Selker Leadership

Unlike the movie Trading Places, we do not play games for sport with the careers of future leaders by creating the conditions where one is pushed out and another, in this case, a most unlikely leader, is placed at the top.  We certainly would not create such a condition just for the sake of betting a dollar on the outcome. Mortimer and his brother played a very high stakes game with people’s lives, for a very small bet to determine whose social beliefs were right.

The more I think about this it seems that we inadvertently DO create an unintended game of sorts when company leaders and boards don’t take any action in planning for the future leadership of the company. This lack of planning is essentially a “bet” that things will work out, and that through the safety of a large search firm (really bad assumption here) the company will be able to find the very best leader to take them to the next level. They must place these bets since they have no other alternatives by the time a change in leadership is recognized as critical.

Many companies fail to do their best in planning for the act of “trading places” on leadership teams. The reason is simple – it takes a lot of work. First, successful planning requires keeping up to date as to where the leaders are in their growth and potential. It takes rigor and persistence to asses, understand and plan the developmental pathway for rising leadership teams. It takes even deeper assessment to know which leaders will be right for which key assignments. You need to be paying attention!

The most successful companies, in our experience, are those who are clear about their performance values. This is a behavioral essential.  Some companies focus their performance values in ways that create a leadership culture across the entire company. This approach ensures a deep pool of emerging strong leaders for the future. They then pay attention to the development of their leaders, give them career broadening assignments, and review their leadership cadres on a regular basis as they plan the leadership teams for the future.

“Mortimer’s bet” will continue to define the approach used by far too many companies.  They will place their bets based on social and personal biases rather than a deep understanding of the kind of leaders the company needs to reach their goals. They will take it lightly when their failures and biases become known. Perhaps some of them, like Mortimer and his brother in the movie, will feel the full force of their bad decisions by losing everything, including that last dollar.

Jim Champy is recognized throughout the world for his work on leadership and management issues, and on organizational change and business reengineering. His first book, REENGINEERING THE CORPORATION: A Manifesto for Business Revolution, sold more than 3 million copies and spent more than a year on The New York Times best seller list. He is also the author of the best seller, REENGINEERING MANAGEMENT: The Mandate for New Leadership, which was recognized by Business Week as one of the top ten best business books of 1995.

Jim’s latest book is OUTSMART!, How To Do What Your Competitors Can’t. Published in April of 2008, OUTSMART!, shows how to achieve breakthrough growth by consistently outsmarting your competition. Champy reveals surprising, counterintuitive lessons learned by companies that have achieved super-high growth for at least three straight years. Drawing on the strategies of today’s “high velocity” companies, he identifies six powerful new ways to compete in even the toughest marketplace. You can read more about OUTSMART!, at www.jimchampy.com.

We are thrilled to present excerpts from the interview with Jim Champy. To read this interview in full, click here: Jim Champy Complete Interview.
 

Greg Selker: What do you believe are the best practices for hiring top leaders?

Jim Champy: If I were going out and recruiting a person for a leadership position – I’d want to hear about their experience. I’d want to hear about the difficult situations they’ve managed, how they made decisions – and try to get a sense as much as I can in advance about how they behaved.

In the end, leadership shows up in how a person behaves. And unfortunately, you don’t always know that until you put a person in a leadership role. By the way, I also believe that a person is never fully prepared for a leadership role. Many times I have seen an organization looking to elevate someone to a higher position and the question is: is he or she ready? Well they’re never completely ready – they’ve never done the job. And so there’s always some risk. But I certainly think you look at past behaviors and past performance, and you ask some “belief” questions to see how they respond. “

I also think there’s a need to assess someone around the alignment of their values and their principles – with the values and principles of your own company. In looking at hiring a leader – a very senior manager, you may not be quite sure about whether he or she has the immediate skills to do what you need or has had the immediate experience in the job. Also, when an executive starts in a new job, the job can change. And as I said earlier, very few people are completely ready for the next job. So, the most important and reliable thing is to find out if the new executive shares the fundamental beliefs and principles of your company.

Greg Selker: What is the best approach to identify and develop leadership competencies within companies today?

Jim Champy: I think it’s open engagement with your people – the ability to have very open conversations about what they see, about what they think, about what you see – and then coming to agreement and alignment about points. But today this needs to be done more quickly than ever before, because time is of the essence in making decisions about people and their leadership skills

I think one of the biggest mistakes I see organizations making is that they stay too long – far too long with people who frankly are unable to do the job. And one of the things that I think needs to be different today is to make decisions around performance and leadership skills more quickly – and then take the appropriate action. When I’m in conversations with other CEO’s – and I ask them what they might have done differently in the last year or two – or once they’ve made a tough decision, these are sometimes tough decisions to make about a person who didn’t have leadership skills, they’ll often say to me, “I wish I had made that decision earlier”.

Greg Selker: What do you think a board’s obligation should be in this post-SOX world to guide the competitive development of its leadership cadre?

