Case Federated Industries

Patricia Paterson is the new vice president for human resources at Federated Industries, a conglomerate with several diverse subsidiaries. Her primary responsibility is to provide support and advice to each subsidiary and monitor their personnel practices to ensure they are consistent with corporate policy and strategy. She reports directly to the CEO of Federated. The CEO is concerned that not enough capable leaders are coming up through the ranks. The subsidiaries have complete responsibility for their own internal management development, but the CEO wonders whether it is time for a more uniform approach. The CEO asked Patricia to find out what each subsidiary is doing to develop leadership skills, then report back with recommendations for improving leadership development overall at Federated Industries. Patricia arranged to meet with the personnel directors of the three major subsidiaries and asked each director to prepare a short briefing. The first director to speak was Peter Proskin, from an engineering company. He explained that his company provides only technical training, because they lack the staff to provide management training. All management training is done outside the company. A manager (or an employee who wants to become a manager) can look at the listing on available training and request any seminar or workshop that appears relevant. If the employee’s boss approves the request, the manager is sent to the training at company expense. Some employees are enrolled in the evening MBA degree program at the local university, and they are reimbursed for half of the tuition cost. Peter said they do not pay complete tuition for degree programs, because it is too costly. After some employees finish their MBA, they leave for higher-paying jobs at other companies eager to get people who have managerial as well as technical skills. The second director to report was Alice Alston, from a company that makes consumer products. She explained that the company provides a program to develop leadership skills in high-potential managers. Managers at each level are encouraged to identify a promising subordinate to mentor. The protégé gets lots of personal coaching and is given special, developmental assignments. For example, a couple of junior managers are put on each executive committee to learn about strategic issues and observe how the senior managers work. Other assignments include serving on cross-functional project teams and carrying out improvement projects such as studying work processes and recommending ways to make them more efficient. Alice said that most of the mentors and protégés like the program. However, people not in the program (roughly two-thirds of the employees) sometimes complain about the lack of developmental opportunity in the company. The last director to speak was Hal Harwick, from an electronics company. Hal explained that they concentrate their training on managers who previously demonstrated their executive capacity. The six most promising managers below the top executive level are selected to participate in a series of seminars held once a month. Each seminar is conducted by one of the top executives, who talks about company activities in his or her area of expertise. Three or four times a year, Hal arranges for an outside consultant to conduct a training workshop on a specific topic such as project management, budgeting, or delegation. The participating managers know they are fast-trackers in line for promotion to top management. They like the program and have told him it is very worthwhile. When one of them is promoted, another promising manager is selected for the program by the top management team. The only drawback is the political infighting that sometimes occurs when executives try to get their protégés selected for the program.

1. Identify strengths and weaknesses in leadership development at Federated.

2. What types of changes are most likely to improve the leadership development?

3. What additional information is needed to make a good report to the CEO?