2014 Best Companies For Leaders

In their book, The Game-Changer, P&G CEO A.G. Lafley and noted author and business advisor Ram Charan observed that “to prosper, companies need to do four things well: develop leaders of the future, improve productivity, execute strategy and create innovation.” Arguably, the first step must be done well if the prospect of succeeding at the remaining three steps is to have any chance of success.

Each year since 2005, Chief Executive has sought to identify those companies that excel in leadership development. In partnership with Chally Group Worldwide, a Dayton, Ohio-based sales and leadership talent-management firm, and with the Human Capital Institute, we canvas world-class companies through a questionnaire and interviews in order to learn what companies are doing to identify and nurture people three or more levels down the chain from the CEO.

The final, top-40 ranking consists of public companies with over $1 billion in revenue, and the top 10 on the list scored within several points of one another.

Rankings are affected by a company’s reputation among its peers, as a source for well-rounded talent. The percent of senior management recruited from internal talent pools is another criterion. Similar to 2013, some attrition among last year’s winners accounts for why previous winners did not appear on the 2014 listing. As a clear indication of the escalating importance of leadership-development processes, half of the companies on the 2014 ranking are new to the list.

Companies are scored on five key criteria:

  1. Having a formal leadership process in place
  2. The commitment level of the CEO to the leadership-development program, as measured by the percentage of time spent
  3. The depth of the leadership funnel, as measured by the percentage of senior-management positions filled by internal candidates, as well as the percentage of middle-management positions filled by internal candidates
  4. The number of other companies that report recruiting from the company being evaluated
  5. A shareholder value-performance metric based on 10-year growth or decline in market capitalization

P&G once again tops the list as the Best Company for Leaders, with IBM coming in second at just a fraction below and GE moving to a No. 3 ranking. These three, leading contenders have different but parallel methods of developing talent. P&G and IBM, for example, place a premium on developing people from within. All of P&G’s senior managers are judged on their abilities to develop those who report to them. Development includes both formal as well as informal training. Lafley himself mentors a group of high achievers several levels below. He also monitors the company’s top 300 executives and ensures that they are inculcated with the values of the firm.

The company often assigns some of its best up-and-coming executives to tough jobs—not just to test them, but to provide useful experiences that will come in handy in future. P&G also takes 150 promising leaders for leadership training at such off-site locations as the U.S. Military Academy at West Point or the Center for Creative Leadership (CCL) in North Carolina. “The challenge at P&G,” he remarks, “as at most every company, is to get the right balance between stretch goals and game-changing results.”

Likewise, IBM identifies those with early promise under its Basic Blue for IBM Leader program, where leadership competences are explored and guidance for career paths is given. As one might expect from a company of IBM’s pedigree, nearly everyone is tracked assiduously. IBM’s Chairman/CEO Virginia Rometty, like her predecessors, follows a range of specific individuals at all levels with “Chairman’s Reviews” with action follow-ups.

GE, which dominated the ranking in its early years, has undergone considerable change since Jeff Immelt took over from Jack Welch in September 2001. He believes that relatively simple actions, such as attending his own instructional courses at the company’s state-of-the-art John F. Welch Learning Center, located in Crotonville, New York, can have far-reaching effects. Crotonville has become the Annapolis and West Point of executive development. Activities there lead to selection and promotion, as they reinforce the creation of new operating mechanisms designed to drive innovation. In addition, GE encourages development by having its executives generate “Imagination Breakthroughs” during its twice-a-year meetings of senior executives. “Chances are, a lot of people have great ideas for growth and innovation,” Immelt says. “It’s up to us to develop a disciplined process to sort them out and encourage our talented people to generate them.”

New to the top-10 ranking are Accenture (4), Unilever (5) and Hormel Foods (9), which report impressive leadership-development processes. Of the companies surveyed, 84 percent have headquarters in North America and 57 percent have international operations. The majority of industries represented included Professional, Scientific, and Technical Services (21 percent), Manufacturing (19 percent) and Finance, Insurance, Real Estate (14 percent).


2014 Best Companies For Leaders Links

Top 10 Skills Needed for Effective Leadership
Biggest Hurdles to Developing Leaders
Deloitte: Building a Future on Millennial Recruits
10 Best Private Companies
List of 40 Best Companies for Leaders


Because it would be inappropriate to compare private companies with larger, public companies that enjoy greater resources, we list the ranking of large, private organizations with in-depth leadership development programs separately. The full Leadership Research Report will be available in February at chally.com.

