“There is a leadership revolution coming that will leave the victors with outstanding performance and the vanquished with under-developed talent,” says Marc Effron, vice president of talent management at Avon Products Corporation.
The forces that are driving this revolution, according to Effron, are well-organized and include a few key forces. He theorizes that the revolutionary threat is not only the loss of your company’s leaders; it’s the loss of your company.
Part of the problem, he contends, is that “we have developed an educated consumer marketplace. They read the ‘100 Best Companies to Work For’ lists and have the backgrounds to make a smart decision,” he says.
Employees have a remarkable ease of movement and “retention packages won’t hold key executives,” he adds.
Another struggle is that lower-cost competitors are building leaders faster than most companies can keep up with.
“These are our 2.5 billion new competitors with an ability to completely replicate what we do in our marketplace,” he says.
For example, he points to international workers who have attended American universities or have spent time in Silicon Valley.
“They have learned what good leadership is about and return back home with a skill-set to compete against those who trained them. Avon does not need high-paid executives in NYC; we can do that in Mumbai for one-tenth of the cost.”
He says boards of directors should be driving these issues, but for the past 10 years, they haven’t done anything. Neither have CEOs, he notes.
“And HR leaders are often guilty of creating programs that are too confusing or too bureaucratic. Consultants come up with their changing theories, whether they are applicable to our companies or not,” he says.
Effron, who spoke Friday morning at the Marcus Evans talent-management conference in Miami, gave attendees some tips on how companies can reform their companies now to win the revolution:
• Reform #1: Select leaders by the battle. Do you believe in the myth of one great leader? You’re not alone, since most company executives believe this ideal, Effron explains. He mentions author Marshall Goldsmith, who writes about the “curse” of successful people. “The rationale is we were successful so we will always be successful. We all have high potential, but none of us are great at everything. Having the wrong leader in the wrong situation leads to poor performance,” says Effron. He recommends developing a strategic leadership “matrix” that basically helps staffing professionals see that “when people fit with their environment, they perform better.” For example, IBM changed its chief executive officer and removed Lou Gertsner to respond to new strategies and new innovations. “He re-tooled the culture, but you only want Lou there for a short period of time. The strategy grew and they needed a good operator. So they put in Sam Palmisano, who had grown with the company and knew operations like the back of his hand. He is a good, steady operator and is the perfect fit for IBM right now. They knew that some leaders fit for only a certain period of time,” he says. “Why don’t we have five-year renewable CEO contracts? Now, you have the job until you screw up. It’s a pretty messy process, and I think we can improve on that,” adds Effron. To make it work, evaluate your team and use “fit” to select and place leaders. Be sure to communicate the “new deal” to leaders and employees.
• Reform #2: Build your leadership underground. In an ideal world, he says ongoing networking would enable companies to bring in quality candidates from the outside, with zero days to fill. For example, “pre-sell” candidates to put your leadership underground. Also, tell executive search firms of your company’s changing demands. To make it work, hold all senior leaders (and above) responsible for identifying top talent in their industry or function. “How many missed opportunities does an open position cause? Don’t buy the sizzle instead of the steak,” says Effron.
• Reform #3: Reward the battle and the war. Reward victories in the battles, he suggests. However, companies tend to reward the wrong behaviors. Compensate leaders based on what truly drives a sustained business, he suggests. “Let’s really pay for performance. Look at market share as a great indicator of how you compare to the marketplace,” he says.
• Reform #4: Execute the plan. Use the simplest plan when executing the plan. “Simpler is better. What is the absolute fastest way from Point A to Point B?” asks Effron. When Effron joined Avon, the company used a nine-page performance-management form. Now, he says the company uses a simpler one-page form that is just as effective. “We extracted the key elements, which doesn’t mean that the other things aren’t important. But it’s more streamlined and improves the way we grow leaders,” he says.
The war is a series of many battles, he argues, with demographics that are unlikely to change.
“China and India will continue to grow. Investors will increase their abilities to show you how they are going to run your company,” he says.