Study examines how Best Companies for Leadership nurture talent and foster innovation in their ranks
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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.
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.
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.
How can family businesses break the third generation jinx?
The first generation builds, the second expands and the third destroys. This is the universally acknowledged phenomenon that few family-owned businesses (FOBs) survive beyond the third generation.
In the typical evolution of FOBs, they start from the Controlling Owner stage to the Sibling Partnerships stage and finally, to the Cousin Consortium stage as they mature from being a start-up company to one thinking about passing the baton.
By professionalizing, FOBs are able to tap into the external labor market, giving them access to higher quality and quantity of human resources. These experts in their corresponding fields can contribute significantly to the expansion and the success potential of the FOB. They also inject more professionalism in the firm and are immensely valuable resources in enabling the FOB to achieve rapid financial growth within a short span of time.
The success of FOBs depends on driving the balance between the
family “heart” and the business “head”. By monitoring the happiness index on top of financial performances, FOBs can keep the hearts of the family members warm and the pockets deep, to ensure the long lasting continuity of the business.
The impact of the Arab Spring has led to several announcements by governments regarding increases in pay and allowances for their national population, mainly in the public sector.
From a recent ‘Hay Group Middle East Flash Survey’, c. a third of the organizations surveyed in the Middle East are looking at expansion in revenue growth in the coming year, indicating a change from the sombre atmosphere of early 2011. They have forecast a healthy 5-15% revenue increase compared with global organizations. FIGURE 1 above highlights the 2012 pay forecast from the responses received from 1,500 organizations in 11 countries. It is clear that salary increases will outpace inflation.
All countries in the MENA region are forecasting a modest-to-healthy increase in salaries in 2012, although this varies depending on inflation rates. From government initiatives in the Gulf countries to recruit nationals, to revisions in pay and benefit policies in North Africa, to salary reforms in the Levant, all these have an impact on pay. A combination of civil unrest and legislation means many changes still lie ahead for compensation and benefits in the region.