Where They Go for Talent—and Why

Participants cited these three companies as top targets when recruiting from outside:

P&G

Known for outstanding technical leaders, marketing expertise and leadership know-how.

IBM

A technology and solutions leader boasting an excellent reputation for developing leaders, reinventing business models profitably and sharing success with global communities.

GE

Multinational organization with complex business units and a strong reputation for developing leaders and leading innovation in technology.

2014 Rank
Company/CEO
2013 Rank
Company/CEO
1 P&G  / A.G. Lafley 1 P&G / Robert McDonald
2 IBM / Virginia Rometty 3 General Electric / Jeffrey Immelt
3 General Electric / Jeffrey Immelt 2 IBM / Virginia Rometty
4 Accenture  / Pierre Nanterme Dow Chemical / Andrew Liveris
5 Unilever / Paul Polman Verizon Communications / Lowell McAdam
6 Dow Chemical / Andrew Liveris 4 Caterpillar / Douglas Oberhelman
7 McDonald’s / Donald Thompson 18 Hitachi Data Systems / Jack Domme
8 Monsanto / Hugh Grant 11 Arthur J. Gallagher / J. Patrick Gallagher, Jr.
9 Hormel Foods / Jeffrey M. Ettinger Boeing / W. James McNerney, Jr.
10 General Mills / Kendall Powell 15 3M / Inge Thulin
11 VF Corporation / Eric C. Wiseman Monsanto / Hugh Grant
12 W.W. Grainger / James T. Ryan PepsiCo / Indra Nooyi
13 Caterpillar / Douglas Oberhelman 6 Royal Caribbean Cruises / Richard Fain
14 Verizon Communications / Lowell McAdam 5 The Cooper Companies / Robert Weiss
15 TJX Companies / Carol Meyrowitz General Mills / Kendall Powell
16 Sprint / Daniel Hesse 16 Sprint Nextel / Daniel Hesse
17 Maxim Integrated / Tunc Doluca 37 Bridgestone Americas / Gary Garfield
18 Southwest Airlines / Gary Kelly McDonald’s / Donald Thompson
19 DENTSPLY International / Bret Wise ADP / Carlos Rodriguez
20 ADP / Carlos Rodriguez 19 Shoppers Drug Mart / Domenic Pilla
21 HNI / Stan A. Askren Bayer MaterialScience / Patrick Thomas
22 McKesson / John Hammergren Barnes Group / Gregory Milzcik
23 3M / Inge Thulin 10 NOVA Chemicals / Randy Woelfel
24 Konecranes / Pekka Lundmark 30 Bristow Group / William Chiles
25 Ecolab / Douglas M. Baker, Jr. 28 Cardinal Health / George Barrett
26 EMC Insurance / Bruce Kelley 35 BP China / Robert Dudley
27 Cardinal Health / George Barrett 25 Dimension Data / Brett Dawson
28 Green Mountain Coffee Roasters / Brian P. Kelley Ecolab / Douglas M. Baker, Jr.
29 RPM International / Frank C. Sullivan Johnson Matthey / Neil Carson
30 Emerson Electric / David Farr Konecranes / Pekka Lundmark
31 Comcast / Brian Roberts Olympic Steel / Michael Siegal
32 Shoppers Drug Mart / Domenic Pilla 20 Phillips NV / Frans van Houten
33 Barnes Group / Patrick Dempsey 22 Autoliv / Jan Carlson
34 Cash America Int’l  / Daniel R. Feehan Hyatt / Mark Hoplamazian
35 Dangote Cement / Aliko Dangote EMC Insurance  / Bruce Kelley
36 The Cooper Companies / Robert Weiss 14 Harman International / Dinesh Paliwal
37 Huntington Bancshares / Stephen Steinour Maxim Integrated / Tunc Doluca
38 Citigroup / Michael Corbat Libbey / Stephanie Streeter
39 Paychex / Martin Mucci ResMed / Peter Farrell
40 Esterline / Curtis Reusser Kelly Services / Carl Camden

2014 Best Companies For Leaders Links

Top 10 Skills Needed for Effective Leadership
Biggest Hurdles to Developing Leaders
Deloitte: Building a Future on Millennial Recruits
10 Best Private Companies
List of 40 Best Companies for Leaders

" Dr. Jenna Filipkowski and J.P. Donlon : ."