Imd report dec. 2013

REAL WORLD. REAL LEARNING®

The Importance of Mentoring for Chairmen, CEOs and the C-suite

Suzanne de Janasz, PhD

Maury Peiperl, PhD

IMD

LONELY AT THE TOP

2 | LONELY AT THE TOP

Case study: Board-level mentoring in practice

In 2010, when David Nish was promoted from CFO to CEO at Standard Life, he knew he had to step up the transformation process, taking the 185-year-old giant from insurer to long-term savings and investment company. The strategic refocus was reflected internally: the walls of the stodgy hierarchy — characterised by a lack of engagement — were literally torn down and replaced by open-plan offices and a focus on performance management, talent management, cost effectiveness and investment in the business. Those unable or unwilling to change were let go (half of the top 100 in his first six months) and the rest were unleashed and empowered to do what needed to be done.1 However, early results were viewed as less than encouraging to investors.

Turnarounds take time and a turnaround leader usually faces massive internal resistance as well as external challenges.2 Before his first year’s results were in, David made good on his formal development plan and sought mentoring from an impartial, experienced outsider who could help him reflect on how others saw David’s leadership and influence. David saw his mentor (a FTSE 100 chairman) as an important part of his development:

“What I needed was a mirror held up to me; to have an open, challenging debate prompting me to reflect. Reflection isn’t naturally in my top five traits. So I’ve got to go and look for it. I’m comfortable talking to people whose opinion or sense I value. [Having a mentor] helped with the continuous reassessment of me and my performance. The support my mentor gave me was beyond my expectation. I view personal development as helping ensure potential is unlimited...and I try to give my people the same — the belief that they can do anything they put their minds to”

David Nish, CEO, Standard Life

The turnaround in Standard Life’s performance has been significant. Over the last 3 years, £1.2bn has been returned to shareholders, market capitalization doubled, and the company is seen as a leader in its industry. This outcome suggests that a strong CEO can become even more successful by looking for outside guidance-mentoring in areas his own experience does not include.

THE CHAIRMAN’S CHALLENGE

LONELY AT THE TOP | 3

The Chairman’s ChallengeExperienced chairmen understand that making any company successful requires the CEO and his or her close colleagues to perform effectively, internally as well as externally, behaviourally as well as strategically, and to work well in collaboration with the board. This can be harder than it looks. In practice, CEO and board tenure is declining, with CEO turnover highest at the largest companies,3,4 and high-profile top-management failures continually dotting the pages of the business papers. Making it to the top is one thing, succeeding in the new role quite another. In the words of one well-known authority, “What got you here won’t get you there.”5

In 2011, 14.2% of the world’s 2500 largest companies changed CEOs, while 19% of FTSE 100 CEOs were new to their roles in 2012.6

But too often CEOs and executive committee colleagues — the people upon whom the greatest expectations lie for delivering company performance — are not well prepared for the challenges they will face. In fact, our own research (see sidebar: ‘The Study’) as well as that of others7 suggests that most senior leaders assuming new roles receive little in the way of onboarding. Research by Stanford University and the Miles Group found that two thirds of CEOs do not receive any external advice on their leadership, despite almost all reporting that they would be receptive to suggestions from a coach.8 Few receive support prior to day one, despite research which suggests that it takes the majority at least six months in their new role to reach ‘full impact’, while one in five takes at least nine months to become fully effective.9

CEOs have often never before needed the strategic or ‘soft’ skills necessary to navigate contentious boardroom discussions or manage the full panoply of external stakeholders and are not sufficiently plugged into an external network. Even those CEOs who recognise these gaps have few to turn to for counsel (it really is lonely at the top). Worse, CEOs with blind spots — which many whom we interviewed admitted having — genuinely ‘don’t know what they don’t know’. In facing novel challenges, the best chance a leader may have to succeed is to be confronted with a mirror held by a highly-respected outsider who has faced similar challenges at a similar level — in other words, to have a mentor.

Mentoring may be as old as work itself, but it has only recently begun to be used in even a limited systematic way at the top-most levels in organisations.10 A detailed scan of more than 30 years of mentoring research in management — which has explored mentoring at middle levels, mentoring of women and those in underrepresented groups, mentoring of high potentials, multiple mentors and even virtual mentors11 — turned up no research on mentoring those at board or C-suite level. We therefore set out to understand this emerging practice through a systematic study.

