From one leader to another
What makes the essential difference to a CEO in times of trouble? Three well-known companies which worked closely with their top HR executives to ensure the development of future leaders tell their story. Pepi Sappal reports.
To deliver Cadbury Schweppes' tough financial targets, CEO John Sunderland needs the right leaders at the helm. He works with global resourcing director Norma Boultwood to chase tomorrow's high-fliers
When John Sunderland was appointed CEO of Cadbury Schweppes last year, shareholders were not happy. "Our earnings per share, and more importantly our return to shareholders, had been sluggish for many years. So things had to change," says Sunderland.
His vision is to continue to grow the beverage and confectionery business globally to beat rivals like Coca-Cola and Mars. "We've set some very tough goals - to grow earnings every year by 10 per cent and double shareholder value every four years," Sunderland says.
In order to achieve these goals he needs the right leaders at the helm of the organisation. "Our business will succeed or fail by the quality of our people at all levels. Given that premise, there's no doubt that people matters such as recruitment are a board responsibility. Yet it's always been a great surprise to me why HR isn't represented on more boards. At Cadbury Schweppes, HR has been on the board for almost 20 years," he says.
Sunderland takes a personal interest in HR matters, working closely with global resourcing director Norma Boultwood to make sure that the right candidates are being recruited, developed and persuaded to pursue their careers at Cadbury Schweppes.
"We fill 85 per cent of our senior posts from within the organisation," says Sunderland. "But to make it to the top at this firm, you have to put in the years."
He and Boultwood did. It took Sunderland almost 28 years to make it to CEO. And Boultwood started her HR career back in 1980 as a personnel trainee.
"Developing leadership at Cadbury Schweppes is almost a 30-year project," says Sunderland. "Our strategy is to recruit them young, ideally straight out of university because the consequences of getting it wrong are low."
So what qualities does he look for? "Vision - people who can intuitively understand the future and have the ability to take people with them," Sunderland responds immediately. "But those types of traits are harder to spot in young recruits. So we look for basic leadership qualities such as energy, drive and a will to succeed. If people have these basics in abundance then we are halfway there."
Those were the qualities he was looking for when he attended AIESEC's Developing Leaders Day in late August this year in Lenk, Switzerland "It's a very efficient way of tapping into the best international graduate population. This group does more than enjoy university," says Sunderland. "The 30,000 members of AIESEC have a global perspective - that's what sets them apart from national university recruits."
The drawback is that this group is far more difficult to seduce, he claims. As these graduates have far more opportunities than before, joining a multinational corporation is no longer their priority. "Far more have their sights set on joining a not-for-profit organisation or the government sector so that they can make a difference and contribute to society."
So Sunderland is cleverly luring this talent by saying you can achieve these goals by joining us too. "Cadbury Schweppes has been criticised for operating in South Africa, during Apartheid, and China - a country often accused of having the worst human rights record. But I genuinely believe we can do far more to influence the way those societies develop from the inside than the outside. By setting a good role model of how we treat and deal with people in those countries, we can - in a small way - make our voice heard."
Many of AIESEC's graduates have shown interest in the company's global exchange programme. Global resourcing director Norma Boultwood explains, "It's a scheme where, say, a Chinese graduate will spend a year at our Australian office, and the Australian graduate in China. Both return home at the end of the year and if things work out, they are recruited in their home countries. We have similar arrangements between the US and UK, US and Mexico, and Argentina and Canada."
But that's just the first hurdle. "We then have to train, develop and groom these people into leaders through our internal programme which moves managers around internationally and cross-functionally," says Boultwood.
Sunderland is also actively involved in developing staff. "We are in the process of developing a sales and marketing academy. And John [the CEO] plans to spend a lot of time there tutoring. He's also helping to devise themes for the coursework," adds Boultwood.
But simply developing the right leaders is not going to be enough to achieve the type of results Sunderland has in mind. "As creation of shareholder value became Cadbury's governing objective, he needed the buy-in of all our 36,000 employees worldwide to agree to go on this journey with him, not just the managers," explains Boultwood.
So Sunderland and his HR team pursued an idea devised in 1997, to help them deliver the type of talent required to achieve that objective.
