New research from DDI identifies leadership practices of top-ranked companies in Best Places to Work, Most Admired, Most Innovative and Global 500 rankings.
Pittsburgh—Companies who propel themselves to the top of various “Best Companies” lists reveal a lot about leadership, managing innovation and developing people. Development Dimensions International (DDI) examined the companies that earn “best” rankings and how they manage their talent differently compared to their non-ranked counterparts— and what that means for their businesses. The resulting research, “Behind “The Best”: Talent Practices of Top-Ranked Organizations,” one of seven new findings released as part of DDI and The Conference Board’s Global Leadership Forecast 2014 | 2015, is unique in identifying the specific talent practices that top companies pursue more consistently and effectively.
As part of the research, 1,528 participating HR leaders were asked if their company was included on rankings or lists identifying workforce strength. DDI researchers consolidated responses into three reputational categories: Most Admired, Best Places to Work and Most Innovative. Companies included on the Global 500 list were designated with a distinct metric based on revenue. Companies ranked on each of the lists were then compared with not ranked companies.
“There’s more than ping-pong tables and open workspaces to being named a best-ranked company and we want to pull back the curtain on the leadership secrets to making these lists,” stated Evan Sinar, Ph.D., study co-author and DDI Chief Scientist. “With this information, companies can emulate the leadership practices of the most admired companies and by doing so, chart their own course towards becoming top-ranked employers of choice.”
The research compares ranked companies on each list with their unranked peers and reveals two sets of talent management practices—one set common across all rankings showing similarity among top-ranked companies and the other unique to specific rankings. The talent practices most likely to be in place across top-ranked companies include: strong leader capability managing within constraints and maintaining effectiveness despite unpredictability; high leader readiness for global expansion, operational excellence and innovation; and highly effective leadership development, selection/promotion and high-potential management programs. Top companies also prepare leaders for readiness to meet several key business challenges and place a heavy focus on developmental assignments and formal leadership training.
Talent practices unique to only one ranking include: Most Admired—Leader capability using data to make decisions; using data to predict talent needs; and drawing high value from developmental assignments; Best Places to Work—Heavy use of internal coaching/mentoring; strong leader capability in avoiding business risks; and gathering efficiency and reactions metrics about leadership programs; Most Innovative—Strong leader capability managing change and understanding customer needs; and high-potential program accountability and measurement; Global 500—Heavy use of external coaching; high leader readiness for global political/economic risk and heavy use of online learning for leaders.
Ranked Versus Non-Ranked Companies Manage Talent Differently
“This research reveals the value of leader development, selection and high-potential management across all rankings in the study,” said Rich Wellins, Ph.D., DDI Senior Vice President. “Ranked companies outperform their unranked peers on many critical talent metrics.”
Ranked companies have more than 63 percent of their leaders promoted from within (versus 59 percent for unranked companies); a 71 percent success rate with internal leader promotions (64 percent for unranked); a 56 percent success rate with external leader hires (50 percent for unranked); a 67 percent success rate for high-potential leaders (55 percent for unranked); and are able to fill 52 percent of critical roles with internal candidates (45 percent for unranked).
When Organizations Get It Right
Achieving “best ranked” status is more than just good publicity—it’s good business. This research recommends pursuing these steps to emulate top ranked companies: 1) Emphasize formal learning and development assignments—integrating them into development programs that link classroom and on-the-job experience; 2) Most Admired—install a culture that uses data to drive decision making and carefully crafted development assignments; 3) Best Places to Work—foster coaches and mentors and seek leaders’ reactions about the talent programs they experience; 4) Most Innovative—bolster leaders’ skills in change management and understanding customer needs; 5) Global 500—connect leaders with external mentors and prepare them to handle global risk factors.
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Global Leadership Forecast 2014 | 2015:
The report—the seventh since DDI began this research in 1999—consists of responses from an unparalleled participant pool of 13,124 global leaders and 1,528 human resource executives within 2,031 participating organizations. Forty-eight countries and 32 major industries are represented, as well as both multinationals and local corporations. Twenty-five findings make up the report including seven new findings outlined below: