Best Companies for Leaders

For our latest Best Companies for Leaders feature, Chief Executive has sought to identify those companies that excel in leadership development. In partnership with GrowthPlay (previously Chally Group), a sales and leadership research and consulting firm headquartered in Chicago, we canvas world-class companies through a questionnaire and interviews to learn what they are doing to identify and nurture people three or more levels down the chain from the CEO.

The 2016 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. We also rank the top 10 private companies. 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 2015, some attrition among last year’s winners explains why previous winners don’t appear on this year’s list. Furthermore, because it would be inappropriate to compare private companies with larger public companies that enjoy greater resources, we rank large, private organizations with in-depth leadership development programs separately. Of the companies surveyed, 83% have headquarters in North America and 71% have international operations.

The majority of industries represented included professional, scientific and technical services (30%); manufacturing (25%); information, media and telecommunications (18%); and finance, insurance and real estate (16%).

For the second year in a row, GE tops the list as the “Best Company for Leaders” with EMC Insurance moving up from No. 4 last year to come in just a fraction below. Hitachi Data Systems
leaped to third, from ranking No. 23 in 2015. Among the remaining top 10, Johnson Controls (No. 5) is new to the list this year, and 3M moves up to No. 8 ranking from No. 11 in 2015. VF Corporation (No. 6) and Dow Chemical (No. 10) both held their rankings in the top 10 listing of companies identified having impressive leadership development processes.

P&G and Deloitte, which normally place in the top two positions among the public and privately held firms respectively, both experienced CEO transitions in 2015. Given that points are allotted for the amount of time a company’s CEO spends on leadership development, their scores would have been a bit lower than normal and this may account for the slippage in rank.

Hitachi Data Systems reported 100 percent internal promotions, conferring the maximum of 25 points, which raised its score significantly. Ecolab enjoyed market cap growth from $7.834 billion to $32.570 billion, which helped boost its overall score. Johnson Controls, Owens Corning and Fluor are all new to the list this year. Stanley Black & Decker returns to the list this year; the premerger Stanley appeared in the rankings several years ago. Their rankings reflect a generous amount of CEO time spent on leadership development, having a formal leadership process in place, the depth of the leadership funnel filled by internal candidates and number of the number of other companies that recruit talent from their company.

Stanley Black & Decker CEO John Lundgren likes to mentor his people, either alone or in groups, and encourages what he calls “boundery-less” behavior. “Our people and our brands, in that order, are our most valuable assets and we are genuinely committed to developing our people to their maximum potential,” he says. “I spend as much time as possible with our early-career, high-potential associates to ensure that they understand our values and our strategy and that they are being given appropriate opportunities to develop their leadership skills. It’s hopefully as motivating for them as it is for me. I always learn something in the process.”

2016 40 Best Public Companies for Leaders

2016 10 Best Private Companies for Leaders

KEY TAKEAWAYS FROM THE LEADERSHIP RESEARCH

LEADERSHIP DEVELOPMENT PROGRAMS RISING

By Bruce Sevy, Ph.D., Managing Director, GrowthPlay Analytics

For the past six years, we’ve tracked key markers of the state of leadership development: the proportion of organizations who report having a formal leadership development program and the specific components comprising those programs.

The six-year trend toward formal leadership development could not be more clear. Over the years, we’ve seen a steady and significant increase in the proportion of organizations who report having a formal leadership development program.

At the beginning of this decade only half of survey participants reported having such a process. For the last two years, the proportion has hovered in the low 80s. This is very good news and clear evidence that more and more organizations value leadership and are willing to invest in developing their leaders.

TOP 10 GREATEST CAUSES OF LEADERSHIP DERAILMENT

1 LACK OF TEAMWORK/COLLABORATION Lack of team orientation; Driven by personal ambitions versus team success; Not cultivating network

2 INSUFFICIENT TRAINING/DEVELOPMENT Failure to unleash talent; Lack of commitment to learn; No formal training process; Lack of focus from top management

3 EGO/ARROGANCE/MICRO-MANAGEMENT Failure to recognize/reward team for success; More interested in themselves than their reports

4 NO CLEAR STRATEGY/VISION Not developing/executing strategy; Behaviors that conflict with organizational values; Business acumen

5 LACK OF LEADERSHIP QUALITIES Failure to lead/develop/inspire/engage; Lack of dedication to employees

6 INABILITY TO CHANGE Lack of innovative thinking; Failure to adapt; Lack of flexibility

7 POOR LEADERSHIP SELECTION Lack of hires with good leadership skills; Poor job alignment

8 LACK OF TRUST Lack of trust, integrity, loyalty; Betraying trust

9 EMOTIONAL INTELLIGENCE/SELF AWARENESS Inability to make hard people decisions; Lack of effort for self-development

10 INABILITY TO DELIVER RESULTS Lack of prioritization, time management, accountability

HOW WE RANKED THE BEST COMPANIES FOR LEADERS

The following five criteria were considered in evaluating companies.

1 Having a formal leadership process in place

2 The commitment level of the CEO to the leadership development program as measured by the percent 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