August, 1998 - Volume 2, Number 11

Executive Talent as the Critical Resource

A research team with McKinsey & Co. interviewed and surveyed company officers, top executives, and human-resource managers at 77 companies whose financial performance ranked them near the middle or top of their industries. It also focused on the 20 top-performing companies, including Allied Signal, Amgen, General Electric, Harley-Davidson, Hewlett-Packard, Home Depot, and Sears.

During the past decade, the top performing companies delivered twice the annual shareholder return compared to the middle-of-the-pack firms. The top performers also more often

• recruited executives from the outside;
• made effective use of performance reviews;
• encouraged candid feedback;
• paid strong performers far more than weak managers;
• offered generous long-term performance incentives;
• emphasized management development in staffing decisions;
• fostered the careers and cultures that managers value.

The study concludes that the "right group of senior executives is the most valuable asset a company has," and securing the right group has become a critical priority among the top performing companies. In the intensifying competition for talent, many are tapping new sources: Hewlett-Packard provides summer internships for high school and college students with an eye to future recruitment; Home Depot raids it competitors; GE hires hundreds of military officers.

No wonder then that the executive search business had expanded from $800 million in revenue in 1980 to $4.4 billion in 1995. And company executives have expanded their own investment in executive development. The chief executive of Allied Signal is said to interview all candidates for the senior-most 500 positions in the company.

Source: McKinsey War for Talent Team, "Winning the War for Talent," McKinsey & Co., 1998.

Disconnecting and Downsizing

Time Magazine writer Barbara Rudolph offers an account of downsizing's aftermath through personal accounts of six AT&T employees who found themselves suddenly "disconnected" during one of the company's many waves of downsizing. What she discovers among the six men and women whose lives she intensively follows is a story of "resilience and triumph, terror and redemption."

Tom Chase, Barbara David, Larry Nagel, Vince Smith, Maggie Starley (real names) and Kyle Stevens (a pseudonym) had all seen Ma Bell as a benevolent and caring employer until the pink slips arrived. Forced on the streets at an age when its especially painful to be there, some soon found good work, others were less fortunate, and all were forced to reconstruct a sense of purpose far more independent of their work identity that had defined so much of their early lives.

David, a sales account executive, and Nagel, a Bell Labs engineer, transcended their shattered assumptions and eventually secured challenging positions in smaller firms. David obtained a position with a competitor of NCR, now spun-off from AT&T, where she enjoyed more responsibility and fatter pay. Nagel moved on to use his engineering background as a supervisor of circuit designers at a chip maker.

For some, however, the interim period of unemployment took its toll. After a year without work, Smith, a former customer service manager, saw his small world was becoming far more so: "My son would come home from school. I'd watch some TV news and hear the events of the day, an all of a sudden it hits you -- another day in the life of the world has gone by, and you were on the bench." Sixteen months after his AT&T downsizing, Smith was finally hired by a health-care insurer where his wife was already employed.

Starley, a telephone operator, reclaimed a second life with AT&T when she was hired by one of its customer care centers (and, later, by rival Bell Atlantic); Stevens, a business strategist, enjoyed reincarnation at NCR, the former AT&T division; but Chase, a middle manager, never recovered, paralyzed by an event not of his own making but one whose shadow he could not escape.

Source: Barbara Rudolph, Disconnected: How Six People from AT&T Discovered the New Meaning of Work in a Downsized Corporate America (New York: Free Press, 1998).

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"Attendance at American art museums is skyrocketing, but upstairs in the director's office, the desk chair is often unoccupied and an eerie silence prevails. At last count, there were about 20 openings for directors at prominent museums, and trustees are insisting, with only partial exaggeration, that they can't find anyone for the job."

"To be sure, all kinds of institutions, from the Ivy League to major league baseball, are having a hard time filling top positions. All around, the theme is the same: money and marketing are stripping jobs of their character and driving visionaries away. The help-wanted problem is particularly acute at art museums, where directors are departing with a new haste as stranded trustees consider alternate models of leadership."

"If you're thinking of becoming a museum director, this is an excellent time to apply."

Source: Deborah Solomon, "As Art Museums Thrive, Their Directors Decamp," New York Times, August 2, page AR1.