"We call it Managing For Value (MFV)," says Boultwood. "The concept incorporates five values that were of most strategic priority for us, including raising financial performance, sharpening the culture, values-based management, leadership capability and rewards.
"It basically meant a fundamental reorganisation of the business. To show our management we were serious about stretching our financial targets, we put them into the public domain very clearly," says Sunderland.
"But it's no good just exhorting people to do better. We then had to provide the tools to help them achieve these tough targets. We introduced values-based management to give our managers new ways to analyse the business to understand where we were producing economic profits and where we were failing, and then ensuring our resource allocation decisions were made in backing the winners.
"Having set the goals and provided the tools, we then had to ensure we had the right team and that they were properly motivated and remunerated. The next phase was therefore a management audit in which, among other things, the leadership imperatives we sought from our management were defined. We assessed and changed our management team. We then launched a worldwide programme to sharpen the culture and engage all our employees in the MFV journey.
"Finally, our rewards scheme also had to change to reflect economic profit. So we developed new ways in which as many employees as possible can have shares and a personal interest in the company," says Sunderland.
He was personally involved in delivering the Managing For Value programme to more than 2,000 of his managers - confirming his mantra: "Running a business successfully is only 20 per cent about strategy but 80 per cent about people", says Boultwood.
"It was this statement that gave HR a fantastic platform. This whole MFV had a great people component, which put HR at the top of the CEO's agenda."
In this case, HR has certainly helped to deliver on the bottom line. "Our 2001 half-year results are ahead of expectations," she adds. "Sales rose 26 per cent to £2.46bn, and pre-tax profits by 14 per cent to £351m compared to the same period last year."
And, although, it's too early to tell whether shareholder return has doubled, the signs are promising. "Over the last four years, we have achieved an 84 per cent increase in total share owner return at a time of considerable stock market volatility," confirms Boultwood. All of which is proof that HR value has a strong correlation to shareholder value.
Pierre Hessler and Carolyn Nimmy of Cap Gemini Ernst & Young's believe good leadership skills can only be acquired through intelligent followship
The downturn in the IT and telecoms industries is certainly having a knock-on effect on consultancies. Management and IT consulting firm Cap Gemini Ernst & Young is no exception.
The group's main activities - helping businesses implement growth strategies and leverage technology in the new economy - have markedly slowed over the past few months after clients delayed or cancelled projects. Like most companies, it has had its fair share of casualties this year - 2,700 out of its 60,000 employees have been shed to date.
However, group managing director Pierre Hessler, former CEO of Cap Gemini, is adamant that industry growth hasn't declined - just slowed down. But demand for good leadership skills within the firm at every level is higher than ever - especially if the firm is to fulfil its growth and financial targets for 2001, about 9bn Euros.
Both he and Carolyn Nimmy, global director of people relationship management at CGE&Y, are looking for leaders who are pioneers and innovators, spearheading change in every sector, continuously evolving and learning, while personally guiding and mentoring others to take on new challenges. But according to Hessler, such skills are in chronically short supply, and can only be acquired through "intelligent followship".
"It has nothing to do with sheep-like conformism or blind obedience," stresses Hessler. "Junior members of organisations learn leadership skills first hand even while following the example of others from the start. But followship does not end with the first promotion, nor if one rises to the meteoric heights of CEO. It is a whole set of skills - from the ability to interpret and translate vision into action, to listening and responding to fellow colleagues - without which, no-one can hope to become a good leader."
Managing change is another crucial skill for future leaders. "There has been more change throughout the economy in the past five years than in the previous 50, and all the signs indicate that rapid change will continue, and even accelerate.
Knowing how to be an agent of change, how to ride change, how to make it happen and how to thrive from its consequences are essential skills for anyone starting a career today."
But the inflexible few, unable to adapt their skills in a high-performance culture are doomed to fail. "An awareness and insight into new technology, as opposed to specific technical know-how, is also an essential skill for wannabe leaders, since the entire structure of organisations and their markets are now determined by the technologies available," adds Hessler.
Of course, such talent is extremely rare. "Yet the search for people with these skills remains constant," says Hessler. "Given that the only money we make is by renting out our brain power, it is imperative we find the best and develop them."
