Consultants' Corner

Management Development: Easy as ABC

Steve Murphy
Insurance Experts' Forum, July 20, 2010

An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.”

“The team with the best players wins.”  — Jack Welch

Jack Welch is regarded as one of the best business leaders of our generation. His obsession with shareholder value drove General Electric to increase productivity and efficiency, which resulted in a 3000%-plus increase in market value during his tenure. However, during the Welch years, GE was known as much for producing corporate leaders as it was for producing light bulbs. While most of us will never run an organization as big as GE, many of the day-to-day challenges are the same. Management development is one of those challenges.                                               

A Google search on “management development strategies” returns about 42 million hits. Go into any major book retailer and there will be lots of books dedicated to the topic. Walk into virtually any company today and you will most likely find that the senior managers are familiar with the latest management practices, read the latest “must read” management books and have adopted many of these strategies. Yet, effective management development is still the Holy Grail for many. Why?

Since it appears that the success/failure conundrum is not due to a lack of information on management development, one can extrapolate that execution is the critical success factor. Execution is directly related to talent. Ergo, it can be argued that talent is the key differentiator.

Companies that find, hire and promote only the most talented people available while removing chronic under-performers typically win. Successful organizations go so far as to make talent selection/management development a top corporate priority.

Many corporate initiatives fail because decision-making responsibilities are given to under-skilled or under-talented managers and they end up making bad decisions. Conversely, the most competent managers are able to drive improvements in productivity, innovation, quality, customer service and so forth.

Now let me state that talent is not the only success driver, but it is an essential one. The biggest mistake senior managers can make is trying to “manage their way” to success with low performers on the team. They must constantly work to upgrade the team with high performers. I bet Jack Welch would argue that it is the primary deliverable for senior managers.

An analysis of GE’s development approach, as well as that of some of Nolan’s most successful clients, reveals some common practices in the area of talent development. These practices can be summarized in the following five steps:

1. Force-rank the managers (and employees) based on objective criteria. The top 10% are the A players, the next 25% the B players, and the rest (65%) the C players. The objective is to proactively identify A players and retain them.

2. Use stringent selection methods to minimize hiring mistakes. Detailed job descriptions, job analysis and comprehensive chronological interviews are critical components of an effective assessment process.

3. Improve the existing talent pool by providing employees with detailed, individualized development plans.

4. Redeploy C players into roles better suited to their skill set. In many cases, this will allow the low performers to excel and become A and B players.

5. Require subordinate managers to adopt the development approach.

It is important to note that this approach starts at the top and permeates the entire organization. It is also not a once-a-year exercise. In order to maximize the value of the approach, it must be an ongoing, dynamic management activity.

Steve Murphy is a senior consultant at the Robert E. Nolan Co., a management consulting firm specializing in the insurance industry.

Readers are encouraged to respond to Steve using the “Add Your Comments” box below.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

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