When leaders are scarce, employees look to peers

April 19, 2012: 9:30 AM ET

To attract the kind of people they need, large organizations like Microsoft and KPMG are flipping the idea of mentoring on its head.

By Ethan Rouen

FORTUNE -- Hiring may be easier when unemployment rates hover near double digits, but super talented candidates with years of experience will hardly ever hurt for a job.

When Microsoft (MSFT) recently was looking to snag 300 senior managers from the competition, the company tried a different approach than the usual.

"We want people with entrepreneurial spirits who also want to innovate in the way they do their jobs," says John McCloskey, director, worldwide strategy and sales. "Money alone is not what's going to convince them to come to Microsoft."

To attract the kind of people it needed, the tech behemoth offered a new program that flipped the idea of mentoring on its head. The 300 new senior employees have been paired up with people at similar experience levels to serve as mentors to the Microsoft veterans.

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This strategy is just one of many peer mentoring schemes that large corporations have been using to keep employees motivated in an economic environment where the path to the top is often believed to require hopping from firm to firm, says Brian Kropp, managing director at the Corporate Executive Board.

Since 2008, the middle-management level at large companies has been gutted, according to a study from the CEB. On average, managers now have 50% more direct reports and 20% less time to spend with these reports, Kropp says. When polled about what they would do if they had extra money to spend, these organizations said they would not invest in rebuilding their management ranks.

This dearth of managers creates several risks. Employee retention and engagement often drop because there is no clear career path when 10 colleagues are competing for the same supervisor's role. Institutional knowledge also becomes more ephemeral, Kropp says.

To solve this problem, he says, many companies are developing programs that have peers in different divisions or locations mentor each other to provide fresh ideas about career paths, help employees develop new skills, and keep them engaged with their colleagues and the company in general.

These connections stand to help companies improve their relationship with their employees, Kropp says. Some companies are even doing reverse-generational mentoring, having younger, tech- and social media-savvy employees mentor their older colleagues.

Twenty-five percent of large U.S. companies have peer-mentoring programs. Before the financial crisis of 2007, Kropp says, only 4-5% of similarly sized organizations had such programs.

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Microsoft has experienced numerous benefits, both quantifiable and intangible, McCloskey says. Everyone involved in the peer-mentoring program has contact with major customers, and the success of the program can be measured in part by the significant increase in the size of the deals the company has completed in the last year, he says.

And the company has been able to make particularly good use of the skills of these new hires. Their knowledge can expand exponentially as they share it with their peers, who can then share it with their direct reports.

The way managers have embraced the program, though, has been the most profound evidence of peer mentoring's success, McCloskey says. There was some initial hostility from people with years of experience who were now going to be mentored by newbies.

That skepticism quickly dissolved though, McCloskey says, and now Microsoft is facing a new challenge with the program. "We've crossed a threshold in the last six months," he says. "We have more mentee requests than mentors at this point."

Accounting giant KPMG says that mentoring is "ingrained in our values," says Kathy Hannan, managing partner for corporate responsibility and diversity. Everyone at the firm has a mentor, she says, offering a way to strengthen employees' skills as well as their connection to others at the company.

Two years ago, looking to expand opportunities for a diverse group of leaders, KPMG started its Leaders Engaging Leaders program, which pairs 60 top managers with members of the management committee, the board of directors, and national managing partners.

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"It gives the most senior leaders in the firm an opportunity to engage with a cross section of leaders that they normally wouldn't see in their day jobs," Hannan says.

The program aims to show mentees that just because there are only a few rungs of the corporate ladder left, it doesn't mean they are stuck in the jobs they are doing now.

In addition, the mentor-mentee relationship should evolve into a form of sponsorship, Hannan says. As bonds form, the connection should evolve from that of a coach, who tells you what to do, to that of a mentor, who offers advice, to that of a sponsor, who advocates for you.

Several people in Leaders Engaging Leaders have taken on more significant leadership roles, including one who has joined the board of directors. KPMG is currently looking to expand the program.

"The goal is ultimately to drive it down deeper into the organization," Hannan says. "It really helps with retention … and gives folks a line of sight to a number of opportunities across the firm."

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