Gear-Up!: Shift Development of Your Leaders in High Gear

By Mark Van Dongen

A scrupulously researched and expertly organized leadership development manual. The overall content may greatly benefi t senior executives and HR directors. --Kirkus Review

This book will be of major significance to senior managers who want to apply sophisticated thinking. Van Dongens exhaustively researched book is a valuable addition to leadership literature. Clarion Review

If you like a highly-refined, in-depth plan, this is a rock-solid resource. It lays out meticulous and valuable strategies for recruitment, hiring, performance and talent
development and includes specifi c models. Blue ink Review


This book explains the mechanics behind the development of leaders and how you can influence this in your company. It makes use of the breath of materials on leader and adult development to come up with one integrated model for practical use.

As no model fits all situations, it is built in such a way that you can also confi gure it to fi t the uniqueness of your company. The book provides various insights into industrial applications, as well as three detailed business cases on how major players in their respective industry
have set up their Leader Development system, and what we can learn from them.

It uses various perspectives on the topic, learning from historical, and modern day examples as well as looking into the future.

This book provides you the foundations for a solid understanding to base your informed
decisions on. It provides three different models; the Human Capital Roadmap, linking the major Human Capital Management processes, the HEART model, a graphical display of the major Leader Development processes, and an in depth audit tool, allowing you to
assess your Leadership Development processes in more detail, and fi nding your areas for improvement. These tools combined with the generated understanding enables you to obtain the needed handles to get a solid grip on your own Leader Development situation.

This multi-facetted book serves a varied audience, from students, to experienced HR professionals, business leaders and CEOs, all interested in the major fi eld of interest to businesses today; how to create the next generation leaders for their company.

• Language: English
• Publisher: Xlibris AU
• Release date: Dec 16, 2016
• ISBN: 9781524519247

Mark Van Dongen

Mark van Dongen is an international HR leader, with a passion for people and leadership development. This passion was aroused in his early career days, when he joined the Army as an officer Cadet at the Dutch Royal military Academy. Then still more experiencing leadership instead of understanding it, he grew to be one of the youngest Majors in the Army, specialized in leadership, and accountable for the policies and implementation of leadership practices in the Army, across the ranks. He helped define the to-date still valid perspective of the Dutch army on leadership. These early days seem far away. In the meantime he has been working for multinational companies of varied nationalities, in regional and global HR roles, both out of Western Europe and the Middle East (Saudi Arabia).. He continued developing himself and pursuit his degrees in industrial psychology (MSc) and Managements sciences (PhD), next to his work. This continuous combination between theory and practice enabled him to continuously link his deep understanding to to practice, without becoming too theoretical. He currently works for ArcelorMittal, the worlds ‘largest steel company, as an HR leader. In this book, he draws out parallels, while remaining connected to the question, why this matters to you as a reader. He reviews examples between industries and various disciplines in order to create an integrated approach on developing future leaders for your company. This approach will guide you to assess and improve your own process to develop leaders.

Book preview

Gear Up!

Shift development of your leaders in high gear

mark van dongen

Copyright © 2016 by Mark van Dongen.

Library of Congress Control Number:   2016918616

ISBN:      Hardcover      978-1-5245-1923-0

      Softcover      978-1-5245-1922-3

      eBook         978-1-5245-1924-7

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

Certain stock imagery © Thinkstock.

Rev. date: 12/14/2016

Xlibris

1-800-455-039

www.Xlibris.com.au

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Contents

Foreword

1 Introduction

2 Social-Economic Drivers of Leadership Thinking

Leadership Thinking 2500 BC

Socio–Economic Developments 1800–1840

Traits Theories (1840–1940)

Contingency Theories (1940–1980)

Value-Based Theories (1980–)

3 Block I: Strategic Embedding of HR and LD

The Human Capital Road Map

Consequences of Strategic HCM

4 Block II: Defining and Finding Talent

Defining and Finding Talent

Indicators for Potential in New Hires

Hiring Experienced Employees, Measuring Competencies

Experienced Employees, Assessing Behaviour in-the-Job. employees

Completing the HEART Model

5 Block III: Phase-Based Development

Theories on Development of Leaders

What is Developed During LD?

