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The Vision Behind the Initiative
It was clear that AlliedSignal's future called for significant growth and productivity gains. In 1991, the reins for management of AlliedSignal were handed to Lawrence Bossidy, a thirty-year veteran from General Electric. As CEO, Bossidy brought a renewed vigor and energy to the organization. He introduced total quality leadership as a way of life. He caused the many paradigms to begin to shift, encouraging change to happen.
As part of its major organizational-change program, AlliedSignal established its vision: "To be one of the world's premier companies, distinctive and successful in everything we do." Values were defined as central to the vision: "Customers, Integrity, People, Teamwork, Speed, Innovation, and Performance."
To achieve this vision of success, AlliedSignal had to set aggressive goals and had to meet those commitments. One of these goals was in the area of personnel development. AlliedSignal had to identify and develop people who would lead the company and contribute to its growth. This major task required a thoughtful evaluation of the strengths and development needs of current and potential leaders.
Core Review Processes
Strengtheningorganizational talent is a fundamental building block of total quality at AlliedSignal. In fact, it is one of three core processes. The triumvirate includes: strategic planning, annual operating planning, and management resource review. The strategic planning process drives the company's direction and the annual operating plan identifies the revenues and spending limits. The management resource review (MRR) process is a key AlliedSignal management tool designed to systematically assess and develop the capability of people within its organization.
Management Resource Review Process
The MRR process objectives are:
Integrated Performance Management and Development Process (IPMD)
This joint process of assessing and evaluating the individual and the organization as a whole is a semiannual, circular program called the Integrated Performance Management and Development (IPMD) process. Each step in the process drives the next and the process is never completed (see Exhibit 2.1). Central to the IPMD process is the concept of continuous development of the employee's career. The career development process starts with the individual and includes seven distinct steps: assessment, research, goal setting, planning, discussion between employee and manager, action, and measurement.
AlliedSignal continues to work to improve the effectiveness and consistency of its MRR process while allowing flexibility for each organization based on different business needs. Consistency in evaluating individuals across the company will enable AlliedSignal to better assess its overall organization and human resource needs.
AlliedSignal developed three foundational building blocks for the IMPD process. Each document is a single-page summary. The Career Profile is a summary of key information about the individual including current position, education, training and development, awards, patents, or recognition, and prior work history. This mini-resume is prepared by the employee and updated as necessary (see Exhibit 2.2).
The second building block is the Continuous Improvement Summary and Performance Objectives Forms, or CIS form (see Exhibit 2.3). This is the primary part of the performance management discussion between the employee and supervisor of the employee's performance. This document is also a focal point of the MRR discussion. It is a summary of the employee's results, behaviors, and developmental needs and plans. The purpose of using the CIS form for both the performance management discussion and the MRR is to eliminate duplication and to ensure greater openness. When employees have a performance discussion with their supervisors, they will know what will be discussed during the MRR. Subsequent discussion of performance, career, and development plans are encouraged and can occur several times during the year, initiated either by the manager or the employee.
The third part of the IPMD process is performance objectives (see Exhibit 2.4). This process involves the review of the four to five most important financial and other business objectives for the employee's review period. These objectives must be specific to the organization's goals and processes as well as measurable in impact and scope. Results might be measured in revenue dollars, productivity improvements, exceptional project completion, process enhancements, or other quantifiable measurements specific to the organization's goals and processes...
This chapter outlines a strategic results and personal change initiative that is designed to prepare the organization for a changing environment within the healthcare industry by developing the competencies of and retaining high potential leaders.
Abbott Laboratories, founded in 1888, is one of the most diversified health-care manufacturers in the world. Three of Abbott's four core businesses--diagnostics, hospital products, nutritionals, and pharmaceuticals--are the number one or two competitors in their fields. Abbott is, and has been for fifty years, a global company. Approximately 40 percent of its sales and one-third of its 57,000 employees are outside the United States. Its profit as a percent of sales places Abbott among the top companies in the world (for example, in 1998 Abbott was ranked 129 of the Fortune 500 in sales and 12 in profits).
Cultural Elements Influencing Leadership Development Initiative Abbott's success is the result of its strategy, execution, and culture. Among these sources of competitiveness are cultural elements that heavily influence leadership development thinking and efforts:
The early- to mid-1990s was a period of extraordinary change for healthcare companies around the world. What America experienced as the Health Care Reform Initiative of 1993 was reflective of a global trend to cap rising healthcare costs. Government intervention and cost containment worldwide reduced pricing flexibility and slowed market growth in economically developed countries. Simultaneously, the balance of power between healthcare companies and their customers was shifting dramatically. For the first time, healthcare customers were bigger and more powerful than healthcare manufacturers. Additionally, partly in response to this situation and partly in response to weak product pipelines, there was a wave of industry merger, acquisition, and general consolidation. Driving even greater change was increasing or changing regulatory standards in the United States and around the world.
