Success stories in talent, leadership and succession

Board Review

CASE OVERVIEW

• Board review

• Chairman as key client

• Australia focus

• Industrial / hospitality

The Context

Our client is a leader in the design and manufacture of semiconductor assembly equipment. With approximately $760 million of revenue in 2010 (three times that of 2009) and about 2,100 employees globally, it provides equipment and tools used in the production of a wide range of semiconductor devices. The organization recently relocated its headquarters from the United States to Asia to be closer to key customers.

The Challenge

In seeking a new global CEO, the Board engaged Russell Reynolds Associates (RRA) to evaluate internal and external talent. In conducting the search, RRA identified two finalists. One was external with considerable relevant experience, and the other was someone who had come through the ranks internally and was heavily specialized in one core function of the business. The Board was divided in its support, and there were considerable sensitivities around ensuring the retention of the internal candidate should he not be successful in securing the CEO role.

The Solution

At the request of the Board and in order to draw further differentiation between the two candidates, RRA conducted a detailed executive assessment process consisting of online testing, in-depth two-person interviews and detailed behavioral referencing. The results highlighted the strengths, development areas and potential risks associated with each candidate. Based on additional information from this assessment, the Board quickly made its decision.

The Outcome

The Board appointed the external candidate and is extremely happy with the result. The new CEO is settling in well, with the data collected during the search phase providing critical insights and guidance to his fast and effective onboarding. A key part of the risk management process was to provide feedback to the internal candidate in a way that was valuable input to a development plan and yet recognized his current strengths and worth to the business. RRA met with this individual to provide the feedback and to help formulate the basis for a targeted development plan. The internal candidate has decided to stay with the organization and to contribute his considerable expertise and knowledge to building the future of the firm. The new CEO is coaching and providing experience and opportunity to broaden the internal candidate’s repertoire, to enable him to move into more senior and broader roles in the future—whether this be within or outside of the firm.

Succession & Development

CASE OVERVIEW

• Succession & development context

• President as key client

• European HQ, focus on Japanese business

• Industrial/pharmaceutical

The Context

With annual net sales of around approximately $9 billion and 22,000 employees globally, this Netherlands-based organization is focused on delivering innovative solutions in health, nutrition and materials. The company is a major manufacturer of pharmaceutical components and human and animal nutrition ingredients, with a developing market in the rapidly growing area of biomedical materials.

The organization’s Japanese business consists of a fully owned subsidiary with 180 employees in two key divisions, as well as two joint venture entities. It is largely considered a source of innovative technology for the global firm, and active investments have been made in business development and global and local acquisitions.

The Challenge

Globally, the organization is undergoing a major culture change program in order to create a more agile, flexible, fast-moving and responsive company. This means placing a much stronger focus on accountability, taking an external view, and having executives who inspire and engage their people. This transformation puts new demands on leaders as role models for these behaviors, as well as implements initiatives to drive this culture throughout its organizations.

Consequently, the response by the Japanese President was to ask Russell Reynolds Associates (RRA) to conduct a pilot assessment process with a select group of key executives. The aim of this work was to identify the strengths, development areas and career aspirations/potential of these individuals as compared with the market and to provide them with this feedback in an open, honest and sensitive manner. It was important that the key messages be positive and supportive rather than evaluative or critical.

In particular, the sponsors wanted to understand:

• How best to help each executive to develop as a leader in the "new world"

• Strengths of individuals in relation to others in the market

• Gaps or development areas in relation to these executives’ current roles and as reflected by the nature of the required cultural change

• Main career drivers and personal aspirations of these individuals and the potential they might have to move to bigger roles over time after exposure to appropriate development

• Development actions recommended for each person

The Solution

As with all talent, leadership and succession assignments, RRA worked closely with the President and the global and local Human Resources Directors to endorse the measurement criteria. These were based on the requirements of the transformed business and were stated in clear behavioral terms. While the technical depth and experience of the individuals were accepted as a "given", greater attention was focused on the behavioral aspects of future global leaders in the organization.

As inputs to the assessment process, RRA drew upon online leadership questionnaire data, in-depth two-person interviews and manager referencing. We prepared individual feedback reports, as well as an overall report, which we reviewed in detail with the President and Human Resources Director.

The Outcome

The results triggered discussions that both confirmed and challenged current thinking about all of the executives’:

• Strengths

• Performance

• Future potential

• Development requirements

• Possible career paths over the next three to five years The President made quick decisions to accelerate actions he was considering for certain individuals and confirmed development plans for others. For some, he identified external coaches who could help maximize the contributions of those on his team and who could refine and shift some of the behavioral changes that were indicated.

The President and Human Resources Director commented on the benefits of having these evidence-based discussions earlier in the process, while making structural changes and identifying who would take on key roles. The plan is to move this successful initiative to other geographies as a way of paying special attention to those in other parts of the world who create and set the environment in which business and personal success flourishes.

Succession Planning - Financial Services

CASE OVERVIEW

• Succession planning & development context

• CEO as key client

• ANZ focus

• Financial services

The Context

Our client is a listed company and leader in providing accommodation services to remote regional areas of Australia. With more than 400 staff and a wide portfolio of facilities under management, the organization seeks to be the leading provider to the resource industry through high-quality, innovative, flexible and best value-for-money solutions. In order to resolve the challenges of workforce accommodation, the organization’s unique business model incorporates land acquisition, village design, regulatory approvals, manufacturing, construction and ongoing management.

