TA L E N T + L E A D E R S H I P
Illustration: MAR IA CORTE
T H E L AT E S T
8 The Briefings Interview
Gail Kelly CEO WESTPAC GROUP
Women on Boards 6
Conversational Intelligence 16
Investing In Next-Generation Talent 18
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Becoming a Director Is a Career Choice
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ary Agnes Wilderotter had a good job as vice president for sales at a small start-up technology company serving the cable industry. She had a good education and parents who encouraged her and her three sisters to be successful. “Ambition is part of femininity,” their mother taught them, and each daughter was expected to find her own path to success. Early on, Maggie Wilderotter decided she wanted to be a director.
That approach has worked well for the chairman and CEO of Frontier Communications (NASDAQ:FTR) who has served on 23 public company boards in the past 28 years. According to Wilderotter, just as an ambitious individual develops a career plan that builds upon each successive job of increasing responsibility as a stepping stone to the ultimate goal of being a C-Suite executive or CEO, the search for a board seat should follow the same path. Some begin with a private or nonprofit board, moving to a small public company board and ultimately a larger public company board. Today, Wilderotter chairs her own board at Frontier Communications and serves on the boards of Xerox Corp. and the Procter & Gamble Company. It’s clear that there’s nothing casual about becoming a corporate director: It should be part of a larger career plan. C. Kim Goodwin agrees. She joined Mellon Bank in 1987 and during her first week on the job, she was invited to attend a career strategy session for women and minorities. The Princeton graduate with an M.B.A. and a master’s of public administration from the University of Texas remembers seeing a diagram of a pyramid with “CEO/Board of Directors” at the top. She was surprised later to learn that she was the only course participant aspiring to rise to that level. Like Wilderotter, Goodwin took charge of her career with the strategic goal of becoming a director. She sought more responsibility and harder jobs, which sometimes meant moving: from Mellon she went to Putnam Investments as senior vice president and portfolio manager, then to American Century Investments as managing director and chief investment officer, then to State Street Research as managing director and CIO. At that point, she decided to “check
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Illustration: J oh n H ERS E Y
By Karen Kane
in” with three CEO’s who knew her well. Was a board seat a valid objective for her? Not only did they endorse the idea, but they became active supporters of her candidacy. Goodwin understood technology, as she had consistently picked winning companies in this industry for her clients’ investment portfolios. While presenting on a panel with the former CEO of Akamai Technologies, George Conrades, Goodwin decided to make inquiries. She told the search firm partner who had organized the event that if Akamai were ever looking for a director, she would love to serve. Because of her initiative and simultaneous conversations at Akamai, the search firm formally proposed Goodwin for candidacy, and she joined the Akamai board at age 44. Goodwin values what she has learned as a board member. She regards Conrades and director Martin Coyne as mentors and supporters. Coyne endorses Goodwin as “a model director who is well versed in business issues, well prepared and actively participates. Her financial, international, risk management and business experience adds considerable value to our board discussions.” When Northwestern University’s Kellogg School of Management decided that alumni clubs were a great tactic in strengthening relationships with former students, Blythe McGarvie, then in her 20s, jumped in as one of the founders of the first club. “As program director, I did everything — arranging programs, speakers, helping with membership.” Her raised profile caught the attention of the university, which sought to recruit her to the Board of Trustees in 1985, a remarkable achievement for a 29-year-old. When she asked what brought her to the board’s attention, she learned it was her passion for her graduate school and willingness to contribute. A recruiter asked her to consider a director role at a private company that wanted to add her retail experience to its board. She declined, saying she would wait for a public board seat. But the recruiter persuaded her to talk to the CEO. “The recruiter was right,” said McGarvie. “Dick Wood is an extraordinary leader. Wawa Inc. is private, yet they operate with all the discipline of a public company.” She joined the board in 1998 and is still on it, serving as the company has grown revenue from $1 billion to $9 billion. “Like my first marriage, it was my first board and I’m going to keep it.” Bob Hallagan, vice chairman and managing director of board leadership services at Korn Ferry
