Taking in a (new) view The travel, leisure, and hospitality industry should roam wider and explore deeper in its search for talent by James Hyde and Erica Wilding
January 2012 Many current leadership teams in the Travel, Leisure and Hospitality (TLH) industry lack experience in different industries, functions, sectors or geographies. As a result, the industry risks becoming insular and stagnant. Companies need to cross-fertilise with more external talent, and prioritise developing high-potentials to fill gaps in skill sets, and transform the sector into a magnet for high-calibre executives and graduates.
About this study Korn/Ferry Whitehead Mann surveyed and interviewed over sixty CEOs, human resources directors, and other senior executives across the industry. About half of respondents came from the hotel sector; the remaining half came from sectors including travel, restaurants, health & fitness, car hire, and timeshare. James Hyde, Senior Client Partner and Head of the Consumer Practice in London, presented our initial findings at the World Tourism Forum in Lucerne, Switzerland in April 2011. This report is our complete analysis of the survey results.
Travel-related businesses, which thrive by encouraging people to take in new experiences, have plenty of management teams who stay put. Few executives appear to move in and out of travel, leisure and hospitality—or even between corporate functions— to the detriment of the industry overall. That was one of the conclusions that emerged from research conducted by Korn/Ferry (Whitehead Mann’s) Travel, Hospitality, and Leisure Practice into how companies are building leadership pipelines. Specifically we sought to understand the prevalence and benefits of talent mobility and define any threats affecting talent strategy. A high proportion of the senior executives surveyed (89 percent) anticipated moderate or significant economic growth at their companies through brand or geographical expansion in 2011 and 2012. However, despite the positive forecast, many expressed anxiety about their industry’s standing in the war for talent, both at the graduate and leadership levels. At the leadership level, the survey revealed an insular executive landscape with a scarcity of fresh ideas and insights from other industries. Nearly half (47 percent) of those interviewed disclosed that “none” or “few” of their leadership teams had experience from other industries, while more than 79 percent rarely moved between functions. The responses gave the overwhelming impression of an industry constrained by a stagnation of ideas, low on diversity and ‘new blood’. The findings also revealed several key gaps in skill sets amongst current leadership teams. The most glaring and significant gaps fall in the category of Strategic Skills, which contains some of the hardest competencies to develop. Many of the executives we interviewed recognised that in order to meet the strategic needs of the industry, they would be wise to cross-fertilise external talent with existing industry experts.
Alternative, multi-tiered talent strategies are necessary if the TLH industry is to fully capitalise on the growth opportunities at hand. Encouragingly, while the research exposed the potential limitations inherent to current leadership teams, it also revealed tangible opportunities to mitigate future talent risks.
The problem: an insular leadership landscape A key objective of the survey was to understand talent mobility at senior levels of the industry. The findings overwhelmingly showed a leadership talent pool lacking in sector diversity and industry breadth. A high proportion of senior leadership teams rarely move between industry, sector, function, or geography. As a result, the industry appears to suffer from minimal exposure to ideas from outside.
Figure 1
Does your leadership team have experience in other industries?
12% None
35% Few
14% Most
39% Some
Only 14 percent of companies surveyed said that “Most” of their leaders had experience in other industries. Nearly half (47 percent) of companies said that “few” or “none” of their leaders had such experience.
Currently, there appears to be a bias in the industry against outside talent; many respondents acknowledged that few TLH companies have a track record of hiring or recruiting from other sectors. Indeed, there have been relatively few examples of leaders coming from outside the industry: 71 percent of the TLH business leaders in our survey had risen through the ranks from the ‘shop floor’. While this structure has the benefit of facilitating intimate knowledge and understanding of the business, it often results in a homogenous talent pool lacking in flexibility and broader commercial awareness.
On the occasions where external leaders have been recruited into the industry, there have been extremely positive results. A good example was the 2006 appointment of Andy Cosslett to the position of CEO at Intercontinental Hotels Group (IHG). Mr. Cosslett came from the Fast Moving Consumer Goods (FMCG) industry and was previously “Very few of the leaders come from outside the Regional President at the confecindustry, which is unfortunate. The best examples tionary company Cadburys (now of people from outside are in finance and audit.” part of Kraft Foods).
