Your Best People Have Left and The Rest Might Soon!
This article points out how important it is to pay attention to your top talent. Great people can always find a job. You have to train and develop them. Google gets it. This is not the time to be an average performer….Lee
Chief executives should act now to prevent defections of key employees next year, says veteran management adviser Ram Charan.
Some companies already are bolstering their retention efforts despite the still-weak job market. Google Inc. will give all employees a 10% raise in January. But Mr. Charan says most employers aren’t doing enough, and face certain talent losses as the economy improves.
CEOs of major U.S. companies “do not really put even 15% of their time into the people-development equation, and that’s far less than needed,” Mr. Charan says.
A white-haired former academic who says he will fly about 600,000 miles and work 365 days this year, Mr. Charan says he has counseled hundreds of CEOs over the past four decades—including ones at General Electric Co., Ford Motor Co. and McGraw-Hill Cos.
Mr. Charan has written or co-written 17 management books—mostly about strategy and leadership. Four became best sellers. His newest, “The Talent Masters,” urges corporate chiefs to “make talent development your obsession.” He recently spoke with The Wall Street Journal.
WSJ: Will there be increased talent defections next year?
Mr. Charan: You will see defections in critical positions. If you are in consumer electronics, product development is critical. Professionals and leaders are going to go where they can exercise their potential.
WSJ: Why aren’t more CEOs worried about retention now?
Mr. Charan: Among Fortune 500 CEOs, the intent to put people as a key item is high. But in actual practice, the percentage really doing a thorough job is less than 25%.
You also should be looking five years ahead. So if 30% of your revenues are going to come from emerging markets and you’re getting 10% today, what are people’s experiences in emerging markets? Are you giving them the opportunity to grow?
WSJ: What proportion of big companies conduct rigorous quarterly reviews of key players, an approach you advocate?
Mr. Charan: Less than 10%. CEOs are focused closely on profitable growth. But I want quarterly reviews of people the way they do quarterly reviews of numbers.
WSJ: What else should employers do to prevent unwanted exits?
Mr. Charan: Reward people on financial outcomes as well as for other leaders they produce.
WSJ: Are there other risks that business leaders now face if they mismanage their talent?
Mr. Charan: The biggest risk is top management not knowing explicitly whom they depend on lower in the organization for success. CEOs like Apple’s Steve Jobs have figured out how to have more people working together despite corporate “silos.” That is central to winning in the marketplace.
WSJ: Your new book says that Goodyear Tire & Rubber CEO Bob Keegan replaced 23 of the company’s 24 top leaders during his first two years [several years ago]. How many corporate chiefs need to drastically alter senior management next year?
Mr. Charan: It depends on the condition of the company. No outside CEO should go into a company without knowing the business direction, key jobs and key decisions that will make a difference.
See which people are willing to change and which have become obsolete. Then, develop a positive way to make changes.
Look at Ford. The company was declining. They bring in Alan Mulally. He still has essentially the same management team, except for a marketing group vice president recruited from outside. He rotated some of the rest or redefined their jobs. He delivers results. He is going to leave superb strength behind him when he goes.
WSJ: Which U.S. industries should extensively change senior management during 2011?
Mr. Charan: One will be personal computing, especially makers of mobile devices. Another will be generic drugs. These industries need to evaluate whether they have the right leaders in this new game. If they don’t, they are going to change.
WSJ: Is that important in competing against businesses from emerging markets?
Mr. Charan: Yes, because some of those companies are faster, cheaper and on the offensive.
So [U.S. businesses] need to do rigorous categorizations of people and the expected outcomes of the top 50 to 60 jobs. Those jobs aren’t necessarily the highest [ranked employees at the company.] It could be at product development down the line. If [those top employees aren't a good] fit, the rest won’t fit.
WSJ: Is there a major company that recently stumbled in managing its employees?
Mr. Charan: Nokia. It changed organizational structures a few times over the past three years. The talent-management issue came in. Their challenge to Apple’s iPhone was not ready in time.
To do that you had to have silos working together. Nokia got a new CEO.
The speed of external change in which Nokia’s industry is moving requires the deployment of the right talent. If you miss one year, it could hurt the company badly.
Copyright 2010 Dow Jones & Company, Inc. All Rights Reserved
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