International, says his best advice for directors looking for a second board seat is, “Be an extraordinary director” on your first board. When Hallagan talks to CEO’s and chairmen, he often asks, “Who is your best director and why?” “Those rated as exceptional directors are bright, engaged and accessible; they challenge management, but in a respectful way,” said Hallagan. In light of difficulty in finding top talent for boards, Hallagan noted that more and more of his clients are doing long-term board succession planning. Anticipating future gaps in the board’s competency — because of changes in business model or upcoming retirements — has paid off for clients. “As one client noted, you can always expand the board by one for a short period of time if it means not losing an exceptional candidate,” he said. While CEO’s remain the most-recruited group, the talent supply is limited, according to Hallagan. His team is now going to highly successful companies, working with the heads of human resources and identifying high potentials. “They will be exposed to best practices, have histories of making good decisions, and through NACD [National Association of Corporate Directors] and other educational programs, we can help educate them on good governance.” Human resources executives represent another new talent pool, said Hallagan. “Ensuring a company has the right CEO leadership and an environment that attracts top talent is a key driver of shareholder value,” he said. “This topic increasingly has to be a top priority agenda for boards, and HR executives can certainly add value.” To the uninitiated, getting on a board may appear daunting, but Wilderotter is fond of saying, “You’ve got to fish where the fish are.” By that she means, those seeking director positions need to get to know the current board members of the company. She also says it’s crucial to know what you offer. “It’s not an elevator speech, but it requires that you know where you are going and how you add value. It requires research and thinking of the matrix of skills that the current board possesses.” Once again, Wilderotter made the Fortune Magazine list of the “50 Most Powerful Women.” The magazine points out that nearly everyone on the list is “striving to reinvent her business,” but this group of executives is not sitting still. The magazine noted that Wilderotter, at No. 40, “remains a respected corporate voice.”
There’s nothing casual about becoming a corporate director: It should be part of a larger career plan.
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The Briefings Interview
Leaning In, Not Blending In. 8
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Gail Kelly. Chief Executive Officer, Westpac Group, Sydney.
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It’s a bright Sydney morning and the sun is streaming in through the glass to Westpac Group chief Gail Kelly’s office in the city’s Central Business District. The boss of Australia’s Interview by Narelle Hooper Photographs by Christopher Pearce
second-largest bank
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has a spectacular view of the sparkling harbor and the company’s new office tower rising up in a revamped historic docklands area below. But Kelly’s rapid-fire mind is elsewhere. With trademark smile and almost infectious enthusiasm, she is recalling relentlessly busy Shanghai and Mumbai and the port of Chengdu. The western Chinese port, 13 hours’ flight north, ships in a week what Sydney does in a year, all mechanized efficiency and throughput. The bank from Down Under is boosting its
institutional presence in Asia, to help support the increasing number of Australian customers building their businesses there. Pretty much everyone is trying to home in on the emerging markets in this Asian century, including rivals from Australia’s bank-heavy market, including Commonwealth, ANZ and NAB. Just shy of its 200th anniversary in 2017, Australia’s oldest company is setting itself up for a third century, knowing it will have to adapt to dramatically different circumstances and competitive terrain. It is a long list: sluggish credit growth, the disruption caused to bricks-andmortar businesses by digitization, the need to rebuild trust and meet new capital rules after the reputational pasting the banks took during the financial crisis, and aging demographics, are just for starters. Kelly drives all this, a business with 36,000 staff and $A696 billion in assets, from a CEO’s office that feels homey,
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that somehow underscores a generosity of spirit she believes leaders require in these disruptive days for business. Budding vases of yellow roses, woven rugs, stuffed brand mascots and splashes of bright paintings, including a famous naive of Aussie bushranger Ned Kelly (no relation), soften the neat corporate furniture. Family snaps hint at the journey of the South African-born teacher and bank teller, M.B.A., mother of four (including triplets) and sports nut, to become Australia’s first female bank chief in 2002. After overseeing an audacious and controversial merger in 2008 with St. George, the smaller rival she previously headed for five years, Kelly is making her mark, as one of the world’s most influential women leaders. To use Facebook COO Sheryl Sandberg’s line of the moment, Kelly is leaning in. She aims to make Westpac one of the world’s most admired companies. The bank is
The Briefings Interview: Gail Kelly
a signatory to the United Nations Global Compact, the world’s largest voluntary corporate responsibility initiative. Having learned by harsh experience that it is not enough just to keep your head down and do your best, she’s also setting up Westpac as a model
of what’s possible when a company sets its mind at achieving gender balance. Kelly recently sat down with Narelle Hooper, former editor of the Australian Financial Review’s BOSS Magazine. What follows is an edited version of their conversation.
