How do great companies groom talent?November 3, 2011: 5:00 AM ET
You can't build a great business without nurturing from within. Meet the firms that are doing it right.
By Richard McGill Murphy, contributor
FORTUNE -- IBM (No. 1) sends leadership SWAT teams around the world. Hindustan Unilever (No. 6) ships young executives out to live in Indian villages so that they can understand the needs of impoverished rural consumers. At farming equipment manufacturer Deere (No. 14), rising managers receive coaching from distinguished board members like Gen. Richard B. Myers, the former chairman of the Joint Chiefs of Staff who coordinated the U.S. military response to the 9/11 attacks. And at consulting giant McKinsey (No. 17), junior consultants are showered with attention from senior partners, whose performance evaluations depend in part on their mentoring skills.
All these companies go beyond the call of duty when it comes to leadership development. McKinsey partner Mona Mourshed, 39, joined the firm 12 years ago after finishing a doctorate in economic development. With the encouragement of her senior mentors, Mourshed and another partner launched McKinsey's global education consulting practice, which Mourshed now runs from Dubai. For the past six years, Mourshed has been advising Arab governments on how to improve their educational systems and close their yawning youth employment gaps, which she describes as one of the key drivers of political unrest. And now that she's a senior leader in her own right, Mourshed formally mentors six junior colleagues who work in McKinsey offices all over the world. "Their reaching the maximum of their potential is a function of how effectively I'm able to support them," she says.
It's been two years since Fortune last published this list, which we produce in association with Aon Hewitt Consulting. Aon Hewitt, in partnership with RBL Group, started by surveying HR executives at 478 companies worldwide about their leadership development programs. Aon Hewitt then interviewed executives at 182 global finalists, drilling into their leadership strategy, succession planning, techniques for identifying high-potential junior employees, and much more. A panel of distinguished judges, including authors, academics, and journalists, then gathered to select the regional and global winners.
This year's takeaway: U.S. companies no longer dominate global leadership development, even though legendary talent factories like IBM (IBM), P&G (No. 3), and GE (No. 11) still appear on our list. Whirlpool (No. 9) made the list despite announcing 5,000 layoffs last month, which goes to show that great leadership programs don't guarantee success. Two years ago, 17 of the 25 companies on our global list were based in the U.S. This year: only 13. Five of our global winners are Indian firms, with the remaining seven sprinkled around the world from China to Brazil.
"International companies are creatively coming up with leadership development ideas that fit their own cultures," says Wharton management expert Michael Useem, one of our judges. Indian companies, for example, tend to stress their leadership role in society, which explains why rising leaders at Hindustan Unilever and Wipro (No. 23) devote significant resources to building hospitals and schools in Indian communities. In China, on the other hand, successful leadership often depends on building strong relationships with local and national government officials.
Brazilian managers must be nimble to deal with an economic and regulatory climate that can change radically from day to day. "You need flexibility, otherwise you can't survive here," says Alessandro Carlucci, CEO of Natura (No. 13), a São Paulo direct-sales company that competes with Avon (AVP) in Latin America. The ability to tell a great story about quarterly numbers is crucial for U.S. business leaders, less so for their colleagues abroad. "You can't be a successful manager of a big public U.S. company if you can't achieve shareholder returns and explain them to your board and to the analyst community," says Useem. "That skill set is less important in India or China."
Cultural differences aside, all the companies on our list view leadership development as a strategic priority. Deere (DE), for example, has set the ambitious goal of doubling its net income by 2018, with much of the growth expected to come from emerging markets that need to produce more food for their growing populations. To that end, Deere is aggressively building out country operations in Brazil, India, China, and elsewhere. "How to motivate and engage these different organizations is a big priority for us," says Deere CEO Sam Allen. "Our leadership themes match what we're trying to do in our business. We stress the need to manage change because we're growing, and the world is changing rapidly."
This article is from the November 7, 2011 issue of Fortune.