Executive Outlook The unsung heroes of logistics Cultivate great division or region presidents from within Developing future executives internally presents a host of advantages for logistics and transportation services companies. By using the right metrics to assess highpotentials, assessing them against success profiles calibrated to the role and industry, and targeting their career development, LTS companies can build a reliable pipeline of talent leading to the division or region president role. One of the secrets of success for leading logistics companies is hidden in plain sight: high-performing division and region leaders. These unsung heroes may attract little notice at times, but they can make the difference between greatness and mediocrity for multi-division or multi-region providers of logistics and transportation services (LTS). The best of these leaders possess a rare combination of leadership style and specific mission-critical competencies that enable them to excel in an increasingly complex logistics environment. These leaders are in short supply, however, so the most sustainable strategy for securing them is to develop them from within the organization. First, however, they must be accurately identified. Historically, heads of business units and region presidents in logistics companies have been expected to deliver in operations to make the many moving parts in any given service or geography work efficiently and cost effectively. Today, they must still be strong operators, but much more is required of them in the face of social and business trends that are transforming the industry, including: Increased customer demand for real-time services, interactive analytics, greater global scope, customized offerings, integrated services, convenience, and environmental consciousness Increased regulation around the world requiring greater supply chain safety, transparency, and compliance Shifting trade demand and resource availability as well as changing sourcing strategies among logistics customers, posing new challenges in network and facility strategy Continuing urbanization and infrastructure congestion New technologies including cloud computing, mobile applications for logistics, automation, and possibly even unmanned aerial vehicles The emergence of Big Data and data analytics of unprecedented sophistication Need for diversity and inclusion across organizations to meet changing global demands 1
The increased complexity that these trends bring now requires division and region leaders to be problem solvers and strategic trailblazers. They must build an organization that is flexible, innovative, and highly responsive to the global market. And they must be able to interact more effectively than ever with customers, regulators, governments, and other stakeholders. At the same time, they must possess some long-familiar attributes. First and foremost, they need industry knowledge, which includes familiarity not only with complex supply chain challenges but also with a complex competitive landscape. That landscape encompasses a handful of big players, continuing strategic consolidation, and numerous smaller players that can provide specialized expertise, cost efficiencies, and personalized offerings. Second, they have to be able to operate effectively in a matrixed organization. Division and region leaders usually report directly to either a CEO or COO, but have 360-degree dotted lines in their reporting structure, which requires the ability to handle ambiguity as well as take accountability. In addition, in a shared services structure, the division and region leaders must be able to influence functions such as sales, marketing, and finance, over which they may have no direct control, although they may be under intense pressure to pursue growth. Finally, wielding influence successfully also requires fluency in company culture the unspoken way things are done so cultural fit is essential. Division and region leaders who combine these familiar attributes with the ability to meet the new challenges of the industry can add significant value. What should LTS companies do to ensure that they have real difference makers in these critical roles? They must first learn to recognize what best in class looks like in terms of decision-making styles and missioncritical competencies. They will then be ready to answer the all-important talent question: should these top performers be sought from outside the company or developed from inside? Assessing leaders inside and out Using psychometric assessments that have been widely validated, it is possible to gauge an executive s fit for a particular role. Leadership assessments can accurately measure the skill level and particular behavioral patterns for instance how an executive delegates responsibility, solicits ideas, approaches information gathering and processing, and arrives at decisions. It is also helpful to look at personal dispositions, such as temperament, empathy, and understanding. However, any habit or behavior, if taken too far, can be counterproductive. For example, conscientiousness in information gathering prior to a decision can become indecisiveness. 2