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You’ve had a fascinating life and career journey — from growing up in Pretoria, South Africa, to running Australia’s second-largest bank. You seem to adapt well to change. How did that come about? KELLY I’m not entirely sure! A combination of luck, hard work and taking opportunities that came my way, I think. I am fortunate to have had an excellent education, to have had parents who encouraged me to give my best and to back myself. I think growing up in South Africa was a help, too – I was given real accountability at a relatively young age and learnt how to deal with change. The 1980s and 1990s, when I was starting out in my career, were really interesting and challenging years. Once in Australia [the family migrated in 1997], I was fortunate to have been given great opportunities which I threw myself into. I really do love what I do.
How do you get that responsiveness in a big organization? That hierarchical structure is so strongly ingrained in the way we operate. KELLY Culture is one of the things I’ve pushed really hard, in all my stay in Westpac, and it has been a theme for me through all of my leadership career. It is what I call a One Team approach, which is different from teamwork by the way. Teamwork is one team working together, a One Team is all of us across the whole operation think about pulling together for the customer. It involves teamwork, but it means different teams will support each other so they will put the outcome for the customer and the outcome for the corporation first before the outcome for their own business unit and the individual.
A lot of organizations aim for that, but how do you make that real for people who go in every day but who are not as connected to it as you and your top team?
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The Briefings Interview: Gail Kelly
KELLY You start at the top — role modeling at the very top of the organization. We take our values very seriously. I talk about the values wherever I go, so there is a big piece of leadership in terms of communication and embedding and showing, by your own actions, that the values actually matter. And we’re very clear on the behaviors that are evidence of One Team and the behaviors that are not. We call them out, and we recognize and reward through official performance reviewing. We evaluate individuals’ performance relative to their values; it’s a specific piece of the performance review.
What about removing employees if they don’t adhere to the behavior? KELLY We absolutely do that. I have examples, and we make sure people understand exactly why that has occurred. Silo mentality, silo behavior … we really do call that out. I run processes twice a year with my team where we sit down as a team and spend time to explicitly address how we are performing as a team and reviewing each. I’m part of that team, and I receive the same feedback and I give the same feedback. It’s very powerful. It is a very open and constructive environment, but it is very candid. Out of that, we each devise our own set of things we are going to work on for the next six months.
In that, there is an issue around trust. It doesn’t come naturally to a lot of people. KELLY It doesn’t happen overnight. You keep on working on it. It boils down to a few things. One is deep respect for people and a belief people make a difference. If you don’t have a deep respect for individuals and a view that people make a difference, you are not going to get trust. You are not going to get a One Team set of behaviors. You are not going to drive a “generosity of spirit” approach towards leadership, which I feel very strongly about.
When did you come to that? Was there a moment it clicked? KELLY Many years ago, I listened to Jack Welch. It was after he left G.E. He was asked about leadership lessons he reflected on and things he might have made more of. He spoke of a generosity gene. That struck me and I thought “That’s it.” I inherently believe leaders need to evidence generosity of spirit. That’s where it clicked for me because I inherently believe in the power of the individual to make a difference. You need to create an environment where individuals can flourish, where they can be the best that they can be. He says it’s a gene in you. I’m not so sure — I think you can develop this empathy through learning, observation and experience, and there are some leadership dynamics. I picked up on this in my research report on my M.B.A., in 1986. I’d spoken to these South African CEO’s, leaders. … If you want to be a good leader, you need to like people. Leadership is about people. If you like people, you take time to understand them, what that person’s individual motivators and drivers are and therefore how to create an environment where that person can thrive…. And to be prepared to develop that relationship to the point where you can have a conversation: “I’ve noticed … and I’m concerned, so perhaps you can help me understand why this is occurring.”