“All great leaders have a bit of a blind spot. Lots of wisdom, but big blind spots…”

Chief HR Officer, €50bn global business

“We wanted it to be a formal programme where people knew we were spending money on it, it would be taken seriously, and there would be a certain rigour to it. It does a lot for [the mentee’s] confidence; he’s feeling that we think highly of him and want to develop him — and he understands that he needs to be developed. For a lot of these people, life is quite lonely, and here is somebody with no interest other than to help him with his career — a very valuable resource.”

Robert Swannell, Chairman, Marks & Spencer

THE CHAIRMAN’S CHALLENGE


The Study

As a part of IMD’s research into top management and board effectiveness, with the collaboration of Chairman Mentors international (CMi), we undertook what we believe to be the first systematic field study on the phenomenon of mentoring — particularly formal mentoring — at the top of organisations. The study incorporated three streams. First and most significantly, we conducted 45 structured, in-depth interviews of CEOs, CFOs, senior executives and board chairmen from large public companies in the UK and continental Europe, most of whom had acted as either mentors or mentees at top level. These were supplemented by interviews with 15 HR and chief learning officers, executive search consultants, and board effectiveness specialists from around the world. In total, we spent over 80 hours interviewing, generating hundreds of pages of transcripts and notes.

Secondly, we reviewed the academic literature on mentoring and top management development, to inform our analytical approach. Thirdly, we constructed a quantitative survey of C-suite mentees, which was sent as a follow-up to the 25 interview subjects, as well as 34 others who had been (or were currently being) mentored. Forty-five completed the survey, an unusually high 76% response.

THE STUDY


Outcomes of MentoringSenior executives we interviewed were clear about their goals for their mentoring sessions. Chief among these were performance at the strategic level (adapting to changing market conditions, fulfilling stakeholder expectations) and the behavioural level (optimal leadership behaviours and managing key relationships). Other outcomes attributable to mentoring included faster adjustment speed, increased confidence and a higher-quality network.

Strategic performance Mentees sought mentors who could help them understand context, set direction, take appropriate decisions and overcome strategic challenges. 71% of mentees gave mentoring credit for helping them improve company performance (see figure). In addition, 69% said they were making better decisions and 76% said they were fulfilling stakeholder expectations better as a result of mentoring.

Impact of mentoring on strategic performance

“Success in the role meant, ultimately, building shareholder value and being able to reverse a trend. As my mentor and I worked through this, all the stakeholders were measuring stock price, etc., and evaluating whether the new strategy was taking hold. We are showing those changes and people are starting to give us credit for that — we are building positive momentum with our new Lumia product line.”

Stephen Elop, CEO, Nokia

71%

Having a mentor resulted in the mentee improving company performance

69%

Having a mentor enabled the mentee to make better decisions for their organisation

76%

The mentee fulfilled stakeholder expectations better as a result of mentoring

Mentor or Coach?

At top management level, a mentor is a role model who has ‘made it’; whose experience, wisdom and network are relevant to the mentee’s job and career.

A coach provides feedback and behavioural advice to maximise a leader’s effectiveness, but often has not worked in an equivalent role.

OUTCOMES OF MENTORING


Leadership and board effectivenessCEOs are the face of the company to the external world, but are also responsible for motivating others and managing key interpersonal relationships. Mentors and mentees described the importance of effective leadership behaviours, such as working through conflicts with a non-executive chairman, other NEDs or colleagues, exhibiting sufficient gravitas to inspire others’ confidence and knowing when to act versus when to empower others. As a result of formal mentoring, 82% of the mentees reported improvement in both their leadership behaviours and their ability to manage key relationships.

Impact of mentoring on leadership effectiveness “When I started my previous

role, I asked the HR director for his advice. My earlier experience on a board had been limited to one year as a NED for a company that was having serious difficulties.

BT was happy to send me to a top management program at Harvard, but I would’ve been away 3 to 4 months. I was looking for a practical way to develop. If you are one of the top 10 people in the business, the possibility of being away for three months is practically zero.

The mentoring was about co-development in situ, not about preparation. Having the problems in front of you and sharing them with an experienced mentor is really where the value comes.”

