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1 Building your Leadership Pipeline Leadership transition focused development - White Paper The Leadership Pipeline framework Business case reflections: 1. Integrated leadership development 2. Leadership transition focused development 3. Pro s and con s on transition focused development 4. The leadership transition 5. Implementation strategy 6. Business impact evidence 1. Integrated leadership development The alternative to building a leadership development initiative around a structured framework and an integrated approach would be to take a more fragmented approach. This would, however, make most sense in small organizations or organizations without a clear perspective on what they want to achieve with their investment in leadership development. A more fragmented approach would often lack the ability to provide long term impact. Using the Leadership Pipeline transition focused concept as the vehicle in integrating your leadership development approach provides: 1) Simplicity 2) Transparency 3) Efficiency

2 Building an effective internal leadership pipeline is not just about implementing leadership training programs. The integrated leadership development approach is characterized by aligning different corporate HR tools around the same purpose: developing a sufficient number of qualified leaders. The core tools in doing this are the Dual Performance Appraisal System, Leadership Transition Programs and People Sessions. However, it also impacts any use of the 360 system (which has to be aligned with the leadership level thinking) in the talent selection process. Over time most elements can be integrated but if you just get it right with the three core tools across the organization then you will have a much stronger pipeline than most companies. The essential thing is that these three core tools be implemented globally across business units and at all leadership levels. 2. Leadership transition focused development A frequently asked question during people sessions and organizational reviews is: Is he/she a good leader? There is a subtle fallacy built into that question. The question itself assumes that leadership is just leadership. However, organizations are built up by a number of distinct leadership levels. Accordingly, the first thing to do is to acknowledge that leadership is not just leadership. Leaders at different levels of the organization play different roles. Recognizing the distinctiveness of each leadership role is a key initiative in designing an effective organization. By clearly defining the different leadership roles you create transparency about what is expected of leaders in the organization and you support the leaders by recognizing how they add unique value to the organization as leaders. Thereby you shape leaders way of thinking about themselves and this is the key to organizational effectiveness. Each role in the leadership framework requires new Skills, Work Values, and Time Application: Skills: New capabilities required to execute new responsibilities Work Values: New attitudes about what they appreciate doing and how they believe they add value to the organization Time Application: New time frames govern how they spend their time Development is cumulative - successful development at one leadership level enhances the probability of success at the next level. Incomplete development (or skipping a leadership level) can hinder success at the next level. Accordingly, it is critical that organizations start their structured leadership development efforts at the level of front line leaders. Transitions between roles present unique windows of opportunity for the development of individuals moving from one role to another. There are things they have to stop doing, things they have to continue doing and things they have to start doing. If the transition is not addressed properly the leader will often be reluctant of letting go of work areas where they used to be successful. The flow of talent in an organization is either clogged, or enhanced, by the degree to which individuals successfully transition between leadership levels.

3 3. Pro s and con s on transition focused development Leadership development can be addressed in many different ways. There are many leadership theories and each of them has their own merits. What characterizes the Leadership Pipeline thinking is that it is not a comprehensive theory. It is a simple mapping of a leader s job that has to get done. Mapping the job shows a leader that there are a number of distinct leadership levels in most organizations. From there it is really up to each organization to decide what they are going to do about this fact. But whether the organization acknowledges this or not will, at the end of the day, not change the fact. The significant advantage of organizing the core leadership development initiatives and talent management process around the leadership transitions is that a leader will experience that the development initiatives are aligned with their reality. When you move from Leader of Others to Leader of Leaders you WILL have to change the way you select direct reports because you now have to start looking for leadership attributes rather than individual contributor attributes as well as a range of other features. The question really is whether you afford to not address these significant transitions. Whether you address them or not they remain part of the reality of the organization. You cannot simply decide that these transitions do not exist. Many organizations seem to find comfort in having leadership development aligned with their title structure. They have a director program, a general manager program etc. You will, however, often find that getting a title promotion does not fundamentally change your leadership challenge! So what training is it that you need just because you change title? The challenge in focusing development around leadership levels rather than titles is often that the organization finds it confusing to operate with two title systems - one for leadership levels and the other (director, general manager etc.) for impact. The fact remains, though, that whether or not you explicitly acknowledge the leadership transitions, they are there. You cannot make them go away. This is in contrast to the traditional title system which is more of an abstract system that is put down on the organization to handle salary, promotions, merit and impact. The conclusion is that you need both concepts and they play unique valuable roles. 4. The leadership transition The step from accepting a leadership position to becoming a successful leader takes more than merely providing better leadership skills. It calls for a fundamental adjustment in mindset. The programs support leaders at different leadership levels in developing the appropriate work values, time application and skills. The programs also capture specific organizations desired leadership culture and existing HR tools. The programs are based on high impact learning principles which integrate the participants' real life situation into the programs. This is done to an extent where the participants often feel that being in the program is like being at their job. Accordingly, the learning from the programs can be applied immediately when the participants return to their jobs.

