help this executive to improve hisinter-cultural effectiveness and global acumen.Johnson & Johnson sends Chinese executives toEurope and the US for one- to two-year stints, where they can learnkey account management, anestablished practice in thesecountries but less well-known inChina. According to Mr Critelli,“The best kind of development isputting someone in a job that tests them where theyhaven’t been tested before.”

When Mr Wilson was CEO of Allstate Financial, henamed a manager from inside the organisation tobecome treasurer, although the individual lackedexperience. But to ensure he blossomed, Mr Wilsonnamed two more-seasoned financial professionals tosupport this executive. “I was convinced that not onlywould he be able to learn the skills required to do thejob but he would show the organisation that (enablingsomeone to grow into a position) was a good thing andit was rewarding in your career if you were acontinuous learner.”

Challenges and risksCompanies must anticipate their future needs in orderto ensure they have the skills to match them, forexample, marketing and sales experience may be moreimportant in two years’ time than a comptroller’sbackground. Many of the executives interviewed saythat they have made good progress in developing atalent strategy that achieved this, but acknowledgedseveral significant challenges in this regard. Mostrespondents believe that succession planning inparticular is a delicate process requiring foresight andconsiderable diplomatic skill. They say theircompanies monitor progress and regularly revisit theirsuccession plans to ensure that they remain future-facing.


“The best kind of development isputting someone in a job that teststhem where they haven’t beentested before.”Michael Critelli, the CEO of Pitney Bowes.



A company’s needs will change with time, too, asbusiness strategy shifts. One of Mr Glass’spredecessors excelled at formulating strategy butanother was better on the people side. Mr Glass hadmore of a financial background. “Every leader takesthat leadership position at a different point in time ina company’s development and so different qualitiesare needed,” he says.

Mr Zesbaugh says Allianz Life’s parent company, theAllianz Group, has been making a more concertedeffort to have an internationally diverse group ofexecutives. Allianz Group has companies and offices in70 countries. Some firms have been trying harder toincorporate more women and minorities into theirleadership ranks in order to service increasinglydiverse customers. Nevertheless, as shown by thiscollection of interviews, organisations have a long wayto go in this area. The glass ceiling may have somecracks, but it is not yet shattered.

The importance of successionAll of the executives interviewed say that successionplanning is a crucial part of talent management andthat transparency in this regard motivates employeesto perform at a high level, thereby fostering stability.

“You need to be able to justify andcommunicate to people why theyare on a list or not on a list. If youarticulate why you have the viewsthat you do, you lose fewerpeople,’’ responds Mr Care.

According to most of theinterviewees, firms that allow workers to languishwithout hope of advancement could lose them. Aboutfour in five of the Co-operative Group’s seniorexecutives were recruited from other organisations. MrBeaumont found that ratio unacceptable when hebecame CEO in 2002 and has overhauled thecompany’s talent management approach. Bob Rogers,the president of DDI, says companies are focusingmore on succession partly because of pressure from

investors. “You don’t want the investment communityto think there’s a lack of potential successors.”

Consequently, all the firms had multiple successionplans to address different levels of leadership. All butone could identify their potential successors now andseveral years into the future. All could name potentialreplacements at other key positions. “Empowering issomething we do very well. I see my role as how do Icreate multiple CEOs within the organisation,” says MrNadar of HCL Technologies.

A strategic role for HRAs talent management has grown in importance inrecent years, so has the role of HR departments. This ispositive news for senior HR professionals who havelong been seeking greater involvement in matters ofstrategic importance. All of the interviewees say thatHR departments are responsible for executing talentmanagement strategy, being custodians of the talentmanagement process and often provide guidance andfresh thinking about talent management programmes.They coordinate recruiting, help set job goals andcompensation, introduce new developmentprogrammes, as well as monitor and report onindividuals’ progress. Allstate’s head of HR vetscandidates for leading executive positions and has avoice in selection.

Mr Zesbaugh expects HR to track talentmanagement trends and programming at othercompanies. “I don’t always have the luxury of seeingeverything. What I look to them to do is come up withinnovative ways to move our leadership to the nextlevel.” At Arup Australasia, HR serves as a soundingboard for employees about development and theircareers. Shinsei Bank works with a chief learningofficer.