Gavin Patterson, CEO, BT

Mentoring led to improved leadership behaviours and ability to manage key relationships

82%



Adjustment speed / confidenceBecause mentoring can facilitate the on-boarding process,12 it was not surprising to hear “getting up to speed quickly” as another goal cited by interviewees, particularly in the case of a surprise appointment. When asked if mentoring had enabled them to become proficient in their role faster, 84% agreed. In a similar vein, when one’s role changes or expands drastically, confidence in one’s own ability to perform often declines, despite past successes.13 Through successive exchanges with mentors, mentees’ confidence and belief in their ability to perform usually increases. Mentees indicated that they were more confident (84% agreement) as a result of mentoring.

Impact of mentoring on adjustment to a new senior role

“I have found the discipline of preparing for my mentoring sessions to be really useful, requiring me to think through what are my real challenges and priorities. A mentor will share what he’s seen works well and then ask me questions like ‘if you wanted to replicate that, what would you do?’ Talking these issues through with someone who has experienced similar challenges in their own past helps to give me a great deal of confidence.

As a result of the mentoring, and of course because of my new role, I now focus much more on the big, strategic issues, and am less directly involved in the day-to-day. I am giving more responsibility and accountability to my immediate reports.”

Chris Jones, CEO, Welsh Water

The mentee became proficient in their role faster as a result of mentoring

The mentee became more confident as a result of mentoring

84%

84%



NetworkTo many, the best mentors are those who not only provide advice from experience, but also offer access to others in their network. When trust is high, such introductions often occur — as attested by 62% of mentees (see figure). Enhanced network size and quality make it easier for the mentee to identify resources, opportunities and expertise. Mentees and sponsors of formal mentoring — typically HR directors or chairmen — were quick to point out the value in being connected to someone of the calibre of a FTSE 50 or CAC40 chairman.

One FTSE 50 mentee noted that one of his goals for formal outside mentoring was “to achieve a NED position...These positions are only achieved when the system gets to know you. I’m talking about very specific high-profile types of jobs…and the network is essential.”

Impact of mentoring on senior-level network

62%

Having a mentor enhanced the mentee’s network



Conditions for Mentoring SuccessMore than thirty years of mentoring research suggests mentoring brings measurable benefits to mentors, mentees and organisations. (On the other hand, studies also demonstrate some mentoring relationships can be dysfunctional.14 ) Research suggests that informality, value similarity, trust and frequent interaction positively affect learning and performance.15 Moreover, multiple, diverse mentors are better than one.16 We tested these and other conditions and offer the following recommendations based on our findings:

Match skills and ensure credible mentorsWith limited time available and a need to ensure that the mentor has relevant expertise that will add value, the most senior of mentees expect ‘star’ mentors whose reputation and track record give them instant credibility. When a mentee identifies with a mentor as someone he would like to be in 10-15 years’ time, he is most likely to experience the mentor’s advice as relevant and worthy of emulation. Within the ‘relationship dynamics’ set of common themes among the interviews, ‘aligned experience’ was the second most commonly mentioned topic (see figure).

Prioritise chemistry and trustChemistry is the spark that enables disparate individuals to bond. Similar experiences, values

or goals strengthen the connection between mentor and mentee and lay the foundation for trust that is vital for an effective mentoring relationship.17 Trust breeds self-disclosure, without which the support a mentor can provide will be at best incomplete and at worst misguided.18 External mentors have an edge in this respect, as it can be career-limiting to reveal weaknesses or fears to one’s boss or chairman. Moreover, some board-level mentees would prefer that no one other than the mentor and sponsor know about the mentoring relationship. Having mentor and mentee commit in writing to absolute confidentiality during and after a mentoring engagement provides senior mentees with assurance that any weaknesses or failures become the focus of the dyad alone.

One mentor refused to fill out a required feedback form (some mentoring providers, as well as some internal mentoring programs, attempt to formally track progress), reminding mentees, “What you tell me is going to remain confidential.” He concluded, “It’s the only way you have a chance of people opening up properly.”

Within the ‘relationship dynamics’ set of common themes among the interviews, ‘importance of chemistry and matching process’ was the fourth most commonly mentioned topic (see figure).