Jim Champy: You know, a board cannot manage an enterprise. But one of the most important responsibilities they have to their shareholders is to make sure there are a very highly competent Chief Operating Officer and Chief Executive Officer in place. And then to be certain that those officers – particularly the CEO, has put in place some set of processes around development and succession.

I think it’s legitimate for a board to actually expect to see and hear from the next line of management, those reporting to the CEO, so that the board can actually sample and sense whether the development job is being done and whether there is within the company potential for succession, and if not, then encourage the CEO to go outside and bring in people who in fact can be his or her successor.

So the first priority is to put in place a CEO with the right competencies, and then to encourage that CEO to address issues of succession and development, and lastly for the board to be sure that the issues of succession and development are in fact being dealt with. If a board doesn’t do that, Greg, what happens is that the board finds itself in some trouble when the CEO retires because there’s nobody there. It means the board has to go outside. That’s a dangerous thing to do because then you are betting on someone who you don’t know and who does not know your company. A really well-run company has been hiring and developing leaders all along in kind of a steady stage, so that you always can look and say – I can see three successors getting developed here for our CEO.”

Greg Selker: Do you believe we’re moving into an era that it is difficult for companies to find talent?

Jim Champy: I believe there’s a lot of talent out there in companies – lots. I think much of it is undeveloped. But I’m always impressed and surprised – frankly I shouldn’t be any longer, when I go into a company and look down a couple of layers and I see a lot of really smart people trying to do the right thing. But they’re not fully developed. And that’s particularly true in larger companies. In smaller and medium size companies, there’s an informal set of systems or processes that develop folks.

I think in larger companies people get put into very narrow roles early – too early. And they’re kept in narrow roles for a great deal of their career – and of course, some companies have job rotation programs that actually do work –but most people get locked into a role – locked into a function, and their ability to see and understand becomes limited and narrow. And unfortunately, they can develop a limited and narrow perspective. Whereas in a small or medium size company, you move around more naturally – you not only move around, but you have problems thrust upon you more directly – big problems that you have to deal with and the work isn’t fragmented the way it’s fragmented in a large company. Yet in large companies, there are very, very capable people whose development I think is just stunted by the fact that they’re put into very narrow roles. 

Greg Selker: How do you make certain that you are identifying the top talent or top leadership, screen for it, develop it, and hire it?

Jim Champy: It’s about where you set your standards. Where do you set the standards for the performance of your business, and therefore – where do you set the standards for the performance of your people? And what skills do you cultivate and how do you cultivate and develop people towards those standards?

And once you get a set of processes going that are based on really high standards for performance and have an underlying set of very good values and principles – I think the whole process becomes self-reinforcing, it perpetuates itself.

Now I can tell you I see organizations that have very high standards and very strong people that I would not want to be part of because I don’t like their values. And so for me, building the really high performing organization is a combination of very high performance standards – both for the company and the individual, but also a set of values that will attract the kind of people that you really need and that you really want.

To read this interview in full, click here: Jim Champy Complete Interview.

© 2008 Selker Leadership LLC

Every company risks exposure to UV-Rays (Useless Values, Rituals, Acronyms, Yawns and Sameness). When you take a step back and observe it as an outsider, the ritual ceremony that companies take part in of developing and posting business values is really a quasi-religious program. Like a tribal celebration, lofty values about good behavior, honesty, hard work, and even morality, are heralded, and the tribe feels good for awhile about the ideals set forth. But ultimately, nothing changes. Because in most organizations, values exist as general statements with little, if any, relationship to the actions people take. They are stylized words or clever acronyms on plaques, screen savers, posters in elevators and prefaces to employee handbooks. So the tribe goes on about its business, believing that if their values are defined and publicized, they will, of their own accord, make their way into the culture and influence actions. Since there is at least a short lived momentum, members of the tribe conclude that the ritual of developing, discussing, and posting values is important to the leaders and thus episodically important to the tribe, at least for a few days each year. Celebration ensues and the cycle repeats. Useless.

Over the past two years we have examined a number of large corporations in terms of the gap between their declared performance values and their actual performance behaviors. We have assessed what they do and how they do it at the individual and team levels. What we observe is that most companies are able to agree on values that would produce real results if practiced. What these companies have been unable to achieve for the most part, is a disciplined way to implement them and have them live in the organization. They know “what” to do but not “how” to do it in alignment with their declared values.

As a result, over time, the leadership teams drift further away from their ritually declared values and reach a status quo that keeps them well below their potential performance levels. In other words, nothing really improves. Companies are leaving a lot of value on the table that could be applied to improving the performance of the entire company. But, they do not do the work to understand how performance values actually drive the capabilities of the company to compete, innovate, improvise, and lead significant change. Understanding how performance values can be managed to expand company capabilities may be the most significant learning failure of companies around the world.

