The magnificent seven

Learning from the best

Hay Group’s 2006 survey in partnership with Chief Executive magazine ranks the top companies for leadership and identifies best practice in terms of leadership development that sets them apart from their rivals. Hay Group's Mary Fontaine looks at the seven practices that make a difference.

Across the 1,279 companies that were polled, seven practices combined accounted for 74 per cent of the variance in having the right number and the right kind of leaders. That is a substantial percentage when you consider what is at stake: a better bottom line, more valuable “intangible assets” and a more productive workforce. If you are going to do anything, adopt these practices.

The top three practices have not changed since last year’s survey. They are the same across industries and across regions and they are more than likely to be in the top three next year. If organizations are going to do anything then they should definitely go for the top three. A motivating work climate, a commitment to leadership development and training for teams account for over 60 per cent of what predicts a company is going to have the right number and the right quality of leaders.

Essentially the companies that featured in the Top 20 were those that not only had more leaders but who were also happier with the number and the quality of their leaders.

The top seven practices comprised:

1. Having leaders at all levels who focus on creating a work climate that motivates employees to perform at their best.

2. Ensuring that the company and its senior management make leadership development a top priority.

3. Providing training and coaching to help leadership teams, as well as the individual leaders, work together more effectively.

4. Rotational job assignments for high potentials.

5. External leadership development programs for mid-level managers.

6. Web-based self-study leadership modules for mid-level managers.

7. Executive MBA programs for midlevel managers.


These companies are testament to the research that shows that leadership development relies on direct involvement by the CEO and interventions at team and individual levels.

A motivating work climate

It is no good expecting individuals to make a difference if there is no support for them throughout the organization.

This is particularly the case with regard to the CEO. CEOs of the top companies devote a considerable amount of time and energy making leadership work. They are hands-on people who make sure everyone is on strategy. As CEO of PepsiCo Roger Enrico was fond of saying “I spend 80 per cent of my time trying to get people aligned around something.”

Not that alignment has to mean conformity. Leaders can embrace eccentricity or maverick behavior within a team as long as the energy is all flowing in the same direction. That is what the top CEOs do – they get involved and make sure their leadership program is delivering their company strategy.

What doesn’t work?

The 2006 survey also highlighted some development practices which no longer make the grade. Key to the success of the following activities: job shadowing, web-based self-study and executive MBA for senior managers is the stage at which they occur.

These activities have to take place at the right time in a career to have any real benefit. So sending a senior manager on an MBA course is too late to give him the experience that he should have already – experience that the Top 20 now expect high potential candidates to gain through job rotation for example. Such activities do not add value when they take place too late in a career. In addition, the incidence of outdoor based courses for middle managers increases the further east that you go – as if this is a cultural legacy the East aspires to as the West gives it up.

Great leaders exist in every generation. It is just a question of finding them and when you have found them, keeping hold of them. Given that the writing has been on the wall in terms of the looming shortage of leaders, it is a sobering thought that Hay Group’s joint survey with Human Resources magazine found that only 20 per cent of CEOs are confident that their talent management processes can deliver the executives needed in the future.



However the future need not be so uncertain. Even hiring from outside can be done with more confidence of success given the right strategy.



With the right advice and by looking at what the top 20 companies are doing better, it is possible to produce a supply of first class leaders who will be the next generation of household CEOs.