“Mentoring was most effective when I was trying to show my strengths and my weaknesses, as opposed to trying to put up a front. How transparent you are determines how much value you can get. You are there as who you are, and have a mentor who wants to help you make the best of that package.”

Martine Verluyten, Independent Director, formerly CFO Umicore SA

CONDITIONS FOR MENTORING SUCCESS


Dynamics of the Mentoring RelationshipChart shows the number of times each of nine subthemes was mentioned across 25 interviews

Mentees in the sample had high trust in mentors (4.7 on a 5 point scale) and trust was positively associated with mentor role modelling. Thus, the more a mentee trusted a mentor, the more likely he or she was to see the mentor as possessing qualities and capabilities to learn from and emulate.

Favour external and independent mentorsTrust and disclosure are higher when the mentor is not in a position to use what a mentee shares against him. An added benefit of external mentors is the broader perspective and network they bring; stepping up to wider

responsibility for leading the company or the board makes an external mentor almost essential.

“Only a certain level of issues can be raised with an internal mentor. With an external, everything is confidential; you have to believe that everything stays in the room. Even personal issues…you can talk reasonably openly. If you only have internal mentors, you will be limited.”

Peter Lynas, CFO, BAE Systems

In the case of formal, external mentors, one further dimension comes into play: paid versus unpaid. Contractual arrangements in which mentors are paid to spend time with and/or be available to top level mentees are relatively new. The majority of those we interviewed saw the contractual, paid nature of formal mentoring as a prioritising feature: The sessions were rarely cancelled or rescheduled, were well prepared and thoughtfully executed by both parties and frequently resulted in tangible actions taken by mentees.

Formal agenda setting and structure of the sessionsAligned experience with the intricacies of a specific country, market, or situation

Evolution of formal to informal/personal relationship (incl. post-contract)Importance of chemistry and matching processIs mentor or mentee driving the conversation?

Mentee openness to learning from mentor (not everyone is suited to be a mentee)Mentee doesn’t always know what to ask (don’t know what they don’t know)Reciprocity of learning

Mentee’s openness about being mentored



Seek multiple mentors

Being able to bounce ideas off a single, senior mentor is important; being able to utilise the experiences and perspectives of two or more mentors — with complementary experiences and skill sets — adds significantly and affords the mentee broader, deeper experiences to learn from and apply in novel situations. Research is clear on this point19 and 80% of mentees interviewed specifically mentioned the opportunity to both select and learn from mentors with complementary skill sets and experience.

“It was interesting to hear the feedback and advice in stereo….[Mentor two] would reinterpret [mentor one’s] words into the French context. That was helpful.”

CEO, major French telecoms firm

“I would agree the two mentor model is the ideal model. If offered to have twice the time with one of them, I wouldn’t swap.”

CFO, UK utility

Use mentoring early and oftenMentoring works best before a crisis hits. A CEO will be too busy to sit with a mentor when fires need to be extinguished. Unfortunately, many companies wait until something goes wrong to provide support — by which time it may be too late. Furthermore, from our interviews it appears that mentoring interventions add value both before and after taking

on the role. One FTSE 100 MD experienced what he described as optimal timing for mentoring at the top: “…about half before and half in the position — an offering of mentoring to help develop talent as well as bolstering appointees when they find themselves in a key role….To be tied into high quality succession planning such that it is thought about and deployed [so that] people have time to think about this.”



A critical juncture may up the ante for mentoring as a mentee faces a very specific developmental challenge. One CEO we interviewed had been on a gradual internal succession path, when the holding company decided to float his division and things suddenly accelerated:

“When it became apparent that we would have to float, the slow process to group CEO suddenly had a date, and the job wasn’t mine by rights, and I had to prove myself to be somebody positive to be a standalone CEO versus a divisional one. I undertook several streams of work, including getting a life coach as well as two chairman mentors.

My mentor had a good dose of what I had to develop…. You don’t want to be mentored by someone just like you. I liked the element of difference. ...I thought, ‘Here is someone I could learn from.’”

Paul Geddes, CEO, Direct Line (formerly RBS Insurance)

“It’s about the outcome – that the person believes on leaving [the mentoring relationship] that something positive has been added to his thinking. Sometimes it’s a lot and sometimes it’s a little. Sometimes it’s being able to talk to someone absolutely in confidence who is not a stakeholder or a paymaster.