Both CEO Geoff Unwin and Hessler rely on Carolyn Nimmy and her HR team to find these skills. In fact, last year, Unwin told globalhr that he personally spends 60 per cent of his time dedicated to sourcing talent.
"There's certainly a stronger focus now on HR from the top to see how our human assets match the current market conditions, and what we are doing to attract, retain and develop the talent required," says Nimmy. "And the board is not just interested in the hard facts and figures but how proactive we are being. Both Pierre Hessler and Geoff Unwin want to know where are our future leaders are and what's being done to recruit the best. They are also curious about how potential recruits feel towards our brand and what their motivations are for joining us."
Both had the opportunity to discover exactly that over the past two years when they attended AIESEC's Developing Leaders Day with Nimmy, last year in Edinburgh, and this year in Lenk, Switzerland (see box ).
Nimmy first got involved with AIESEC back in 1997, when she was quickly infected with the positive energy and entrepreneurial skills of this organisation. "We are actively involved with AIESEC as many of these graduates will end up working for a consultancy," says Nimmy. "It's a great to opportunity to not only increase our brand awareness in more than 85 countries, but expose our managers to future talent."
The case of SwissAir provides an insight into how hard the company fought to keep its business airborne. The group's CEO Mario Conti, who hails from a financial background, and chief personnel officer Matthias Mîlloney firmly believe that the right leadership in the driving seat can help a company in trouble
The SwissAir Group had its fair share of problems over the past few months. Two changes of CEO, plus reported losses of SFr2.9bn (approximatley $1.7bn) for 2000 - largely due to its fledgling airline operations. So CEO Mario Conti, formerly CFO of Nestlé, had enough to contend with when he took up his post in April this year.
globalhr learnt of his strategy to keep the company airborne in late August. Unfortunately the tragic events of 11 September in New York marked its eventual demise. It plunged the group, along with other airline companies, into further crisis and ultimately led to the company filing for bankruptcy in early October.
SwissAir's story provides a fascinating insight into how both Conti and chief personnel officer Matthias Mîlloney struggled to turn the company's fortunes around. They continued to fight until the events of 11 September forced them into bankruptcy, which is why we have decided to run the comments they made at the time.
Conti had been working closely with Mîlloney at the time to ensure the company's survival. This shrewd operator knew he was unlikely to turn the fortunes of the company around without the buy-in of his staff. So one of the first things he did when he came on board was to invite Molloney onto the executive management board.
"What's unique about Mario Conti is that, unlike most CEOs with a finance background, he understands the value of HR," said Mîlloney. "The fact that he's from Nestlé - a company reputed for its HR best practices - probably explains a lot."
Conti may have only been eight months into his job but was getting to know his organisation's strengths. "He is keen to find out what our skills base looks like, and spends at least half a day a week at our offices and factories to find out more about our staff - what drives them, concerns them and so on," said Molloney.
He took a huge interest in HR matters - a fact which impressed Mîlloney. "In our regular one-to-one hourly meetings we often discuss specific training for managers. Other times we discuss management audits, to see whether we have allocated talent effectively for optimal performance," he said.
Making sure their leaders were in the right place at the right time was critical, explained Mîlloney. "Leaders that can not only see through the tough times, but those with good international capabilities to grow and expand the business internationally as our home market is extremely small. If we want to grow successfully, we need 10 times the size of our market, and that means competing for international clients," he said at the time.
But finding leaders with global skills and multicultural experience to grow and respond to an international customer base is extremely difficult, said Mîlloney. "They need more than languages, but transnational thinking."
So Conti and Mîlloney worked together on strategies to help find these global leaders, and also develop and motivate them enough to stay. That's why both attended AIESEC's Developing Leaders Day with Cadbury Schweppes and Cap Gemini Ernst & Young.
Mîlloney, who also sits on AIESEC's board, believes the graduate members of this group have the global mindset they are looking for. Having been in the HR business for approximately two decades, Mîlloney believes leadership is something that no university can teach. "But leaders should have a licence to lead," he says. Perhaps in his dual role as practitioner and professor of HR, he'll change that. However, as events have overtaken him, he now has other things to keep him occupied.
Tomorrow's Leaders
