The Revolving Door of Talent - chief executive officers - Panel Discussion

Chief Executive, The, August, 2001 by Rick Frederick

IN THE EXECUTIVE ranks, the war for talent rages on, fierce as ever. Here are some orders from CEOs on the front lines.

Jordan, Pippin, Rodman, Kukoc, Kerr, Longley. Phil Jackson and his Chicago Bulls scored an unprecedented six championship seasons. A top coach with top players and winning seemed easy.

But of course, recruiting the cream of the crop and integrating them into your culture is never a simple feat. Even in a sluggish economy, there's no shortage of opportunity for talented executives -- so what can you do to keep your high-flyers? And conversely, what do you do with the executive who isn't performing? How long do you hang on before sending him or her to the trading table?

Today's CEO is a coach -- to culture, the team, and individuals--and his or her individual style and philosophy of leadership runs throughout the company. If you're a good coach, the theory goes, your top players will become good coaches, too. In the following roundtable, co-hosted with The Center for Creative Leadership, CEOs trade strategies for developing an "A" team, and winning loyalty so the good players stay in the lineup.

Lily Kelly-Radford (Center for Creative Leadership): Attraction and retention is the No. 1 strategic challenge for most organizations, according to recent reports. "A" companies want to hire "A" players. Yet turnover rates are at an all-time high. A recent report cites findings that show one-third of staff interviewed would leave their jobs in the next year and an additional 20 percent would consider leaving.

There's a tendency to hire more ex-executives from the outside making this hiring trend tricky, because of the chance of failing at the senior level. According to our research, senior executives fail, in general, 34 percent [of the time] when hired from the outside and 24 percent when hired from the inside --and that's usually within the first 18 months. The cost of replacing executives tends to run 2-4 times salary. In one situation a client told us it was costing them $1 million to replace lost talent. There's also a limited pool of talent, and that's being exacerbated by demographic shifts, particularly with baby boomers retiring early.

The question is, what do you do to attract and retain talent? We've found there are two basic things you can do. People will be attracted to a company for money and because of a strategic and cultural fit. But even if you can lure them with great compensation, you might not necessarily be able to keep them with money.

So the question is, if money can lure them, but can't keep them, then how do you work with strategic and cultural fit? How do you create that fit? A lot of consulting firms are doing research, and the evidence is mounting that there has been a distinction between what HR executives say will keep people and what employees say will keep people. Employees are saying, we will stay if we have strategic clarity. It's the strategic confusion and mixed messages about priorities and alignment that make people want to leave an organization.

So what will you, as CEOs, do to try to create the right culture and provide the organizational alignment to give people a sense of clarity about where the company is going? How do you intentionally create that culture? If you're going for acquisition of talent in terms of strong leadership, and retaining the leadership you have, what kind of capabilities or competencies might you be looking for?

One is the ability to operate on a team. A lot of executives have never been on real teams. The second is ambition, although that needs to be tempered. The third is knowing how to handle change and adapt to change, to know how to seek out and work collaboratively with others. This particularly comes up with international work and global assignments. And, finally, executives have to show that over a long period of time they can demonstrate excellence in terms of sustained business performance.

J.P. Donlon (CE): I'll ask the four questions, as they do in the Passover Seder: What are your beliefs about your own leadership style? What are you doing to develop leadership -- consciously and unconsciously, directly and intuitively? What do you do when derailment happens, when things go off the track? And, finally-the $64,000 question -- what are you really looking for in terms of talent?

Arthur Selkowitz (Bcom3 Group): The desire to retain sometimes results in excessive allegiance. Because as we look at these four factors, some of them are trainable, but some of them aren't.

Very often our desire to retain executives -- when in our heart we know that they fail in some key areas and are never going to change -- sets us up for a trap, where we become excessively dependent on them, rather than realizing that their style is never going to change. And it only becomes more difficult as they become more integral to the organization.

Dug Campbell (Tower Automotive): How do you know when to give up on someone?

Steve Potter (TMP Worldwide): How many people here do a 360 review at the executive level? A lot of companies spend a lot of time trying to save people that may be fine in another organization, but just aren't going to fit. I'm spending way more time than I ever thought I would basically coaching and building culture. The single hardest thing I've wrestled with is trying to build culture. And what I've found is if you have an executive who doesn't adhere to the culture you're building, you have to get rid of him or her. You can't train somebody to do that.