Over at Management Exchange, Mike Richardson asks why is it that small and medium businesses who can least afford it are more likely to invest in human development, in the form of peer groups, than large corporations.
I've been exploring this issue over the last several months, but from a slightly different perspective. I've been asking why is it that Fortune 500 executives are so reluctant to leverage peer groups as a development tool for themselves or their teams. Peer groups are, after all, a proven and cost effective development tool. The answers provide a guide for selecting a peer group and a road map for peer group organizers.
In my interviews with over 50 Fortune 500 executives, I learned that most peer groups fail to meet five basic criteria. They say for a peer group to attract Fortune 500 executives it must:
- Be composed of equals. At their root the challenges facing executives in corporate America are not that much more complex than those facing SMB CEOs, but the political ramifications of the various ways to address them are. One of the major benefits of a peer group is the opportunity to brainstorm how to tackle these challenges in a safe environment. Safety can only come from sharing with people who understand the complexity not only of the corporate environment but of the functional responsibility. A chief financial officer is dealing with a very different set of risk/reward calculations than an EVP of Sales. An EVP of sales with an annual quota of $1 billion is likely dealing with a longer and more complex sales cycle than one with annual quota of $50 million.
- Be complementary. It's a given that peer groups must be void of competitors. But it is equally important the group include complementary companies. By complementary, I don't mean all members must be natural partners. That creates a terrific networking environment but limits the group's exposure to new ideas. Rather, the group should be comprised of companies with similar business models.
- Include a focus on development. It's an unfortunate truth that executives don't receive (or for that matter give) enough coaching and mentoring. A peer group be should be designed to offer career guidance and professional development through facilitation, guest speakers and sharing between members.
- Align guest speakers with member profiles and groups objectives. Guest speakers are critical to the quality of the group. They should be selected based on their ability to provide credible insight and alternative perspectives. Too often, typically due to lack of budget, peer group organizers mismatch guest speakers with the group's profile. An author of a book on social media for local marketing will have little value for a group of Fortune 500 sales executives. At the same time, it important to use guest speakers to bring the group outside functional perspective. A group comprised of CIOs benefits greatly from hearing from chief marketing, customer or sales officers.
- Meet face to face. I know I'm going to get a lot of push back on this one. But executives (VP and up) in Fortune 500 companies I spoke to all agree, meeting face to face is absolutely essential to the success of the group. Supplemental web-based meetings can add value, but candor requires trust and trust is built much more slowly without face to face interactions. Equally important, it is too easy to multi-task and not really focus when meeting via web or conference calls.
The value of peer groups is undisputed. The key to success is organizing and selecting the group based on these five criteria. What else makes a good peer group in your opinion? Will you be joining one in 2013?