And the flip side is when they need stretching? KELLY Correct. You see it in sport as well. I love sport. I have several passions in life, one of them is sport. My father represented South Africa and in team sports. I grew up on sports fields. I’ve watched and been involved in team sports, and I’m interested in the psychology of team sport and competitiveness. Some people need daily feedback and others are, “Let me be. I know what I’m doing and when I’m ready I will bring it to you.” My kids are like that: “Mum, don’t keep asking me how I am. I am fine,” and other kids are different.
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The Briefings Interview: Gail Kelly
shareholders. We have EPS and TSR metrics. We talk about four quadrants. We seek to achieve a balance on financials. We need to be strong first, so we set clear goals on capital liquidity. Then the growth quadrant — we’re looking to target the growth in segments where we get the best return — so increasing in Asia, wealth, insurance and focus on deposits, transactional banking, SMEs and strength. Then there’s the productivity quadrant. It is really important, and we have to keep simplifying and standardizing and eliminating waste. The last quadrant is return. It goes to margin management and ROE. And they’re trade-offs: you want the appropriate level of capital to be really strong and driving the growth piece to really drive the return metrics. You are balancing them, knowing there are trade-offs. Part of my job is balancing resources that are finite – people, money, time — to best balance that set of outcomes.
How does that influence your day and how you do your job? KELLY A big part of my job is assisting in the process. I’m playing a leading, steering, guiding and cheerleading role in lots of ways. My job is in lots of ways to take all the fantastic work, input and thinking and make sure I can distill it in really clear ways that have meaning. That is so people can identify with it and say, “I’ve got it.” For example, we have a question on our [employee] survey on whether I as an individual understand how my work connects to the vision of the organization — 97 percent said yes. I talk a lot about the elevator speech. They tease me about it. So you get in at level 1 and by the time you get out at level 21 between the two of us we can nail the elevator speech. You want people to have a simple, clear understanding.
What are your main objectives as a leader? KELLY You have global goals — to be the [one of the] most highly respected companies in the world. That’s why our sustainability metrics matter. It is about deep respect. That’s why I was so chuffed with the World Economic Forum where they choose 100 companies as best in sustainability. We came out 10th this year. We were the leading bank on the survey and the leading Australian company on the survey. It is about being respected and helping our customers, communities and employees prosper and grow.
How does that sit on your shoulders?
And other goals? KELLY We set clear frameworks. We want to achieve at least 15 percent ROE because it is important to be strong first, if you are going to play this role in society. We’ve all seen what happens when banks fail, they can’t support customers, or provide an adequate return to
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KELLY I don’t feel alone. I have a fantastic board — and it provides great input and support, understanding and guidance — and a great relationship with my chairman. And I have a fantastic team. … Having the right people in the right roles is the single most important factor for achieving business success. And that includes moving the wrong people out of the wrong roles. So I have a great team and we are all marching to the same agenda and we are all really clear about what success looks like and that balanced scorecard. We’ll sit as a team and make prioritization decisions, and that comes to the One Team, because not everyone will have their wish; there are always many more requests for funding than we can do. It’s not just funding—it’s often people and change. You can’t put too much change into a system at once.
“Leadership is about people. If you like people, you take time to understand them, what that person’s individual motivators and drivers are and therefore how to create an environment where that person can thrive. —Gail Kelly
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By Judith E. Glaser
What is Conversational Intelligence?
