Getting the global view: Nestle, led by Peter Brabeck-Letmathe, climbs to the #1 spot in this year's Best Companies for Leaders

Chief Executive, The, Oct, 2004 by Igor Reichlin

How can a food and beverage company that wants to sell 8,500 brands in 86 countries become all things to all customers yet maintain its focus and keep its identity intact? Nestle CEO Peter Brabeck-Letmathe says it all hinges on the talent that his company nurtures. "We want to make sure that employees at all our regional companies maintain their original cultures, but follow the same Nestle principles," says the Austrian-born Brabeck. "We don't want to transform a Chinese into a Chilean or an American into an Australian. All we're asking for is that he or she embrace the common values that we have."

The company's Management and Leadership Principles state that "people are Nestle's most important asset." It seems to work. "Nestle puts its money where its mouth is," explains Robert Hooijberg, professor of organizational behavior at the International Institute for Management Development (IMD) in Lausanne, Switzerland. He says the food giant spends heavily on its high potential managers by putting them through a rigorous program of executive development at Nestle's training center in Rive-Reine, not far from the corporate headquarters in the small Swiss town of Vevey.

There, nearly 2,000 junior executives selected from all over the world undergo a monthlong induction into Nestle's corporate philosophy, work together on team projects and meet the company's top brass in groups as well as one on one. Brabeck, 60, spends at least four weeks a year at the training center. He sees it as his key task. "Leadership development," he says, "is perhaps one of the most important duties that I have."

It was Nestle's commitment to developing leaders that led a panel of judges, including Hooijberg (see list, below left), to conclude at a five-hour meeting in New York that the Swiss company deserved to be cited as the Best International Company for Leadership Development. After two years of examining U.S. leadership development practices, Chief Executive this time cast a wider net, focusing on European and Asian companies. Judges found European practices particularly impressive. "The Europeans have a leg up on their American counterparts," says Michael Mankins, a judge and managing partner of Marakon Associates in San Francisco. "These companies recognize that developing 'bench strength' is the key to unlocking future performance and value."

Are the Asians Coming?

This year's Best 20 span the globe from Finland to South Korea and from France to India and Japan. What unites them is the acute understanding that companies based outside the huge U.S. market can compete only if they learn to create different faces to present to a wide range of constituencies. One key point of difference is that some American CEOs think of leadership development and diversity as different objectives. But the European experience, in particular, suggests they are inseparably intertwined. "We are confronted with diversity because there's no such thing as a united Europe," says Benoit Potier, chairman of Paris-based Air Liquide, whose company is ranked No. 15. "Diversity has to become a manager's policy."

Potier, whose $10 billion company has adopted English as its official language, says that training leadership is so important for a company that operates all over the world because far-flung executives have to understand how to take risks, and when. "We coach people on how to take risks," he says. "But risk-taking is culture specific. That's why we need diversity in management. At the same time, not the same kind of management is required in all business environments. So we create an environment profile and match the management profile to it. My task is to place the right kind of people in the right kind of environment."

Air Liquide has clearly been making the right choices since it's been around for more than 100 years, says Rakesh Khurana, associate professor at Harvard Business School and another juror on the Best 20 panel. If a company has survived that long, he says, "there's something in the DNA that's good."

Asian-based companies are younger than European multinationals and are therefore different animals. Founding families at Asian companies tend to play stronger roles. Samsung Electronics, for example, is controlled by the Samsung group, which is dominated by the second generation of the Lee family. Yet Chairman Lee Kun Hee "has really placed a huge amount of emphasis on professionalizing talent and bringing in the best and the brightest," says Kyung Yoon, vice chairman of Heidrick & Struggles and a judge.

As a result, CEO Yun Jong-Yong, a professional manager, has used the various divisions of the company to breed talent so strong that one of his managers, Chin Dae-Je, became Minister of Information and Communications, and Chief Marketing Officer Eric Kim has just been tapped to join Intel. There is, in short, an external market for Samsung talent, which is one of the factors the judges cited in assessing a company's leadership development.

Toyota, too, is dominated by a founding family, the Toyodas, yet the company has groomed and trained a series of top managers, including current CEO Fujio Cho, who have worked their way up by rotating through a series of international assignments.