The common thread would be genuine advice based on true life experience. The credibility of what I say is rooted in the visibility of what I have done, over a long time. ...So when they talk about their jobs, frustrations, points of insecurity, challenges…, my many experiences — good and bad — enable me to add value.”

Sir Roger Carr, Chairman, Centrica and one of Paul Geddes’ two mentors

Integrate with other developmental approachesMost of our mentee interviewees were either in a C-suite role (usually CEO or CFO) or targeted in the succession plan for one. Interviewees reported that key actions undertaken to prepare for the role consisted mostly

of job assignments and to a lesser but significant extent, mentoring/coaching and executive development programmes. While there is no substitute for experience in building capabilities, succeeding in a top role requires more than high proficiency; it also means building exposure and credibility with new constituents — principally board members and other external stakeholders. Those who realised this early on sought mentors — informal or formal —to learn how to balance internal and external performance. Some also sought coaches to help them come across as more credible and confident. Interviewees (including chairmen, CHROs and board consultants) agreed that integrating multiple approaches gave C-suite appointees the best chance for success.

External appointees face even greater challenges: They must quickly develop an in-depth understanding of the workings of the company and build their internal network. At the same time they need to have an informed opinion on the competitive position of the firm, while simultaneously living up to the board’s initial positive impression and overcoming the natural suspicion of the internal leadership. Strategies for doing this often emerged out of conversations with mentors who had taken on similar challenges in their careers and could serve as critical sounding boards.



Conclusions and Call for ActionFor chairmen and boards in charge of securing a company’s future, the risk and the cost of failure in the top executive ranks are high. Our research strongly suggests that mentoring for C-suite executives is thus a worthwhile investment:

• CEOs and CFOs of major firms are rarely in a position to take 1-2 weeks off to attend a senior executive programme to hone their top management approach. Instead, they require just-in-time advice as and when it will be most useful. But as most successful managers ‘don’t know what they don’t know,’ having regular conversations with a mentor who has faced similar situations can ensure such just-in-time learning takes place, increasing the odds of success.

• Because new CEOs have less and less time to prove themselves and attend to urgent needs in the marketplace, preparation before taking on the role is essential. Mentoring can play an essential part, as can early exposure to the board and key external constituents.

• Continuous, lifelong learning is important to the success of leaders and organisations alike. We recommend an approach to the development of top managers that can be likened to benchmarking — understanding what has worked most successfully for others and adapting it, where appropriate, to your own situation. Mentoring is one method of making this happen — and of preventing senior leaders from becoming complacent. For one thing is certain: successful leadership continues to evolve and the skills required of top managers in the years to come will be as different from today as the keys to success today are from a generation ago.

As the demand for mentoring at top level evolves and the portfolio of skills required of C-suite executives does so as well, the need for continued research on this emerging topic is apparent. We look forward to remaining a part of that effort and thank all those who have participated in the present study for their time, their interest and their thoughtful input.

“The biggest challenge we all face is getting to grips with our new normal VUCA (Volatile, Uncertain, Complex and Ambiguous) world and finding the right mentor and mentee relationships to equip our future leaders. Our biggest challenge is what is leadership going to look like in 2020, when our business, which today is around 45% in the developed world, is around 70% outside of it. What unique attributes are going to be needed to be able to build a competitive sustainable organisation in the future?...The software skills are going to be disproportionately more important than the hardware skills. I really believe that.”

Doug Baillie, Chief HR Officer, Unilever

CONCLUSIONS AND CALL FOR ACTION


About IMD & CMI

IMD (www.imd.org) is a top-ranked business school, particularly recognised for its expertise in developing global leaders through high-impact executive education. Located in Lausanne, Switzerland, IMD has a deep commitment to (and a long success record in) helping boards and CEOs to maximise effectiveness. IMD’s Global Board Centre and its High Performance Boards Programme, as well as its annual CEO Roundtable, are a few of the sources of thought leadership IMD offers in this area. IMD also has strong traditions of research and learning in family business through the Global Family Business Centre, in competitiveness through the World Competitiveness Centre and World Competitiveness Yearbook, in sustainability through the Global Centre for Sustainability Leadership, and in global interdependence and trade policy through The Evian Group@IMD (www.eviangroup.org).

