Since 2005, Hay Group has researched the Best Companies for Leadership. In previous years our research focused on understanding how organizations were planning on meeting the impending leadership shortage, driven by growth in emerging markets coinciding with the retirement of the baby boomer generation.

Given the economic challenges organizations are now facing, this year Hay Group and BusinessWeek have partnered to understand the evolution of leadership. With organizations confronting a new diverse landscape, many are struggling to determine how to best develop their talent to meet new and changing organizational needs. For organizations to succeed, they will need to understand what key leadership elements are paramount in driving their organization toward future growth.

As we look at the world’s best-in-class, we can see how they are preparing to meet their new leadership reality. By studying these top organizations, we can identify best practices that will help others to prepare their talent ‘pipeline’ for what lies ahead. Here are the details for participating in this year’s survey.

Watch a webinar about the last year’s Best Companies for Leaders

The world’s Best Companies for Leaders

They are focused on developing leaders who will not only survive and thrive in the current financial crisis but will be well positioned for growth once the economy improves. The research suggests a number of best practices to help organizations and their leaders navigate the significant challenges brought on by the economic downturn as well as key tips to prepare for the upswing.

Surviving the downturn

When asked what organizations value the most in leaders, 83 percent of the best-in-class organizations said “execution.” They value leaders who can achieve results through others. These leaders create a climate in which people know exactly what is expected of them. In ideal times, people value authoritative and democratic styles of leadership in comparison to the other four styles of coercive, affiliative, pacesetting and coaching. In tough economic times, employees’ desire more communication and clarity around goals. They want their leaders to become more visible and to be leading from the front. Typical leadership styles which accomplish this include authoritative with some coercive and pacesetting when needed. (see prior post entitled Crisis leadership).

The best-in-class companies create clarity, encourage development, drive accountability and recognize successful leaders. Here are some key differences:

  • 65 percent of the top twenty companies on the list hold senior managers accountable for commitments versus 36 percent for all others.
  • 63 percent create a sense of purpose for employees by communicating values versus 43 percent for all other companies.
  • 45 percent honor leaders within the organization versus 32 percent for all other companies.

Preparing for the upswing

The top 20 best companies for leaders make leadership are making development a priority as they prepare for a return to better economic times.

“What we have been seeing in these uncertain times is that organizations are not pulling back on their development of leaders, primarily because organizations recognize they don’t have the depth of leadership they need to meet future demands,” said Hay Group’s Rick Lash. “This year we have seen the best in class organizations become more focused, investing their assessment and development on their best leadership talent, rather then providing across the board development for everyone”, he said. “The Best Companies for Leaders are making serious investments in leadership development. Development opportunities include special projects, assignments, and online training programs.”

The survey reveals that

  • 70 percent of the top 20 companies say they have a formal process to identify individuals for leadership roles, versus 37 percent of all companies.
  • 65 percent of companies say that talent management is driven by a clear business strategy versus 39 percent of all other companies.
  • 55 percent have formal programs to accelerate leader development versus 34 percent of all other companies.

Matrices increasing

In addition, 62 percent of respondents indicated that matrixed roles are increasing in their organizations. Managing in a matrix poses its own set of challenges, including the need for collaboration, creating a cohesive team, not having authority over resources, managing conflicts over differing agendas, goals or priorities, and minimizing confusion over roles, decision-making and accountability. Skills that are required to manage successfully in a matrix include:  relationship building, influencing, adaptability, interpersonal skills and collaboration skills.

2008 Best Companies for Leaders (with last year’s rank in parentheses)

1. 3M Company (15)
2. Procter & Gamble (2)
3. General Electric (1)
4. Coca-Cola (5)
5. HSBC Holdings (14)
6. ABB
7. Southwest Airlines
8. IBM
9. Hewlett-Packard (10)
10. PepsiCo (7)
11. Nokia
12. Accenture Ltd.
13. FedEx
14. Infosys Technologies Ltd.
15. McDonald’s Corporation (18 )
16. Caterpillar
17. American Express
18. Cisco Systems
19. Oracle
20. Intel Corporation