Phase-Based Development

6 Block IV: Organisational Prerequisites and Low-Hanging Fruits

Process Prerequisites

Size and Representation of the Talent Pool

Integrated Approach on LD

7 Assessing of Managerial Practises

Method Discussions on the Assessment Process

Conclusions on the Assessment Method

The Instrument

Introduction to the Business Cases

8 Managerial Practise I: LD Within the Allianz Group

9 Managerial Practise II: LD Within Novartis

10 Managerial Practise III: LD Within Accenture Plc.

11 Conclusions on Current LD Practises

12 Future of Talent

Initiatives

Characteristics of Future Talent

Talents in the Future

Bungee Talent

Retention Through Reward

Opening Up the Talent Environment

Organisational Characteristics Change

Conclusions

Appendix I: Leader Development Audit List

Appendix II: Key Leadership Theory Overview and Their Critics

Appendix III: The Human Capital Roadmap, and the HEART model

Appendix IV: Bibliography

Appendix V: Table of Figures

Foreword

With this book, a multi-year track comes to an end, which had its beginning in a large research project I undertook on the topic of leadership development in 2012. When I found my fascinating with the topic, and how few structured books were written on how to develop leaders in organisations, my intent to write this book materialized.

The initial text was written with a basis in my research. This I passed on to a panel of senior executives, both CEO’s, CEO-level readers as well as HR Leaders. Their input is included in the book. I thank all participants in the reader’s panel, for their content comments. All in all, your comments made this book possible.

Purpose

The purpose of the book is to increase awareness of LD and improve these processes in organisations as well as improving the function owning in, so that businesses profit from sustainable development processes for their leaders.

This book serves different reader-groups, namely HR professionals, C-level leaders, and academic students.

For the HR professionals, I hope this book can help you improve the leader-development processes in your company, and while doing so, increase knowledge on the topic of leadership and the development of the singular leaders. It is a strategic items HR has in its hands and we should show worthy of that responsibility.

The C-level leaders are included, as they are the final accountable of the leader development process. When you are a general manager or CEO, I think understanding more of the topic will help you to challenge and direct the discussions in your annual C-sessions better. Overall this book will provide you a better understanding, as well as insight into what factors will challenge our current processes, when we are faced with the next generation of leaders to develop.

Finally, for students, you will find that the chapters are written with endnotes so the text reads easier, but all the references are in the literature list at the end. Also, there is the appendix that provides a short overview of the relevant theories where the ‘regular’ academic reference format is used. These will provide you with guidance for further study and review.

Guidance to the Use of the Book

This book has various parts and is set up so it can be used by the different people with different interests.

With this short introduction I hope it served to guide your reading to the items of interest to you.

Konz, Germany

October 2016

Dr. Mark van Dongen

1

Introduction

Leadership and the development of leaders is something fascinating. I have been wrapped for years by the questions around what makes individuals able to take the lead of other people. This book goes one step further. It explores the question how leaders can best be developed within an organisational setting. This poses the above question, but also the questions how do leaders develop, what are the key determining factors for successful development, and finally how an organisation can enable such development processes to take place.

At the moment, there is a vast increase in articles and coverage on leadership and the role of leaders in organisations. But why is that so? Surely, there have always been leaders who drove people and organisations, so why this the focus moved toward leadership? This introduction will cover what changed versus the past, which will explain the increase on emphasis on the topic. Also, this will serve as a first introduction into the main topic of the book—leader development in international organisations.

Why a Leader Development Scheme?

The purpose of this book does not solely lie in the generation of a more structured and more effective leader development program. The true question lies in the fact why we would need leaders and leader development in the first place. Though ample research has been spent on the direct relationship between good leaders and great company results, the outcome is not that obvious. This relation lies more with leadership of the company than with the key characteristics of any individual leader. Unfortunately, the reverse is true, as a poor leader has the abilities to influence a company very negatively, or as Jim Collins states¹, ‘While no leader can single-handedly build an enduring great company, the wrong leader vested with power can almost single-handedly bring a company down.’²

To this, a side remark is in place. A great leader in an organisation creates the leadership of the company around them through the hiring, or creating of equally capable leaders that complement their own ability. So true, it is not one leader alone that can do this, but a poor leader will influence the leadership of the organisation overall, as they will poorly choose the people to supplement their abilities, and as such have no complementary team around them.

Combine this with the knowledge that problematic succession of leaders is one of the causes of great companies to fall. Most external CEOs are not able to turn around a struggling company, Lou Gerstner, who restructured IBM being one of the few exceptions, so we need to create our company leaders in-house. This need for fluent succession underlines the demand for a strong, well-developed internal succession mechanism. Such a mechanism, in turn, can be ‘fed’ with well-developed leader talents that are ready to take over in case of unforeseen (or even foreseen) CEO departures.