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can be cultivated in individuals, teams and organizations. Conversational Intelligence is the hardwired ability in all humans to connect, engage and navigate with others. It is the most important intelligence that gets better when “we” do it together. While the other types of intelligence are more “I-centric” in nature, Conversational Intelligence is a collaborative effort. We can raise the Conversational Intelligence level in personal relationships as well as the teams and organizations we are a part of. Conversations are not always what we think they are. We’ve grown up believing in a narrow view of conversations, thinking they are about expressing thoughts, observations and opinions. Many see conversations as “persuasion” or “getting others to think the way I think.” In our early research, we watched conversations under different circumstances, everything from first meetings to major negotiations. It wasn’t difficult to see the patterns emerge. We found that as many of 95 percent of verbal exchanges were “telling” statements. “Asking” statements were rare, as was quality listening. Conversational Intelligence is about closing the gaps between your reality and mine. As such, it can yield improved business results and create a framework for enhancing relationships and partnerships, releasing new energy for growth and transformation. For many, it may be a new concept to think that what we hold in our head — as our reality — is not nec-
he corporate battlefields are littered with the burnt-out, rusting hulks of auspicious strategies that failed in spectacular fashion and companies that — despite having novel and promising ideas — constantly trail their peers in profits and shareholder returns. A while back the drug company Boehringer Ingelheim suspected its underperformance sprang from a lackluster sales force. New Wave Entertainment blamed conflicting egos in the executive suite, and Clairol believed inconsistent marketing efforts led to the company’s poor numbers. However, none of these assumptions turned out to be the whole truth. By digging below the surface, each company uncovered another obstacle that was holding them back. It wasn’t simply that they couldn’t execute, market or sell. The bigger problem was a lack of Conversational Intelligence™. Conversational Intelligence is an organization’s ability to communicate in ways that create a shared concept of reality. Having worked with these companies and many more of the world’s largest businesses over the past 30 years, I’ve learned that Conversational Intelligence
Judith E. Glaser, CEO of Benchmark Communications Inc., is chairman of the Creating We Institute. She is an organizational anthropologist and author of seven books, including her latest best seller, “Conversational Intelligence: How Great Leaders Build Trust and Get Extraordinary Results.”
www.conversationalintelligence.com
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Five M That Listakes Conve ower Intellrisational gence
Fixation on “Being Right”
Ignoring Other Perspectives
Illustration: MAR IA CORTE
Many people err by spending most of their time describing their views of reality rather than learning how others assess a situation. But the more we focus on the “realities” that others perceive, the more we connect with them.
Neuroscientists are discovering that humans have a passion for being “right” — more than a passion — a compulsion. People “get high” on being right — and are rewarded individually for having “correct” answers. But, the more a speaker pushes his or her “reality,” the more the listeners will seek to protect their positions or points of view, which reduces their connection with others and raises the risk of conflict.
Tell-Sell-Yell It’s a mistake to think that more talk always translates into better communication, understanding and influence. The truth is, the more we try to align others around “our” point of view, the more we create groupthink, resistance or grudging obedience driven by fear. To employees, this comes across as “my way or the highway.”
essarily what others see. Each of us maps the world through our experiences. We create the meaning, and then we share it with others. Conversations provide the tools for talking about what we think and feel, and if the conversations are healthy and robust, we will come to see how others view the world and learn to work successfully with them. Conversational Intelligence begins with trust. Consider the challenges Angela Ahrendts, who heads Apple’s retail businesses, faced when she stepped into her previous job as CEO of Burberry in 2006. How did she transform this tradition-rich British clothing line, founded in 1856, so that it outpaced all other brands in the luxury apparel sector? Ahrendts put it this way. “Trust is truly at the heart of it all. If trust is your core value, you hire accordingly. I interview
Allowing Emotions to Affect Listening Every conversation has emotional content. Fearful listeners may misinterpret friendly advice or warnings as threats.
Disengaged Listeners Those who nod their heads while others talk aren’t always paying attention. Leaders need to learn to practice engagement strategies with others to ensure they are truly connecting, sharing and learning.
a lot of senior management people, and at this level competence and experience are a given. Trust is the difference-maker. When I look them in the eye, I’m asking myself: Do I trust them, and do I get the feeling that they trust me? Do they get the vision?” Distrust leads to defensive listening; trust leads to intelligent listening. Creating a healthy, trusting environment is the first step to gaining Conversational Intelligence. When intentions are set on bridging our realities, being open and transparent, focusing on respect and relationships before tasks, listening to understand, discovering shared success and consistently working to narrow the reality gaps, we are exercising our conversational muscles. When we do that, we are much more likely to achieve organizational goals and perhaps our personal ones as well.
