The Challenges and Opportunities Of Preparing The Next-Gen Leader

As we witness industry after industry disrupted by the ripple effects of technological advancements, it’s clear that today’s companies must continually adapt and evolve to survive. Against this backdrop of rapid transformation, the always challenging task of attracting, developing and retaining talent becomes even more complex, agreed CEOs gathered for a recent roundtable discussion co-sponsored by AlixPartners and Chief Executive.

For UPS CEO David Abney, changes wrought by the growth of e-commerce coupled with innovative technology created talent challenges at a company long lauded for its ability to recruit and retain workers. “Our business used to be primarily B2B, but now more than half of our business is B2C,” explained Abney. “We’re determined to be on the front end of the technology that can help us be much more efficient than we have ever been before. On the other hand, there are people trying to figure out how to use the latest technologies to take a niche of our business here and a little bit there.”

Embracing Outsiders
Despite a reputation for successfully attracting young recruits and retaining them for decades, UPS now faces a need to augment that talent pipeline model. “Once we get them ‘brown-blooded,’ as we call it, we promote from within and keep them for life—that’s been our story,” said Abney, who joined the company himself as a loader while a freshman in college. “But our business has changed so much that for the first time we’ve been bringing in people at much higher levels in a significant way.”

“Once we get them ‘brown-blooded,’ as we call it, we promote from within and keep them for life—that’s been our story.”—UPS CEO David Abney

On-ramping experienced talent with fresh perspectives, however, has proven more challenging than expected. Ironically, the company is actually too good at indoctrinating new employees in the ‘UPS way’. “I’ve noticed that as soon as we bring them in, we try to make them like us,” explained Abney. “We have to learn that the reason that we’re bringing them in is that we need to change a little bit—and that the same things that worked with our former system are not going to work as we bring more people in midstream.”

Abney noted that bearing in mind that the biggest challenges his company faces are also its biggest opportunities helped in navigating these changes. “It’s really important to frame it in that direction, because if you just focus on the challenge part, it becomes more of a defensive maneuver,” he explained. “I don’t think that brings as positive an outcome as embracing the opportunity.”

Fighting Complacency
Galvanizing existing employees toward change can be particularly challenging for healthy companies. Henry Schein CEO Stan Bergman is no novice at transformation, having been named Chief Executive’s 2017 CEO of the Year in part for his success in shifting his company from a healthcare product distribution company to a provider of management solutions for dental and veterinary practices. Yet, Abney’s experience resonated with Bergman, who pointed out that convincing employees to leave the familiar behind and embark on new paths takes a healthy amount of persuasion.

“We have a company that has been successful for a long time, so when you go to the team and say, ‘We’ve got to change,’ they say, ‘Why? Things are working,’” asserted Bergman. “So, we have to find a way to convince the team.”

Both technological innovations and the swinging pendulum of healthcare reform have become platforms for Bergman in rallying his troops toward embracing change. “We know healthcare is going to evolve over the next 10 years, because [the country] can’t afford what it is today,” he said, likening his situation to Abney’s. “No one knows exactly where the future is going, but we do know we have to change from a logistics, a technology and a solutions point of view. We need to drive change and drive change quicker. We’re not a technology company per se, but at the end of the day, we are not going to be selling product. UPS is not going to be selling shipments. We will both be selling solutions.”

For some leaders, transformation required a complete overhaul. “You don’t have to be a rocket scientist to see that seven management layers wasn’t the right structure for what we were trying to accomplish,” said Quest Diagnostics CEO Steve Rusckowski, recounting his decision to restructure the company he joined in 2012. “We took out three layers and 15 percent of management. It wasn’t easy, but it had to be done.”

Having a more egalitarian leadership structure enabled the team to move more quickly and to overcome the resistance from within that typically plagues turnaround efforts. “It’s a perpetual fight against all the antibodies of change,” he noted. “There are always a lot of people in the middle who don’t want change. They think, let’s see how long he lasts. Five years later, I’m still here, so we’re wearing them down. Some of it is mechanical but some of it is just strong, hard, dedicated leadership and persistence.”

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Jennifer Pellet
As editor-at-large at Chief Executive magazine, Jennifer Pellet writes feature stories and CEO roundtable coverage and also edits various sections of the publication.

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