The transformation, however, is the result of a long and painful process that pinpointed critical flaws running across the organization and all of its workforce management practices, from recruiting to succession planning. In 2000, the company could fill only 6 percent of the openings in its top 180 positions from within the organization.
Today, the internal promotion rate for those jobs is 74 percent and steadily moving toward the company’s goal of 90 percent. That degree of measurable change does not occur without a significant shift in succession planning as well as in the recruiting process.
Building an adequate internal talent supply to fill jobs at the top of the house begins with a recruiting process that pulls in high quality candidates who have the potential to move up through the ranks and into key positions.
At Textron, radically raising the number of internal promotions required deep changes at all points in the talent management continuum across a large global company. From its headquarters in Providence, Rhode Island, Textron orchestrates operations in 34 countries and employs 44,000 workers to produce Cessna aircraft, Bell helicopters and other global brands. The multi-industry company reported revenue of $13.2 billion for 2007.
In 2000, with the company sinking by any number of measures, Textron abandoned its 80-year history as a conglomerate and launched a series of deep changes to restructure as an integrated enterprise. The company divested businesses, established shared services for IT, finance and human resources and adopted sweeping Six Sigma practices across all of its business units.
The transformation required a complete overhaul of every aspect of workforce management to draw in and develop the talent needed to run what is now essentially a new company.
"It changed the way we do everything, including how we bring in talent and develop it to move into an integrated enterprise with a common process," says Gwen Callas-Miller, director of leadership development.
Linking recruiting to promotion rates
Textron has nine business units, each of which operated independently before the transition. To form a new integrated enterprise, the company generated uniform processes for every function, including human resources and recruiting.
"We established new methods for sourcing," Callas-Miller says. "Now we identify the behaviors and competencies needed for alignment across the enterprise. This required changes in everything from the position descriptions to the recruitment process."
The need for a new succession planning process, evidenced by Textron’s extremely low internal promotion rate, led back to flaws in recruiting and determined the steps the company would take to correct them.
"Now we create dialogues about the areas that we need to develop going forward and then drive that into the recruiting process," Callas-Miller says.
Each business unit uses a common process to identify high-potential employees and identify talent gaps two to three years out. Textron executives then conduct a formal management assessment or talent review.
"The business units own the assessments but use tools," Callas-Miller notes. "And there are discussions with the management committee on an annual basis."
Textron combines the talent reviews with its formal corporate strategy discussion to devise strategy for the next 12 months and create a longer-term strategy and talent management approach for the next three to five years.
"If our goal is to move into new geographies in three years, for example, we look at the people in place and whether they have the capabilities to accomplish that goal," Callas-Miller says. "If they don’t, we decide how we can best provide them with those capabilities or determine if we need to bring in someone from outside the organization."
Responsibility for the annual talent reviews belongs to Textron’s management committee, which includes the CEO, CFO, the head of governance and communications, general counsel, the chief innovation officer, the business unit presidents and their HR directors and Callas-Miller. The same talent review process also takes place within each business unit.
Refocusing the recruiting process has played a central role in Textron’s attempt to boost internal promotions for the top positions.
"The goal is to emphasize entry level jobs and use a number of programs to bring talent in from universities in supply chain management, finance, IT and strategy," Callas-Miller says. "We want to recruit people who have a lot of runway in front of them."
Textron has stepped up its campus recruiting efforts for the two job families that are most critical to the organization but in short supply worldwide: management and engineering. In the U.S. alone, an additional 160,000 engineers will be needed by 2016, according to the Bureau of Labor Statistics, but university enrollments in engineering have dropped from 8 percent of all undergraduate students a decade ago to 5 percent today. Many are foreign students who will not be allowed to take permanent employment in the U.S.
More than 500,000 additional managers will be needed by 2016. Business school enrollments are rising, but not fast enough to meet new demand. Industrials such as Textron find it increasingly difficult to complete against service firms for the best managerial talent.
"These two groups are equally difficult to recruit, and we need to meet our unique needs for top engineering and managerial talent," Callas-Miller says.
Training and development
Employees hired into the organization with an eye toward development and promotion into high positions benefit from the extensive programs offered by Textron University. About 20,000 employees, from first-level supervisors up to the most senior executives, have passed through the university’s programs.
Textron partners with top business schools such as Wharton School of the University of Pennsylvania, Thunderbird School of Global Management and the University of Michigan Business School to buttress its offerings for managers. Its growth leadership program, designed for the top 1,000 leaders in the organization, deepens each leader’s understanding of other functions and how they can work together to generate growth.
Significant upgrades to the training programs in 2007 pushed the participants’ satisfaction rating from the historical average of 5.2 out of 6.0 to 5.6 out of 6.0.
"The real purpose of the university is to meet enterprise-wide business needs," Callas-Miller says. "For example, Textron’s goal is for high growth, so we bring in talent from across the company for a five-day program on growing new products and global markets."
The leaders who attend the program are expected to produce real results.
One of the most notable developments in workforce management during the past five years is a renewed interest in formal succession planning, including planning for jobs that don’t carry an executive title but are nonetheless critical to the growth of the organization. Textron is not alone in its struggle to develop effective recruitment and development programs that feed into succession planning and generate sufficient internal talent to fill key positions.
Corporate leaders at most global companies are not satisfied with their organization’s ability to identify and develop top talent, according to an extensive study of more that 1,200 human resources executives and business unit leaders at global companies conducted by international consulting firm DDI. The survey found that only 41 percent of global leaders are satisfied with their company’s talent development programs.
Although the importance of succession planning is acknowledged worldwide, almost half of the surveyed organizations reported that they have no defined process for succession planning. For first-level supervisor and front-line professional contributors, less than one-third of the organizations have a defined succession planning program in place.
Global companies are also keenly aware that they need the right recruiting and succession planning processes in all of their geographies, not just their headquarter locations and major markets. The DDI survey, however, found that only half of organizations have a formal process for identifying high-potential leaders and only 40 percent have a process for identifying multinational leaders.
Textron is now addressing the worldwide shortage of business leaders. Nine thousand Textron employees are based outside the U.S., and the company increasingly offers international assignments as part of its talent management process.
"We need to move talent to develop talent, whether that is across industries or geographies or functions," Callas-Miller says. "We look down the organization and also across each function to maximize talent utilization. We are increasingly looking outside the U.S. for leaders in local talent pools. We have to be able to identify them and develop them."
Callas-Miller believes the leaders who companies need today are much different from the leaders of the past.
"Leaders today need to have greater breadth and depth in their knowledge because of changes in the global markets," she says.
Workforce Management Online, July 2008 -- Register Now!