Leadership Development as a Competitive Advantage

A.G. Lafley, CEO of Proctor and Gamble, believes that developing leaders is a source of competitive advantage for P&G.

Somewhere out in the global sprawl of 160 countries where Procter & Gamble sells its products is a 35-year-old manager who, one day, will be CEO. And the company's current chief executive, A.G. Lafley, sitting at headquarters back in Cincinnati, is watching, focusing his attention far and wide on those bright upstarts.

Lafley takes succession management and leadership development seriously. He and his senior vice president for human relations, Dick Antoine, regularly look through four "bands," or layers, of managers to identify future CEOs. Members of the board of directors get the same names and are encouraged to go out into the field to meet the possible CEOs-in-waiting. "The further out you look, the more speculative it is," says Lafley, who is 58. "When I'm guessing on a 35-year-old, I really am guessing."

Overall, Lafley says he spends a third to half his time on leadership development. The company says it cannot calculate precisely how much money it spends on leadership development, but it is obviously huge. All employees are subject to 360-degree reviews beginning within a year after they start, and there are a raft of leadership development programs that span an entire career. Line managers are evaluated-and compensated-not just on their business results but also on the basis of how well they develop their organizations. The company also has a computerized Talent Development System containing names of 3,000 top executives and details of their backgrounds in order to help in identifying the right person for the right job.

P&G says it believes it would take competitors considerable time and money to fully replicate its leadership development system. "The people we hire, and the focus we put on their development as leaders, are critical to P&G's ability to innovate and compete," says Lafley, who says he is constantly looking for "teachable moments" to improve the skills of his management team. "Nothing I do will have a more enduring impact on P&G's long-term success than helping to develop other leaders."

The article goes on to discuss the best companies for leaders. You have to be careful when discussing leadership, because it has a cult-like status in the world of business. But one thing is for sure, developing your people – on any level – is good for the bottom line.