CMi (www.cmi.eu.com) is the only company in the world exclusively dedicated to top-level mentoring on an international scale. CMi has 45 European chairmen from 12 countries acting as exclusively retained mentors. Their aggregate board experience covers over 20 jurisdictions including 288 quoted company boards, of which they have been chairman or vice chairman on 144. CMi mentors’ board experience spans 45 FTSE 100, 49 Eurotop, 12 AEX, 18 CAC 22 and 10 OMX Index companies. 35% of all CMi mentors’ board appointments have been outside their home country.

CMi has managed 150 mentoring engagements to date in 10 European countries. 77% have been at board/executive committee level and the balance one level below (typically for those expected or designated to succeed to the C-suite). 54% of those mentored have either recently been appointed CEO/CFO/chairman or are in the final stages of preparation for one of these roles. 67% of CMi mentees are, or have been, serving on the boards of listed companies.

ABOUT IMD & CMI

REAL WORLD. REAL LEARNING®


References1. See http://www.dailymail.co.uk/money/article-1311252/David-Nish-wants-Standard-Life-open-organisation.

html#ixzz2D9mP7aFn

2. Jick, T.D., and Peiperl, M.A. (2011). Introduction: The Challenge of Change. In Managing Change: Cases and Concepts, Jick & Peiperl, Eds., pp. xix – xxix. New York: McGraw-Hill.

3. Booz & Co, 2012, http://www.booz.com/global/home/press/article/49489867.

4. Kaplan, S., & Minton, B. (2012). How Has CEO Turnover Changed? International Review of Finance, 12:1, 57-87.

5. Goldsmith, M. (2007) What Got You Here Won’t Get You There: How Successful People Become Even More Successful. New York: Hyperion.

6. Booz & Co, 2011, http://www.booz.com/media/file/BoozCo_CEO-Succession-Study-2011_Extended-Study-Report.pdf

7. Based on interviews with CEO/Board practice partners at Egon Zehnder International, Amrop International, and Capita Partners.

8. Stanford University (July 2013); 2013 Executive Coaching Survey, http://www.gsb.stanford.edu/cldr/research/surveys/coaching.html

9. Egon Zehnder research (Summer 2013); 12th International Executive Panel: Leaders in Transition; http://www.egonzehnder.com/leadership-insights/integration/12th-international-executive-panel-leaders-in-transition.html

10. A recent report published by Stanford University found that nearly 66% of CEOs do not receive coaching or leadership advice from outside consultants or coaches. See Executive Coaching Survey, 31 July, 2013: http://www.gsb.stanford.edu/cldr/research/surveys/coaching.html

11. For a review, see Allen, T. D., Eby, L. T., Poteet, M. L., Lentz, E., & Lima, L. (2004). Career benefits associated with mentoring for protégés: A meta-analytic review. Journal of Applied Psychology, 89, 127–136.

12. Eby, L.T., McManus, S.E., & Russell, J.E.A. (1999). Newcomer Socialization and Stress: Formal Peer Relationships as a Source of Support, Journal of Vocational Behavior 54, 453–470.

13. Bandura, A. (1977). Self efficacy: Toward a unifying theory of behavioral change. Psychological Review, 84: 191-215.

14. See for example Scandura, T. A. (1998). Dysfunctional mentoring relationships and outcomes. Journal of Management, 24, 449–467.

15. Allen, et al., 2004.

16. Higgins, M. C. (2000). The more, the merrier? Multiple developmental relationships and work satisfaction. Journal of Management Development, 19, 277–297.

17. De Janasz, S.C., Ensher, E.A. & Heun, C. (2008). Using e-mentoring to connect business students with practicing managers: Virtual relationships and real benefits. Mentoring & Tutoring: Partnership in Learning, 16(4): 394-411.

18. De Janasz, S.C., Sullivan, S.E. & Whiting, V.R. (2003). Mentor networks and career success: Lessons for turbulent times. Academy of Management Executive, 17(4): 78-91.

19. De Janasz et al., 2003.

REFERENCES

www.imd.orgwww.cmi.eu.com

Imd report dec. 2013

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Transcript of Imd report dec. 2013