CEO Lessons Learned 2 – Critical Constituencies

In our client work we often get a chance to discuss with CEOs matters that evolve into significant lessons learned for our clients and ourselves.

The Role of Critical Constituencies

As we exit the global recession it is essential that we remind ourselves of the need to clearly identify what are the most critical roles in an enterprise, and whom are the most essential incumbents in these areas.

The following derived from a recent client experience.

One of our clients is a large global insurance company.  When the CEO was asked,“what are your critical roles”, his response was “my direct reports.” When we probed a little more aggressively we determined that the most important role, or what we refer to as “Critical Constituency,”  was in fact the Actuaries.

When we met with the Actuaries we found that they felt very disenfranchised and in fact were “counting down the days”! What was even more compelling was that the average age of this group was 59! 

As we would expect Actuaries understand retirement!

This group was treated as if they starred in The Revenge of the Nerds.  They even had  their own tables in the lunchroom.

When we looked at the external marketplace we discerned that despite the recession the profession is not exactly a magnet for new recruits.  After all who wants to take exams for the rest of their professional life!

When we informed our client of their risks…. he did an outstanding job of recovering lost ground with the adage…. “Sheer panic brings clarity of thought.”

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CEO Lessons Learned 1 – Differentiation

In our client work we often get a chance to discuss with CEO’s matters that evolve into significant lessons learned for our clients and ourselves.

 The Dilemma of Differentiation

The most recent edition of the Harvard Business Review focused on Talent Management highlighting a Center for Creative Leadership study on High Potentials.  The findings highlighted the need to reconcile the fact that High Performers are not always High Potentials. 

 The article also indicated a need to insure that assessment protocols or “rack and stacks” are based upon enterprise reality vs. a rigid application.

 The following was derived from a recent client experience.

 “A global Financial Services company over the years had introduced the Differentiation espoused by GE whereby each year the “bottom 10%” were invited to leave the company.  The selection of 10% was somewhat arbitrary as those in GE would be the first to acknowledge.

 As we entered the recession many companies used many formulas to restructure.  Those whom are being brutally honest indicate that the recession allowed them to pare down the ranks “starting with those who should not be here”.  

 So the hypothetical question we posed to our client “why are you continuing to arbitrarily take out 10% of your now significantly reduced workforce?”

 The recession has increased enterprise productivity because of the significantly reduced workforces.  In this client’s instance they acknowledged that among the 10% who would be leaving in fact had some terrific performers in the population. 

 Eating chocolate to excess will make one heavy….as will dismissing good performers to adhere to an arbitrary percentage set when times were different, will reduce the enterprise IQ.