April, 1997 - Vol. 1, No. 7

Valuing Employees

Theresa Welbourne and Alice Andrews have studied the initial public offerings (IPOs) of stock by 136 non-financial companies in 1986. Half of the firms had fewer than 110 employees at the time of the IPO, while a fifth had more than 700. They evaluated the company's offering prospectus for evidence that the firm (1) placed a high value on its employees as a distinct asset, and (2) rewarded employees for organizational performance through such devices as profit sharing. The researchers find that the companies that value employees and use performance compensation at the time of the IPO are significantly more likely to survive for at least five years

The researchers also interviewed the most senior executive who had been with each company since the IPO five years earlier. When they asked the executive to rate a set of factors that best explain the company's performance since the IPO, the factor deemed most important is the quality of the top management team.

Implication: Build employee capacity and top leadership for growth and survival.

Source: Theresa M. Welbourne and Alice O. Andrews, "Predicting The Performance of Initial Public Offerings: Should Human Resource Management be in the Equation?" Academy of Management Journal 39 (August, 1996), 891-919.

Learning to Lead

Professor Jay Conger of the University of Southern California asks, can we really hope to teach leadership? To find out, he enrolls in several leadership development programs open to the public, including those of the Center for Creative Leadership, Pecos River Learning Center, ARC International, and the Leadership Challenge. He also examines company leadership development programs at General Electric and Levi Strauss & Co.

His personal odyssey begins with a leap from a canyon ledge to its floor 125 feet below. He is harnessed to a wire that transforms his fall to a glide, but a crash landing is still imminent if his teammates at the bottom fail to cushion his arrival. They do, he survives to write Learning to Lead, and he learns that the enduring leadership principles of taking risks and trusting others can be learned.

Leadership is an acquired ability, Jay Conger concludes, but a learning program only works if it

1. focuses on teachable skills, such as the ability to envision and communicate a strategy;
2. improves the managers' understanding of how leadership differs from management;
3. builds self-confidence and helps managers transcend their personal limitations, such as resisting feedback.

Leadership development programs should also contain, Conger finds, exercises in personal mastery and risk-taking to ensure that the lessons are memorable.

Source: Jay A. Conger, Learning to Lead: The Art of Transforming Managers Into Leaders (San Francisco: Jossey-Bass Publishers, 1992).

Preparing for the Future

Wharton Executive Education is offering an open-enrollment program in Winning in the Next Millennium: The Wharton Perspective" on August 24-27, 1997

Information:execed@wharton.upenn.edu and http://www.wharton.upenn.edu/execed

Leadership Programs at General Electric

GE provides brief information at http://www.ge.com/ibcroa18.htm on its education and training programs -- including those on leadership development and cultural change -- and on its Crotonville campus, which GE describes as "the world's first major corporate business school."

"I learned that a group of ordinary people, when they share a vision, can take on an incredible challenge and do things they never dreamed possible. This is true in climbing mountains or achieving business goals. If you can get a clear picture of your goal -- really see, feel it, taste it -- that I'm convinced you can make it happen...in the Himalayas or in your cubicle at work."

-- Arlene Blum, "Leading the Climb," Hewlett-Packard's "Measure" magazine, September-October, 1996, p. 20-21. Arlene Blum organized and led the American Women?s Himalayan Expedition to a successful climb of Annapurna in 1978, the world's tenth highest mountain at more than 26,000 feet; her account and its leadership is reported in Annapurna: A Woman's Place (San Francisco: Sierra Club Books, 1980).