‘The ability to manage complexity is critical for a leader’

‘The ability to manage complexity is critical for a leader’

Development Dimensions International (DDI) works with the world’s leading companies to help them manage their talent better. In India, they have worked with corporates like Infosys Technologies (Infosys), Wipro, General Motors India and Aditya Birla Group, to evaluate and train their next-generation leaders.

Dr. Rich Wellins is senior vice- president of global marketing and business development at DDI. He is responsible for launching DDI’s new products and services, leading its Center for Applied Behavioral Research (CABER) and its major research projects, all while developing and executing DDI’s global marketing strategy. Wellins has spearheaded DDI’s bi-annual research on best practices in leadership development and talent acquisition on a global scale.

An expert on leadership development, employee engagement and talent management, Wellins has written for more than 40 publications and published six books, including Empowered Teams, Inside Teams, and Re-engineering’s Missing Ingredient. He has made over 100 presentations at numerous professional conferences around the world and is on the judge’s panel for CNBC’s Asian Business Leaders Award.

The Smart CEO caught up with Rich Wellins to talk at length about business leaders and talent management.

What are the key skills a leader must possess?

I think key skills remain the same, even over a period of time. From our experience of working with leading companies like Infosys and Wipro, there are some skills we have identified to be very important- having a vision for the future, sound business acumen, creating a culture of innovation, being able to change business models and continuously look for newer opportunities. I think Indian business leaders are superb at identifying newer opportunities. People skills and being able to coach and develop a workforce is critical as well.

But, I think, the most important has to be the leader’s ability to execute. Business leaders today need to be agile. Newer opportunities are coming up at a tremendous pace and business models are changing faster than ever. However, in addition to all this, chief executives need to have the vision and skill to manage complexity. According to the recent IBM CEO Report, complexity is the number one issue companies face today.

What is the strategy to keep a workforce happy?

At the base level, compensation, being fair to your employees and providing them with opportunities for advancement in their career are extremely important. But, these things are the basic requirements. We have actually researched this topic extensively over the last six or seven years and our primary finding is this- you want more than just satisfied employees. You want to work with people who have the passion.

Intangible rewards are important. Employees need to see their contribution to the big picture. They need to understand the importance of how their work fits into the overall strategy of the company.

There is one other important aspect. Employees look up to their bosses, to see growth. Like they say, people do not leave a job, they leave a boss. It is not entirely true, but it is partially true. People want to work with high-performance bosses and they look up to them for future growth within the company.

How should companies handle promotion-related conflicts, especially at the senior level? For example, if there are two or three people running to become the next CEO and one of them is promoted, how should the others be treated?

I think the senior leaders who do not get promoted should leave the company. You are making a career decision and it has to be based on what works for you. Let us take General Electric as an example. Three people were in contention for the top job to succeed Jack Welch (ex-chairman and CEO). After Jeffrey Immelt was appointed the CEO, the other two left the firm. Typically, the top two or three people are very competitive. I think, as soon as Immelt was appointed the CEO, Bob Nardelli, who was also in contention, became the CEO at Home Depot. People with top billing are ambitious, highly skilled and want the top job. There is no point staying around if the person is uncomfortable.

What are your thoughts on CEO compensation, especially during problematic times?

In general, if you look at CEO compensation in the U.S. and U.K., it is really high. Millions of American dollars being paid out for poor performance is ridiculous. What is the risk? You get a huge package while coming in and then a huge exit package as well. The exit packages are far too generous, and that is my primary complaint against extremely high CEO compensation.

A number of Indian small and medium enterprises (SME) that are about Rs. 100 crores in size are still entrepreneur run. How should they look at their leadership structure if they want to scale up?

Obviously, there is no one answer to this question. But, fundamentally, entrepreneurs need to understand that being the boss of a U.S. $20 million business is very different from being the CEO of a U.S. $1 billion company. In the past, we have seen a lot of businesses not scaling up, because entrepreneurs do not want to give up control. The first step is to analyse the leadership team and see what needs to be done. Everything else will follow. But, as I mentioned, there is no one single solution to this question.

You worked with Infosys on structuring their global sales force when they were at revenues of U.S. $1 billion. The goal was to structure their sales force to reach U.S. $4 billion in revenues in four years. Can you take us through the experience of working on this project?

Our primary job at Infosys was to assess the sales force and give feedback to senior executives at the company. Overall, there were no problems. We had the opportunity to work with some of the most gifted leaders in this regard. They were entrepreneurial, customer-focused and their assessment scores were very good. This just proves that good leadership can build good businesses.

What were the key findings from the India-specific leadership forecast report you published recently?

Globally, things have gotten worse. Confidence in leadership has gone down. In spite of more investment in leadership development, leaders themselves are not finding this to be true. There is a certain difference between the value human resources departments think they provide and the actual value they provide to CEOs.

However, on the whole, India is good news. Data shows that here, there is more confidence in leadership than the rest of the world. India is doing a better job in succession planning, compared to other nations. Indian leaders are applauded for their ability to implement a business strategy. Most importantly, findings suggest that Indian organisations have a process in place to identify high-performance future leaders.