If leaders are really interested in building the asset value and competitive capabilities of their companies, they should take the time to learn how to implement and manage the values process. The few organizations that we know to have done this have taken a grass roots approach – bottom up, and top down. They have the right level of SPF (Specific Performance Fundamentals). They have defined their values at behavioral levels that reflect each function. Expected performance values behaviors are clear to each employee from the get go, and they are integrated into each job description, assessment and incentive programs.

Taking performance values operational and turning values into assets of the corporation, requires a strong program of learning and practice, measurement and management. Without this disciplined approach the long lists of declared values and all the posters on office walls will always be empty words and useless business values.

1. Develop Your Talent. This is your #1 priority for 2008. So many CEOs say, “talent development is critical,” but what they really mean is “I have HR working on it.” If you’re serious about talent development, you need to make the leadership development and mentorship of your senior team and their direct reports your personal priority.
2. Implement Succession Planning. Every CEO talks about the need for a successor, although very few do anything about it. If you or your board doesn’t have someone who could step into your job if you got hit by a bus, then you need to take action now. If you don’t have successors today, recruit “bench strength” candidates for the most critical positions, including your own.
3. Unplug Yourself. Most CEO’s have forgotten about the importance of scheduling “disconnect” time. They move from one task to the next and never unplug themselves from their cell phones, email, or blackberries. Make and take the time for you to reflect, think, contemplate and integrate. You will be surprised at what will happen in a good way.
4. Define Yourself in New Terms. The most powerful leaders all ask themselves, “What kind of leader do I need to be to help my organization and people achieve their maximum promise? What do I need to do to have the impact I envision? The bigger the vision and broader and more expansive your self-definition is, the higher the likelihood that you will achieve greatness.
5. Invent New Behaviors. Identify three things you can do with your senior team, your board and your customers that are driven from your redefinition of yourself. Translate your words into new actions and sustainable behaviors.
6. Involve Your Board With Your Team. If you are like most CEO’s, your board only interacts with your team in formal board presentations. This is like leaving money on the table. Your board is a valuable resource. Create opportunities for them to interact with your team in non-board room settings.
7. Develop Your Board. Succession planning and building bench strength are not just concepts for your company, they work for your board as well. Encourage your board to invent innovative approaches to developing new directors and in turn themselves.

Virginia Gambale is a successful investor and technology leader. As Managing Partner of Azimuth Partners LLC, which she founded in 2003, Gambale operates globally, developing growth strategies, business partnerships and executing successful exits for technology and business service companies. She is highly regarded for her innovative thinking, personal involvement, concern for people and ability to deliver results.

Gambale garnered such prestigious awards as the Forbes Great Communicators in 1999 and was named one of the top three CIOs on Wall Street in 1997. Most recently, she was named by Directors and Boards Magazine as one of 12 “Directors To Watch” for in their special 30th anniversary celebration publication in 2006.

She has served on over 20 public and private boards including: JetBlue (NASDAQ-BLU), Motive (NASDAQ-MOTV), Workbrain (TSE-WB), Voxpath, IQ Financial (Chairman) and Synchronoss Technologies (NASDAQ-SNCR). She has often served as Board Chair and Compensation & Transaction Committee Chair. Gambale’s work on Advisory Boards is extensive and includes: DB Capital Partners, FT Ventures, Apax Technology Ventures, New York City Investment Fund, Mobius Ventures, Gartner Group & SIM CIO Roundtables, CPM Brazil, MPI Professionals, Knoa Software, and RWD Executive Search.

Prior to 2003, Gambale held senior management positions, including CIO, at global corporations including: Merrill Lynch, Marsh & McLennan, Bankers Trust Alex Brown and Deutsche Bank. Additionally, she headed DB Strategic Ventures, where she successfully liquidated their 100M investment portfolio. This lead to her appointment as general partner in ABS Ventures where all investments she led resulted in successful IPOs; Workbrain (TSE-WB) and Synchronoss Technologies (NASDAQ-SNCR). She was subsequently a partner at DB Capital Partners.
A former senior executive in large multinationals, she has recruited senior level executives and understands how a firm becomes the employer of choice. An advocate of performance management systems and metrics, she is known for her success in employee development and satisfaction.

Gambale’s memberships include: National Association of Corporate Directors (NACD), Association for Corporate Growth (ACG), Economic Club of New York, Women’s Hi-Tech Coalition and Women on Wall Street. She is a member of the Mentor Faculty and Thesis Evaluation board for Columbia University’s Graduate Masters in Technology Leadership. Ms. Gambale is also an active mentor and financial sponsor for the education of underprivileged minority women at St. Michael’s Academy in New York City.

Gambale earned a Bachelor of Science degree in Mathematics and Computer Science with a minor in Business from the New York Institute of Technology. She also studied at Julliard and Hartt Conservatories.

For the complete interview with Virginia Gambale, click here: Virginia Gambale Complete Interview

Greg Selker: As an active board director what do you see a board director’s role should be in helping their companies get their arms around identifying and developing their next generation of leaders earlier and quicker?