All but one interviewee say their director of HR ispart of their inner circle, along with C-level executives.At YRC Worldwide, the head of HR is “my consigliere,”says Mr Zollars.

“Empowering is something we dovery well. I see my role as how do Icreate multiple CEOs within theorganisation.” Shiv Nadar, the CEO of HCL Technologies.

ddi2639j 5/24/06 3:35 PM Page 9


Accelerating leaders’ development

The firms interviewed provide increasingly structuredopportunities for executives to improve theirleadership acumen through formal programmes, oftenoff-site. Pitney Bowes conducts week-long retreats forvice-presidents. The events cover strategy, executionand personnel issues. Inchcape has created aleadership academy with Loughborough University inthe UK. Executives may even pursue an MBA at theschool. Medtronic designs its own curriculum for two-and three-day training events. It will soon require itsleading executives to spend three separate weeks atdifferent business units each year.

Asia Pacific, Delphi Packard Electric Systems sendssenior executives to a two-week programme createdwith the University of Michigan and other shorterprogrammes. “As the executive progresses in theorganisation from one level to another we have themgo through specific leadership development training,”says Mr Abulaban

All of the companies use mentoring, executivecoaching or both. At Inchcape, Peter Johnson, theCEO, mentors his eight direct reports and fourexecutives below that level. Rodamco Europe usescoaches to help bring under-performers up to speed.Mr Nadar helps executives at HCL Technologies to pickthrough problems and tries to meet with them oftenoutside of work, “In a lot of ways, a CEO’s job is chiefmentor,” he says.

But many interviewees say that on-the-jobexperience is also critical. When choosing andpromoting managers, they prefer the person to have abroad background rather than expertise in one or twoareas. Their firms encourage executives to pursueopportunities in unfamiliar settings, includinginternational assignments and project work designedto hone new skills.

Mr Zollars recently named a rising star as US chiefintegration officer overseeing acquisitions and placedhim on the China development team. The company has

been looking to expand in China through a series ofjoint ventures. Mr Zollars believes the newassignments will help this executive to improve hisinter-cultural effectiveness and global acumen.Johnson & Johnson sends Chinese executives toEurope and the US for one- to two-year stints, where they can learnkey account management, anestablished practice in thesecountries but less well-known inChina. According to Mr Critelli,“The best kind of development isputting someone in a job that tests them where theyhaven’t been tested before.”

When Mr Wilson was CEO of Allstate Financial, henamed a manager from inside the organisation tobecome treasurer, although the individual lackedexperience. But to ensure he blossomed, Mr Wilsonnamed two more-seasoned financial professionals tosupport this executive. “I was convinced that not onlywould he be able to learn the skills required to do thejob but he would show the organisation that (enablingsomeone to grow into a position) was a good thing andit was rewarding in your career if you were acontinuous learner.”

Challenges and risksCompanies must anticipate their future needs in orderto ensure they have the skills to match them, forexample, marketing and sales experience may be moreimportant in two years’ time than a comptroller’sbackground. Many of the executives interviewed saythat they have made good progress in developing atalent strategy that achieved this, but acknowledgedseveral significant challenges in this regard. Mostrespondents believe that succession planning inparticular is a delicate process requiring foresight andconsiderable diplomatic skill. They say theircompanies monitor progress and regularly revisit theirsuccession plans to ensure that they remain future-facing.


“The best kind of development isputting someone in a job that teststhem where they haven’t beentested before.”Michael Critelli, the CEO of Pitney Bowes.

When Mr Wilson was Chairman and President of

Allstate Financial, he named a manager from inside the organisation to become treasurer, although the individual

lacked experience. But to ensure he blossomed, Mr Wilson named two more-seasoned financial professionals to support this executive. “I was convinced that not only

would he be able to learn the skills required to do the

job but he would show the organisation that (enabling someone to grow into a position) was a good thing and

it was rewarding in your career if you were a

continuous learner.”



Despite the variety of experience and opinions of theexecutives profiled in this study, a number of commonthemes emerge.

● Strong talent management leads to greaterworkforce productivity and other benefits. Indeed,companies are increasingly realising that they cannotbe successful unless they have a good strategy fordeveloping talent.

● Given its importance, the strategy needs to bedriven from the top. CEOs and COOs should overseetalent management strategy rather than delegatingit to HR departments. HR, in turn, should be maderesponsible for supporting the strategy andexecuting it.

