Special Report Training and Development—Building Better Leaders...Faster
At the top global companies for leadership development, HR owns the process and uses it to inform every aspect of workforce management.
GE’s massive leadership development programs range from entry-level training to ongoing classes for the 197 officers who run the 300,000-employee company. "Leadership development is embedded in GE’s philosophy and operating system, and is a core competency of the HR function at GE," says John Lynch, senior vice president for human resources. "It’s also where I, and all our senior human resource managers, spend the majority of our time."
But Fortune’s Top 20 list also includes companies that are less well known for leadership development, including four companies from India, led by Hindustan Unilever, which ranks just three notches below GE on the list. The company’s 37-year-old executive director for human resources, Leena Nair, is both the powerhouse behind a new model for accelerated leadership development and one of its early products. The model springs from India’s leadership shortage, but offers universal best practices for training and retaining the next generation of executive talent.
Also on the Fortune list is Whirlpool, which has finally pulled the wraps off its leadership development program after years of quietly producing top executives. Senior vice president for global human resources David Binkley runs a tiered series of leadership development programs based on a proven set of leadership attributes defined by the CEO and the executive committee.
The common ground for all these companies is that human resources owns the leadership development process but receives enormous support from the full executive committee and from a system that holds business leaders and line managers accountable for identifying and training executives. At the top companies, leadership development dominates the HR agenda and the C-suite agenda as well. Fortune’s list was developed by Hewitt Associates in partnership with Fortune and the RBL Group.
Feedback and accountability
Whirlpool has been pouring its corporate heart and soul into leadership development for decades, but shunned publicity about its programs to avoid attracting poachers. The company is determined to keep its leaders for itself, unlike GE and other "academy" companies that are famous for their leadership programs and expect to see some of their executives picked off.
"We don’t want to be an academy company, and unlike some of my colleagues, I find no flattery in the title," Binkley says. "We do everything we can to keep our exceptional people from leaving. We used to keep our leadership development programs below the radar for precisely that reason, but we now recognize that our work has value to shareholders, and we communicate more about it."
Whirlpool is the largest manufacturer of major home appliances in the world, with 2007 sales of $19.4 billion. Binkley, who manages 73,682 Whirlpool employees in 32 countries, has moved up though the company’s leadership channels for 20 years, including a couple two-year stints as director of HR for Europe and for Asia.
He is also a member of the executive committee and a teacher in Whirlpool’s high-level leadership training courses. "Compelling leadership is necessary for success here," he says. "Leaders are accountable for developing leaders. This is our explicit stated philosophy." Binkley devotes 75 percent of his time to leadership development.
Whirlpool’s leadership development programs now center on a model of 12 attributes developed by the CEO and the executive committee in 2002. "We were locked in together in a hotel room on a Sunday afternoon to develop the model," Binkley recalls. "To put science behind it, we worked with the HR group and pulled in a number of experts from a wide range of fields. Before, we used a model that HR developed, but it never had the traction of the model developed by the executive committee."
The 12 critical attributes and practices are character and enduring values, communication, confidence, customer champion, developing talent, diversity with inclusion, driver of change/transformation, extraordinary results, management skills, strategy, thought leadership and vision.
Whirlpool’s leadership development programs and its worldwide policies and practices for selection, onboarding, performance systems, rewards and corporate culture are now governed by the 12-attributes model. The leadership development programs, designed around the model, are organized into three tiers.
The first tier consists of the company’s Leadership Development Programs to train new graduates, many with MBAs, for top positions in brand marketing, engineering, finance, global information systems, global supply chain and human resources. Each program runs three or four years and includes formal training, mentoring and rotations though job assignments lasting 12 months or more. The human resources program, for example, is a four-year rotation through three job assignments, including one global assignment.
"LDPs are next-generation leadership development," Binkley says. "We recruit from the best universities and put 100 people into the programs each year." Globally, 350 to 400 people are moving through their LDP rotations at any one time.
The second tier is a series of programs called Leading the Whirlpool Enterprise, which moves senior executives though two one-week classes taught at two levels. Leading the Whirlpool Enterprise 1 is a global program that focuses on each attribute in the leadership model and includes a 360-degree assessment based on the attributes for each participant. "The point is deep feedback," Binkley says. Level 1 of the program is required for the top 700 leaders at the company.
Leading the Whirlpool Enterprise 2 is a one-week program for the top 300 to 400 Whirlpool executives. "We take the top 10 strategic objectives of the company and ask leaders to take on the most pressing business issue and develop a 100-day plan to resolve it," Binkley says. Whirlpool is now developing the curriculum for Leading the Whirlpool Enterprise 3, which will reinforce classic leadership development and provide additional feedback for participants.
The third tier of Whirlpool’s leadership development process is called Leaders Developing Leaders. The executive committee members shape the design, determine the investment and teach in the program at the company’s Brandywine Creek Training Facility in Covert, Michigan. The participants are 20 to 25 top Whirlpool executives selected from around the world.
