Peer admiration involves more than just profits and performance for India Inc.
Global management consultancy, Hay Group, in association with Fortune India, has released the findings of the second edition of India’s Most Admired Companies (IMAC) research. Business solutions major Tata Consultancy Services (TCS) has topped the ranking for 2013, followed by Hindustan Unilever (HUL), ITC, and Infosys rounding up the top three.
The study is based on a unique peer ranking methodology, which covered 493 companies across the economy’s 16 key sectors. A total of 552 respondents participated to rank their peers across a scale of ten parameters - corporate governance, endurance, performance, quality, financial soundness, innovativeness, leadership, talent management, social responsibility, and global business. Hay Group partners with Fortune globally, using a similar methodology, to develop the World’s Most Admired Companies.
TCS tops the list this year, replacing last year’s winner, group company Tata Steel, by scoring highest on parameters such as corporate governance, financial soundness, and talent management. Second-ranked FMCG HUL has been rated highest on its endurance and product quality, while ITC and Infosys share the joint third spot. SBI, L&T, Tata Steel, ONGC, Maruti Suzuki, and ICICI Bank also feature in the top ten (table 1).
Gaurav Lahiri, Managing Director, Hay Group India, comments, “Hay Group India is excited to roll out the second edition of India’s Most Admired Companies in partnership with Fortune India. This year, two criteria in particular, Leadership, and Creating Shareholder Value, separated the Top 10 from the rest of the winners, with Talent Management coming in a close third.”
Interestingly, last year’s top ten did not include any PSEs - accounted for by SBI and ONGC this year. ICICI makes its debut in the top ten this year, while Colgate Palmolive, Tata Motors, and Dell India all have slipped down the order compared to their ranking last year.
The study has also compiled sectoral rankings for 16 key industries – based on their performance on the ten evaluation criteria for the study.
A new addition to the 2013 study is the Endorsement list – where companies were ranked based on unprompted endorsements by peers. This ranking threw up some surprises and, in many cases, differed from the overall rankings – for instance, HUL tops this list, followed by TCS and Infosys. Bharti Airtel, ranked 19th in the overall rankings, featured at 11th place in the Endorsements section, while Cisco Systems India appeared at 26, a big leap from its overall ranking of 40.
Adds Gaurav Lahiri, “As demonstrated by the IMACs, in today’s uncertain business environment, it is more important than ever for organizations to create shareholder value through good leadership and talent management practices.”
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The global economic meltdown has radically changed the deal landscape. Research findings from Hay Group reveal that there are several critical success factors for all executives to keep in mind which make the difference between winning and losing in the M&A game.
Whilst the collapse of debt-fuelled financing put the brakes on M&A activity,
the virtual disappearance of private equity investors, reduction of sovereign fund investment and a rush to divest non-core assets to shore up balance sheets, has increased opportunities for strategic M&A investments. And, as always with M&A, the stakes
are high. Has deal-making become a game of Russian roulette for those who pulled
the trigger and chased cheap deals?
This is what led Hay Group to look again at how executives are maximising value from their M&A activities. Are businesses now paying a higher price than they expected? Partnering with merger market, part of the FT Group, we asked global business leaders about their experiences of integrating newly acquired businesses.
Our research revealed that those actually running businesses were not necessarily aligned with shareholders on the rationale of mergers or acquisitions. Whilst half
of respondents said growth was a driver for M&A activity, only four per cent aimed to increase shareholder value through deal-making.
To try and motivate someone by saying, ‘go and read this book’, when they don’t learn that way, is going to be as frustrating for them as it is for you. Especially when you find out later that they can’t do what you expected the book to teach them. However, if you recognize that they need to watch you do something to learn how to do it, then you will organize your time differently to achieve your objectives.
