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Best Practices in Preventing Leadership Derailment

Best Practices in Preventing Leadership Derailment

The rise of a “rock star” executive can capture the public imagination and bring positive exposure for a firm. More often, however, a high-flying executive suffers the sort of public flame-out common to actual rock stars. The result can inflict massive collateral damage to the reputation, morale, and value of a company.

How do the best companies keep leaders from “jumping the tracks” and dragging the organization into a disastrous crash? Helping key people avoid derailment is a unique talent management challenge: entirely individual, deeply personal, and with the highest possible stakes for both the individual and the organization. While there are no easy solutions, companies that excel in developing talent can offer some answers.

The Global Leadership Research Project

The results of the Fourth Annual Global Leadership Research Project offer a fresh perspective on this difficult issue. Conducted by Chally Group Worldwide, the project began with an in-depth survey of approximately 300 CEOs and senior HR leaders spanning companies from under $25 million in revenue to over $10 billion, and from fewer than 50 employees to more than 100,000.

Engaging with a sampling of these leaders directly through interviews and an online survey, Chally investigated the approaches and tools pioneered by companies committed to making the most of their own talent. One topic, seldom addressed quantitatively in the literature, was derailment.

Why do leaders fail?

Before investigating preventive measures, however, the first step is to consider why leaders derail. After all, those who reach the highest levels of leadership have been extensively vetted, tested, and proven throughout much of their career – whether at their current company or elsewhere. How do the best and the brightest go so tragically wrong?

The reasons for derailment are generally driven by underlying aspects of personality and personal behavior. These are almost as varied as the individuals themselves, ranging from impulsiveness, arrogance, and melodrama, to excessive caution, perfectionism, and mistrust.

Such behaviors are present all along. Sometimes they even contribute to success in other roles. When magnified by the spotlight of a leadership position and the stress of the job, they are often tacitly recognized and accommodated as long as things are going smoothly. Eventually, if organizational or personal crisis dials up the stress, the leader reacts by doubling down on the familiar behavior, and the situation accelerates, hurtling past the breaking point. In the aftermath, observers often say, “we saw it coming from a mile away, but what could anyone do?”

Taking action: from personal to formal 

leaders-derailer-chart

Firms that excel at talent management do take action, proactively and preventively. Coaching or mentoring is the approach most often reported (by 21.2% of respondents) as the best practice to minimize leadership derailment. This is also the developmental activity that CEOs spend the most time on (49.4%).

However, the second tier of responses features more structured, formal approaches. These include setting clear expectations (14.4%), feedback mechanisms (13.7%), assessment programs (12.3%), and performance measurement and goal setting (10.3%).

More than a dozen other tactics, from early detection to recognition and empathy, trail off beyond these. This very broad distribution indicates that even the best-run companies have few consistent answers for the problem of derailment.

 

Mind the gap: managing transitions

The interview portion of the study reveals a similar diversity of approaches, as well as some common threads. In one firm, known for developing its leaders from within, minimizing derailment is a stated goal of the entire talent management effort. “We try to minimize leadership derailment by preparing leaders over time for increasingly greater levels of responsibility.” A range of techniques starting with coaching/mentoring specifically seeks to identify and strengthen any areas that could potentially derail leaders in the future.

Other firms surveyed also put particular emphasis on the risks associated with transitions upward in the organization. One mandates coaching for every newly promoted or hired executive. Others report formal transition programs of various kinds during the onboarding and promotion processes, often relying on coaching or mentoring.

Root causes: looking inward

The focus on coaching highlights the recognition that personality-based behavioral traits most often drive derailment. The core issue is not about professional skills of any kind but about self-awareness. Discussion of “self-reflection,” “self-regulation,” and “self-management” features prominently throughout the responses. Self-awareness also ranks in the top five among the traits reported as most predictive of leadership success.

This cluster of qualities lies outside the typical scope of development programs due to its very nature. As one respondent put it, “some competencies are easily acquired and highly trainable. Others, like good emotional self-regulation or integrity…are much harder to acquire or enhance.” Besides intensive coaching, other strategies commonly used to enhance self-awareness include psychometric assessment and feedback programs. However, careful screening of potential candidates for “maladaptive behaviors” as early as possible also plays a leading role, an admission that some qualities simply cannot be taught.

Staying out of the headlines: integrity and trust

Another critical trait that seems equally resistant to development revolves around integrity, honesty, and trust. Of the skills required to be a very effective upper-level manager, respondents rank integrity (46.4%) and trustworthiness (37.5%) among the top five, ahead of traits typically associated with senior leadership such as team-building and vision. (Adaptability and strategic thinking topped the list at 60.5% and 56.6% respectively.) Arguably, these qualities aren’t skills at all, but rather fundamental behaviors based on personality.

Failures of integrity certainly provide some of the most high-profile leadership meltdowns. Screening prior to promotion and coaching in previous roles may be the best options for preventing them. “Alignment with organizational values” ranks highly among criteria for hiring, promotion, and development. One company even requires an annual “corporate Integrity recertification” for executives.

Actions vs. words

Requiring integrity and trust of leaders almost seems to go without saying. Yet the frequency of reputation-destroying events in the news shows concerted actions in this area must be far more difficult than reassuring words.

One can easily infer that this is true of any attempt to identify and mitigate deep-seated aspects of personality among highly successful, powerful individuals. What seems common to companies that manage derailment well is a serious commitment to the effort, alignment with a strong organizational culture, and support from the highest levels of corporate governance, including top leaders themselves. With a clear intent and consistent follow-through, these companies can keep key people firmly on the rails and leading the company in the right direction.