Virginia Gambale: I think responsibility for this should initially reside at the board level, because the board should be worried about their fiduciary responsibilities to shareholders on a long term basis … and in doing so it’s a quality of the asset as a whole, and a very big part of that asset is the talent residing in the company. So I think requiring and instituting developmental programs should come from the board.

Greg Selker: Do you find that is often the case?

Virginia Gambale: No. I think as we begin to populate boards with more operationally experienced people as opposed to just former CEO’s and academics and rock stars, I think you begin to hear the discussions around doing identifying, building and developing leadership– and then it’s building consensus with the other board members to try to do that. So it happens – it’s being discussed for sure.

Greg Selker: And this is kind of where we started the conversation, where you were talking about the group of people that you’re participating with on the NYSE where this is being discussed.

Virginia Gambale: Yes.

Greg Selker: What are some of the solutions you are seeing for this and how are these solutions being implemented?

Virginia Gambale: You know what our conclusion is in a lot of these discussions? It is that until there is a presence of a different mentality – either at the board level or on the executive management committee, that these things are not going to be moved forward very far – unless there’s a corporate structure that allows for the delegation of more radical programs.

Greg Selker: And if this different kind of mentality was present at both the board and executive management level, what would that look like?

Virginia Gambale: I think one piece of evidence that this is being addressed would be that the need to institute leadership that is more environmentally – what’s the term I’m looking for, leadership that is more compatible with the new talent base that is coming into the work force, this issue would be raised and talked about …

Greg Selker: Got it. So a kind of mentality or a mental model that says that this is important, that we need to address this – and that here are the things that we are going to try to do about leadership and not just talk about it.

Virginia Gambale: Right.

Greg Selker: Very good. And so in kind of following along this… if it’s the board’s responsibility to make certain of this, what are the ways in which you see that a board director or board collectively can kind of awaken the consciousness within the executive team and the rest of the board to the importance of leadership as an issue?

Virginia Gambale: Well like anything else, either critical mass is accumulated at the board level or there are regulatory requirements which force attention to be paid.

Greg Selker: Yes.

Virginia Gambale: And I think actually a lot of people are not fans of SOX, but I am a fan of it in that it’s a start. Yes, it needs to be refined. But I think just as board directors of public companies are answering questions around succession planning that need to be checked off on the D&O questionnaire to meet SOX compliancy requirements – in order to kick start these issues of leadership there may need to be some regulatory moves.

Greg Selker: Well that was exactly my next question, because we actually see that as well. In fact, it’s been our belief that a natural outgrowth of SOX is to move into this area of leadership and accountability at the board level for the leadership of a company.

Virginia Gambale: Ultimately, I think this is true as well. But unfortunately before that is going to happen I believe there’s going to be a little bit of backlash against SOX as it exists today resulting in that SOX will be relaxed a bit from its present form.

Greg Selker: Yes.

Virginia Gambale: There are a number of groups which are rallying around the relaxation of SOX who have some strength, although it may be interesting to see how the upcoming 2008 elections play into this. So I think there will be some backlash to lessen the requirements of SOX, but SOX will not disappear. I think that while this backlash will take SOX a step back in a sense, it will actually serve to have SOX be more thoughtful going forward. You see, big failures in public companies are not going away. They will continue to occur – and it’s natural that we’re going to try and regulate around these failures as a response. And at the heart of a lot of these failures are the absence of some very basic skills and capabilities around leadership. These failures are not happening because people do not read or understand accounting regulations.

Greg Selker: Yes. The failures that have occurred are not just about accounting improprieties.

Virginia Gambale: Correct. These failures exist due to the interpretation of, and then the execution, or lack of execution, around specific guidelines. I always give this example. I sit on an audit committee and the question being asked of us is how do you know you are in compliance with SOX 404? And my response is … I don’t really care whether we meet the specific number of day criteria for Sarbanes Oxley. What I care about is, are we ready to implement, or roll out this new product, or implement this new system? As an organization, are we ready? And that means much more than X number of days of testing. Are we ready in total? I mean are our people ready? Is our advertising ready? Is our brand ready? Looked at in this context SOX is much broader than meeting a set of accounting regulations. And while these regulations need to be met, it really is a result of these larger issues that SOX was even developed and implemented in the first place. And central to these broader issues are concerns and actions which are representative of leadership and help create leadership within a company’s culture.

For the complete interview with Virginia Gambale, click here: Virginia Gambale Complete Interview

© 2007, Selker Leadership LLC

Over the past seven years I have, as a consultant, been inside two significant global companies and in a position to observe the details of several acquisitions. It was impressive to see how the companies developed their “continuous short lists” of target companies they would track throughout each year. They had solid processes to measure and compare the targets to ensure a high probability of a generous payoff. They had plans, processes, and assigned lots of talent to get to the acquisition phase and bring home the bacon.

