Top Companies for Leaders – What Really Matters?

Fortune Magazine and Aon Hewitt recently announced the 2011 Top Companies for Leaders. The results are based on a comparative evaluation of company submitted information on practices related to attracting, developing and retaining leaders.

Top Companies for Leaders has been published nearly every year since 2002, with several companies consistently appearing on the list including P&G, General Mills, IBM, and GE. During that span of time, a number of companies have come and gone from the list. For example, five companies-Dell, Microsoft, JP Morgan, Chase, The Home Depot and Johnson & Johnson were in the top 10 list just 5 years ago and were not listed in the top 25 this year. Whether these changes are the result of a company’s decision not to participate in the survey or other factors, we do not know. Should who is on the list from year to year matter for most of us? Not really. More important is the pattern of leadership practices demonstrated by the companies on the overall list.

The three practices that appear to be common to the 2011 Top 10 Companies for Leaders are:

It’s an investment: While many companies view such development activities and associated experiences as purely an expense, the top companies view them as investments. The report cites IBM, who invests in “mobility assignments” of 3-6 months for thousands of employees, because it sees the long term value of having leaders with “cross geographic experience.” Clearly, for IBM, this investment is viewed as important to its ability to realize long term success, much as investing in R&D.

Experience is a key element: Many of the companies view development first in terms of on- the- job experience and not primarily classroom training. Hindustan Unilever places significant importance on 3 year job rotations in addition to a week of training and 4 elearning classes per year. Of course, IBM’s mobility assignments reflect the importance of experience.

Senior leaders are personally involved: At P&G, the Chairman and CEO both teach in the company’s leadership colleges. At General Mills, the CEO creates an individual leadership development plan to map out his own personal development goals for the year. All other leaders at General Mills do likewise. At McKinsey, the Managing Director, Dominic Barton, estimates that he spends 60% of his time mentoring employees.

No real surprises here. Why then are many companies challenged with attracting, developing and retaining leaders? Often, the issue is discipline. Consistently investing in leader development, committing to key experiential assignments, and actively engaging c level leaders require a discipline that many organizations find tough to maintain year after year. While the focus, design and investment in these areas may (and should) shift over time to make development more relevant to the business in changing circumstances, the importance of leadership for long term organizational sustainability does not.

So what should one take away from the annual company listing? Two things – an affirmation of the practices that build leaders and a reminder that those practices only matter if the organization has the discipline to consistently align and apply those practices.