Best firms focus on CEO's skills: Hewitt

Focus on talent equally important, says report

What does it take to be a leading company? According to a Hewitt Associates prescription, chief executive officers' involvement, strong and dedicated focus on the best talent, emphasis on development-oriented strategies and proper gauging of leadership performance are the pills that can improve the health of a company.

Hewitt Associates' strong conviction lies in the fact that all the companies on the list of top 10 companies for leaders, 2003, in the Asia Pacific region have incorporated these elements to reach the top.

On the Asia Pacific list, Wipro, Tata Steel, The Australian Gas Light Company have bagged the first three positions, respectively.

Others on the list are ICICI Bank, Larsen and Toubro, Asia Pacific Breweries, SingTel, ITC and Sinclair Knight Merz.

Traditionally, a group of human resources executives handle the process of developing and evaluating leaders. But with growing demand and competition, this may not be effective any longer.

As per a Hewitt study on 267 companies from Asia, the CEO's active participation is a critical factor in building leadership quality and depth.

They provide the resources needed to create and sustain strong practices for building leaders. The study points out that 90 per cent of the top 10 firms feel that their CEOs commit the necessary resources for leadership development. Only 69 per cent of other companies feel the same about their CEOs.

The board of directors (BoDs) should also be actively involved in nurturing leaders as the study also says 80 per cent of the companies believe that the board of directors is committed to developing leaders.

In comparison, only 39 per cent of other companies have strong board of directors participation.

Wipro is an active example -- its CEO Azim Premji organises regular round-table discussions on key issues of business interest.

The top 10 per cent of the executives of the organisation gets an opportunity to interact with the top management.

The board regularly reviews high potential talent at its meetings and is actively involved in the succession planning process for the top 200 roles. Premji spends almost 15 per cent of his time as a faculty in Wipro's in-house training school.

Also, there is a need for a strong focus on talent. Around 60 per cent of the top firms have succession planning process and tally current performance against future potential.

In all, 70 per cent of the top companies identify a group of high potential leaders from their performance management process and source their leaders internally.

The top companies also link their leaders' compensation to the current job performance, which has positive impact on the CEOs.

These companies have a specific strategies internally for developing and selecting leaders.

About 80 per cent of these companies offer mentoring and developmental assignments.

Leadership competencies are used regularly to develop the executive education curriculum and a 360 degree feedback is used to measure the demonstration of the competencies.

The Hewitt study also highlights that 60 per cent of the top companies have the provisions in place to evaluate the effectiveness of their leadership practices as compared to only 20 per cent of other companies.

The provisions are critical in measuring the return on investment from leadership practices.

Nearly 80 per cent of the top firms track turnover for their high-potential leaders, which is an effective indicator.