The Challenge

In building a clear strategy for growth and increasing investor confidence over the coming years, the Chairman engaged Russell Reynolds Associates (RRA) to conduct a Board review. The primary aim of this work was to advise the Board on how to evolve and strengthen its ability to guide the business to achieve its significant growth goals over the next two to three years. Given the redefinition of the business into the hospitality space and related industries, there was concern that the Board reflected too much of the mainstream skill sets, with insufficient diversity and too much emphasis on members who could open doors rather than on those who could drive a strong agenda of diversified growth into the future. There was a view that the Board had helped build a strong business platform and that members were well-aligned in their values and focus for growing the business. However, given the future growth trajectory, it was considered timely to review the strengths and development areas in terms of Board operation, capability and effectiveness.

The Board review was designed to provide insight, clarity and advice in relation to:

• Skills and capabilities that the Board would need to add over the next two to three years (diversity)

• Role of the Board and Non-executive Directors and the evolution of this role over time (roles and expectations)

• Where and how the Board could enhance its effectiveness (operational improvements)

• How Board members could strengthen their contributions (personal impact)

The Solution

RRA conducted a rigorous and structured assessment process consisting of detailed interviews with the executive team, individual Board members, key shareholders, and industry experts and analysts.

Key areas of focus included:

• Board remit (scope, purpose and responsibilities)

• Board processes (governance, meetings and papers)

• Board composition (experience profile, demographics and personal attributes)

• Board effectiveness (collaboration and communication, strategy, leadership and culture)

Each area was reviewed against RRA’s Board success criteria, and assessments were made in relation to strengths, potential risks and future enhancements.

The Outcome

The output and RRA’s recommendations provided valuable data points to guide key development decisions and actions to enhance Board effectiveness. In particular, the assessment provided the basis for a forward growth plan for the Board, including open debate about timelines and the implications for Board members.

Specifically, recommendations included the following:

• A move to an Independent Chair by appointing an additional Non-executive Director who potentially could succeed the existing Chair in the next two to three years

• Refocusing Board meetings to invest more time discussing future strategy vs. operational issues

• Redefining and articulating expectations and contributions required from each Board member

• Addressing board development and composition issues by developing a Board road map regarding the timing and skill sets required to optimally shape the organization’s future

The Chairman was extremely pleased with the work and moved ahead with several key decisions relating to structure, positional moves, Board effectiveness and Chair succession based on the findings and advice.

CEO Search

CASE OVERVIEW

• CEO search context

• Board as key client

• Global scope, HQ in Asia

• Technology

The Context

Our client is a specialist mortgage and financial services company, with a diversified distribution network through its aggregation business and an online mortgage platform. It specializes in offering property-related and financial services solutions, including finance, bonds and insurance. Growing quickly, it has built a loan portfolio of more than $18 billion.

To continue with its strategy to grow the business through aggressively broadening and deepening the distribution network, further organic growth and acquisitions are planned. This also will be accompanied by a significant growth in headcount.

The Challenge

As leadership capability and bench strength are critical to the success of the ongoing growth story, the Board wanted to introduce greater rigor into the succession plan and the succession planning process to minimize current succession exposures.

In particular, the Board was interested in a "below the surface" understanding of its key senior talent, as well as insight into how those leaders might make substantive progress in their development. The Board sought to understand who might have potential as a future CEO and who might be groomed for a COO role. Along with the CEO, the Board recognized that an assessment would assist in introducing objectivity into decisions and create a level playing field, as well as help fast track the development of key players.

At the same time, the Board was keen to understand who in the market could be potential candidates for the CEO and COO roles in case an internal solution wasn’t identified.

The Solution

Russell Reynolds Associates (RRA) worked with the CEO and Chairman to establish the success criteria and competency dimensions that would be the basis for the assessment. This framework was grounded in the future strategy and challenges facing the business. With this confirmed, participants were asked to complete online questionnaires that provided insight into their personal and leadership style, their preferred ways of operating and indication of how they might perform when under pressure.

• Two-person in-depth interviews were conducted to assess behavioral characteristics, strengths and development areas and to evaluate how their technical experience and capability compared with best in class in the market. Questionnaire and interview data were further complemented by behaviorally based phone referencing for each person.

• RRA presented the results to the CEO and Chairman, which included the overall themes observed about the business and the leadership team, along with specific information about the strengths and gaps in this group of leaders relative to the market. The results also outlined these executives’ potential and assessed them against the market for the COO role. At the same time, we presented the results of the pre-search for both the CEO and COO roles.

• After a detailed feedback discussion with the CEO about key messages, each participant was debriefed with his or her individual feedback report, where we discussed, in depth, the strengths and gaps, as well as focus areas and suggestions, for each individual’s ongoing development.

The Outcome

The CEO and Board were delighted with the quality and depth of the review of their key executives, and commented that they gained a much deeper and insightful view of their own talent. They also appreciated the frank and open manner in which the data were shared with them by the RRA team.

Specific outcomes also included the following:

• At the individual level, the CEO moved quickly to put in place actions to address development requirements in each of his key people, which included coaching, training, executive leadership programs, etc.

• The CEO used the data to validate and refine structural reorganizations and changes in the roles of his key people based on their potential, capabilities and "stretch" areas.

• From a succession planning perspective, the Chairman and Board implemented a succession planning process within the required time frame and, thus, could report to the market that they had both potential internal and external candidates identified.

• The assessment process identified gaps in the current leadership team capability sets, and new roles were created to better utilize existing talent and bring in innovative skill sets.