Special Report February 16, 2010, 10:37PM EST

Leadership Trends for 2010

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SPECIAL REPORT

Best Companies for Leadership

Best-In-Class Organizations are Looking Toward the Future

Best-In-Class Are Shifting Their Focus

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For example, during a recent meeting at Procter & Gamble (PG), I learned the company is helping to build schools in Africa—and at the same time providing hygiene products to young women to encourage them to attend these schools without interruption.

This project is a perfect demonstration of the idea of doing well by doing good, as P&G helps to develop a new market for its products while at the same time investing in undeniably positive social goals. Moreover, the managers involved in these efforts gain invaluable leadership experience in developing markets—strengthening the company's current and future leadership ranks.

Positive Public Image

General Electric (GE), a perennial member of the Top 20, has grouped numerous corporate initiatives and development partnerships within two broad, socially responsible themes: environmental responsibility and access to health care.

These initiatives have generated strong marketing and communication campaigns and earned positive press coverage as well. The donation of solar-powered water purification units and medical technologies to Haiti, for example, resulted in several national news stories, helping to generate good will toward GE among all its stakeholders, including the general public, which of course includes current and prospective shareholders.

Even more fundamental to GE's business interests, however, is the prospective long-term gain it foresees from such initiatives. Company leaders expect that both regulatory and market forces will continue to accelerate demand for both more energy-efficient products and technologies and more accessible, lower-cost medical equipment. With its investments and innovations, the company hopes to gain a significant competitive advantage against these market trends—again, doing well by doing good.

Attracting the Young

These kinds of projects offer companies additional benefits: strengthening a company's culture by fostering a common commitment and sense of purpose; helping young leaders plug into a collective identity beyond their role as individual contributors; and supporting recruiting efforts by harnessing the idealism and energy of employees and prospective employees alike.

As companies search for competitive advantages in an increasingly global economy, look for this growing acceptance of and involvement in socially responsible efforts to intensify.

The commitment to leadership development revealed in this year's results is striking—particularly compared with results from previous recessionary periods, when leadership development came to a virtual standstill as companies pared back spending on all activities deemed nonessential.

This year, however—despite the effects of the worst economic downturn in a generation—the Top 20 companies not only entered the recession with strong leadership in place; they also maintained their commitment to preparing and retaining present and future leaders. Even more surprising to me, while the Top 20 companies exhibit these qualities to a higher degree than other companies, the differences are less pronounced than in other aspects of this year's study.

A Broadening View

This study shows that most companies are highly committed to developing leaders from within their ranks—perhaps a reflection of hard-won experience from past downturns. Then, when businesses shut down leadership pipelines, many experienced problematic consequences when economic conditions improved. This time around, more enterprises have recognized the value of having seasoned managers ready to help lead the way into the new opportunities that accompany a recovery.

In part, this focus on leadership reflects the growing challenges today's top managers experience in leading diverse, global enterprises in a highly interconnected world. In this environment, leaders more often face mutually contradictory requirements—for example, the need to cut costs and improve efficiency in a downturn while also maintaining effective leadership development programs.

Arriving at the "right" answer in such dilemmas requires a deep understanding of a company's operations and culture, plus the seasoned judgment to foresee and evaluate the impact of differing options.

Complicating matters, today's multinational companies are affected, to varying degrees of severity, by often unexpected events virtually everywhere in the world. In this unpredictable environment, leaders must be prepared to improvise and shift tactics, all the while keeping broader goals in sight and performance results on target.

Rick Lash is director of leadership and talent practice, Hay Group, Canada. He has been closely involved in gathering and analyzing data from the Best Companies program for a number of years.