Most impressive of all was their ability to conduct financial due diligence. They had boxes of spread sheets and tons of financial data. They measured everything and produced a final valuation term sheet that eventually was briefed to the board and provoked a decision to proceed or not. Most of the time if the brief reached the board the decision was “Go forward.” In each of the cases I witnessed, however, the decision was informed by every factor except the talent quotient. No one performed a leadership and talent “due diligence” on the target company in comparison to their inside talent. They always assumed that the target company had inferior talent and that their “inside team” was the one who was most capable of leading the transition. They firmly believed they had measured everything needing measurement and that they would exceed the goals which had been established for the acquisition.

They were dead wrong.

Even so, in their bliss, they would get the team together and someone would say, “OK, lets do the deal, lets drive through this and lets make the numbers happen.” As they found out, the “driving through” part eventually involved crashing into a wall.

In each case, the transition time-period required to integrate the target companies stretched into years rather than the planned-for months. Inside executives who were good leaders in the context of their old organization were exactly the wrong leaders who had the wrong set of experiences needed to lead the integration of separate teams and manage the change required to transform their organizations. Most of the elegant due diligence numbers went up in smoke as the value of the acquisition fell far below expectations for the company and for Wall Street. The numbers that should have worked so well, over time were not working at all.

Numbers were not leading the company, people were. This little killer fact had been ignored.
 
These very sophisticated companies, so good at measuring most things, had not recognized the need for or developed a competency in “leadership due diligence”. The lack of rigorous diligence in this single domain was the prime cause of their acquisition and integration problems. Both companies, the acquiring and the acquired, held assumptions which were proved wrong about who should be in key leadership roles and who was the best fit. There was little understanding of what really were the right competencies and experiences needed. Even if the competencies and experiences had been identified correctly, their leadership did not know what to do and how to do it.

Most companies have problems with mergers and acquisitions. And, most of the time the leadership-knowledge-void plays a key role in failures or under-performing organizations in the post acquisition period. It is feasible to suggest that the value of 90 percent of large acquisitions could be improved by 30 percent or more (financial results) just by focusing on leadership due diligence and getting the right people on the job at the outset.

The reason this is not happening is because, just as in the examples noted, implementing “leadership due diligence” for recruiting new people, assigning people to critical jobs, or sorting through a comparative talent pool during an M&A process, is not a core competency of most companies.

The annual performance appraisal dance inside most companies is conducted at a surface level, generally driven by politics and loyalties rather than actual measured performance. Assessing new hires is often “outsourced” to a search firm that rarely puts candidates through a rigorous evaluation process. Instead of having confidence in the search firm’s abilities to do more than a surface level assessment, the onus for a deep assessment is pushed onto the client company. By and large search firms play the odds, producing enough candidates who are willing to meet with you who have similar titles in similar companies within similar industries, thereby increasing the probability that you, the client, will select one of them in the absence of any real rigor to the process. Likewise, making critical internal executive assignments is a swirl of internal political barter more often than it is based on a deep and current assessment of a person’s ability to stretch into their next level of performance.
 
On the other hand, those companies known for their unmatched ability to compete globally are also those who have developed a critical edge and core competency in leadership due diligence. They insist on objective and rigorous assessments of all key people and they focus on developing their leaders to attain their highest potentials. They are known for hiring, developing and retaining highly talented and capable people. By large and far, their M&A strategies and execution are successful and innovative because they recognize the importance of “leadership due diligence.”

Given that “leadership due diligence” can be practiced and learned, the great mystery remains why more companies do not practice this as a means to attain a higher level of performance? There are operationally proven methods and tools of leadership due diligence that people can learn to use and master. This undiscovered rich capability is waiting to be found and deployed in the global markets.

Unfortunately for most shareholders, the likelihood is that only a few companies will take the time to invest in one of the highest pay-off exercises available. Search firms will continue to play the odds. Leadership and personnel decisions governed by politics and loyalty will continue to be the norm. Financial spread sheets and valuation formulae will continue to be the preferred ways and means to support M&A strategies. The “numbers games”, after all, are a lot sexier than the hard work of figuring out what people can really do and what they cannot do.

Spencer Clark recently retired as Chief Learning Officer of Cadence Design Systems Inc., the industry leader in the electronic design automation space. In this role he built Cadence University to drive global implementation of technical, professional, executive and leadership development. He was also responsible for implementing an organizational development practice within the Cadence culture and the development and integration of an explicit talent development program into the Cadence succession planning process.

He is currently an Executive Director of EDA Networks where he is responsible for facilitating the Chief Learning Officer Forum, a network connecting senior executives responsible for enterprise-wide learning and development with their peers in other leading companies. This network is designed to take learning & development to the next level at a time when it’s increasingly common for companies to view talent as a major source of competitive advantage.

Spencer’s background is a blend of practical business experiences combined with a strategic formal education in support of his professional objectives. He has earned roles as President, Chief Operating Officer and General Manager with Fortune 100 companies including General Electric, Litton Industries and Black & Decker, as well as serving small privately run companies.

