Where Have AII the

Leaders Gone?
KEVIN CASHMAN 08.14.06, 06:00 AM ET
There`s a new crisis in Corporate America. It has nothing do with Enron,
ethics or Sarbanes Oxley. The real problem is the dwindling supply of
CEO and C-Level talent. In May, CEO departures within U.S. companies
hit a record high of 148 executives, according to Challenger, Gray &
Christmas. "In fve years, 50% of all C-Level executives will retire," says
Paul Reilly, CEO of Korn/Ferry International.
What`s causing such attrition? Wall Street pressure for results with no
hiccups doesn`t help. Neither do boards who seem fxated on fnding
heroic hired guns. Meanwhile, the pool of talent is dwindling as baby boomers retire and many
corporations fail to properly invest in their high-potential talent.
Who will step up and fll the growing void? That`s a good question--with an unpleasant answer. In the
next decade, the challenge to locate and develop leadership resources may be every bit as much of
a struggle as drumming up new energy resources. In fact, our leadership "reserves" may be heading
for an all-time low. Demand is going up, and supply is going down. Is it any surprise executive
compensation is accelerating?
The following reader questions give a taste of what it feels like to be a leader in short supply today.
(To encourage an honest dialog, executives` and companies` names have been withheld.)
FORMER CEO IN THE PUBLISHING INDUSTRY: As a former CEO, I know how difcuIt it is to
face even an occasionaI taIent drain. What practicaI measures can senior Ieaders take to deaI
with potentiaI crises?
CASHMAN: It may sound simplistic, but the best thing a top leader can do is be a great coach, boss
and mentor. After conducting 19,700 exit interviews of key employees leaving companies, the Saratoga
Institute found that 85% of bosses thought their top people left for more money and opportunity. But
the real reason behind the turnover: 80% said they left due to poor management and leadership or
because of a dysfunctional company culture. If you`re a board member, a CEO or a leader on the front
lines, paying more attention to the development of your people and teams is the crucial variable for
retaining key people.
PRESIDENT AND COO IN THE EDUCATIONAL SERVICES INDUSTRY: WiII the coming shortage
of senior-IeveI taIent cause companies to become more thoughtfuI and aggressive in their
deveIopment and retention initiatives?
CASHMAN: Let`s hope so. However, the current situation doesn`t look so good. We estimate that
only 35% of all frms have a retention or talent management system that will produce at least one
successor for each key position. World-class organizations have two people ready for each key job
that will need flling at the top. But this only accounts for about 10% of companies. The crisis is here,
and most leaders don`t fully see it yet. The ones that do and invest in succession and leadership will
have a signifcant competitive advantage in the coming decade.
CEO IN THE FINANCIAL SERVICES INDUSTRY: Faced with a shaIIower pooI of taIent but
armed with Iucrative compensation packages, how can I ensure that--amid erce competition
for taIent--we do not unintentionaIIy compromise our vaIues and become an Enron?
CASHMAN: Enron espoused beautiful values and believed in paying top dollar for top talent, but
recognizing and living values are not one in the same. Retiring business owners can attest that the
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heart of succession planning is fnding talented people who genuinely connect with the company`s
culture and values. In fact, upholding values on par with results in every phase of business is what
transforms corporate cultures. As a result, people will be attracted to the company and its value
proposition. This is why Southwest Airlines, in the midst of a tough marketplace, still has thousands of
qualifed applicants beyond its need. Companies that walk the talk attract the people they want.
More specifcally, when looking for principled successors, don`t be afraid to put them to the test. Solid
behavioral assessments, interviews or simulations can gauge values--not just achievements--helping
character-centered leaders stick out from more self-centered ones. Also, involve the company from
top to bottom. Surveys reveal that board members and employees are both more stringent than CEOs
when it comes to evaluating a candidate`s ethics. Use checks and balances to make sure you`re not
viewing individual candidates with rose-tinted glasses.
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Kevin Cashman is founder and CEO of LeaderSource, A Korn/Ferry Company, a global leadership development,
executive coaching and team effectiveness consultancy headquartered in Minneapolis. He has written four books
on leadership and career development, including the bestseller Leadership From The Inside Out (revised edition
out soon). Kevin Cashman is a regular columnist for the Leadership Channel of Forbes.com. Ongoing input or
questions for 'Consult Cashman` can be shared at http://www.leadersource.com/consultcashman or
consultcashman@leadersource.com
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