On the globalizing talent pool:
As workforces and consumer markets become more global and service businesses proliferate, CEOs worry about their ability to keep their scattered workforces nimble and strategically aligned to both the opportunities and the threats that arise from the
global marketplace. The pressure to optimize workforce alignment requires the movement of management assets and forces executives to think at least two moves ahead when it comes to deploying talented business leaders.
“We have to be able to put bright talent and expertise where there’s a need . . . we need to be able to move the talent around,” says one corporate executive.
The need to drive business on an international scale dictates the effective deployment of management talent inasmuch as it requires companies to talk to their customers, employees, and shareholders on a global scale. Consider the case of Mexican cement industry giant Cemex (NYSE: CX), which found that it had to translate its Web site into eighteen different languages, in part because it operates in fifty countries around the world.
The capacity to conduct business globally rests on individuals’ willingness to follow opportunity and adapt to a new environment, much in the same way a German executive recently followed opportunity all the way to Shanghai, a new crossroads for international business. His sense of discovery was short-lived as he walked into a conference center there, to be greeted by a gathering of more than five thousand of his countrymen. These days opportunity attracts leaders like a magnet, no matter what the longitude and latitude.

On the competition for world-class leaders
The market for professional and management talent is cyclical, like the business cycle itself. During the late 1990s in the United States, for example, employers were paying handsomely and recruiting talented workers at a staggering pace. In the years since, the growth and contraction of industrial economies has moved large multinational companies to hire by the thousands and lay off by the thousands. The struggle for human capital has alternately cooled and re-ignited, ensnaring midsized, small, and now micro-companies in a battle for talent in economies far more reliant on their vitality as businesses.
We’re only now in the opening skirmishes of the global war for executive talent. For organizations that find themselves unprepared to engage in it to defend their precious leadership assets, the truth hurts. It’s painfully clear that all participants in this war need to make whatever succession plans they have more global and more inclusive.
These days, shifting demographics and a serious decrease in executive job tenure portend serious leadership succession challenges, and the implications of not planning for these challenges (or simply continuing to promulgate haphazard recruitment and retention practices that bring mixed results) will be far more punishing to corporate profits than in years past.
The fateful combination of demographic change and organizational dysfunction that has pushed executive turnover to new records
in recent years has left the future of many fine organizations hanging in the balance. The graying of executive ranks, together with organizations’ failure to develop management bench strength, has left many unable to provide internal replacements for the increasing numbers of top business leaders who will soon head into retirement. In fact, a study by RHR International, a U.S.-based human resources consultancy, found that 50 percent of the Fortune 500 companies anticipated losing half their senior management by 2008, while only about 25 percent were highly confident that their internal talent pool would meet the organization’s future needs.
Effective recruiting is a key to addressing those issues because, as global consulting firm Watson Wyatt has found, “organizations with superior recruiting practices . . . financially outperform those with less effective programs.”15 And research by Hewitt Associates, a global human resources company, found that “the attraction and retention of pivotal employees plays a critical role in increasing shareholder value.”

A significant corporate challenge
Even for those companies with succession plans, talent management strategies, and executive development programs, those initiatives simply are not generating leaders fast enough to give organizations confidence that they’re well prepared to meet their future challenges.
Many companies face the stark reality that a majority of their senior executives could retire now, and that their leadership bench strength is weak in some functions and business units. Others know that they’ve identified successors for only a small percentage of their most critical senior management jobs, and fewer have a strong grasp on which of their top leadership posts can be filled through internal promotion and which must be filled with new hires.
The competition for leadership talent will intensify as companies realize that replacing the productivity of one retiring Baby Boomer
may require hiring more than one Generation Xer.And the interests of organizations and a new generation of executives wanting at least some work-life balance will soon collide. There simply may not be, from a productivity perspective, a clean one-for-one transfer of knowledge, experience, and productivity as the mantle of leadership is passed by the Baby Boomers to Gen X. This will only exacerbate the competition for the best leaders.

A delicate yet incredibly influential business
Corporate reliance on the external leadership talent market is critical to change management, performance improvement, and management succession. As one corporate vice president of global talent management puts it: “We’re realizing we just can’t continue to rely on [internal] talent. You’re going to see us hiring more from the outside.”
Another big-business leader puts it this way: “Inbreeding can be a problem with promoting from within.” Still another points out that
“We have gotten hit with market changes we didn’t see,” and recruiting new senior management is an effective way of buying strong corporate leadership and critical market intelligence at the same time.
The business of picking new, world-class corporate leaders is not easy, and the search for game-changing talent is especially difficult. Just ask the owner of virtually any professional sports team about the firstround draft picks that never led their teams to the playoffs, let alone a single winning season. He or she will tell you that in addition to the most methodical and scholarly analysis, there’s a measure of luck, timing, and maybe even karma involved.

Learn more about the book at www.DecidingWhoLeads.com