While Abbott's sales growth rate did slow during this period, pursuing this strategy provided it a foundation on which to build in the late-1990s and into the next millennium.
Strategy and Leadership Development--Creating a Business Case This rapidly changing environment had very clear and powerful implications for Abbott's leadership development practices. The key questions it raised were:
These questions signaled the need to modify the company's main leadership development instrument, the Leadership Development Program (LDP). In addition to responding to the business's strategic needs, enhancements to the LDP also had to address two "technical" leadership development concerns that program administrators had identified:
Against this backdrop, the company's human resources planning and development group began its redesign of the LDP in 1996.
The Leadership Development Program, initiated in 1991, was a solid beginning for the redesign of Abbott's executive education and development efforts. It was a three-week annual process of providing thirty-five high-potential leaders with current thinking from outstanding business school faculty and much of Abbott's most senior management. Participation was by business unit nomination and was considered an achievement in itself. The pool of participants included was high-performing leaders with potential for advancement. Generally, these would be people for whom vice president, the top 140 positions in the company, was the next step. In addition to new ideas and insight, networking among participants was considered a key benefit of the program. This networking was especially valuable given the limited cross-company interaction most participants experienced on the job.
As the program administrators went about redesigning Abbott's executive development effort, they were guided by both business objectives (for example, how can we ensure Abbott's success?) and leadership development objectives (for example, how do we become "world class" in developing leaders?).
Strengthen Abbott's leadership team by:
Enhance the programs by:
An important first step in rethinking executive development at Abbott was "audience." Given the size of the company and even a narrow definition of "leadership team," a target audience of thirty-five people annually was simply too small to provide the learning or impact the company needed in a reasonable time frame. In line with the objective of developing more people sooner, the company initiated a second program called the Management Challenge: Managing Across Boundaries (MC). The MC was designed to provide an opportunity for a broader audience, targeted to their needs. With two programs, it was important to develop a clear distinction between audiences and purposes--to avoid confusion and to maximize the investment and opportunity. Table 1.1 shows the distinct target audiences.
Table 1.1. Leadership Development Audiences
With target audiences established, the design could begin. The same basic approach was used to structure both the LDP and the MC. The team used two "streams" of content to determine the programs' components. The first stream was Abbott's strategic needs: (1) What are the company's current strengths to be leveraged for future success?; (2) What are the "gaps" that must be bridged to avoid difficulty?; (3) What new skills or competencies are needed to achieve the intent of the new strategy?
Working through the two streams of potential content led to the identification of three key competencies to be developed in each program, as shown here in Figure 1.1.
These outlines provided a very solid framework and touchstone for the challenge of determining specific content and program format. The desire for program excellence caused program designers to study and consider best practices in executive development as part of the design work. An early and important learning from benchmarking was that "leading edge" is relative; a practice is only as valuable as the quality of its application in its environment. An academic or other company's best practice cannot be successfully laid on an unprepared and/or an unwilling culture. Understanding this, the task in shaping the MC and LDP experiences was to marry innovations in executive development with Abbott's culture. The trick would be to continually stretch the culture and participants beyond their comfort zone, but not to the point of their rejecting the experience as impractical or irrelevant.Table 1.2. Inclusion & Exclusion Program Components
Of the best practices that Abbott did choose to implement, several--simulation, multi-rater assessment, executive dialogue/involvement, and individual planning--are fairly popular and well-documented in industry, consulting, and academia.
The executive interaction also gives senior managers a platform for sharing their aspirations and expectations while simultaneously scouting talent. The interaction takes the form of "dialogues" with the CEO, COO, and other senior operating people. This element is generally viewed as one of the most positive of the MC and LDP experiences.
Table 1.3. Participant Feedback
Driven by the goal of providing leading-edge thinking and expertise, both the MC and LDP are heavily dependent on external faculty for program delivery (approximately 70 percent of program time). Additional aims of the programs are to marry leading-edge thinking with company strategy and present an integrated stream of content. Given these objectives, program outcomes are heavily dependent on the quality and "fit" of that external faculty.
The benefits of this partnership for Abbott are multiple. First, the quality of instruction in the classroom steadily improves as the faculty gains experience with Abbott's culture and needs. Program flow improves as the faculty understands and works the points of integration. The faculty understand Abbott's goals and needs and begin to refer their own network of peers to the program, much like employee referrals for new employees. Finally, many of the faculty members have, through their introduction in the MC and LDP, engaged in consulting and research projects at Abbott, extending the value of their expertise within the company.
