Eighth Annual Hay Group Study Identifies Best Companies for Leadership

Hollywood has the Oscars, Television the Emmys, publishing has the Pulitzer prizes, and leadership development has its own annual awards.

There are a few of these annual leader rankings, and quite frankly, it’s difficult to keep them straight. There’s Chief Executive’s 2012 40 Best Companies for Leaders, Fortune’s 25 Top Companies for Leaders, and the just published Hay Group Best Companies for Leadership Study and Top 20 list.

It’s no surprise that the same companies appear on these lists year over year. That’s because, unlike many of the high tech sexy companies that dominate the business headlines, companies that develop great leaders just quietly go about it and deliver great results year over year. Yes, Google and Zappos may be cool places to work, and Apple develops great products, but when it comes to leadership development, they may be still relatively immature. Although, I was surprised to see that Facebook made the Hay list this year. Could Mark Zuckerberg be the next Jack Welch when it comes to talent development? I’ll need to talk to Hay and find what they’ve been up to.

Here is the press release from the Hay study:

The 8^th annual Hay Group study ranks the best companies for leadership around the globe and examines how those companies nurture talent and foster innovation in their ranks. This year, Procter & Gamble topped the list, followed by Microsoft, General Electric and Coca-Cola.

According to Hay Group’s study, the Best Companies for Leadership are purposeful and strategic in developing, enabling and motivating leaders throughout the organization to do their best. In fact, 73 percent of the Top 20 companies reported giving everyone at every level of the organization the opportunity to develop and practice the capabilities needed to lead others, compared to only 47 percent of all other companies. These future-focused companies also look ahead to what roles are ­– and will be – mission-critical to their success, and then intentionally identify and develop leaders with the right skills to fill those roles. To facilitate this process, the Top 20 companies reported doing more to develop their population of new and mid-level managers, with higher usage rates of web-based leadership modules (72 percent vs. 39 percent at all other companies), classroom-based leadership training (80 percent vs. 55 percent) and mentoring by a senior manager or executive (68 percent vs. 39 percent).
“The Best Companies for Leadership recognize that many of the skills once required solely for senior leadership roles — high levels of emotional intelligence, commitment to continuous learning, analytical thinking — are now critical at every level of the organization,” said Ruth Malloy, global managing director of Hay Group's Leadership and Talent practice and co-leader of the Best Companies for Leadership Study. “To excel in today’s highly complex and competitive business environment, the Best Companies are taking deliberate steps to develop and reward these competencies to enable their organizations to achieve operational excellence today, while driving innovation for tomorrow.”

In fact, 82 percent of the Best Companies for Leadership use rewards or reprimands that are based on rigorous measurements of performance against goals, compared to only 58 percent of all other companies. Similarly, 89 percent of the Top 20 companies encourage employees to set challenging or aggressive goals, versus only 69 percent of all other companies.

At the same time, the Best Companies for Leadership foster cultures that encourage innovation. Seventy-six percent of the Top 20 companies reward and stimulate cross-business-unit collaboration to develop new business lines, compared to only 54 percent of all other companies. The Top 20 companies are also more likely to encourage employees to learn in areas outside of their areas of expertise (70 percent vs. 48 percent) and to recognize and reward employees for really new and different business ideas (77 percent vs. 58 percent).

“It’s becoming harder to create and run profitable businesses in traditional ways,” said Rick Lash, director in Hay Group's Leadership and Talent practice and co-leader of the Best Companies for Leadership Study. “Organizations have to think differently about how they relate to their markets. The Best Companies are adept at anticipating and meeting client needs at multiple points along the consumer spectrum. They’re shifting from selling products and services to becoming integrated business partners that can help their customers solve for pressing needs.”

In fact, 78 percent of the Top 20 companies reported that their organization encourages employees to spend much time discussing customers’ future needs, compared to only 55 percent of all other companies.

Correspondingly, 90 percent of the Top 20 companies reported that senior leaders communicate that the firm’s survival depends on adapting to evolving market trends, compared to 70 percent at all other companies.

“In times of rapid change, many companies lose their focus, failing to adequately engage and enable their current workforces as the organizations shift to achieve short-term or immediate objectives,” added Lash. “Those companies that simultaneously execute on immediate priorities while aligning their employees with a shared sense of purpose, and develop leaders at all levels to contribute and act on innovative ideas, have a better chance at financial success.”

Other major findings from Hay Group’s Best Companies for Leadership Study include:

The Best Companies develop, motivate, engage and enable employees	Top 20	All Other Companies
Actively manages a pool of successors for mission-critical roles	85 percent	55 percent
Leadership development programs better enable employees to deliver on my company’s goals/strategies	84 percent	62 percent
Leaders work hard to connect people with projects that are personally meaningful to them	82 percent	61 percent
Senior leaders personally spend time actively developing others	74 percent	48 percent
Provides employees access to resources for innovation, even though success is not guaranteed	68 percent	47 percent
Leaders have the ability to generate personal and organizational loyalty	84 percent	67 percent
The Best Companies emphasize innovation	Top 20	All Other Companies
Provides structured opportunities for younger employees to promote innovative ideas to senior leaders	71 percent	54 percent
Treats failure (after a good effort) as a learning opportunity, not something to be ashamed of	72 percent	59 percent
Views employees in new start-up or innovation areas as having equal importance to those driving operational improvement	80 percent	56 percent
Provides employees with creative challenges rather than narrowly defined tasks	78 percent	62 percent
The Best Companies are globally aware and respect diversity	Top 20	All Other Companies
Requires an appreciation of global issues as a key job requirement	79 percent	46 percent
We actively recruit cultural minorities	71 percent	34 percent
Leaders are culturally savvy and have the skills to work effectively with diverse teams	84 percent	64 percent
Has a high proportion of women in senior leadership positions	59 percent	40 percent
The Best Companies emphasize environmental and social responsibility	Top 20	All Other Companies
Leaders are advocates for environmentally responsible business practices	89 percent	61 percent
Our leaders are change agents who initiate change toward higher environmental standards	86 percent	59 percent
Actively applies sustainable and energy-efficient policies	83 percent	56 percent
Uses corporate social responsibility to recruit employees	68 percent	48 percent

For more information on Hay Group’s Best Companies for Leadership, please visit the microsite www.haygroup.com/BCL, or join the conversation about #BCLeaders on Twitter at http://twitter.com/HayGroup.