Because nearly any trait can undermine a leader s effectiveness when carried too far, the key lies in assessing the degree to which a leader exhibits certain traits. Once an executive has completed an assessment, the results can be compared with a statistically validated best-in-class profile the top 20% of performers in a particular role. Among the types of characteristics that can be examined, some of the most important for best-in-class division or region leaders: Leadership styles. How an individual gathers input, presents ideas, and mobilizes people, whether they are employees, suppliers, customers, or community members. These encompass externally visible aspects of decision-making, influencing or motivating others, or presenting to an audience. Outstanding performers among division and region heads is characterized by propensity to: Listen actively Remain receptive to others ideas Tactfully express views Respond to customer needs Resolve conflict Foster teamwork Build consensus These habits and behaviors present a picture of a leader who is highly responsive to other people and takes considerable care when making decisions to move everyone forward together. That style is critical in highly matrixed organizations, in which a division or region leader s success usually depends on the ability to influence people especially at the corporate level over whom the leader has no direct authority. However, leaders who have these traits to an exaggerated degree may be too interpersonally involved to give tough feedback. They may also wait for consensus that does not materialize, slowing down decision making. In addition, their desire for consensus and their constant soliciting of others views can be seen as a lack of conviction or focus. Thinking style. These traits home in on how executives behave when focused solely on the task or subject at hand not interpersonal demands such as when they are alone or with a small group of trusted individuals. Outstanding division and region heads exhibit a pronounced ability to: Analyze complex data thoroughly Project strategic vision Formulate detailed plans Identify new opportunities Think creatively and intuitively 3
The best in class can summon the vision required for breakthrough strategies and construct a workable tactical plan line by line. However, exaggerated emphasis on the analytical can lead to analysis paralysis, resulting in missed deadlines. Conversely, overreliance on intuition can result in missed opportunities because others ideas have been dismissed on little more than the leader s gut feel. Interpersonal style. The capacity to interact with others and deal effectively with emotionally laden situations is vital if a leader is to drive the agenda for the organization. Among top performing division and region heads, the characteristic temperament is someone who will: Maintain the self-assurance necessary to take on the challenges of the role Make tough decisions comfortably Tolerate ambiguity and unanticipated change Resist giving up or becoming discouraged, unmotivated, or mentally tired Exercise good insight into people and understand their behaviors Share credit with others These leaders possess the confidence and tenacity to take their organizations forward even when they face stiff headwinds. They are cool under fire, making tough calls deliberately and calmly. And their understanding of the behavior of others and their willingness to share credit often inspires the leaders people to follow enthusiastically. On the downside, the self-assured leader could be perceived as having an overly optimistic attitude. The ease with which tough decisions are made could be seen as arrogance. Comfort with ambiguity and uncertainty could be seen as a willingness to take risks too readily. And deep insight into people could result in making exceptions for those who perform poorly. Because nearly any trait can undermine a leader s effectiveness when carried too far, simply determining whether someone has particular traits is insufficient. The key lies in assessing the degree to which a leader exhibits those traits. Assessment therefore requires experience, skill, and the ability to recognize nuances of behavior and make accurate distinctions among people who might appear to be alike. Unacknowledged differences in degree can ultimately translate into big differences in cultural fit and performance. 4
Top performing leaders understand what competencies are required in particular roles, enabling them to deploy people for maximum advantage. Completing the leader s profile: three mission-critical competencies In addition to an analysis of leadership characteristics, success profiles for specific industries and contexts also should include mission-critical competencies that is, business-specific skills, abilities, talents. Competencies round out the picture of a top performing division or region head in LTS and greatly multiplies the power to predict whether an individual will succeed in that role. Among many central competencies for LTS division or region heads, three stand out: Making complex decisions. Given the nature and magnitude of the trends transforming LTS, leaders will be increasingly confronted with complex decisions about strategy, technology, and people. A number of LTS businesses, such as XPO and Roadrunner, are faced with myriad challenges integrating new business lines and often very different culture together quickly to drive the value of the purchase prices in this market. These leaders make the difference between success and failure of these acquisitions. Often, they must consider macro issues including geopolitical forces, regulation, risk, and many other factors in making a decision. Top performers can solve even the toughest and most complex of these problems. They excel at gleaning meaning from whatever data are available and at getting up to speed on the new and different. They use multiple problem-solving tools and techniques, and they are also able to bring to bear their personal wisdom and experience to arrive at the best solution, given the situation. Evaluating and deploying people accurately. Asset-intensive or asset-light LTS enterprises depend on people to deliver success. Top performers possess an acute ability to read people accurately and to diagnose their strengths, weaknesses, and potential. These leaders also understand what competencies are required in particular roles, enabling them to deploy people for maximum advantage. 5