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Investing in Next-Generation Talent Reaps Rewards
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By Nels Olson & Megan Shattuck
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Illustration: J oh n H ERS E Y
here are clear benefits to “homegrown” talent — including lower cost and less turnover — but perhaps the most important reason to invest in up-andcomers is a simple and logical one: The best managers, those who can make a real difference in corporate performance and are wooed by many employers, are attracted to companies that excel at development. They seize the opportunity to build their portfolio of skills and experience, whether ultimately to use in a senior position at that company or to pick up and take with them to apply elsewhere.
Moreover, a reliable succession process — with as few surprises as possible — is something for which companies are increasingly rewarded in the marketplace. It is being demanded by shareholders, required to be reported in the proxy, and is a metric of “good governance” for shareholder proxy services that vote companies up or down as solid investments.
Demonstrate commitment Any company that wishes to be known — inside and outside — as a development-oriented culture should start at the top. The board and CEO must make it clear that growing and advancing talent is a priority, and that message should be understood in every corner of the company, particularly with high-potential executives who know their career and their future matter. It’s easy to repeat platitudes about the importance of leadership and valued employees — as many companies do — but the real priorities quickly become apparent to insiders through the words and actions of those at the top. Companies that do it right understand that management succession is not an occasional exercise, but muscle that must be flexed regularly and continually strengthened. Further, leadership planning should be closely linked to the organizational strategy.
Cross-train, maintain flexibility Where “development” may previously have had a remedial ring to it, those who know they may be tapped for leadership roles are now more likely to view coaching as a signal that they are headed for bigger things and that the organization is investing in their future. Global leaders today need a wide range of skills and often, because of the sheer speed of change, boards and CEO’s may not know precisely the mix of capabilities and experience required in a successor until fairly close to the transition. So it’s important not only to ensure that any development gaps are addressed for leading contenders, but also to maintain a range of candidates. The goal is not to pit one candidate against another like jockeys in a horse race, but to ensure the right CEO for a particular stage of the company’s growth, as well as for a particular industry and global environment. Let the strategy lead the way, keep options open, and don’t choose a successor until the timing is right.
The board at the center
The board’s role in every phase of the succession and management development process is crucial. On the most elemental level, while the board doesn’t manage development day-to-day, it should make sure that these topics are regularly on the agenda. The board should identify an immediate, Focus on the critical few emergency successor — which may change over time For those who will add the greatest value as leaders, — who can step in on a moment’s notice, as well as long-term, boards and CEO’s should look beyond promising next-generation leaders who will be critical the most obvious choices. The goal is to build the to the future. Most companies that have implemented best talent, and many CEO’s get consumed with the a rigorous succession process ensure that the board has “what,” not the “who” and the “how.” ample opportunity to get to know future leaders, both Consider tapping the organization for input in board meetings and in less formal settings. on future internal successors. The best may be While CEO succession and passing the baton from highly capable and respected by their colleagues, one star CEO to another is the sort of news that regubut “hidden” from leadership. And it’s important to larly makes headlines, the less glamorous process — the engage the organization in identifying promising plain old hard work — that ensures successful transileaders for another reason. When you make a leadtions gets far less attention. ership change, of course you want the market to CEO’s and their boards are finally waking up to respond positively, but you want company insiders the fact CEO succession is not an event, or even a to be enthusiastic, too. That can be a powerful motiprocess that exists in isolation, but part of a larger vator throughout the organization. development effort that reaches deep down into the To mobilize the critical few who will become the organization. By focusing on succession planning, future leadership of the company, the first step is boards are executing their most important fiduciary identifying them, but the more important part is enduty: ensuring a steady flow of leadership for their gaging them in regular communication organizations. How fortunate that Nels Olson is about their development progress. It’s doing the right thing for shareholders Vice Chairman and crucial to gauge what the individual enalso helps to burnish the organizaCo-Leader, Board & CEO Services Practice, visions for the future, including interest tion’s credentials as a leadership deand Megan Shattuck in a plan to prepare him or her for a leadvelopment culture and a magnet for is Client Partner, ership role. management talent. Korn Ferry.
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