Many great companies with strong CEOs seem to have moved from one CEO to another without too much turmoil, GE being a great example. When Jack Welch stepped down, he had vetted a number of ‘ready-now’ successors where the board could then relatively easy assign the person they viewed as most competent and suiting to the needs of that moment, Jeff Immelt, who has been the GE CEO since 2001.

Strong leaders know the culture of their company, as they (at least partly) developed through that culture. When leaders have a shorter tenure, they need to take their time to understand the culture. As I will explain in the chapter, Personal and Company Values, on page 79, the exact fit of the leader and the culture is a necessity for a person to be accepted as an authentic leader in a company.

That being said, the next step is then to review and develop your internal leader development scheme. This book will enable you to assess your leader development processes in a structured approach. This approach is brought to you in two major forms. At first, I will present to you the combined processes that make up the technical backbone of your people processes, the so-called ‘Human Capital Roadmap’. This encompasses all the major people processes that touch the employees during their life cycle in a company. Then I will discuss the characteristics of the leader development process in the form of in total eight major clusters of items that together form an effective process. These clusters in turn are based on a list of 35 more detailed questions. These questions are re-ordered into an audit list at the end of the book, allowing you to rate your internal processes, and see what processes to keep, were to improve the existing ones and where to set up new processes.

The Process to Develop Leaders

The process of development of leadership talents in organisation is intended to deliver future senior level leaders. This process, as I will describe later, received a lot of attention and popular discussion. Irrespective of the amount of attention, there are still no generally defined methods for the development of leadership skill³. Development of leaders seems to be the least explored topic within the field of leadership⁴. Systematic investigations on leadership interventions are rare in literature, as are theories of leadership development⁵.

But if this is so, then why has this not been flagged in the past as an issue? Or potentially, when it was no issue, then why has it become one? What changed in the environment of leaders that made this a need to look into? Though job titles have changed, from tribal head to CEO, the grooming of successors and nurturing of talents in organisational contexts has existed through the ages. The first grooming of leaders had its origins in family settings where, traditionally, the parents raise their children to become the new leader. Be it a small or large barn, a blacksmith shop, or a small company, the parents created the leadership succession bench and safeguard the long-term existence of the company by preparing their children as successors. This nurturing the children is as natural as breathing itself, as one cares, and teaches what they need to know. Over time, we evolve the challenges we have them face, and this increased complexity supports the children’s development and prepares them for their final challenge—the succession into the (family) business.

As time evolved and complexity of the organisations increased, so did society and the thinking about leaders. On society came diverse economic and technical influences, and these led to the changes in the organization of companies and led to the development of professional management.

What changed was that we became employees and managers without being (partly) the owners of an organisation. At first sight this does not seem to be a big difference, as leaders still lead people and still developed others to help the company prosper over the long term. But we started to behave differently. For instance, we found that the age-old and proven practise of one’s own children as the natural successor of a company disappeared when the managers stopped being the owners of the company. Also not only family members worked in the company.

So the companies have become more and more an amalgamation of people from different backgrounds, which creates the new workforce. Stakeholders and stockholders now look at companies as an investment where annual returns are one of the key drivers instead of continuity and the ability to pass the business on to the next generation. In turn, employees are—or should be—seen as assets for a company where the company invests in these assets in order to ensure continued operational performance. In 2009, in the US alone, according to the American Society of Training and Development, $125.88 billion was invested in the development of employees⁶.

As displayed in the hierarchical structures in an organisation, it is expected that the added value of the employee increases with their rise in the hierarchy of the company. This is the rationale explaining why higher hierarchies in the organisation are compensated (paid) more than employees lower in the same organisation. Nevertheless, at each level an employee should bring a multiple of his or her cost as added value to the company.

As with other assets, the investment in the employees has an expected return. For this to be optimised, it is key that the investment takes place in those employees who, in future, will bring the bigger added value; hence, those employees who are expected to be at the highest point in the organisational structure, the future leaders. Of the population of employees, those with the talent to progress in the organisation (talents) are viewed as a source of competitive advantage and a way to improve the bottom line⁷. Inversely, the iconic 1998 McKinsey study⁸ depicted prominently the negative impact through the lack of care for talents in the organisation in their study, which first used the words ‘war for talent’. The finding of people with the potential to develop for senior leadership positions and the support of their development has since become more important. Even more so due to the demographic shift, which means that fewer people will become available to develop and to succeed the current senior level leaders.

In a PricewaterhouseCoopers (PwC) survey, it was found that 97 per cent of CEOs stated that having the right talent is the most critical factor for business growth⁹. It seems the continuing economic difficulties in many economies has strengthened this, as the Chartered Institute of Personnel and Development (CIPD) states in their 2012 survey: ‘in today’s challenging economic climate, the effective and strategic management of talent is critical to differentiate organisations from their competitors and drive business success’¹⁰.

