Leading lights: Lessons in law firm leadership development from GE

 

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Three things you will learn from this Masterclass:

1. What companies known for their leadership development do differently

2. How GE’s culture and processes enable it to develop better leaders

3. How to adapt best practice in the corporate world to your law firm

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As the differences between Old Law and New Law have become increasingly stark and apparent, the issue of whether law firm leaders are equipped to face the challenges ahead is an important one. The demands on leaders have intensified and changed over recent years, but it’s questionable as to whether the leadership development processes in place at most law firms have kept pace.

Innovating around the issue of leadership development in a way that produces significant impact can be difficult. One approach is to look at companies in other industries to see what they have to offer by way of ideas and concepts.

Leading the way

GE is particularly well known for its ability to develop and leverage strong leadership at all levels. Its CEOs have traditionally been very hands-on when it comes to developing leadership talent. Jeff Immelt, the current CEO, sums it up as: “The only way I can run GE well is if I handpick the top couple of hundred people”.

Far from being a glib statement, accumulating an in-depth knowledge of individuals at varying stages of the leadership track is the foundation of GE’s leadership development programme. The box ‘Leadership development at GE’ explains how the formal part of the process works in practice.

 

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Leadership development at GE

• Reviews (known as Session Cs) of leaders and potential leaders across each business unit are carried out by the senior leadership team at the location of each business unit so that individuals can be observed in context. The Session Cs lead to decisions on matters such as developmental needs, future roles and retention. The CEO is actively involved.

• The style and thoroughness of the sessions are what make Session Cs stand out from the reviews carried out at other companies. Individuals’ core talents and qualities are rigorously examined by combining hard performance facts with observations made by senior leaders. The thoroughness of these discussions also improves leaders’ skills in judging other leaders.

• Session C reviews are carried out before the yearly strategy sessions for each business unit. This ensures that the right individuals are in place to formulate and implement the strategy for each business. The strategy review is combined with a follow-up on Session C. The operations and budgets review for each business unit take place a couple of months later, which is preceded by a further Session C follow-up.

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Other key aspects of GE’s leadership development system include the following.

1. Consistent and substantive coaching and feedback by leaders at all levels to their more junior colleagues.

2. Tailored quality education. Crotonville is GE’s legendary off-site education centre for high potentials and leaders. Training is broad ranging and specifically designed to fit with GE’s strategy, culture and values.

3. Leaders must develop other leaders in order to progress. This isn’t optional. Eighty per cent of the instructors at Crotonville are senior leaders from GE, including the CEO. Most instructors teach once a month and both instructors and participants evaluate and challenge each other. For example, CEOs have been known to ask participants what they would do differently if they were the CEO.

4. Opportunities for informal social interactions are actively created by senior leaders. These reinforce formal teaching sessions and reviews and enable senior leaders to get to know individuals better. The interactions are used by senior leaders to feed into a leadership data bank of information on junior leaders and high-potential individuals.

Comparing processes

At first glance, it can seem that the types of processes in place at GE and other companies best known for leadership development aren’t that different to those in many other organisations, including law firms. However, the telling difference between the best companies and the rest becomes clear when examining the benefits that they consistently reap (see box: Benefits of the best leadership development programmes). Their programmes give them a significant competitive edge that others are not able to demonstrate to the same extent and on the same consistent basis.

 

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Benefits of the best leadership development programmes

• There is a sufficient pipeline of quality leaders to meet the company’s existing and future business needs.

• Promotions can be made quickly if a key individual resigns, ensuring stability.

• There is a high talent retention rate, as individuals’ careers are carefully planned and they are offered carefully-chosen on-the-job development opportunities to learn new skills.

• Valuable talent isn’t carelessly lost, as additional coaching and mentoring are promptly given to those who have potential but are struggling.

• The organisation attracts the best talent due to its reputation for developing individuals and providing rewarding career paths.

• With the right people in the rights roles, the organisation has a better chance than most at adapting quickly, making sound strategic decisions and implementing them. If the business falters, as even the best can do, it gets back on track quicker than those with poor leadership.