As a leader in a group you need to be aware of your own style too, because it has implications for the impact you make on the team. Without acknowledging your own style you may encourage your team to focus on issues from a certain perspective and miss the opportunities that result from different approaches. A team has a collective learning style all of its own. For example, if you have a group of sales managers who all share a preference for action, they are less likely to stop and think about the underlying framework
and rationale for their actions (with a tendency for headless chicken syndrome!). As their leader, your job is to guide this group and help them to understand the strengths and potential weaknesses or blind spots associated with their learning styles.
Hay Group can help you look at your own learning style and those of your team so you’re better able to tune into the needs of others, to the aims of the group and to the optimal way of using your collective time, resources and capabilities.
CEOs at the world’s most successful companies know that they can only safeguard their business’s competitive future if they have the right leaders to develop and implement their strategy. While CEOs know they can also hire external candidates, they also know that the track record of outside hires can be very unpredictable. CEOs and HR Directors from those organizations seen as best by their peers for managing talent, prefer to ensure they develop a good bench-strength of talent from inside their own organizations.
For many years CEOs at the world’s most successful companies – such as GE, P&G, BP – have seen the importance of securing their long term competitive future by investing large amounts of money and time in identifying future leaders. Using a whole battery of assessment techniques and processes they have attempted to recruit the best graduates and to see, early in their careers, which managers had the long term potential to make it to the top: what the British army has called: ‘finding the General’s batten in the knapsack of the new recruits.’
But in recent years CEOs have become more concerned about their more immediate competitive future: do we have the talent and capability to develop and implement the strategies that will enable success in today’s highly competitive and changing business world? Today the pressures for change are greater than ever – from globalization, competition, technology, break through business models – which means that the shelf life of both strategies and leaders can be much shorter.
And here is the CEOs real concern: the ability of leaders to implement one type of strategy may not be the type needed to implement another: the skill sets may be different, the behaviors may be different, the experiences needed may be different. For example those needed to lead a nationally based, fully functional company, operating in a stable competitive and technological environment, will be very different from those needed for a leader in a highly matrixed global organization facing rapid competitive and technological change. But this is the transition many businesses are going through.
Some major companies have responded by throwing out or downgrading their programs for building long term bench- strength because they have lost their confidence in their ability to predict the type of talent needed. But our research shows that it is the companies that can resist this response and combine a focus on both the long term and the short term which have enduring success.
Future winners are investing in the right leaders today. As in past recessions margins are being cut, costs pushed down, currencies are shifting – and future winning organisations are starting to reposition themselves. These winners invariably see the writing on the wall first, take advantage of market movements and realign their resources to where they can make most money. This is the message from our annual Best Companies for Leaders research which shows that these winners are already thinking about, and investing heavily in, the future leaders they need to identify and grow.
The big difference this time round is that they want to know the odds: to place bets on the right employees to invest in and to do so at significantly reduced cost. To put it simply, once they have worked out how to re-organize and operate differently, they are investing heavily in redefining what that looks like for the people agenda, particularly their leadership competency frameworks. They see this as the first step in re-aiming their talent management processes on their new success criteria. They also make sure they keep their next-generation leaders engaged and energized despite the difficult market conditions. That way, when the economy swings back, they will be ready for repositioning growth and stealing a march on the competition.
This article offers our best thinking on the most cost effective way to identify future leaders – those who should get the cream of your development budget.
Bob Geldof ’s achievements suggest that he might have a lot to teach us about how to achieve goals through new leadership techniques. After all, here is someone who assembled one of the biggest pop concerts in history and – as a result – the way we think about Africa, poverty, fund-raising and the way rich and poor nations live alongside each other has never been the same since. He did it by anticipating a change in the world environment, working outside the formal structures of the economy to energise people around a shared vision and using his connected global leadership skills to create success.
Geldof might not look like a corporate leader and not many people could or would be able to address shareholders and employees with his colourful language. But I’ll bet those stakeholders would be pleased with the outcomes he achieved. More interestingly still, the way in which Geldof brought about this change of thinking and energy of action resonates with much of the research we’ve been doing at Hay Group into what makes truly exceptional leaders.