"They undergo a very intensive assessment and enter a one-year leadership development plan with an external coach and an internal coach," Binkley says. "We don’t use this to fix broken people. We use it to make the best better."
The company also uses a multi-language worldwide survey to measure employee engagement, with a section that evaluates managers’ leadership skills and organizational leadership. "We slice the results by geography, position, gender and a number of other factors," Binkley reports. "We really monitor the health of the business through the scores we see for managerial and organizational leadership. For managers and executives, the scores are directly connected to their rewards."
Whirlpool’s approach to leadership development hinges not only on instruction and mentoring but constant feedback and direct accountability for developing talent. "Leaders know that meeting their specific objectives for leadership development are just as important as their financial results," Binkley says.
On the other side of the world, Indian companies now focus intensely on building skills to meet the shortage of executive and managerial talent and the scramble for top business leaders at companies experiencing high growth rates. Hindustan Unilever has accelerated leadership training and promotions across the company.
"Five or six years ago, it took 15 years to hit the top level; now it takes 10 to 12 years," says Nair, the company’s executive director for human resources. "This is true not only at Hindustan Unilever, but all across India. Companies need to accelerate leadership development to match their growth needs. We have been taking a risk and pushing younger people into roles of greater responsibility. They step up to the task and bring fresh thinking to the position. We balance this with a mix of more experienced people. This acceleration has been highly successful." The average time in any one position is two to two and a half years.
Hindustan Unilever, which is 51.55 percent owned by the Anglo-Dutch Unilever, is India’s largest consumer products company. Nair manages the company’s 15,000 employees, including 10,000 production workers, with an HR staff of 250, including 80 managers and a leadership development team of seven. In addition, each of the company’s 45 plants employs three HR leaders, who spend 50 percent of their time on leadership development.
To replenish the ranks, Hindustan Unilever brings in 50 to 55 MBAs every year for 15 months of business leadership training, with heavy mentoring and rotations out to rural areas and through other parts of Unilever. "This is a program for which we are very much admired," Nair says. Both Nair and the company’s CEO are products of this program.
Nair joined Hindustan Unilever as a management trainee when she finished her MBA 16 years ago and is now the first woman on the management committee and the youngest executive director at the company. In April 2008, the former CEO of Hindustan Unilever moved up to become president of Unilever’s Western Europe region, and Nitin Paranjpe, executive director for the home and personal care unit, moved into the CEO spot.
Paranjpe joined the business leadership training program when he completed his MBA, and quickly moved through a series of increasingly challenging executive positions, including a stint with Unilever in London. At 44, he is Hindustan Unilever’s youngest CEO. The company runs with a minimum of three candidates in line for the CEO position and two for other critical positions.
"The essential reason that we are so successful in leadership development is the commitment of senior managers and executives, who devote 40 percent of their time to leadership development," Nair says. "I have ultimate responsibility, but the process is owned by senior management."
HR is directly accountable for managing what Hindustan Unilever refers to as "hot jobs, hot people." The hot jobs are the 50 most strategic positions in the company, and the hot people are the 50 people with the highest potential. "Our objective is that the hot people must occupy 90 percent of the hot jobs," Nair says. "Every 15 days, I report to the management committee on these 50 jobs and 50 people, including any difficulties that any of the 50 may be having. We want to maximize the movement of these 50 people into these 50 jobs."
For six days each year, the management committee meets to discuss the highest band of executives in the company. Every committee member has a regret-attrition number, and bonuses are affected by performance in this area.
"At these meetings, the committee discusses the top 150 to 200 people, name by name," Nair explains. "It’s not acceptable for a committee member to say that he has never met one of these people. Each member has to find a reason to know every one of them. We bring in every piece of objective information about all of these people and make a very informed call about their development."
To recruit the best MBAs in the country, Hindustan Unilever now promotes itself as a company that produces top executive talent. According to Nair, 440 Hindustan Unilever alumni are now CEOs or board directors. Alumni include Anand Kripalu, managing director of Cadbury India; P.M. Sinha, chairman of Bata India; and Debu Bhattacharya, managing director of Hindalco.
Nair regrets the departures, but notes that alumni-turned-CEOs give full credit to their training at Hindustan Unilever. Globally, Unilever has pulled 150 executives from Hindustan Unilever, which is the largest exporter of talent to the parent.
Nair outlines four best practices for leadership development. "You need tremendous involvement from senior management," she says. "And you need to take the basics of talent management and do them brilliantly. The basics are quite simple: Know your jobs, know your people."
She also notes the importance of differentiating talent. "Put your mind behind the top 50 people," she advises. In addition, it’s important to closely manage careers. "We move people across businesses every two-and-a-half or three years. Our rule is that no business can hold talent. All job openings are visible to everyone across the company."
"The key is our belief that talent makes all the difference," Nair says. "This is deeply ingrained. Senior management models the behaviors that stem from this belief."
Workforce Management, June 9, 2008, p. 25-28 -- Subscribe Now!