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While he did not have industry or sector experience, he brought a much needed focus on brands and considerable international expertise. Under his leadership, IHG expanded significantly, particularly in Asia, and broadened its brand focus. The business is now a ‘brand owner’ “The advantage is that people know the system and operating hotels globally. Its philosophy of the company, and we avoid acquiring bad strategy looks robust in what has habits.... However, we only know what we know. That is been a volatile global economy.
a significant limiting factor.”
Another example was the 2005 appointment of Andrew Harrison to the fast expanding budget airline Easyjet. Mr. Harrison joined Easyjet with no aviation experience and presided over significant growth in their route network and aircraft fleet. He stayed for four and half years before a recent move to become CEO of Whitbread Plc, the hospitality group whose brands included Costa Coffee and Premier Inn. In both cases, Mr. Harrison arrived without industry or sector experience but was nevertheless able to positively impact the respective businesses. Reasons given for the lack of multi-functional experience included: a low appetite for risk under current economic conditions and the need for specialists. Nevertheless, a number of executives highlighted the need to expose high-potential employees to several functions early in their careers in order to equip them with the full complement of competencies needed for more senior roles. A few Figure 2 respondents stated that there was How frequently do leaders in your business move more functional movement at a between functions? middle management level rather 10% Never than at a leadership level, a trend that reflects the high risk of movement at the upper echelons of the 26% Often senior team. The cost of not moving between functions was also highlighted, with several respondents acknowledging that the experience was necessary.
64% Rarely
74 percent of those surveyed said that leaders “rarely” or “never” moved between functions. None of the respondents said the senior leadership team “always” moved between functions.
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The skills gap When we explicitly probed into existing skill-gaps, several key competencies were identified as deficient amongst current leadership teams. A number of executives seemed to indicate a failure of senior management to evolve as the sector changed, indicating that the skills required now to drive successful consumer-facing businesses are different from those needed historically. One executive stated that this was an “outcome of recruiting from their own workforce”—reinforcing the need to Figure 3 cross-fertilise existing talent with What skills gaps do you see in your senior leadership team? external expertise. 14% Don’t have one 25% Strategic 24% Other 6% Focus on outcomes 15% Consumer insight
16% Brand awareness
Only 14% percent of executives felt they have no “skills-gaps” in their leadership team. The skills-gap most frequently identified (25 percent) were strategic skills, brand awareness (16 percent), and customer insight (15 percent).
Brand awareness was amongst the key skills-gap amongst senior management in the industry. This tended to manifest in a general lack of “proactive management” and “a short-termist” mentality.
While brand awareness is not considered a competency per se, it is an organisational imperative driven by an effective marketing and communications strategy. Our survey results appear to suggest that leadership teams in the TLH industry need a clearer picture of their brands, a better understanding of brand positioning, and a more focused strategy to leverage the value of a brand. The need to embrace and innovate with new technology was another common theme in the research. The rapid evolution of technology presents a specific challenge to the industry, necessitating a complete reconsideration of how to define products and services and take them to market. Much of the discourse surrounding skill-gaps in the industry clustered around strategic skills. Indeed, strategic leadership and thinking became a recurring theme, especially the need for external strategic expertise. Innovation, creative thinking, and a focus on outcomes were Disney, our industry does not specifically pinpointed as lacking.
“With the exception of have good marketers and brand builders. It seems to be an industry weakness.”
These specific competencies have been researched extensively by Korn/Ferry Leadership and Talent Consulting and vary to the extent they can be developed. Certain competencies—such as Creativity and Dealing with Ambiguity—are easier to develop, revealing an opportunity to give future leaders
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detailed and differentiated development plans, mentoring, and coaching. Other competencies—such as Strategic Agility and Innovation Management—are more difficult to develop, highlighting the need to buy in capabilities through new internal and external recruitment.
Solutions We asked what most needed to change to enable leadership teams to remain competitive and meet strategic goals. A high proportion of respondents, more than a third, said they required a team which balanced operational internal tenure with strategic expertise from outside. The results suggest that there is a need to strike a balance between ‘building up’ and ‘buying in’ talent. Neither strategy will exclusively solve the talent challenges at hand. However, when combined, the dual strategies complement each other and address the talent deficiencies in a holistic and durable fashion. Recalibrating the industry’s appeal to the very brightest graduates was pinpointed as one way the industry could meet its future talent needs. The industry currently suffers from a poor reputation, however, and is not considered an attractive career option by the best graduates. Decades of intellectual snobbery, a relatively low entry bar, poor remuneration packages, and a lack of challenging career paths are largely responsible for this.
