Tuesday, December 16, 2014

The leadership management strategy should become a 'national' issue

The leadership management strategy should become a 'national' issue: Karen Greenbaum & Peter Felix

Interview with President & CEO, outgoing President, Association of Executive Search Consultants
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That is because a lot of the top talent of developing markets is outside. To move the economy forward, the government has to get back its talent, Karen Greenbaum & Peter Felixtell Abhilasha Ojha

How big is the potential of the executive search business for developing markets such as India?

Peter Felix: There is a tremendous demand for professionalised executive search firms. We sense the need simply because there is tremendous shortage of top management talent even as the demand to manage global businesses increases. India is a growing market and generally speaking, ever since the economy revival started, the search market has exploded. In fact, it is at its all-time peak. There's a demographic shift and companies are competing for talent all over the world, a reason why proactive recruitment is so essential.

Karen Greenbaum: When you look at the business of executive search firms, there is no barrier to entry. Everyone can do that but with businesses all over the world getting a more professionalised complexion, even the search (especially for top management leaders) has to be professionalised, ethical, complete with guidelines and meet qualifications of quality standards. At AESC (Association of Executive Search Consultants), which is a worldwide association for the retained executive search and leadership consulting industry, we promote the highest professional standards in retained executive search and leadership consulting through its industry recognised Code of Ethics and Professional Practice Guidelines. In markets like India, bringing in the right leadership is important; it is not about bargaining, it is about finding the right person, it is about sensitivity in the boardroom vis-a-vis genders and building diversity in thought leadership.

Executive search is a $11 billion business worldwide; India is less than $100 million. So when we look at India, the need to have top search firms that can actually understand the needs and requirements of the boardrooms is important. Why should companies look at search firms? Simply because markets like India are providing ample opportunities and good search firms are sensing the need that companies want to look at best practices not just to build and grow organisations but also while hiring for such organisations.

AESC looks at leadership consulting as well. What are the challenges in leadership management globally - including both developed and developing markets?

PF: The leadership management requirements today, compared to a decade ago, are different. Today's leaders need to be able to manage uncertainty, they need to be interdependent, they need to be able to grasp nuances about different markets and economies and should manage to comprehend world views. Leaders need to be excellent communicators particularly in today's business environment where there's so much conversation happening on the social media. The way public companies are exposed to various media platforms, leaders need to manage quite a lot. In a market like India, leadership requirements and training are trickier because of the demographic shift. The urgent need is to have young leaders who can be swiftly trained and cover experience in 20 years what, perhaps, a CEO, manages in 30-40 years. With a majority of employees being young, it means that they will reach the leadership milestone when they are younger than, say, their developed market CEO counterpart.

Additionally, the leadership management strategy should become a 'national' issue/strategy simply because a lot of the top talent of a developing market like India, ironically, is outside of the country. You need to be able to attract this talent back in the country. If the government wants to move the economy forward, it has to get back its talent.

KG: A good way to identify leadership issues in a company is to look closely at the boardroom members. You need to pause and see if the diversity is reflecting; we are not just talking about gender here, we are talking specifics. For example, if you spot a gap in leadership in the organisation, understand why you didn't ask relevant questions: What are the specific requirements you need to address in the boardroom? What's the gender representation like? Why do you need, for instance, a non-Indian, Asian male in a particular leadership position? Do you have a leader who connects well with the customer? Your leaders have to reflect the vision of the company - so is your boardroom a place where enough innovation and global strategy is taking place? This is where leadership consulting, management and training come in so people can start taking the roles seriously and show results within the first year itself.

Do corporates lack sensitivity in addressing issues specifically related to women?

KG: Surveys show that there should be at least three women in the boardroom of companies. Thankfully, some companies realise that they don't need just a woman 'relative' to tick the diversity box but they need genuinely talented leaders who happen to be women. Many companies are building leaders from within organisations who are women and others are hiring talented women leaders from outside for their company's growth. Having women leaders along with male CEOs leads to more diversity… the real success will come when issues like work and home flexibility, balancing home and office etc become 'people' issues, not 'women' centric issues. So, it won't be about special treatment given to a 'woman' employee, it will be an issue to address an employee. I know some firms have created opportunities to stay connected even when women employees go on maternity leaves or take a break… an increasing number of firms are genuinely valuing employees, wanting them back in the company, a reason why they stay connected and create ways for them to work flexibly, even train them to be future leaders. Eventually, companies should not lose out on human talent, they should allow them opportunities to return. It is not just about the turnover cost and the replacement cost; the cost of training employees over the years is huge and simply turning away from employees means you throw away all that experience.

Should companies develop leaders organically or can they be hired from outside?

KG: Companies should do both. Thinking that you can develop leaders organically won't always help especially if you want to grow rapidly. Also, the way you do it needs extra attention in that people internally should not think of it as a bad move. Fresh thinking can emerge from hiring people from the outside. Also, succession planning should be at all levels and be made a part of the culture in a company.

PF: You are dictated by the situation of the company. GE is a good example in succession planning because the company is training not one but several potential successors at the same time. There is a war for talent and companies can be coaching their best talent even as they seek to hire people from outside in leadership positions. It is an integrated process. Colgate Palmolive is thoughtful in planning leaders with a complete professional development programme that includes training, career development tools, coaching and feedback processes. A good 'leadership development' company is one that actually makes a provision for its future leaders to get hired by competition. So even as you build loyalty, build culture, a provision that your best human talent can sometimes get hired by someone else, can make the succession planning more realistic and even better.

  • Karen B. Greenbaum is CEO of (AESC), the worldwide professional association for the retained executive search and leadership consulting profession. She has served as president and COO of Mercer Consulting/MMC
  • Agenda, a Financial Times publication for board members recently named her one of 100 top board candidates in the country to sit on compensation committees
  • Peter M. Felix has been President of the AESC since 1998. From 1984 to 1994, Felix served the British-American Chamber of Commerce in New York and London as director, president, and chief executive officer

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