Have you seen the disturbing headlines (du jour) in the business press? Executive turnover is continuing a steady trend upward. If you are a business leader, you probably have one of two reactions to that news: Either you're excitedly looking at your options to jump ship, or you're wondering how the heck to ensure a solid pipeline of executive talent for your organization.
The online Wall Street Transcript characterizes executive turnover as being "on a tear" over the past year. And figures compiled by Liberum Research offer a sobering comparison of January 2011/January 2012 changes for CEOs (up 191%), CFOs (up 144%), and C-level executives (up 107%). The latter category includes board members, CEOs, CFOs and other execs down to the VP level. Sectors taking the hardest hits across the board: energy, banking and drugs/biotech.
And turnover among executives isn't just a matter of choice. Along with voluntary departures, there is the still-fresh-in-our-minds loss of Steve Jobs - and the protracted debates about succession that his long-term illness engendered - to remind us that the unexpected can happen to anyone at any time ... potentially leaving a void at the top of an organization. Further, ethical missteps, sudden changes in organizational structure, unforeseen market shifts, changes in business strategies or results, and other factors offer vivid reminders that involuntary turnover at the executive level can have profound and rapid ramifications.
ahead for organizational leaders
In the shadow of executive turnover concerns, leadership-related research conducted by i4cp confirms that companies are concerned about the challenges that lie ahead and about their ability to prepare leaders for them. When we surveyed 512 business leaders late last year, these were their predictions about the issues their leaders could look forward to:
The high response percentages affirm significant agreement that the future will bring leaders a wide array of issues to manage. But in this and other i4cp surveys, respondents also revealed that their effectiveness at developing leaders isn't what it should be.
There are other considerations, too. Even if leaders can be found, groomed and retained, they need to operate within a supportive environment if they are to achieve success. For instance, organizational cultures must facilitate good leadership outcomes. HR, learning and other functions play key roles in leadership success. Business strategies must be carefully developed and the mechanisms put in place to guide their execution. These are just a few of the elements that enter the overall leadership mix.
Like tremors building toward a major earthquake, steadily rising executive turnover, predictions of coming leadership challenges, acknowledgement of poor leadership development results and questionable organizational support factors signal trouble for companies that don't take action to improve. Will there be qualified talent to populate executive pipelines? If organizations can find the candidates they need, how do they ensure that their leadership development programs are equal to the task of preparing emerging leaders effectively? How can leaders determine and orchestrate the "right mix" of supportive factors?
In a 2011 i4cp survey into leadership competencies, results found only one in four organizations taking action to a high or very high extent to address the various barriers they encountered in their efforts to develop future leaders. The same percentage of survey respondents confessed that their companies were doing little or nothing at all to overcome obstacles impeding development - a sure recipe for eventual disaster.
work to improve leadership development
That same survey confirmed that high-performing organizations (based on revenue growth, customer satisfaction, profitability, and market share) do more to tackle barriers to leadership development. Leaders of organizations focused on performance educate themselves about the business environment. They read the research, they monitor trends in their own and other industries, they study the strategies that winning companies use, and they implement initiatives aimed at improving the results their firms are achieving.
For example ... Texas-based energy company Luminant - an i4cp member - read the handwriting on the wall for its industry and undertook a proactive workforce planning program to identify critical jobs (including leadership positions) at risk due to retirements and turnover. Once talent risks are assessed, Luminant's workforce planning team has the information it needs to prioritize pipelines to be stoked.
When it comes to building those pipelines, the company enhances recruitment and outreach efforts by operating Luminant Academy in Tyler, Texas. There, the company pays for high school students to study a Luminant-developed curriculum designed to teach the skills needed for future employment at the company's power plants.
At ConAgra Foods - another i4cp member organization - development of an HR data warehouse is underway, and workforce metrics already are in use to provide insights into key issues. The company uses quality scorecards to help identify trends in such areas as attrition, succession and internal movement. Applying metrics to regularly gauge workforce issues (including executive turnover) can help empower leaders at any organization to recognize and avert potential problems before they occur.
High-performing companies work to identify and address issues that drive turnover, interfere with succession planning and impede leadership development. They look for ways to gauge the health of their leadership and crucial role pipelines. They assess the results their development programs achieve. i4cp research shows that higher-performers apply metrics more often than lower-performers do. High-performers use a broader range of measures, too.
to focus on executive leadership development
Executives in higher-performing companies are driven to build a thorough understanding of key leadership issues and the innovative and practical strategies that can make positive differences in their business results. For leaders who want to take their know-how to a higher level, i4cp created a program of strategic working groups - called Exchanges - to offer an exclusive and powerful resource to fuel growth and change. The disturbing trends in executive turnover and leadership development are behind a soon-to-begin Executive Leadership Development Exchange that will enable members to investigate, collaborate, share best practices, and craft new tactics to help them build reliable pipelines of prepared leaders for their organizations.
Exchange participants will work together with subject matter experts, researchers and colleagues on actionable takeaways related to such crucial considerations as these:
- Managing supply chains for senior leadership
- Understanding the trends that affect supply and demand of leadership talent
- Making build-versus-buy talent decisions
- Designing leadership development programs and experiences that really prepare and engage leaders
- Defining and applying metrics to capture ROI on development investments
- Exploring succession planning, coaching, governance, high-potential programs, competencies and other key aspects of leadership preparation.
There are many ways for organizations to make positive impacts on leadership development and executive retention - from DIY efforts to collaborative learning and strategy-building offered by working groups like i4cp's Exchanges. The point is that the writing is already on the wall. The trends in executive turnover and leadership development ineffectiveness are gathering more momentum every day. Your organization can shape its future, or become a victim of it. It's time to decide.
Carol Morrison is a senior i4cp research analyst and has authored white papers, playbooks, reports, analyses and other publications on a variety of topics related to human capital, leadership and talent management. Feature articles by Carol can be found in Talent Management Magazine, Chief Learning Officer, HR Executive and in other leading print and online media.