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Each company has designed its disciplines and processes to reflect its specific business needs and culture, but they nevertheless stem from the following common themes.

Leadership development starts at
the top

• The CEOs at the best companies are almost obsessed with developing strong leadership at all levels of their organisation. While they rely on a capable HR department to support the process, the CEO and the senior leadership team drive it.

• CEOs and other senior leaders spend substantial amounts of time spotting and developing other leaders, which is backed up by tailored training.

Leadership development is a disciplined process

• Judging and developing an individual’s potential has been converted from a subjective hit-or-miss art into a precise and institutionalised discipline underpinned by in-depth observations and discussions, where viewpoints about individuals are challenged and need to be backed up.

• The senior leadership team exhibit the same in-depth knowledge of key individuals’ characteristics and core talents as they do of their company’s financial statements.

• Senior leaders consistently link business results to other leaders’ actions, decisions and behaviours until their core talents and areas
  for development become clear
  and specific.

Linking leadership and rewards

• Although rewards are based on financial performance, they are also linked to how the results are obtained and whether they reflect the values of the company.

• Values are made explicit and detailed examples are given so that there is clarity around expected behaviours.

Leaders as teachers

• Leaders cannot progress through the ranks unless they actively and consistently develop others through both formal teaching and informal mentoring and coaching. It’s common for the CEO and other senior leaders to reach down a couple of levels and coach a more junior leader on an ad-hoc basis.

• Feedback is recognised as being of paramount importance in developing leaders. It is targeted, constructive and, most importantly, candid.

Providing development opportunities

• Using their in-depth knowledge of more junior leaders, senior leaders ensure that they are given on-the-job opportunities to grow and develop, depending on their skills, developmental needs and ultimate career ambitions.

• Senior leaders are always clear about what an individual is expected to gain from a new opportunity – for example, whether it’s testing to see if a new skill can be acquired or increasing an individual’s judgment about people or the business.

• An individual is always coached and supported in a new role by a more senior leader, with constant feedback provided.

Lessons for law firms

Law firms are undoubtedly different to organisations in the corporate world and, when it comes to leadership development, they face specific challenges. However, firms wishing to ensure that their leadership development processes remain fit for purpose may benefit from adapting and applying the themes discussed above.

The extent to which the themes can be adopted will depend heavily on the firm’s existing culture and partnership; the following factors should be considered.

Starting at the top

Managing partners have an additional hurdle to contend with when trying to drive through the types of leadership processes and disciplines employed by the best companies. The culture and economic model of law firms necessitates the support of the wider partnership.
As a result, although a managing
partner with a genuine belief in the importance of leadership development
is a prerequisite, he also needs to
engender sufficient buy-in from his
fellow partners.

This is undoubtedly a key point to consider before embarking on any leadership programme that requires genuine change. It is only when the partners are on board that the senior management team are able to adopt
the hands-on approach of senior leaders at the best companies.

Analysing talent

Senior leadership teams at law firms don’t tend to analyse their lawyers, and in particular, their fellow partners, in the same focused manner as GE and the other companies best known for leadership development. There are
two main reasons for this.

1. The concept of analysing and rating fellow partners goes against many partners’ view of what a partnership means. However, with buy-in, this barrier can be minimised. Helpful lessons can be learnt from how GE introduced candour and rigour in analysing its talent. The behaviour changes required were driven from the top, with the-then CEO consistently exhibiting the types of behaviours he required when it came to analysing and providing feedback to his senior leadership team. This allowed those individuals, in turn, to exhibit the same behaviours when dealing with the next tier of leaders. A cascade effect followed throughout the organisation. It goes without saying that this wasn’t an easy process or a quick one, but the
   end result is enduring.