For the last ten years, Hay Group has been carrying out research with Fortune magazine into the ingredients for global success.
These days we can take a good level of technical knowledge and intellectual ability in a given job for granted. These are qualities related to our IQ. Our Emotional Quotient (EQ) measures personal qualities such as empathy, adaptability and persuasiveness. These qualities are becoming more and more important in a world fragmented by technology and changing work structures. How important? We reckon that EQ is twice as important as IQ in determining future career success (not to mention what is does for your social life). And it can count for even more.
It’s a growing phenomenon. The emotional abilities of today’s children are dropping even as their IQ is rising. So Emotional Intelligence is becoming more and more important as a way of recognizing tomorrow’s leaders. A low level of Emotional Intelligence can actually hold you back; think of the boss who loses their temper. Out of control emotions can render the smartest people stupid. The smart thing to do is work on your EQ. It’s not a fad, it’s not a trend. EI is the result of a long history of analyzing social intelligence (otherwise known as ‘what makes people tick’).
Another demonstration of the value of Emotional Intelligence comes from the financial sector. Hay Group provided emotional competency development support for 45 sales people in the insurance industry. Our client gave high quality product and sales training to a matched sample of 45 other sales people. Their intention was to run a comparison of the two groups for a full year. They called a halt to the action research after seven months because the difference in sales results was so large that they could not afford to wait another five months before training the control group.
Emotional intelligence is “the capacity for recognising our own feelings and those of others, for motivating ourselves and for managing emotions effectively in ourselves and others.” This has been misconstrued by some as a requirement to become ‘warm and fuzzy’ at the expense of having a hard-nosed business sense. But emotionally intelligent leadership is not about unfaltering ‘niceness’, nor is it about being emotionally bland or controlled to the point of appearing emotionless and robotic. Rather, it is about exercising real choice, based upon a realistic and accurate assessment of oneself in a given situation, instead of being driven by one’s emotions to act in an uncontrolled manner.
As described in detail in The New Leaders2, this perspective on emotional intelligence can be encapsulated in a behavioural framework of four competency clusters: self-awareness, self-management, social awareness and relationship management.
This kind of leadership is not based on personal dominance and is not directed toward self-aggrandisement,the service of self-interest or the exploitation of others. Nor does it rely on manipulation, threat or punishment. Rather, it shows regard for the rights and feelings of others, within the context of established institutional procedures and guidelines. In order to be a catalyst for change, these leaders must deal with their own uncertainties and gain the personal confidence that will enable others to respond positively to change. Emotional intelligence is not for ‘wimps’. In fact, leaders who are not emotionally self-aware will not be mentally tough enough to succeed in tomorrow’s business environment.
Organizations are emerging from recession into a tougher, more cost-conscious and performance-oriented world. It is clear that a return to ‘business as usual’ is unlikely. Indeed, the new mantra is ‘do more with less’. Firms are lean, and, if not exactly mean, concentrating their effort and investment on those activities that will deliver the greatest returns.
At a time when both financial and human resources are at a premium, the discretionary effort of employees will be the most vital component in creating high-performing organizations. And in order to ‘go the extra mile’ employees need to be both ‘engaged’ and ‘enabled’.
As we highlight in this issue of ViewPoint engagement alone will not driveperformance; enablement is also critical. Embedding both into organizational cultures is no easy feat. It requires strong leadership, management accountability, strong performance management, ongoing measurement,excellent communication and, last but not least, clear alignment between individual targets and rewards with business objectives.
It’s a challenge, but it can be done, as some of Hay Group’s recent research shows. Three of our landmark studies – The World’s Most Admired Companies (in conjunction with Fortune magazine), Best Companies for Leadership (with Bloomberg Businessweek) and The changing face of reward – provide valuable insights and lessons for fi rms wanting to create their own high-performance cultures. In the rest of this ViewPoint we examine some of the different levers to create better engagement, as exemplified by some of the world’s leading organizations.