Problem 2: Your CEO delegates talent development

As part of the launch of The Impactful Executive, Dr Ali Monadjem and I have launched a newsletter focused on the topics of organizational health and performance. Over eight weeks on this site, I will post the previous eight articles from that newsletter, an 8-part series on the problems and solutions with corporate training and professional development in 2024.

The introduction to the series can be found here

If you'd like to read the whole thing now, please go to https://newsletter.impactfulexec.com/

Problem 2: Your CEO delegates talent development

Corporate training is a $300 billion global industry, but much of the training offered is ineffective. Over six weeks, I am detailing six reasons I’ve seen for that ineffectiveness, and how they can be addressed.

Today’s focus…

Problem 2: Your CEO delegates talent development

If there is one piece of advice new executives hear more than any other, it is this: learn to delegate. You can’t do it all yourself! Figure out what only you can do, and leave everything else to others. Work on the business, not in the business. And this is usually good advice.

But not always.

Years ago, I worked for an investment fund. We had invested in small commercial banks in two neighboring African countries.

One bank was run by a Harvard MBA with experience as a banking executive in the US and in the UK. She had raised tens of millions of dollars for this new bank on an inspiring story and a polished business plan, and had surrounded herself with an experienced team of investors, advisors, and executives. They used cutting edge technology and elite business practices to put themselves in the best position to succeed.

The CEO of the second bank had never worked outside his home country. He had founded the institution 15 years earlier as a cooperative that helped the rural and urban poor save for school fees. He had slowly grown the business over the years, incorporating other types of savings accounts and eventually microloans as he expanded throughout the country. His business kept track of its thousands of client records on Microsoft Excel, sending employees on motorbikes with thumb drives from every branch to the head office daily, because the internet was not reliable or secure enough in his country to consolidate accounts any other way.

When I asked the first CEO, “What is your Portfolio at Risk?” (note: Portfolio at Risk is a banking term for the percentage of a loan portfolio that is overdue, often by at least 30 days) she replied, “I’m not entirely sure, I’ll have to check with my credit risk leader. I believe it is somewhere in the ballpark of 7%, though of course we’d like to get it down to 5%.”

When I asked the second CEO, he said, “As of this morning, it is 4.2%. That’s down from 4.4% last week, mainly because of improved collections in our Kousseri branch over the past three days.”

One of these two banks went out of business two years later. The other recently completed its IPO. I’ll let you guess which is which.

The point of this story is not to say, “always do everything yourself,” although attention to detail is indeed a very common trait among top CEOs. The point is that CEO’s communicate, through their conduct and their attention, what matters to the business and what type of company they are building. A CEO who knows the complete credit risk breakdown in every location every day for 15+ years communicates very clearly to his team that they cannot take their eye off the strength of their credit portfolio for a single moment.

When it comes to their people, many CEOs are more like the Harvard MBA described above. If they have any metrics to track the success of their people development and performance improvement efforts, they likely do not know what they are. They certainly do not personally track them on a regular basis. They delegate that task to their CHRO (if they have one), or their Head of Learning and Development, or to another role often well below the center of organizational focus.

This is a mistake. In Talent Wins, (2018) McKinsey argues that companies should in fact elevate three people to the top of the organization: The CEO, the CFO, and the Chief Talent Officer (CTO). After all, “companies,” as amorphous entities, do not create value. People do.? Maximizing the amount of value that your people can create is, in many ways, the core job of a CEO.

Almost every company has taglines to this effect. “Our people are our most important asset,” or something similar, can be found in boardrooms all across the world. But what are CEOs communicating with their actions and with their attention?

Think about recruiting and hiring. Every company has a hiring plan, most have projections for future skill needs matched to growth, and people in place to attract that talent. But how many treat hiring with as much discipline and focus as they do sales? After all, hiring is fundamentally a sales process. You have an offering (a job) that you want to sell to potential “consumers” of that offering. Have you studied your target market, analyzed your competitive positioning, tweaked our brand strategy, and adjusted your offering until you achieve product-market fit? Do you track your (hiring) sales funnel and sales metrics, and look for ways to continually improve them?

Once people are on board, companies generally have a plan to train and develop them. But does the CEO have a detailed understanding of the successes and failures of these efforts? Is he or she personally intervening when the desired results are not achieved? Or are these efforts just a checkbox amid the hundreds of other compliance checkboxes the company completes every month?

For many companies, it is the latter. Despite the words on the walls of their offices, developing their people in a way that maximizes their potential is not among the CEO’s top priorities, and the results of their efforts reflect this reality.

Measuring talent development efforts in a rigorous way that promotes continuous improvement is really hard. Few companies do it effectively. But it is possible. Next week, we will discuss a few ways to do so.