An Assignment on Leadership Factories
Case 2
Leadership Factories
Companies differ markedly in their ability to produce future leaders, as several recent analyses of the 1,187 largest publicly traded U.S. companies revealed. Among the CEOs in one study, a remarkable total of 26 once worked at General Electric (GE).
However, as the following table shows, on a per employee basis, that ability earns GE only tenth place in terms of the likelihood of a current or former employee becoming CEO of a large company. Top on the list is management consulting firm McKinsey & Company. Amazingly, if we extrapolate into the future from the current stock of McKinsey alums who are CEOs, of every 1,060 McKinsey employees, one will become CEO of a Fortune 1000 company. Company
Size (employees)
CEOs Produced
Odds
McKinsey & Co.
17,000
16
1,060:1
Baxter International
48,500
11
4,410:1
Motorola
60,000
7
8,570:1
Intel
82,500
8
10,310:1
Procter & Gamble (P&G)
127,000
12
10,580:1
General Electric (GE)
287,000
26
11,040:1
Ernst & Young
144,000
12
12,000:1
Some companies did not fare nearly as well, such as Citigroup (odds: 30,180:1), AT&T (odds: 23,220:1) and Johnson & Johnson (odds: 15,275:1). While some might dismiss the results, not surprisingly, the companies at the top of the list do not. “We are a leadership engine and a talent machine,” said retiring Procter & Gamble CEO A. G. Lafley.
Questions
1. Management consulting firms did very well on a per-employee basis, partly because they are mostly made up of managers (as opposed to blue-collar or entry-level workers). How big a factor do you think composition of the workforce is in likelihood of producing a CEO?
2. Do you think so-called leadership factories are also better places for nonleaders to work? Why or why not?
3. Assume you had job offers from two companies that differed only in how often they produced CEOs. Would this difference affect your decision?
4. Do these data support the value of leader selection and leader
Leadership Factories
Companies differ markedly in their ability to produce future leaders, as several recent analyses of the 1,187 largest publicly traded U.S. companies revealed. Among the CEOs in one study, a remarkable total of 26 once worked at General Electric (GE).
However, as the following table shows, on a per employee basis, that ability earns GE only tenth place in terms of the likelihood of a current or former employee becoming CEO of a large company. Top on the list is management consulting firm McKinsey & Company. Amazingly, if we extrapolate into the future from the current stock of McKinsey alums who are CEOs, of every 1,060 McKinsey employees, one will become CEO of a Fortune 1000 company. Company
Size (employees)
CEOs Produced
Odds
McKinsey & Co.
17,000
16
1,060:1
Baxter International
48,500
11
4,410:1
Motorola
60,000
7
8,570:1
Intel
82,500
8
10,310:1
Procter & Gamble (P&G)
127,000
12
10,580:1
General Electric (GE)
287,000
26
11,040:1
Ernst & Young
144,000
12
12,000:1
Some companies did not fare nearly as well, such as Citigroup (odds: 30,180:1), AT&T (odds: 23,220:1) and Johnson & Johnson (odds: 15,275:1). While some might dismiss the results, not surprisingly, the companies at the top of the list do not. “We are a leadership engine and a talent machine,” said retiring Procter & Gamble CEO A. G. Lafley.
Questions
1. Management consulting firms did very well on a per-employee basis, partly because they are mostly made up of managers (as opposed to blue-collar or entry-level workers). How big a factor do you think composition of the workforce is in likelihood of producing a CEO?
2. Do you think so-called leadership factories are also better places for nonleaders to work? Why or why not?
3. Assume you had job offers from two companies that differed only in how often they produced CEOs. Would this difference affect your decision?
4. Do these data support the value of leader selection and leader