Managing diverse relationships. Diverse relationships are the hallmark of LTS. Division and region heads must be able to maintain fruitful relationships with corporate leaders, employees, customers, governments, and regulators. They must also embrace diversity of styles, types, classes, nationalities, and gender not only treating differences fairly and equitably but also harnessing the business power of diversity. Top performers build diverse networks and they are quick to find common ground with other interested parties. And, in their highly customer-centric industry, where responsiveness is not only expected but demanded, they treat everyone as a preferred customer. Make or buy? Ensuring the supply of top talent Not surprisingly, best-in-class leaders who possess the mission-critical competences for LTS are hard to find. Because they are in short supply and can create significant value, recruiting them from outside the company can be expensive. Further, leaders in the industry who have proven themselves in the role are often reluctant to move to an unfamiliar company. Even if they were willing to move, the distinctive cultural differences between companies within the industry could impede their progress at the outset of their tenure and eventually derail them. Looking outside the industry can be even riskier, given the time required for a newcomer to learn the enormously complex LTS world and adapt to an LTS company culture. A far less risky or costly approach lies in the early identification and careful development of internal candidates. Internal development can ensure that candidates, by the time they assume the role of division or region head, have a sure grasp of the culture, a thorough knowledge of the industry, and the tools they need to succeed. In addition, their power to generate value will be multiplied by the networks of relationships they have built internally during their time with the company. Cultivating internal candidates who could become division or region presidents begins with four steps: Identify high potentials through learning agility. Many organizations conduct programs for high potentials up and coming young executives who show great promise for the future. In identifying these promising people, however, organizations often use inappropriate criteria IQ, current performance, or other measures that have been shown to have poor predictive power for future success. Decades of research indicate that learning agility provides a far more accurate indicator of potential. Learning agility is the ability and willingness to learn from experience and then apply that learning to perform well in first-time or new situations. 6
People who score well on assessments of learning agility use failures, successes, and feedback to form rules of thumb, models, maps, paradigms, or templates and they apply their learning effectively in other, quite different situations. They learn faster, not because they are more intelligent, but because they possess more effective learning skills and strategies. Assess high potentials for leadership readiness and competencies. Once high potentials have been accurately identified, they can then be assessed for their degree of match to the competencies that are mission critical for division and region leaders in LTS organizations. Such assessment should uncover strengths, which some high potentials may already have in abundance, and weaknesses that can be addressed. Create a development road map. Results from assessment can be used to design the most efficient and effective development program for individuals who show the most promise of one day rising to a division or region leadership role. Areas of existing strength can be quickly dealt with while weaknesses are given greater attention. The development plan should include targeted job assignments that build mission-critical competences, leadership coaching and mentoring, rotations through functions like sales, and immersion in specific business issues such as P&L management, strategy development, external relations that provide the depth and breadth of experience required in a division or region leader. Use ongoing assessment. Candidates should be reassessed annually in order to gauge their progress toward the division or region president success profile, to make adjustments in their development plan, and to determine their readiness for promotion. This reassessment should not be the standard annual performance review, which is often merely a pro forma exercise, but an objective, in-depth, science-based determination of the individual s progress toward one of the most critical roles in the organization. Conclusion Today, more than ever, LTS organizations need division and region leaders who can profitably grow the business in an environment in which nothing stands still: technology, customers, or opportunity. Success as a division or region president requires the personal and external style of leadership in the right degree, indispensable problem-solving and complexity-wrangling competencies, and a deeply embedded learning agility. Those requirements can not only be assessed at all levels of hiring and promotion, they can be cultivated in high-potential executives. Companies that cultivate the right competencies can ensure a strong and reliable supply of some of the biggest difference makers in the industry. 7
About the author Neil Collins is a Senior Client Partner at Korn Ferry and the Global Sector Leader for the firm s Logistics & Transportation Services Practice. He is based in Atlanta. +1 404.783.8811 neil.collins@kornferry.com About Korn Ferry At Korn Ferry, we design, build, attract and ignite talent. Since our inception, clients have trusted us to help recruit world-class leadership. Today, we are a single source for leadership and talent consulting services to empower businesses and leaders to reach their goals. Our solutions range from executive recruitment and leadership development programs, to enterprise learning, succession planning and recruitment process outsourcing (RPO). About The Korn Ferry Institute The Korn Ferry Institute, our research and analytics arm, was established to share intelligence and expert points of view on talent and leadership. Through studies, books and a quarterly magazine, Briefings, we aim to increase understanding of how strategic talent decisions contribute to competitive advantage, growth and success. Visit www.kornferry.com for more information on Korn Ferry, and www.kornferryinstitute.com for articles, research and insights. 2014 The Korn Ferry Institute 8