● Talent management should be explicitly linked withoverall strategic planning and deliver the quantity andquality of leaders the company will need in the futureto achieve its goals.

● Formal processes for identifying top talent,including performance evaluations, and strategic

reviews of key talent should occur at least annuallyand incorporate written feedback to buttress scoredcategories. There are many other components requiredin a good programme, and a rigorous approach toobtaining reliable performance data is essential.

● Smart companies communicate effectively aboutthe importance of talent management. By publiclyrecognising and rewarding deserving candidates withpromotions and other awards, companies can cultivatean environment in which talent flourishes.

● A varied business background is the best groundingfor the CEO and COO roles. As today’s corporate leadersface such diverse challenges and opportunities, firmsare looking for people with wide experience in terms offunction, role, and, increasingly, geography.

● Talent development programmes should combineboth theory and practice in the form of structuredlearning experiences and off-site meetings, as well asthe proper business experience. They should besupported on a daily basis by coaching and mentoringactivity.

Conclusions


Other interviewees are of the opinion that timingpromotions is difficult. If the process is too slow, thereis a risk of losing a talented executive to a rivalcompany—occasionally after a candidate has beendeveloped for years. But promoting someone tooquickly represents a risk to the business and can createresentment and job vacancies that cannot be filledlower down. Several respondents say it is difficult to

promote executives over the headsof less-talented superiors.“Figuring out how to managewhere you put that individual andwhere you make room for thepeople under them that truly dohave the potential to get to thenext level is by far the biggest[talent management] challenge wehave,” says Mr Critelli.

Mr Wilson says it is difficult bypassing an executiveto promote a more junior manager. The higher-levelindividual may be affronted and decide to move on.But Mr Wilson believes candor is best in theseinstances. Strong talent management requires him tomake tough decisions. “The way in which I give myselfthe emotional strength to do that is to tell myself thatfor the good of the organisation we need the bestleaders in place and that if I’m not willing to make ituncomfortable for somebody who just is doing an allright job but just isn’t going to take it to the promisedland, then I’m doing the rest of those people adisservice. You have to do what’s good for the team.”

According to a few interviewees, setting the righttone and mix of learning activities and promotions isalso difficult. Mr Porte has had to adapt programmesthat have worked in other countries to Japanesebusiness culture. He says that convincing executiveswhy talent management is important and getting them

to participate is also a challenge. “There are a numberof challenges. Of course, one is creating the rightstructure for it and making sure that it’s not justsomething that people see as a burden, but really asan opportunity both for personal growth as well as formaking a contribution to the company.” Mr Zesbaughadds that he’d like to develop executives faster.

Developing tomorrow’s CEOsMost of the executives say their approach to talentmanagement is influenced strongly by their owndevelopment. Ms Lau spent more than a decade as amarketing officer. She favors this role as a springboardto her position. Mr Zollars spent five years in Europeand a year in Japan earlier in his career. He nowencourages executives to spend time overseas. MrHawkins moved around as an executive with anotherfirm. He believes his experience, including a stint as adivision CEO, was good preparation for the COO job atMedtronic. Both Mr Johnson and Mr Josefsson wereCEOs before assuming their present roles. MrJosefsson says that his previous experience preparedhim well.

A number of the executives believe that no singlejob provides the perfect preparation to become theCEO. “What I look for isn’t necessarily the technicalcompetency but the leadership competency,” repliesMr Zesbaugh. Indeed, according to Mr Abulaban,certain leadership qualities are universal. He says thatit is easy enough to measure how effective leadershipskills are, anywhere in the world. “The global way ishow well people and teams respond to that leader. Thetrue mark of an effective leader is whether the peopleare following the leader. Is his organisationdelivering?”


“The global way is how well peopleand teams respond to that leader.The true mark of an effective leaderis whether the people are followingthe leader. Is his organisationdelivering?”Majdi Abulaban, the managing director ofAsia Pacific Delphi Packard, ElectricSystems.

ddi2639j 5/24/06 3:35 PM Page 11



Despite the variety of experience and opinions of theexecutives profiled in this study, a number of commonthemes emerge.

● Strong talent management leads to greaterworkforce productivity and other benefits. Indeed,companies are increasingly realising that they cannotbe successful unless they have a good strategy fordeveloping talent.

