CPG firms rank highly in Global Top Companies list

Posted by Daniel Palmer on 24th November 2009

IBM, Procter & Gamble and General Mills have topped the 2009 list of Global Top Companies for Leaders, one of the most comprehensive studies of organizational leadership in the world.

The Global Top Companies for Leaders study is conducted by Hewitt Associates, a global consulting and outsourcing company, in partnership with The RBL Group, a leadership systems advisory firm, and Fortune Magazine. The winners were selected and ranked by a panel of independent judges based on criteria including strength of leadership practices and culture, examples of leader development on a global scale, impact of leadership in communities in which they operate, business performance, and company reputation. The 2009 list of 25 companies includes eight from the CPG and food sectors (see: bottom of page).

Budget cuts must not impact development of leaders

When comparing the Global Top Companies with more than 500 companies around the world, Hewitt identified one distinguishing characteristic that sets them apart from their peers: even during the economic downturn, Global Top Companies remained committed to building leadership capability within their organizations. Tighter budgets and fewer resources forced these organizations to think and act smarter and more creatively about what really mattered when it came to leadership – but they didn’t lose focus.

“Strong leadership is a critical element in helping global companies successfully compete, yet many organizations lack the know-how and infrastructure to create a robust pipeline of leaders for future success. Simply put, they lack the discipline to build leaders,” said Robert Gandossy, global practice leader of Leadership Consulting at Hewitt. “Our research and experience tells us that, while leadership talent is in short supply around the world, the Global Top Companies for Leaders are still able to groom a near-constant supply of world-class leaders . . . year after year and regardless of economic conditions. This capability gives them a unique advantage over their competitors and will poise them to emerge stronger – and more quickly – out of the economic downturn.”

“The quality of the leadership within a company helps meet the expectations of investors, customers and employees, and sets the stage for growth,” said Norm Smallwood, co-founder of The RBL Group. “So developing the next generation of effective leaders is perhaps the most important undertaking of a forward-thinking company. The Global Top Companies for Leaders understand the urgency of a robust leadership culture and are learning to master how to build and sustain one.”

Since the study’s inception in 2002, Hewitt has identified a set of standard leadership characteristics embodied by companies that possess a winning leadership culture. Leaders at these organizations are passionate and committed and leadership programs are practical, relevant and aligned with business goals. Top Companies have an intense focus on talent, and they are deliberate about who they hire, who they coach, who they promote, and who they reward. Finally, leadership development at these organizations is an institutionalized practice and mindset.

In addition to this standard set of leadership traits, Hewitt’s research identified four other critical areas that set the 2009 Global Top Companies apart from other companies around the world:

Leadership remains a critical priority – in good or bad economic times

According to Hewitt’s research, all companies ranked cost pressure as the single most pressing challenge over the next three years. Stabilizing cash and debt positions and balancing immediate cost pressures with long-term growth were key priorities in 2009, and they will remain a top priority as the global economy begins to recover. However, Global Top Companies also plan to have an intense focus on ensuring they do not abandon key leadership and talent efforts in favor of shortsighted goals. As A.G. Lafley, chairman of the board at Global Top Companies winner Procter & Gamble, explains, “All the value we create comes from our people – that doesn’t change if we are in a recession or if we are growing rapidly.”

Succession planning is deliberate and consistent

All Global Top Companies have a formal succession planning process in place, compared to only 72 per cent of all other companies. Almost all (95 per cent) have developed succession plans specific to the CEO or an emergency plan, compared to just under two-thirds (63 per cent) of all other companies. Succession plans at Global Top Companies are also more likely to offer specific elements to ensure the capabilities and depth of their pipelines are strong. Eighty-four per cent of Global Top Companies identify a leader’s current performance against his/her future potential, compared to just 64 per cent of all other companies. In addition, 88 per cent offer 360-degree feedback, compared to just over half (56 per cent) of all other companies.Leaders clearly understand what is expected of them as leaders

Leaders at the Global Top Companies understand what is expected of them and are held accountable for their actions

Seventy-two per cent of Global Top Companies rate the ability to effectively develop other leaders as one of the top five leadership skills most critical to their firm’s success, compared to just 39 per cent of other companies.

Developing the next generation of leaders is a priority

Hewitt’s research shows that Global Top Companies recognise that the ability to attract, assess and develop leaders across roles, functions and geographies is a necessary and differentiating strategy. All Global Top Companies formally identify high-potential talent, compared to 68 per cent for all other companies. All of them also have formal processes for developing leaders, (compared to 77 per cent of other companies) and use leaders as teachers and mentors (compared to 55 per cent of all other companies) in these efforts.

Food industry and CPG players who made the list of 25:

2. Procter & Gamble
3. General Mills
3. McDonald’s
10. Unilever
12. Colgate Palmolive
17. Cargill
18. Olam International
20. PepsiCo