Committed to facilitating people in the process of their professional development, Spencer has acquired additional expertise in the deployment of 360° feedback programs, change management, and executive coaching.

For the five years preceding Cadence, he was President of his own consulting company using his skills to improve the performance in a variety of industries and disciplines, including Power, Defense, Human Performance, Security, and Manufacturing.

Spencer holds degrees in mathematics and physics, an MBA, an Executive MBA, and is an accredited Professional Nuclear Engineer. He has completed GE’s prestigious multi-year Leadership Development Program at the Crotenville Learning Center. The Crotenville experience became Spencer’s inspiration for his recent role as CLO of Cadence and the foundation of his enduring passion to contribute to the building of great companies.

Spencer is a member of the Board of Directors for the Zhongguancun-Cadence Institute of Software Technology, the Advisory Board for Leavy School of Business Santa Clara University, Board of Directors for Project Hired Inc, RFI Enterprises.

For the complete interview with Spencer Clark click here Spencer Clark Complete Interview

In this candid conversation, Spencer shares his views on what companies need to do to prepare and deal effectively with the upcoming workforce shortage.

Greg Selker: In 1998, McKinsey published the report “The War for Talent” – and that was a pretty extensive study, as I’m sure you remember.

Spencer Clark: I do. And I happen to know a bit about Axelrod too. So we’ve had the pleasure having a conversation around some of that research.

Greg Selker:  It was pretty seminal piece of work at that point, and it says that the most important corporate resource over the next twenty years will be talent – smart, sophisticated business people who are technologically literate, globally astute and operationally agile. And what I’m struck by in reading that report is that what McKinsey pointed to perhaps was only the fringes of what was to come. And I’m very interested in what your thoughts are on the war for talent and how it has affected you and your organization?

Spencer Clark: I think most of what they said was right, I’m not sure that I agree with everything. I certainly agree with the requirements for the talent that is needed and becoming more sophisticated than it was. And that the supply is going down. There’s another great work by Ken Dychtwald, Tamara J. Erickson, and Robert Morison called “Workforce Crisis: How to Beat the Coming Shortage of Skills And Talent.” It’s about the demographics of what’s happening with the workforce and the speed with which people are now retiring because the baby boomers are going out of the workforce – or at least partially going out. And I can’t recall the exact numbers, but she also talks about the number of new jobs that are created – and the percentage of them that are required to have a college level degree and the number of our kids that are actually finishing college and getting a degree. There’s like a 20 or 30% miss on those. You add the two together and it looks like half of the new jobs being created won’t have domestic people available to be able to fill them. So the numbers are just staggering, and the crossover was late in 2006 – so we’re beginning to enter it.

I saw another study that said only 14% of the HR people are doing anything about this – less than 40% of them even recognize it as a problem. So my first reaction is it will be a catastrophe before we really recognize how big a deal it’s going to be.

Greg Selker:  So what do you see that could be done from a leadership position as either an HR executive or business executive to forestall this catastrophe or produce a different outcome?

Spencer Clark: There are two things. All corporations are in the education business whether they want to be or not. So knowing how to develop your talent is going to be a key thing for corporations. If you don’t have – and these are my numbers and I’m making them up from my belief system, but if you’re a half a billion dollar business and you don’t have a strong and developing learning and development organization – I think you’re going to be in trouble.

 Second thing is that these corporations must learn how to capture some of the great minds in other parts of the world. And that means knowing what they need. For example at Cadence, we were at $1.3 billion dollars in revenue with only software when I left. When we looked for the kinds of people that we needed to write code, we found that for the analog people they were in Russia. They have people with those skill sets. So we set up relationships with the top five technical universities in Russia and we’re now shipping a lot of our code writing to Russia in the analog studies. We know that there’s a different set of strengths in China and a different set of strengths in India, but the question I would ask is what are you doing to identify where those kinds of minds are that you need to have and how are you going to export that work to them. So the skill with being able to both identify and to move it is important.

Greg Selker:  It also sounds like what you’re saying is, once you have identified those people and recruited them into your organization that there needs to be some significant commitment and resources that are made available to continually develop those individuals so they are retained.

Spencer Clark: Yes, that’s right. Because you talk about it being such a fast moving world, one report that I read said that we’ll change careers about seven times during our work life. If that is the case then you’re not going to stay very long in any one of them. So the skills that you have when you’re graduated and enter the workforce simply won’t stay. At Cadence we found that even with a Masters degree, most new graduates weren’t ready to be contributing engineers. We set up under Cadence University a six month program in Austin just to move them from what they had at the Masters level to being able to begin to contribute as a software engineer for us.

 So our entry level employees right out of college with a Masters in electrical engineering or computer science weren’t at the level we needed them to be in order to be productive quickly. We found their time-to-productivity was between 30 to 36 months. If we hadn’t recognized this and put a mechanism in place to get them up-to-speed, our services and products would have been slower to market. Time to market is one of the key differentiators between success and failure in this industry. This means corporations must have the capability of continuing to develop their people.

Greg Selker:  When you have a university that is set up within a corporation, what do you see as the ideal mix in terms of focusing on expansion of functional skills versus expansion of overall leadership and management skills and competencies?

Spencer Clark: Well you know that I grew up in GE, and one of the things that I think makes them strong is that they have a belief that everyone should have general management capabilities. So even if you’re in Research & Development, you are taught general management skills, most everyone can read a P&L statement, a balance sheet. So I believe in the holistic approach and what I’m doing now that I’ve left Cadence and working with Align Technology, is we’re building general management capabilities.

 Right now we’re focusing on the top 36 people of the company. First of all we’ve done the competency work to know what we need. Now we’re going through and doing general management assessments and we’re running week-long simulations to give them at least management awareness if not skills. So they understand the impact of their decisions on the broader organization. I think that’s a key thing, but that’s making the assumption that you’re functionally competent. So there are basic blocking and tackling skills that you have to have in each of your functions. If you’re in IT and you don’t understand enterprise systems, then obviously you’re not going to be successful. Or if you’re in manufacturing and you don’t understand “just in time” inventories or the latest in automation, then you’re not going to be successful.

 So you have to continually do those refresher “skill buildings” as a function, but I think the key to it is having appreciation of what an entire organization looks like – or what the entire business looks like. If you’ve got a top person who can’t answer very succinctly the question, “How do we make money here?”, then I don’t believe that person is contributing as well as he or she should be. So I think these are the responsibilities of leaders and their people.

Greg Selker:  It all comes back to leadership – doesn’t it Spencer?

Spencer Clark:  Leadership matters.

For the complete interview with Spencer Clark click here Spencer Clark Complete Interview

© Selker Leadership LLC 2007

I remember 3 or 4 years ago while spending the better part of my day in an airport (as we search consultants often do), I ran into an old search colleague of mine from big firm partner days. I had been on my own for a couple of years at that point and was pleased to learn that during that time he had been promoted to partner and running a very successful search practice.

Over the course of the conversation, he asked me point blank why I had gone out on my own. I shared with him my vision to move the search process from a pure transactional approach to one where we were adding true value by actually assessing the candidates for the client company. I told him that I believed this was the future of search and that our industry needed to stop measuring our success in metrics like “time to fill”, and instead focus on matching candidates based on values and the cultural fit. This would allow us to gauge our success with the only metric that really mattered, the impact a placed candidate has had on his/her company.

To this day I can still clearly see the look of horror on his face when I told him about our 2 year guarantee on all placed candidates and philosophy that our job is not done until the placed candidate positively impacts our client’s results and culture.

I’ll never forget his response. He said, “Greg, I truly hope that your vision never comes to fruition. I hope the marketplace never adopts your philosophy and metrics because if they do, I’m out of a job.”

Sadly, this is true of 90% or more of my search colleagues. It is the fundamental reason that I started my firm. I got tired of seeing the escalating payments made in search fees for value that seemed to be ever decreasing, and I was somewhat sickened at the near total lack of accountability exhibited by search consultants to do something about this and actually deliver a better product and service.

On the surface, it would appear as if nothing is wrong with search. The major firms are once again reporting record growth. Fees are high, profits are up. The number of placements/year continues to escalate. Simultaneously, the services and value search firms have provided for their fees have consistently eroded year after year.

In the past, clearly a large portion of the fee paid to a search firm was due to their access to candidates. They were the keepers of the relationships. They had the database and the phone numbers. In the past, information about people was only available as a result of spending time with them. Building that database and the industry knowledge took time and it was valuable.

However in today’s Internet age, the proprietary database is a myth.

Today, surface knowledge about people is readily available. Finding out who is where and how to get hold of them is a dollar and a mouse click away.  

Without the reliance on the proprietary database, major search firms now resort to selling on brand. You know the pitch for you probably have heard it numerous times. “Our brand gives us the access to candidates. We know who they are. They know us. And as a result, they call us back.”

Don’t be fooled. This is primarily a repackaging of the proprietary database. The lie at the heart of this market speak is, “we know who they are.” All this really means is, “we know where people are and know their contact information.”

I am not saying that brand doesn’t matter. As someone who spent most of my career in a major search firm, I can attest that 25% of return calls on most search assignments happen because of your brand. But that 25% higher probability of a potential candidate calling back does not translate into “knowing who people are.”

Now you might think that search consultants would use their “brand accessibility” to candidates to build a deeper knowledge base about these individuals and in doing so, would increase the value they bring to their client by providing strong behavioral assessment. They would use the time spent with candidates to uncover leadership behaviors, competencies and cultural values. However, this is not the case.

Don’t believe me?