4 In order to benefit fully from the Leadership Transition Programs they must be available for all leaders across business units and geography as one of the few corporate programs. These are not just for selected talent. On the contrary, these programs are critical in order to increase the number and quality of talent within the organization. A leader moving to a new leadership level should attend the relevant Leadership Transition Program 6-9 months after moving to the new leadership level. In addition to this, leaders who have not fully transitioned into their leadership role should attend the programs irrespective of the number of years they have been in a leadership role. Just before attending the program the participant will take part in a 360 survey addressing the themes that will be covered in the program (and ONLY those themes). The participant will go through a similar 360 survey 6 months after the program is completed. This is done in order to keep the participant in a learning space for 6 months, and further, it enables the leader and the organization to measure behavioral change. For large companies the best way to do this is often to set up a system where local business entities can order programs from the corporate university to be delivered locally. The corporate university then manages the practicalities and orders facilitators from Sirrah to deliver the training wherever relevant. These programs can be supplemented with leadership transition coaching initiatives provided by external coaches. Over time, though, leaders attending the programs will return to the office where they have a leader who has been a participant in a transition program and they would then provide the leadership transition coaching. 5. Implementation strategy Many issues can arise in an implementation phase and they just have to be addressed as we go along. However, in order to achieve results relatively fast and solid buy-in from the organization it is an advantage to address the implementation decisions below up-front. a) Which core initiative should be launched first? The most critical issue to address is the dilemma of launching training programs or a dual performance appraisal system first. You may not want to measure leaders on specific behaviors if you have not provided training within these areas before. On the other hand, the impact of any training program is strongly correlated to whether people feel that the training really matters to them and the company. Accordingly, you may not want to launch training programs without first measuring the behavioral change via the performance appraisal system. We recommend implementing the dual performance appraisal system no later than 12 months after the implementation of the Leadership Transition Programs. In addition to this, we recommend that the decision for doing this be taken up-front because this enables the facilitators at the programs to refer to the existing/coming appraisal system. The People Session is a critical element for pushing accountability into performance management and for talent selection/development. However, it is a tool that can be used as a stand-alone tool. It is not critical to implement it at a particular time.

5 b) Where will you implement the initiative first? Companies have different traditions for rolling out new initiatives. Some prefer pushing it out to the entire organization at once whereas others feel more comfortable rolling it out in one or two business units or a specific geography of the company as a test before going full scale. The Leadership Pipeline concept and the Sirrah solutions have a proven record of functioning well across cultures and industries. To the extent possible, we recommend going full scale from the beginning. By taking one business unit or geography first you easily risk customizing the approach around this particular business unit or geography which just complicates the further anchoring of the concept across business units. You might then find that, for practical reasons, one particular business unit or geography will only include themselves one or two years down the road which is not a problem. c) In which order will you implement the initiatives? You will most likely find it meaningful to run internal Leadership Transition Programs for Leaders of Others, Leaders of Leaders and maybe even Functional Leaders. However, you do not have to implement them all at once. Some organizations prefer a top-down approach while others prefer a bottom-up approach. By implementing top-down you ensure that when leaders at lower level return from their program their direct manager understand how to support them. On the other hand, it can take years before you reach the Leader of others level and, after all, probably 70% of all employees in your organization reports to a Leader of Others so why would you want to delay training these front line leaders? The success of these programs does not depend on one or the other approach. We recommend that you launch the programs more or less at the same time and then the issues outlined above will resolve themselves over a 2 or 3 year period. The important part is to openly communicate the implementation strategy so that the leaders understand why things are done the way they are. Should you wish to prioritize the roll out of the Leadership Transition Programs we recommend that you start with the program for Leaders of Leaders. Most of them are probably senior enough to cope with the fact that their own leader has not attended a similar program. Also, this is often by far the most overlooked transition, and yet a very significant transition. d) To what extent are you planning to work with customized versions? Some organizations prefer not to customize the programs at all in order to save some up-front costs or because they just want to run some selected talents through the programs. A significant part of institutionalizing the leadership transitioning thinking is, however, at least to use the company s own logo and colors in the programs. Furthermore, these programs offer a unique opportunity to anchor all core human resource processes among your leaders. After these programs leaders will own the HR processes rather than just executing them due to pressure from the HR function. These critical customizations will often constitute 10-15% of the programs.