Coaching/mentoring continues to be the most popular practice for developing leaders

In the four years Chally conducted the Global Leadership Research Project, coaching/mentoring continues to be the most popular leadership development practice for both small and large companies. The practice of coaching has many variations depending on the level of formality and the allocated resources. From informal mentoring, to peer-to-peer coaching, to executive coaches, coaching others involves forming a trust-based relationship committed to supporting others to achieve their developmental objectives. The next favored leadership development programs are action learning and assessments. Assessments, action learning, high-potential programs and exposure to senior executives are exercised more in larger organizations. Larger organizations are more likely to have a formal leadership development program with resources to support these practices.

coaching-and-mentoring

Read more Key Findings from the
2014 Global Leadership Research Project

Global Leadership Research Findings

Leadership development plans should include opportunities unique to a specific leadership role’s requirements and address competencies relating to risk factors. Identifying companies good at developing leaders is an old research topic, but competitive rankings don’t offer insight into what causes success and failure. Chally, in partnership with Chief Executive magazine, researchers and analysts from management associations, universities and talent management firms globally, surveyed CEOs and senior HR leaders at more than 1,000 companies on six continents to gather data in 2010, 2011 and 2012. The annual revenue of companies represented ranged from more than $10 billion to less than $25 million; they varied in size and participants from less than 500 employees to more than 100,000. This is the first of a series of postings outlining the findings of the ongoing Global Leadership Research.

Where Leaders Come From

Chally’s research revealed that leaders evolve from a variety of backgrounds, experiences and jobs. Determining which functions were most likely to produce C-level executives was of particular significance in this study, as researchers hypothesized this would reveal much about leadership practices and development. When asked to identify the functional areas most likely to produce C-level executives, 68 percent of participants in 2011 chose operations, followed by finance — 56 percent — and sales — 49 percent. Specialized functions such as marketing, human resources, engineering, IT, and research and development were equally less likely to provide a career path to the top. While leadership is often thought of as a singular capability, the study indicates clear differences in what competencies are necessary in each leadership role. According to respondents, capabilities most critical for the chief executive officer are different from those needed by other C-level personnel. Both CEOs and human resources leaders indicated creating a strategic vision, inspiring others and maintaining leadership responsibility, developing an accurate and comprehensive overview of the business, and decision making were key competencies for CEOs. Competencies that respondents considered most critical for other C-level roles varied.

While 91.7 percent of respondents saw creating a strategic vision as the most critical competency of a CEO, this did not register as critical for any other C-level position. Further, the next most important competency for a CEO — inspiring others and maintaining leadership responsibility — did not register in the top four competencies required of chief operating officers or chief financial officers, which the study indicated is the typical training ground for CEOs. The only competency viewed as essential for CEOs, COOs and CFOs alike was developing an accurate and comprehensive overview of the business. The fact that such little overlap exists between the competencies required of the CEO and other C-level positions may indicate that experience in other functional roles does not necessarily prepare one for the CEO role.

Watch for more postings of the Global Leadership Research findings. To download the full research report, click here.  Chally is opening the survey for the 2014 Global Leadership research featuring Chief Executive Magazine’s “Best Companies for Leaders” on August 15.  If you would like to be notified when the survey is open, go to www.bestcompaniesforleaders.org and input your contact information.

Agility Mobility

by Tracey Wik

I was speaking at a succession planning conference for a group of senior HR and Talent Management leaders recently, and I was pleased to see the acceptance of executives of the digital age. I don’t mean to be flippant, but having been an early adopter of these technologies and I have found it fascinating the dichotomy between one’s connectivity at work and one’s connectivity at home. I have also seen it thwart the building of people and organizational capabilities.

While something like 50% of the world’s population is under 30, the cadre of people running most large, global organizations is Baby Boomers. The digital divide has typically meant the gap between those who have access to technology as opposed to those that do not, but at this conference, it was as defined by “those who are using agile mobile platforms in their leadership development strategy and those who are not.” Most corporations have formal social media policies in place, and limit access to personal sites during work hours. There are those exceptions of course where social media by employees is a cornerstone of the employee value proposition as well as the brand, like Zappos.

The conversation about agility mobility was lively when discussing how to close the gap on the necessary skills needed to compete today and in the future. The majority of people in the room are being pulled by the demand of their employees to engage with them in ways that work e.g., getting coaching guides on their smart phones. This is a good thing, and if you do not have a digital strategy in place, now is the time to consider how your competitors will leave you behind.

The Chally Questionnaire does not measure specific digital skills, but the mistake people often make is assuming that how to be a good digital citizen is different than how to be a good corporate citizen. The fact of the matter is, the key to a successful digital strategy requires many of the same skills bricks and mortar or face-to-face demand with one exception—an understanding of the appropriate tool and technology to align with the culture.

Like most things in life, this is simple and not easy to do. When implementing a leadership development program, we advocate our clients embed agility mobility in the design of the deliverables. While this is not Chally’s core skill, we have partners who are cutting-edge in this domain. There are all kinds of research studies that talk about the need for consistent habits over an extended period of time to change behaviors. Given that most of us spend more time connected to our phone than any other possession, what better platform to remind people of those habits than your hand-held device? Give your employees what they want!

For more information about Chally’s Leadership Talent Audit and research-based Predictive Assessments, go to www.chally.com.

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