Are You Accelerating the Development of Your Talented Future Leaders?

I was in Norway last week with Statoil Hydro, the global energy company. Our firm, The RBL Group, has been privileged to assist Jens Jenssen and his human resources team in the transformation of HR. (Readers can read more about our work with Statoil Hydro in "HR Employees are Becoming Business Partners").

At a meeting of the HR leadership team, we talked about the company's global growth ambitions and the importance of accelerating the development of their future leaders. Like so many companies, Statoil Hydro has many opportunities for growth -- more opportunities than they have "ready" leaders to fill.

We faced this challenge at National City Corporation, one of the largest U.S. banks and now part of PNC. Over a five year period, we learned that a simple rule governs a company's ability to develop leaders quickly and effectively. RBL Group partner Dave Ulrich calls it the 70/20/10 rule.

The rule holds that 70 percent of development is "on the job." Future leaders develop from the formal and informal responsibilities of the assignment, by reporting to superiors and taking on new roles in the larger organization structure (for example, being part of a leadership team), and by being coached and mentored. They also develop from special or additional assignments, task force leadership and other temporary roles that test and prepare them for increased responsibility.

Another 20 percent of development is training related. The obvious aspect of training is time working with colleagues in a leadership training program. But the broader opportunities for a more robust 20 percent are worth considering. For example, many organizations utilize action-learning projects that challenge young leaders to apply what they are learning in the classroom. At National City, each participant in a leadership program was expected to identify, develop and implement a "back home" initiative that could generate tangible financial benefit. Not all participants were successful, and a few "mailed it in," but the overall results were significant. Not only did participants learn, but the financial benefit to the organization was literally millions of dollars of incremental profit as a result of innovation in products, services and efficiency gains.

The final 10 percent of development is what we call "outside-in." At National City, we encouraged young leaders to contribute to the community as board members for municipal and charitable organizations - from the local symphony to Big Brothers Big Sisters. Doing so gave back to the community and also provided young leaders with an opportunity to participate in a board, deal with strategic issues, and gain a hill top view of what its like to grow, change or turnaround an organization. The public affairs department of the bank provided a service of matching young executives with specific external opportunities.

One of the most important "practical innovations" we established at the bank was what we called the "future leaders steering committee." This was a very senior group, led by a Vice Chairman of the bank. It provided a marketplace to connect high potential future leaders with what we called "rocket jobs" -- positions that represented a step up in accountability and visibility and provided unique developmental opportunities.

The future leaders steering committee was created to reduce gridlock and parochialism. Like so many organizations, it was sometimes difficult at National City to ensure we were using all of the assignment opportunities of the bank to accelerate the growth of promising future leaders because managers were understandably tempted to hold onto their best talent. By making the future leaders steering committee the owner of top talent and rocket jobs, we were able to break this logjam.

Through the 70/20/10 rule -- including the future leaders steering committee, well thought through training plans and outside-in participation on boards or community organizations -- we were able to provide a comprehensive developmental plan for high potential future leaders of National City. As a result, the bank became what RBL Group partners Ulrich and Norm Smallwood called a "leader-feeder" (see the book "Leadership Brand" by Dave and Norm, published by HBS Press). Prior to its acquisition by PNC, a high proportion of senior financial services executives across the Midwest had had their ticket punched at National City.

What has your organization found helpful in accelerating the development of future leaders? Let me know.

Jon Younger is a Partner of The RBL Group, a firm providing consulting and executive education in strategic HR and leadership. Jon leads the Strategic HR practice area and is also a Director of the RBL Institute. He is co-author, with Dave Ulrich and three other principals at The RBL Group, of "HR Competencies" (SHRM, 2007), "HR Transformation" (McGraw-Hill, July 2009) and many articles, and last year logged client work in 35 countries.