So the awareness of the need to develop the right talents has increased. Combine this with the demographic effect that there are fewer talent to work with. For instance, between now and 2020, 30 million US employees will retire, whereas only 10 million of the following generations are there to succeed them. The already existing ‘war for talent’ combined with this demographic effect leads to an increased pressure to find and develop your own talent in the organisation, as there might not be hat many ‘out there’ to fish for.

Finally, let’s come back to the investment, as a lot of money is already involved. Of the abovementioned amount of $125.9 billion, 24 per cent is spent on leadership development¹¹. A 2006 survey of Human Resource (HR) leaders showed the number one problem for HR directors is identifying and developing the leadership talent needed for growth and expansion of their respective organisations¹². In a similar study conducted in 2007, 44 per cent of the HR leaders surveyed reported increasing the effectiveness of training as being their first or second priority. Combine this thought with the fact that it becomes more and more difficult to develop leaders in-house, as organisations have become flatter and therefore have fewer internal opportunities for promotion and on-the-job learning of leadership skills. Nevertheless, ‘the most effective learning and talent development practises are in-house development programs’¹³. So how to resolve this issue? This book should help you here.

Though large amounts are invested, current research has showed investments in leadership development initiatives can gain a return on investment in access of 200 per cent when investing in the right people, whereas a negative ROI occurs when investing in the wrong individuals¹⁴.

When reviewing all this, it seems evident that the topic of leadership and management development systems would have been elaborately covered in research. However, this is not the case. In fact, a review of the leadership intervention literature from the last hundred years produced only a few articles per year on studies examining the impact of leadership interventions, and less than half were focused on leadership development¹⁵.

Why so Few is Known on this Topic?

Why is the topic of leader development, contrary to the popular attention to leadership, so little researched? This can be explained by the fact that talents are seen as a strategic asset for a company, so a good that is a differentiator for the company’s future positioning. By definition, strategic assets are valuable, differentiating, and hard to imitate¹⁶. Others knowing and understanding how your company developped such assets and insight in how to increase effectiveness can lead to a decrease of a company’s competitive advantage. So, companies are not eager to have their strategic assets analysed. This could serve as one reason why so little information is shared.

Next to this, though some HR organisations have gone through the process of fundamentally repositioning and providing new purpose to the function, little has been shared on which design options are most effective¹⁷. This lack of sharing through open research in turn is because HR on itself is not an integrated science, but more an amalgamation of various disciplines covered by separate sciences. Therefore, there are few publications on research in the field of HR. One of the characteristics of research publications is peer-review, which leads to sharing of knowledge. When this is a road less followed, such shared knowledge—if at all available—is hard to come by.

The effect of this is that the topic is not well covered, and few or no best practises are shared in practise. This leads to underdevelopment in this strategically important area. According to a CIPD 2010 research, only 59 per cent of organisations undertake talent management activities. Of this group, half (29.5 per cent) rate these as ‘effective’, although only 3 per cent consider them ‘very effective’¹⁸. A similar study by Egon Zehnder, the global leading executive search consultant for C-level positions found in 2010, that 60 per cent of top leaders identified lack of leadership as the major constraint for company growth.

Talent = High Development Ability

Now we should not look only at the dark side. Many companies develop their leaders, and they will not randomly invest in individuals. The first key item is to find the right talents to secure the high return on their development investment¹⁹

At first, talents and high potentials are two different words for the same item. Talent is a more European term, whereas high potentials is the US term. But what is a talent? A talent is a person who generates a disproportionate value versus the cost to employee them. This value is created for the company²⁰ or its stakeholders.²¹ Irrespective of the beneficiaries, talent is measured through their added value to the organisation in the broader sense, which captures both high as well as deep talent²². These are two types of talent, though not every organization will support their development equally. The cause of this lies in the difference between Deep and High talent. Examples of deep talents are for instance the skills-based deep talents as the master sword makers in ancient Japan where a person could spend their life to learn to create the optimal sword, or in more modern setting, the Japanese sushi-chef who spends years to master the art of cutting and blending the right ingredients. Closer to home, we find them in the blend masters working for whisky blenders, and the ‘noses’ at work in the perfume industry. Their skills are deemed so valued that their compensation mirrors this.

Next to skills-based deep talent, there is knowledge-based deep talent, such as R&D specialists. Examples of such deep talents can be found in the pharmaceutical industry where