Six Ways Top Organizations Avoid
Leadership Crisis

by Freda Turner Ph.D.

There is a leadership void and the crisis is evident as high as the CEO level. The nation has watched an unsettling trend in the number of CEOs who are sent packing after less than two years on the job. This list includes Durk Jager, chairman and CEO of Procter & Gamble Inc., who left after only 17 months in the job; Michael Hawley was ousted from his job after serving only 18 months as the chief executive for Gillette; Jill Barad, chief executive of the toy manufacturer Mattel, was forced out after 18 months on the job; and Lloyd Ward, chairman and CEO of Maytag Inc., came and departed 15 months later.

A study released by the outplacement and career development consulting group Drake Beam Morin (DBM) examined CEO turnover at 450 of the world's largest corporations. The DBM researchers found that roughly half of the CEOs had held their current jobs for less than three years, and that many of the CEOs who left their jobs were either dismissed or forced to resign. As of June 2001, the rate of replacement of chief executives was 55 percent higher than last year, reports the Christian & Timbers' Quarterly Index of Fortune 1000 CEO Replacements.

Leaders, like superstar counterparts in professional sports, are paid to perform, sometimes to work miracles, and when results disappoint - no matter how unrealistic expectations may be - they're cut from the team. Some research suggests that it takes between 4 and 7 years for change to really take effect in large organizations. However, Boards of directors and investors are very interested in protecting their investments and generally don't want to wait 4 years to see if things turn around.

The dot.com failures have taught that leaders need both life experience and knowledge to be successful.. Many of the dot.com leaders were young and void of diversified life experiences. Bill Gates recently stated in an interview that he fears having too many technical folks so he hires history/liberal arts majors to add diverse perspectives to his Microsoft Teams' decision making.

Leaders are made and not born. They develop through education and life experiences. GE is known for having one of the best leadership development models in the nation. Their leadership development plan is fairly simple. GE managers and executives are moved from job to job every two to three years, and each job change or promotion is a well-thought out process that provides GE managers with much-needed experience and exposure to certain elements of the business. The end result is that GE is able to build a management core that is very knowledgeable and experienced in the operations of the giant corporation. The Navy uses this model in developing talent also.

Welch was once quoted as saying that he spent about 50 percent of his time thinking about how to develop talent . Other organizations realize that GE has developed excellent leaders and GE executives have become a recruitment target. Recently, James McNerney, head of the GE aircraft engine division, was named CEO and chairman of Minnesota Mining and Manufacturing Co.-better known as 3M. He is also the first outside candidate to ever become CEO of the 98-year-old corporation. Less than a month later, Robert Nardelli, head of the GE power systems division, became president and CEO of Home Depot Inc. While GE realizes they will lose some talent, their leadership core has kept GE as one of the top corporations in the nation.

So as the nation watches the GE leadership team move ahead, here are several strategies GE has implemented to avoid a future leadership crisis in their ranks:

  1. GE has an aggressive employee suggestion program. All GE managers are expected to partner with their teams and provide one suggestion annually that saves GE $35K.
  2. GE has a succession plan that identifies strengths and weaknesses within each and every department and provides managers with training/experience in weak areas. Everyone has a weak side.
  3. GE has an orientation program that incorporates a strategy to win the pride, minds and contributions of new employees from the first day of employment.
  4. GE has a mentoring program to provide employees coaching to shorten the learning curve and to provide every employee a support system.
  5. Employee turnover is monitored by department to guard against managers who donít exhibit efforts to develop and retain employees.
  6. GEís annual evaluation system grades employees on an A, B. or C scale. Employees who are ranked as C (10% of the workforce) have one year to upgrade skills/productivity to a B employee or they are cut from the team. This eliminates dead wood and provides new blood to the GE team.


Freda Turner is affiliated with the Graduate and Doctoral Programs at University of Phoenix. She can be reached at fturner@email.uophx.edu.

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Copyright 2001 by Freda Turner. All rights reserved.

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