Jim Citrin Leadership by Example

Which companies attract and nurture the best talent?

This is more than a theoretical question in today's increasingly mobile, knowledge-driven economy. The issue of talent has implications for you from a career-management, leadership, and, potentially, investment perspective. Let's take a look at each of these three areas in turn.

A Lasting Reputation

As you think about your career, recognize that your value in the market is inexorably linked to the reputation of your employer. Is your company a dynamic, cutting-edge, creative winner? Or is it a solid but dull middle-of-the-packer?

Chances are that these terms will be used to describe you as well. In many cases, you'll be associated with the company you work for more than the specific job you hold. Just as your college label stays with you over the course of your career, so too does the company you work for become part of your professional identity.

Working in a company with great people will plug you into valuable networks and offer the best opportunities for skill-building and professional development. Being associated with a blue-chip company brand will also enhance your career options down the road. After all, it's generally easier to move from a large, widely recognized, well-respected organization to a smaller or more speculative one.

The Traits of Success

What if you're a leader in your company? What can you do to attract the best talent that will ultimately enhance the brand of your organization? In a large-scale research effort with thousands of senior executives, a colleague and I analyzed the characteristics that the most talented professionals value in their organizations.

To sum it up in a phrase, the best leaders create a "success culture" -- one that attracts and unleashes the energy and creativity of the best talent. A success culture is one in which the organization:

• Wins in the marketplace and meets well-communicated performance expectations.

• Encourages the values of mentorship and making colleagues successful.

• Makes it easy to take appropriate risks and learn from results without an undue fear of failure.

• Provides organizational mobility and ready access to new responsibilities and opportunities.

• Provides sound feedback and coaching on self-assessment so that employees can take advantage of organizational mobility and move into roles that play to their greatest strengths and interests.

A New Accountability

There's a new dimension beyond creating a success culture that's rapidly becoming an additional requirement for attracting the best talent -- the degree to which companies are judged to be socially responsible. According to a McKinsey global survey, society's expectations for companies are rising beyond donating funds to local hospitals, schools, or cultural institutions.

Consumers and employees, among other stakeholders, are increasingly holding companies accountable for their actions in areas as wide-ranging as environmental degradation, swelling consumer debt, and working conditions in developing countries.

Talent is now evaluating employers based on the degree to which they're ethical; whether they demonstrate and communicate good values and good works; and how well they align their social strategy with their products and marketing messages.

The Stock-Talent Connection

Finally, what about the talent question from an investor's perspective? In the short run, you need only to look at the impact of new CEO appointments on a company's stock price to be reminded of how linked investment returns are to top executive talent. Over the long term, however, talent can potentially become an actionable investment strategy.

This suggests that the companies best known for developing managers and leaders outperform the broader market by a wide margin. The business press puts out many rankings of best companies to work for, most valuable brands, best-managed or most admired-companies, and so on. The names most often cited on these lists tend to be well known: General Electric, Procter & Gamble, IBM, Nokia, Microsoft, Goldman Sachs, McDonald's, Caterpillar, Colgate-Palmolive, Starbucks, Nike, to name a few.

About two-thirds of these companies has outperformed the S&P 500 over the past five years. More dramatically, over a 10-year period, all but one has outperformed the S&P, and more than half have outpaced the broader market by a factor greater than tenfold.