● Given its importance, the strategy needs to bedriven from the top. CEOs and COOs should overseetalent management strategy rather than delegatingit to HR departments. HR, in turn, should be maderesponsible for supporting the strategy andexecuting it.

● Talent management should be explicitly linked withoverall strategic planning and deliver the quantity andquality of leaders the company will need in the futureto achieve its goals.

● Formal processes for identifying top talent,including performance evaluations, and strategic

reviews of key talent should occur at least annuallyand incorporate written feedback to buttress scoredcategories. There are many other components requiredin a good programme, and a rigorous approach toobtaining reliable performance data is essential.

● Smart companies communicate effectively aboutthe importance of talent management. By publiclyrecognising and rewarding deserving candidates withpromotions and other awards, companies can cultivatean environment in which talent flourishes.

● A varied business background is the best groundingfor the CEO and COO roles. As today’s corporate leadersface such diverse challenges and opportunities, firmsare looking for people with wide experience in terms offunction, role, and, increasingly, geography.

● Talent development programmes should combineboth theory and practice in the form of structuredlearning experiences and off-site meetings, as well asthe proper business experience. They should besupported on a daily basis by coaching and mentoringactivity.

Conclusions


Other interviewees are of the opinion that timingpromotions is difficult. If the process is too slow, thereis a risk of losing a talented executive to a rivalcompany—occasionally after a candidate has beendeveloped for years. But promoting someone tooquickly represents a risk to the business and can createresentment and job vacancies that cannot be filledlower down. Several respondents say it is difficult to

promote executives over the headsof less-talented superiors.“Figuring out how to managewhere you put that individual andwhere you make room for thepeople under them that truly dohave the potential to get to thenext level is by far the biggest[talent management] challenge wehave,” says Mr Critelli.

Mr Wilson says it is difficult bypassing an executiveto promote a more junior manager. The higher-levelindividual may be affronted and decide to move on.But Mr Wilson believes candor is best in theseinstances. Strong talent management requires him tomake tough decisions. “The way in which I give myselfthe emotional strength to do that is to tell myself thatfor the good of the organisation we need the bestleaders in place and that if I’m not willing to make ituncomfortable for somebody who just is doing an allright job but just isn’t going to take it to the promisedland, then I’m doing the rest of those people adisservice. You have to do what’s good for the team.”

According to a few interviewees, setting the righttone and mix of learning activities and promotions isalso difficult. Mr Porte has had to adapt programmesthat have worked in other countries to Japanesebusiness culture. He says that convincing executiveswhy talent management is important and getting them

to participate is also a challenge. “There are a numberof challenges. Of course, one is creating the rightstructure for it and making sure that it’s not justsomething that people see as a burden, but really asan opportunity both for personal growth as well as formaking a contribution to the company.” Mr Zesbaughadds that he’d like to develop executives faster.

Developing tomorrow’s CEOsMost of the executives say their approach to talentmanagement is influenced strongly by their owndevelopment. Ms Lau spent more than a decade as amarketing officer. She favors this role as a springboardto her position. Mr Zollars spent five years in Europeand a year in Japan earlier in his career. He nowencourages executives to spend time overseas. MrHawkins moved around as an executive with anotherfirm. He believes his experience, including a stint as adivision CEO, was good preparation for the COO job atMedtronic. Both Mr Johnson and Mr Josefsson wereCEOs before assuming their present roles. MrJosefsson says that his previous experience preparedhim well.

A number of the executives believe that no singlejob provides the perfect preparation to become theCEO. “What I look for isn’t necessarily the technicalcompetency but the leadership competency,” repliesMr Zesbaugh. Indeed, according to Mr Abulaban,certain leadership qualities are universal. He says thatit is easy enough to measure how effective leadershipskills are, anywhere in the world. “The global way ishow well people and teams respond to that leader. Thetrue mark of an effective leader is whether the peopleare following the leader. Is his organisationdelivering?”


“The global way is how well peopleand teams respond to that leader.The true mark of an effective leaderis whether the people are followingthe leader. Is his organisationdelivering?”Majdi Abulaban, the managing director ofAsia Pacific Delphi Packard, ElectricSystems.

ddi2639j 5/24/06 3:35 PM

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For a PDF version of this report and individual CEO interviewsynopses, please go to www.ddiworld.com/EconomistCEO

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