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This Week in Leadership (July 19 - July 25)
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Top firms are discovering that talent—acquiring and developing it—must be a top priority for the chief executive. In this excerpt from the new book Talent Wins: The New Playbook for Putting People First, authors Ram Charan, Dominic Barton, and Dennis Carey argue how a routine meeting between the CEO, CHRO, and CFO can become one of the most powerful tools in business. Carey is a vice chairman of Korn Ferry, Barton is the global managing partner of McKinsey & Company, and Charan is a longtime business advisor and speaker.
In April 2015, Peter Zaffino, then the chief executive of Marsh, the giant insurance broker and risk manager, did something simple but radical: He invited Chief Human Resources Officer Mary Anne Elliott and then-Chief Financial Officer Courtney Leimkuhler to sit together with him to review the business. What was radical about this? Well, Zaffino had been meeting regularly with Elliott to review talent. And he’d been meeting every quarter with Leimkuhler for numbers-driven operational reviews. But he’d never brought the two of them together for a company-wide review. By bringing people and numbers together for the first time, Zaffino was convening what we call a G3—and nothing was ever the same at Marsh.
“The whole meeting took about fifteen minutes,” says Zaffino. Their work was high-level stuff, built on a simple design. They drew a two-by-two chart on a white board. On one side of the vertical axis, they listed issues relating to business performance; on the other, organizational concerns. Above the horizontal axis, they noted things that were going well; their list of things that weren’t went below. The simplicity of the chart, combined with the power of having both finance and HR in the same room, made some major trends at Marsh pop: The business was effectively controlling costs, and its products were differentiated; but the company was still adjusting to the fact that fees were being unbundled across the industry. Unit leaders were committed to the company’s goals, but some weren’t pursuing growth opportunities as aggressively as they could.
Together, the three executives adjusted a new sales incentive plan that Elliott was about to introduce so that it better aligned with Marsh’s overall business goals and would encourage the team to deliver near-term results and focus on the future. They also moved a problem that they’d put on the back burner to the front. They all knew that regional business leaders weren’t being transitioned quickly enough, but only when they looked at the problem together could they acknowledge that this was an issue that was a real drag on the business. They agreed to attack the problem immediately.
After that first meeting, Zaffino decided that the G3 would became a permanent fixture, the core management group of the company. The trio met formally each quarter and interacted constantly outside that formal setting. Conversing frequently, Leimkuhler and Elliott gained a fuller understanding of the business and became their own team of two. “We already ran the business with disciplined processes,” says Zaffino, who left Marsh for AIG in the summer of 2017. “But this G3 process provided us with a terrific lens into the business without adding bureaucracy.”
The G3 that Zaffino created is the most important and most powerful tool at the disposal of any modern CEO. As CEO, you have two critical resources: money and people. Getting the people who manage those resources in the same room with you is the only effective way for you to link the company’s financials with the people who produce them. The G3 is most effective when its mandate is vast: it should lead the way on anything where the deployment of talent influences the company’s results. In other words, the G3 will tackle almost anything you would tackle as CEO.
In formal meetings and informal get-togethers like those that characterized the interaction of Zaffino’s trio, the G3 will work constantly to ensure that both talent and finance will be appropriately linked in all mission-critical decisions, operations, and future planning. This trio of top executives must dissect past events to understand the root causes of a business’s failure or success. It must prescribe strategies to improve performance and ensure that the organization has what the talent it needs to reach those goals. Listening closely to that talent, it must try to predict where the business is headed. By tightly linking finance and talent, it ensures that the organizational side is considered through a holistic lens, and that financial projections are informed by the reality and potential of talent. The multi-discipline combination of CEO, CFO, and CHRO can ensure that your company stays on offense.
By putting talent and finance on equal footing, the G3 will change the way and sequence in which these critical matters are discussed. A G3 leadership team doesn’t turn to personnel and organization issues only after having reviewed financial results and strategic initiatives across each business unit, as typically happens today. Talent is not some discrete item on your agenda. Talent is inextricably tied to every item on the agenda.
Think of the G3 as the central brain trust of a talent-first organization. (You might want to keep the general counsel or chief risk officer close on big decisions if that suits your business, but it’s the ongoing CEO-CFO-CHRO linkage that’s crucial.) Effectively deployed, the G3 is the mechanism that will create the future of your organization.
Reprinted by permission of Harvard Business Review Press. Excerpted from Talent Wins: The New Playbook for Putting People First by Ram Charan, Dominic Barton, and Dennis Carey. Copyright 2018. All rights reserved.