Leadership Incident

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Case Incident 2
Leadership Factories
Companies differ markedly in their ability to produce future leaders, as several recent analyses of the 1,187 largest publicly-traded U.S. companies revealed. Among the CEOs in one study, a remarkable total of 26 once worked at General Electric (GE). But as the table below shows, on a per-employee basis that earns GE only tenth place in terms of the likelihood of a current or former employee’s becoming CEO of a large company. Top on the list is management consulting firm McKinsey & Company. Amazingly, if we extrapolate into the future from the current stock of McKinsey alums who are CEOs, of every 690 McKinsey employees, one will become CEO of a Fortune 1000 company.

Company| Size (employees)| CEOs produced| Odds|
McKinsey & Co.| 11,000| 16| 690:1|
Deloitte & Touche| 17,170| 8| 2,150:1|
Baxter International| 48,000| 11| 4,365:1|
PricewaterhouseCoopers| 47,750| 10| 4,775:1|
Ernst & Young| 103,000| 12| 8,585:1|
Merrill Lynch| 62,200| 7| 8,885:1|
Motorola| 66,000| 7| 9,430:1|
Intel| 88,100| 8| 11,010:1|
Proctor & Gamble (P&G)| 138,000| 12| 11,500:1|
General Electric (GE)| 300,000| 26| 11,540:1|

Some companies did not fare nearly as well, such as Citigroup (odds: 30,180:1), AT&T (odds: 23,220:1), and Johnson & Johnson (odds: 15,275:1). While some might dismiss the results, not surprisingly, the companies at the top of the list do not. “We are a leadership engine and a talent machine,” said retiring P&G CEO A. G. Lafley. Questions

1. Management consulting firms did very well on a per-employee basis, partly because they are mostly comprised of managers (as opposed to blue-collar or entry-level workers). How big a factor do you think composition of the workforce is in likelihood of producing a CEO? 2. Do you think so-called leadership factories are also better places for non-leaders to work? Why or why not? 3. Assume...
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