6 e) Who will facilitate the initiative? Some organizations have a strong culture using internal facilitators. It is often a privilege as a line leader to be selected as an internal facilitator. They then normally commit to delivering 4-5 programs per year in a 3 year period. Other companies face a situation where they find that it is not possible to have line leaders assigned a facilitator role and consequently use external facilitators. Another reason for using external facilitators is that often it is difficult to be the wise man in the city you grew up. The program participants simply request external people. This can be done with success either way or as a combination. The critical thing with using internal facilitators is, however, that it is line leaders and not full time HR professionals that facilitate the programs. We find that participants can be reluctant opening up when internal HR professionals are part of the facilitator team. f) Additional implementation considerations The question is, of course, often how to fund these initiatives. There are significant costs of not taking a coordinated approach towards leadership development. You will often find that immense amounts of money are spent on duplicating leadership initiatives across the organization when a coordinated approach is not taken. The most challenging part of implementing this concept will often be that many local organizations are somewhat reluctant to give up on existing initiatives. A way to bridge this issue in a transition phase is to NOT close down local initiatives but rather to launch the Leadership Transition Programs as a global core curriculum and allow local organization to do things ON TOP of this but not INSTEAD of this. Over time you will find that most other duplication initiatives will have been closed down by the local organization. 6. Business impact evidence We have listed below some evidence on business impact by implementing the core tools which support the Leadership Pipeline concept. They range from quantitative evidence to evidence of a more anecdotal nature. a) Delayering exercise A 25,000 people company wanted to decrease the number of layers in the organization from 12 to 7 and increase the average number of direct reports from less than 4 to 7. Normally you would engage an external consultancy to support you in this exercise at a high cost. However, this organization had implemented the Leadership Pipeline concept two years earlier. About 30% of all leaders had been through their respective Leadership Transition Program and the Dual Performance Appraisal system had been in place for two years. This particular organization executed the delayering exercise without any external consultancy support. The majority of leaders had successfully transitioned into their leadership role and was thus ready by heart and mind to lead a larger number of direct reports. It is not enough to change structures and systems, you have to change the thinking behind these structures and system and this is what the Leadership Pipeline concept supports.

7 b) Talent selection An organization operates with internal talent pools at three layers of the organization; Executive, Director and General Manager. The organization has a 90% hit ratio on selected talent for their Executive Talent Pool without using external assessment centers. The internal information from the Dual Performance Appraisal system, People Sessions, psychometric tools and engagement survey is so comprehensive and valid that no external partner can add significant value to the selection process. c) Engagement An organization runs an engagement survey on an annual basis. It consists of about fifty questions. Twelve of those questions relate to the relationship between the leader and direct reports. These questions are together named leadership index. One year the organization experienced a significant decrease in the engagement score, most likely because they had to let go of 10% of their staff. In the same year, however, the leadership index increased significantly across the board. At that time it was one and a half years since the Dual Performance Appraisal system was introduced and about 30% of the leaders had been though their respective Leadership Transition Program. By simply conveying expected leadership behavior in a hands-on language that connects with the leaders at different leadership levels and evaluating it explicitly the leadership performance was, in general, improved. It also turned out those leaders who attended their relevant Leadership Transition Program improved, on average, 3 times more than those who had not. d) People Sessions A 20,000 people organization introduced People Sessions top down. During the first year several business leaders were quite displeased that they had to spend a full day on a people session. However, we experienced that the business leaders across the board got more and more engaged in the process as the day went by. One of the business leaders who had initially been the most negative towards the concept concluded at the end that this had to be done not on an annual basis, but on a quarterly basis. Later the same year the People Session concept was rated the best HR process in the organization by the business units. e) People Sessions In a 100,000 people organization a variation of the People Session was implemented for the top 125 executives. In advance of the People Session all ratings were forwarded to HR. The average score was 4.3 on a 5 scale. After the People Session the average score was down to 3.6. Next year the average score on the input was 3.9 and the after the session it was 3.6. The People Sessions simply drive accountability on performance ratings. This, on the other hand, creates transparency and trust in the organization. f) Leadership performance vs. business results When the Dual Performance Appraisal system was implemented in a 100,000 people organization there was criticism that this was like doubling the work, now having to make a separate evaluation of leadership.

8 However, after one and a half years we were in an interesting situation. Whenever we discussed executive succession planning our senior leadership team looked much more at the leadership evaluation than the evaluation of business results. The reason was straight forward. There are many factors impacting the business results and it is difficult to dedicate good or bad results to one single person. However, the leadership behavior is a personal factor that runs across business units and functions and as a result this evaluation became much more important in the selection of candidates for vacant positions Sirrah. This material is confidential and only to be used by the client company, its parent, affiliates and subsidiary companies. No part of it may be circulated or reproduced outside the client organization without written approval from Sirrah.

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