Figure 4
What does your leadership team need most? 5% None
7% Sector breadth 12% Functional breadth
20% Other 22% International experience
A better balance between internal operational experience and strategic expertise from the outside was cited by more than a third of respondents.
34% Operational internal tenure vs. strategic expertise from outside
To meet future strategic goals, it is imperative that companies not only attract, but also retain high quality talent. The industry needs to place increased importance on the early identification and development of high potentials in order to give them broad, structured, and challenging career paths. A commitment to identifying talent and accelerating development would allow companies to leverage talent strategically and ensure healthy long-term succession planning. A crucial question is how companies identify their high potentials, a subject which has been researched extensively. A key predictor of high potential is the concept of Learning Agility, which is currently considered one of the leading benchmarks in talent management. Studies have repeatedly shown that the ability to learn from experience—to be open to change and willing to learn—is what differentiates executives who succeed when given challenging assignments and promotions.
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Individuals with high Learning Agility are resourceful problem-solvers in general. But they tend to also have good people skills, high ambiguity tolerance, clear vision, and strong innovation dexterity—precisely the talents needed in the Travel, Leisure and Hospitality sector. Companies in the industry would therefore be wise to audit their leadership teams using Learning Agility assessments and identify individuals with the necessary skills to deploy to high priority areas of the business. In the event that external talent is needed, such assessments can be used to screen potential candidates and quickly discover where the necessary skills lie.
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Key takeaways 1. Despite an uncertain economy and a squeeze on consumer spend, the Travel, Leisure and Hospitality industry is expected to grow in 2012 through brand or geographic expansion. The need to have strong leadership teams to guide this growth through a period of volatility has never been more critical. 2. The industry faces significant talent challenges. Many current leadership teams lack diversity and few have a broad range of experience in different industries, functions, sectors, or geographies. As a result, the senior executive landscape is in danger of becoming homogenous, insular, and stagnant. 3. The changing nature of the industry is demanding different skill sets. Strategic thinking – including creativity, innovation and a focus on long-term outcomes – was highlighted as a key skill-gap amongst current leadership teams. 4. Certain strategic skills can be developed with relative ease, necessitating the implementation of detailed development plans for industry leaders. Other strategic skills are harder to develop, underlining the need to bring in external talent with a proven track record of effecting positive and lasting strategic change. 5. Companies need to cross-fertilise external talent with existing industry experts. Operational internal tenure is hugely valuable and needs to be leveraged alongside exposure to the workings of other industries. 6. The industry is currently failing to attract the highest calibre graduate talent. This is mainly due to its reputation as a ‘low payer’, lacking in intellectual horsepower or challenging career paths. Addressing this issue is central if the industry is if to meet long-term strategic needs. 7. Companies need to prioritise the early identification and development of high potential talent. A key predictor of high potential is the concept of Learning Agility, which is the ability to learn from experience. Research shows this attribute is what makes and develops expert leaders. Companies would benefit hugely from implementing talent audits based on Learning Agility assessments in order to detect and retain future industry leaders.
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James Hyde is a Senior Client Partner and the head of the Consumer Practice in the UK. james.hyde@kornferry.com
Erica Wilding is a Senior Associate in the Consumer Practice in the UK. erica.wilding@kornferry.com
About The Korn/Ferry Institute The Korn/Ferry Institute generates forward-thinking research and viewpoints that illuminate how talent advances business strategy. Since its founding in 2008, the institute has published scores of articles, studies and books that explore global best practices in organizational leadership and human capital development.
About Korn/Ferry International Korn/Ferry International, with a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, is a premier global provider of talent management solutions. Based in Los Angeles, the firm delivers an array of solutions that help clients to attract, engage, develop, and retain their talent. Visit www.kornferry.com for more information on the Korn/Ferry International family of companies, and www.kornferryinstitute.com for thought leadership, intellectual property, and research.
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Š 2012 The Korn/Ferry Institute