Effectiveness of Strategies Critical Issue

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<p><strong>Palo Alto, Calif. &mdash; Sept. 19</strong><br />Boards of directors are playing a more hands-on, proactive role in governing the organizations they serve, and one area in particular &mdash; talent management &mdash; is an area of growing strategic importance to directors today. </p><p>Historically focused on CEO succession, directors are finding themselves more often involved in broader talent management discussions with the CEO that involve one or two additional levels of management deeper into the organization. </p><p>A study by the consulting firm McKinsey & Co. indicates the top area board directors intend to spend more time on is &ldquo;talent/skills&rdquo; and that among the top seven issues directors desire to spend more time on, five of them involve talent management issues such as developing management, valuating management and CEO succession.</p><p>There are a few key drivers for this increased attention on talent management. </p><p>First, directors are increasingly aware of the &ldquo;war for talent&rdquo; and recognize the challenges in keeping key players. </p><p>Additionally, directors want to ensure their organization is planning appropriately for succession as CEO turnover is at a relative high point. </p><p>According to a study by Booz Allen Hamilton, North American CEOs have an annual turnover rate of between 15 percnet and 20 percent in the past couple of years, and CEOs in Asia and Europe also are experiencing similar<br />rates.</p><p>Another driver is relatively new legislation put in place in the United States such as Sarbanes-Oxley, which is causing directors to spend more time on the organization, understanding all of its key strategies and gaining familiarity with the quality of its top talent.</p><p>&ldquo;The way CEOs manage their team and the development opportunities they provide executives and high potentials are important issues for boards today,&rdquo; said Eleanor Bloxham, strategic governance and leadership authority and CEO of The Value Alliance and Corporate Governance<br />Alliance. &ldquo;With the baby boomers retiring and the competitive challenges of globalization, companies need individuals who can innovate and help the company survive and grow to the next level. Increasingly, that means skills not found in traditional learning settings. </p><p>”In carrying out the strategic plan, Boards need to ensure the CEO has built a solid team that can meet the changing<br />requirements in the years ahead.&rdquo;</p><p>In the benchmark survey &ldquo;Executive Transitions&rdquo; produced by The Institute of Executive Development and Alexcel Group, 40 percent of organizations have directors with a low level of involvement with executives who are changing roles &mdash; a crucial point in an executive&rsquo;s success &mdash; and another 40 percent of respondents are not involved in such transitions. </p><p>&ldquo;Historically, boards do not play a very active role in talent management issues for anyone other than the CEO, but I<br />expect that to change soon,&rdquo; said Scott Saslow, executive director. &ldquo;We are starting to see more cases of directors who play an important role in their organization&rsquo;s top team<br />development by providing feedback and mentoring to senior leaders among other activities.&rdquo;</p>

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