The idea of faculty partnerships may not be "leading edge," but the concept is incredibly effective. Likewise, the use of community service in leadership development may not be new, but Abbott's application of it is unique and has been shown to have the potential for powerful impact on the thinking and actions of its high-potential leaders.
One LDP class worked with residents in a temporary residence for men just released from prison. Initially, many of the LDP participants were frightened of the residents and held stereotypical views about the nature of ex-convicts. Through the program's interactions, participants came to understand that the residents were equally afraid of them and that given a chance, many of the residents could contribute very positively to society. The experience of getting to know someone in a new light caused many participants to examine their view of others (especially their subordinates). They discovered their narrow or stereotypical view of their followers was limiting the contributions they were allowed to make. At a personal level, many of the participants "stuck with" the agency long after the program was over, donating time, energy, and money to carry out the work of the residence.
The amount of personal stretch in any of these projects creates apprehension in many participants. There is generally nervous tension and some grumbling before the first experience for each class. Most participants work through their concerns and find great value in the effort. Others reject the idea as too radical or impractical. Many non-U.S. participants are initially thrown by cultural-norm differences. In some countries, the government is responsible for all social work. Despite these difficulties, and occasional administrative opportunities for improvement, this shift has been successful on multiple fronts:
The design thinking described throughout this chapter results in a logical program flow within the weeks of each program and between the MC and the LDP. See Exhibits 1.2 and 1.3 (pages 29, 32) for the agendas of these programs.
This data, by its nature, is both quantitative and qualitative. The turnover among program participants (past and present) is running between 3-4 percent annually, and the depth of Abbott's leadership pool, which is the number of "ready now" candidates for corporate asset positions, is expanding. What still needs work is the qualitative side of this piece--are leaders quicker to see and adapt to a changing world? Are they more global in their thinking? Are their followers more motivated? Anecdotal stories from past participants are being gathered, but have not yet been translated into solid measurement.
This last frontier of measuring leadership development is, for Abbott, the most difficult. Though it is the area richest in data and measurement (such as sales, financial and operational data), the direct links from leadership development to that data are the weakest. Still in the early stages of this development, Abbott is gathering anecdotal data from past participants about the impact of program participation on their business performance. Among the "good news" stories are the transfer of a U.S.-based value-added service to South America, and internal "networks" among program participants that have led to cross-business opportunities that had not been identified previously. Abbott will continue to work at refining these anecdotal stories into more concrete measures of success.
The purpose of redesigning Abbott's leadership development program was to improve its ability to prepare its leaders for a rapidly changing environment. In the eyes of participants, their managers, and the organization at large, much progress has been made toward achieving that objective, yet much more progress still needs to occur. By continually monitoring the process, perception, and impact of the MC and LDP internally, these programs can be continually shaped to meet Abbott's needs. In addition, by continually monitoring the external best practices in leadership development, others' expertise can be leveraged for repeated improvement.
Exhibit 1.1: Abbott's Leadership Competency Model
As previously mentioned, Abbott Laboratory's Leadership Competency model is discussed here in more detail.
Create and deliver a vision of the future to maximize company performance. Establish and commit to strategies and a course of action to accomplish that long-range vision. Communicate a clear view of the desired future state.
Attract and grow people to maximize the collective skills of the organization. Inspire and motivate them to achieve the organization's strategic intent, vision, and goals. Create and sustain the organization and structure needed to support the company's people and business strategies.
Understand Abbott's customers, markets, business operations, and emerging issues. Base decisions on facts, experience, and logical assumptions, taking into consideration opportunity for gain, resources, constraints, risk and reward, and organizational values.
Establish high goals for organization success and personal accomplishment. Lead to meet or exceed those goals. Create a nimble organization that executes well and makes speed in achieving high-quality results a competitive advantage for Abbott.
Make timely decisions in the face of obstacles, difficulties, and challenges. Act decisively, demonstrating confidence and the strength of one's convictions. Commit the organization's resources to achieve the company's strategies taking calculated, well-thought-out risks when necessary.
Create a culture of open, honest communication where all are encouraged and feel free to express their views.
Exhibit 1.4: LDP Participant Survey
Don Kraft (firstname.lastname@example.org) is the director of human resources planning and development at Abbott Laboratories. Kraft is responsible for leadership development, succession planning, and the redesign of the company's performance management system. In his twelve years with Abbott, he has worked in five different businesses, all within the human resources function. The majority of his Abbott career has been in a human resources generalist position; however, he has had specialist assignments in staffing as well as the current assignment in organization development.
Prior to Abbott, Kraft held several human resources positions at Harris Corporation in Melbourne, Florida. He has a master's degree in management from Northwestern University and a bachelor's degree in business administration from Villanova University.