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JANUARY/FEBRUARY 2013
2013 best companies for leaders
by Dr. Jenna Filipkowski and J.P. Donlon
Warren Bennis once observed that whether or not leadership is well understood, its impact on performance is dramatic and unmistakable. An Accenture study several years ago
noted that the share price of companies perceived as being well
led grew 900 percent over a 10-year period, compared to just
74 percent growth in companies perceived to lack good leadership. (See “Leadership Development ROI,” p. 26). Bennis points
to Fortune’s roundup of most-admired companies, quoting Fortune’s Thomas Stewart: “The truth is that no one factor makes a
company admirable, but if you were forced to pick the one that
makes the most difference, you’d pick leadership.”
Since 2005, Chief Executive has sought to identify the top
global companies that seek to develop talent beyond the CEO’s
direct reports, with the view that every CEO, regardless of the
size of the company he or she leads, can learn to be a better nurturer of talent and builder of teams. Few firms have the budget for a Crotonville, GE’s storied management retreat, or Clay
Street, P&G’s converted brewery in Cincinnati that former CEO
A.G. Lafley once described as a combination think tank and playground. But the methods and principles of the companies ranked
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here can be scaled and applied to any firm wishing to hone a differentiator that will boost performance. Note also that we list the
top 10 private companies, most of which are much smaller than
the global ones in the top publicly traded list.
Returning to first place is P&G, a company now celebrating its 175th year. Bob McDonald, its CEO, attributes its longevity to close attention to leadership development at all levels of
the company—not just the top ranks. “To tap the full potential of our employees, we have developed a rigorous and disciplined approach to leadership development at every level of the
company,” says the former West Point graduate, who favors a
rigorous development process. “We systemically build multiple generations of leaders by developing them throughout their
careers with varying experiences across businesses and geographies. This has created a very strong pipeline of globally capable
and mobile leaders.” GE moved into second place from third last
year with IBM following right behind. Dow Chemical jumped
from 11th in 2012 to 4th and is followed by Verizon, up from 13th
place last year.
Researching the Ranking
The annual ranking of the Best Companies for Leaders is
based on a survey of leading organizations worldwide, which
is conducted in partnership with Chally Group Worldwide
(www.chally.com), a sales and leadership talent management
firm headquartered in Dayton, Ohio. Companies were scored
on five key criteria:
1. Having a formal leadership process in place;
2. T
he commitment level of the CEO to the leadership
development program, as measured by the percent of
personal time spent in these activities;
3. T
he depth of the leadership funnel as measured by the
percentage of senior management positions filled by
internal candidates, as well as the percentage of middle
management positions filled by internal candidates;
4. T
he number of other companies that report recruiting
from the company being evaluated; and
5. A
shareholder value performance metric based on
10-year growth or decline in market capitalization.
The final top 40 ranking consists of public companies with
more than $1 billion dollars in revenue. The top 10 on the list
scored within few points of one another, but the difference
between the bottom and top companies was substantial, at 29
points.
Rankings are affected by a company’s reputation among
its peers as a source for well-rounded talent. Verizon moved
up on this year’s listing because of the number of times it
was cited as a company from which others recruit. The percentage of senior management recruited from internal talent pools is another criterion. This accounts for Hitachi’s
and Monsanto’s rising in the rankings. Similar to 2012,
some attrition among last year’s winners accounts for why
previous winners did not appear on the 2013 listing.
Because it would be inappropriate to compare private
companies with larger public companies that enjoy greater
resources, we list separately the ranking of large, private organizations with in-depth leadership development programs
The following pages offer a look at the top five companies on
this year’s list, highlighting some of the reasons they secured
their top positions.
1 P&G: Tackling Turnover
P&G again tops an impressive list of companies wellknown for their leadership development. “I continue to be
personally involved in all leadership decisions for our top
P&G leaders,” says CEO Robert McDonald. “In addition to
our organization strategy reviews with our business leaders and function officers, I’m working with our next generation leaders, including those deeper in the organization, to
help them grow and develop. I spend a significant portion of
my time recruiting, teaching and coaching. Successful leadership development for a build-from-within company is a strategic imperative and a responsibility that I take very seriously
for P&G’s current and future success.”
P&G’s biggest challenge is the loss of an employee on
whom they have made a significant investment. Because they
have such a deep talent bench and are well-known broadly as
an engine of leadership development, companies and executive recruiters often seek to recruit their best talent. While
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2013 best companies for leaders
their retention is strong, even the loss of one person in a key market can be a setback in terms of the investment put into his or
her training and development over 10, 15 or 20 years. P&G is committed to build from within and seldom goes out to hire experienced talent unless there are unique qualifications required.
P&G screens over a half million candidates globally each year and hires less than 1 percent. They challenge these new leaders with meaningful work and great responsibility from Day One. Business and functional leaders actively recruit, teach and
coach and also mentor junior employees, helping them to develop the skills they need to lead large, global businesses and organizations. P&G managers play a vital role in identifying and growing the company’s next generation of leaders. This starts at
the top. Their CEO, vice chairs, presidents and functional officers recruit on college campuses and teach in their executive education programs.
They manage P&G talent globally—starting at mid-levels of management and higher—to facilitate career development and
growth across businesses and geographies. They groom people through a series of varied and enriching assignments that will
prepare them for future roles—developing an extremely broad, deep pool of talented employees. Senior management assignments are planned monthly among the CEO and vice chairs, quarterly with the presidents and annually with the board of
directors, who are all personally involved in leadership development.
P&G leverages the scale of their unique organization structure to help employees to learn and grow. This often occurs across
functional disciplines, where leaders get experience in every facet of the business—as well as wide-ranging geographies and
markets. They focus on sustained results and the continuous improvement of leaders over time, with their most significant
development occurring through on-the-job experience, feedback and coaching. Ninety-five percent of hires are recruited from
college campuses and begin their careers at P&G in entry-level roles. The remaining 5 percent come in at lower to mid-levels of
management. The vast majority of recruiting efforts are focused on sourcing candidates from universities around the world.
Reputational Leaders
Survey participants were asked to list the three companies they would recruit from when there are insufficient internal candidates for openings in their organizations. The reputational stars for leadership development are still limited to a few at the top of
their game. Here are the top target companies and some of the reasons behind their status as perceived by respondents.
Disciplined approach to leadership development. Emphasis on cross-functional training. Comprehensive
GE
processes for assessment and feedback.
Strong training ground for GM bench. Variety of consumer goods and products. Global in scope and very
P&G
process focused.
Technology and business solutions leader with excellent reputation for developing leaders, reinventing the
IBM
business model profitably and sharing success with global communities.
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