Take a look at one of the recent candidate interview reports your search firm provided to you and compare it with the candidate’s resume. Is there any data in the report that is substantive? What conclusions in the report are not discernable from the resume? Do these conclusions truly provide you with a deep assessment of who the candidate is, how they behave and what their values are? By reading your search firm’s assessment do you now know how the candidate has demonstrated these values in the results which have been produced and consequently, why they would be a good fit for your company?

The truth today is that search firms get paid for getting the candidates into your door. The onus for assessing the fit of the individual to a company now rests almost solely with the client company, not with the search firm. Most search firms today play the numbers game knowing that the percentages are in their favor to produce at least someone who will be hired.

The question begs to be asked; shouldn’t you be getting more for that $100,000 plus fee than an introduction and the management of logistics? 

Companies are paying 100’s of thousands of dollars to search firms for their Brand and the myth of the proprietary database. And guess what, the search firms don’t care because the marketplace doesn’t demand more for their money. If they did, then just like my former colleague, the majority of search firms and search consultants wouldn’t know where to start and what to do.

So the next time you’re selecting a search firm, find out how the search consultant assesses candidates. Ask what guarantee your search firm has that the placed candidate will positively impact your company and how the search firm holds themselves accountable for the placed candidate’s results.  

© 2007 Selker Leadership LLC

Gregory T. Lucier has served as Chief Executive Officer of Invitrogen and member of the board of directors since May 2003. In April 2004 he was appointed Chairman of the Board of Directors. From June 2000 to May 2003, Mr. Lucier was the President and Chief Executive Officer of GE Medical Systems Information Technologies. Mr. Lucier was named a corporate officer of General Electric Corporation (GE) in 1999 by that company’s board of directors and served in a variety of leadership roles during his career at GE including as Vice President Global Services, GE Medical Systems. Mr. Lucier is currently a director of BIOCOM, serves on the BIO Board of Directors as well as on the board of the Burnham Institute of Medical Research. He is actively involved at San Diego State as a distinguished lecturer. He received his B.S. in Engineering from Pennsylvania State University and an M.B.A. from Harvard Business School.

Invitrogen Corporation (Nasdaq:IVGN) http://www.invitrogen.com/content.cfm?pageid=1&CID=TN-Home is a global company with revenues of $1.15 billion. They provide products and services that support academic and government research institutions and pharmaceutical and biotech companies worldwide in their efforts to improve the human condition. The company provides essential life science technologies for disease research, drug discovery and commercial bio-production and its products can be found in nearly every major laboratory in the world. Invitrogen’s product family includes many of the most widely recognized names in the industry, including Molecular Probes, Gibco, and Dynal Biotech. Founded in 1987, Invitrogen is headquartered in Carlsbad, California, and conducts business in more than 70 countries around the world.

Recently we sat down and spoke with Greg Lucier to get his perspective on some of today’s most crucial issues, such as what it takes to hire and develop top leadership, how to adapt your management style to meet the need of the emerging Gen Y workforce and a board’s obligation to guide the competitive development of its leadership cadre in this next era of SOX compliance.  After a candid discussion with Greg Lucier, it became clear to us that trust is now a prime ingredient in leadership development programs for global companies.  Trust is the catalyst that can foster collaboration between mentors, top and emerging executives to build long term careers and develop superb leaders. Here are the highlights of that discussion. 

For the full interview with Invitrogen’s CEO, Greg Lucier, click here.  Greg Lucier: Complete Interview 

Greg Selker:  What are you doing today to help develop your people into the best leaders that they can become? What are you doing that’s different today than you might have done in the past?

Greg Lucier:  You know ten years ago, fifteen years ago, there was a much higher degree of trust between the employer and the employee, and given that implicit trust there was a greater ability to have people take horizontal moves, even take a step back, to learn a new skill in order to take two steps forward. Unfortunately, I just think there is not that level of trust anymore in the population between employees and employers.

Greg Selker:  Why is that? What do you think happened?

Greg Lucier:  Well, this is certainly just me opining but the concept of moving to a new job every couple of years has certainly been accepted. That fact linked with the point that the labor markets are very tight, makes it more acceptable for “an every person for themselves” mentality.

What that all translates into is it becomes harder and harder to get people to actually do career development inside a company. To resist that trend, you better have one heck of a good career development process. And you better have really good mentoring capabilities inside the company. In spite of doing everything right, companies are still in a constant struggle against this force of employees asking the question:  “I wonder if the grass is greener over there?”

Greg Selker:  What type of cultural edge do you think you can develop or hone that will make a difference in your ability to not just hold your own but to win against these trends?

Greg Lucier:  I think this may sound a bit “Machiavellian”, but it comes in two ways. One is you have to do a much better job screening people coming in for the right type of character—a personality that can commit. We’ve done some work there. The second point, and this is where the Machiavellian comment comes in, is that when somebody leaves in a less than honorable way, you have to be very clear that it happened in a less than honorable way to the rest of the organization, and that there is a collective learning. What you’re basically saying is we are a company t