2. Some of the more senior leadership roles, particularly at larger law firms, are elected, which makes analysing individuals for these roles irrelevant. While it’s likely that managing partners and senior partners will continue to be elected for the foreseeable future, it’s possible for the senior leadership to persuade their fellow partners to agree to change the way other senior roles are appointed.
   A prime example of this happening is the recent change at Clifford Chance, allowing the managing partner to personally appoint a number of senior roles which were previously voted on.

Rewarding results and behaviours

There are often a number of criteria that contribute towards how individuals are rewarded. Financial performance will undoubtedly be a prime factor in assessing compensation levels.
However, firms that also look at how
such performance was achieved are
those that will have an advantage in identifying valuable leadership talent.

For example, a partner who grows client revenues by developing and motivating a team to help achieve the revenue growth is more likely to succeed in a formal leadership role than a partner who also grows client revenues but
works in lone-ranger mode.

Teaching more than the law

It’s standard practice for lawyers to hone their legal expertise by learning from more senior lawyers. However, this type of essential mentoring and coaching doesn’t tend to extend to the development of leadership skills. In fact, the thought of one partner developing another can
raise hackles.

But, it may be time for a change of mindset, as effective leaders shouldn’t expect to lead all the time. “The ability to toggle between leading and following is critical because circumstances change,” notes leadership expert Jim Collins.

The best companies for leadership
put this into practice on a daily basis.
For example, at Toyota, no one is
allowed to mentor or coach another person unless they themselves are
being mentored or coached.

As many law firms become more corporate in nature and appoint different leadership roles, it may well become easier to persuade partners to not only take on a wider ‘leader and teacher’ role but also to accept mentoring and coaching from other colleagues.

Developing opportunities

The increasingly complex structure of many law firms provides an ideal training ground for developing leaders in a variety of leadership roles. It’s implicit that, in order to provide the right development opportunities, senior leaders must have a comprehensive knowledge of leadership talent across the firm. But, in addition, in an environment where much of leadership boils down to persuasion, care needs to be taken to ensure that those given leadership roles have sufficient standing within the partnership to be able to influence their fellow partners as needed.

Other factors

As well as the common practices of companies with the best leadership,
some other factors to be considered
when looking at leadership development
in law firms are as follows.

Frequent and tailored

Companies at the forefront of leadership development recognise that they frequently need to revisit their processes to ensure that they are up to date.

The old adage of self-help being the best help also resonates strongly with these companies. Rather than buying in a formulaic solution, they work with their internal constituents to develop their own unique, research-based leadership model based on their specific business needs, strategic goals and culture.

Future trends

While it’s fairly safe to say that law firms probably won’t be at the forefront of leadership innovation, keeping abreast of trends and what other industries are doing can help to ensure processes remain fit for purpose (see box: Future trends in leadership development).

 

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Future trends in leadership development

1. An increase in vertical development, as opposed to concentrating on horizontal development. This is because, in complex, fast moving and often ambiguous environments, leaders need to be taught to think in a much more sophisticated way than previously. Vertical development focuses on increasing an individual’s thinking abilities and cognitive development, whereas horizontal development concentrates on teaching skills, abilities and behaviours.

2. A shift from leaders being developed to individuals owning and driving their own leadership development. This sits well with the younger generations’ values and expectations and aligns with established motivational theory, which suggests that autonomy increases intrinsic motivation.

3. Collective leadership –this involves a move away from a single ‘heroic’ leader to connected networks that lead through collaboration and sharing information. Again, this fits with younger generations’ ability to communicate and share information easily through social and work networks.

Note: Adapted from the whitepaper ‘Future Trends in Leadership Development’, Nick Petrie, Centre for Creative Leadership

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Spotlight on leadership

The challenges that continue to face law firms are by now familiar enough to not need repeating. But, it’s easy to forget that, without consistently strong leadership at all levels, the chances of successfully dealing with these challenges are much reduced. As a result, reviewing leadership development more proactively and through a broader lens has never been more important.

Ava Madon is partner at UK
law firm Penningtons Manches
(www.penningtons.co.uk). She
has an MBA in legal practice and
is an accredited business coach.

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