CORPORATE LEADERSHIP COUNCIL

DECEMBER 2000 www.corporateleadershipcouncil.com

CASE PROFILE

FEATURED COMPANY

3Ms Leadership Competency Framework

EXECUTIVE SUMMARY

COMPANY: HEADQUARTERS: INDUSTRY: 1999 EMPLOYEES: 1999 SALES:

MINNESOTA MINING AND MANUFACTURING CO. (3M) ST. PAUL, MINNESOTA MANUFACTURING 71,000 $15.7 BILLION

! In the face of complex competitive pressures, 3M required an up-to-date leadership model to guide targeted leadership development across its diverse businesses and a strong succession planning process to secure future corporate leadership. ! 3M involved its senior executives and leadership talent in the development of a global framework of leadership competencies specific to 3Ms business, vision and values. ! The models identified competency areas, framework and behavioral anchors now facilitate leadership assessment and development and the executive succession planning process.

CHALLENGE AT HAND
In the mid-1990s, 3M faced significant structural changes to the business environment in which it operated. Globalizing markets, rapid changes in product and information technologies, and a critical need for organizational agility refocused attention on the nature of corporate leadership. In addition, these structural changes, particularly globalization, have impacted the type of leadership capabilities required for organizational success. 3M faced two challenges in particular: first, to update its model of corporate leadership and cultivate the leadership talent necessary for growth; and second, to improve the effectiveness of its succession planning process to ensure capable leaders are properly deployed in the organization. These challenges are described below. Issue #1 Stewarding Future Growth In order to survive competitive pressures and grow the company, 3M required strengthened leadership, both in the contemporary senior management cohort and in the pool of high-potential leadership talent. As advocated by the quote below, one approach to ensuring the development of skills and behaviors that support corporate objectives is the creation of a model that describes the organizations desired competencies.
"To be effective, the development of workplace and managerial skills must reflect the current and projected needs of the organization. It is a critical responsibility to identify the core competencies of the enterprise and to ensure that the competencies required by managers, specialists and the workforce in general are adequate and appropriate."1
Pickett, Les. Competencies and Managerial Effectiveness: Putting Competencies to Work

Although 3M had developed a leadership competency model in the mid-1980s, a review of this model against more recent literature showed that the identified competencies needed to be updated particularly with respect to changes in leadership philosophy to address the rapidly-changing global business environment for the company to be able to pursue its growth plans. Issue #2 Facilitating Leadership Succession 3M faced a second challenge in relation to its leadership team. The company has a policy of promoting from within in order to ensure that individuals filling leadership positions possess the broad understanding of 3Ms diverse businesses to provide effective executive leadership. It was therefore critical not only that the companys leadership development process was properly targeted, but that succession planning was carefully managed. Recent research indicates that the use of competency models as a basis for objective talent assessment and succession planning is a common practice in large organizations. A Leibman Associates study of the practices of over 100 Fortune 500 companies showed that approximately two-thirds had developed explicit leadership competencies.2 3M had need of a company-specific, but company-wide, leadership profile on which to base objective assessment of leadership potential, identification of development needs and probable career-pathing. Objectives of the new leadership competency profile were: ! To accurately assess leadership capability ! To more effectively develop talent within the organization ! To select and place leaders into key positions

2000 CORPORATE EXECUTIVE BOARD CATALOG NUMBER: CLC12NLK2

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CORPORATE LEADERSHIP COUNCIL

DECEMBER 2000 3Ms Leadership Competency Framework

Critically Reviewing Established Competencies The project team used the identified stakeholder groups heavily in reviewing 3Ms current set of competencies and revising them to reflect the companys current business environment. These groups roles in critical stages of the competency model development process are outlined below.
! Ensuring fit of new competencies with leadership philosophy

HR SOLUTION
In 1995, 3M convened a global conference of HR professionals to position leadership selection, assessment and development as the primary HR priorities for the company. At the conclusion of the conference, two HR professionals were identified to lead a team in creating initiatives aimed at competency-based leadership development. The first step was the creation of a global leadership competency framework that would describe and drive the type of leadership required by the company. Identifying Stakeholders In keeping with best practices identified in literature regarding competency-modeling,3 3M included in its leadership analysis those individuals who shape the positions targeted by the model: in this case, the members of the executive leadership team. In order to ensure that the model would accurately illustrate the true leadership needs of the organization, the project leaders worked with three groups of senior managers to create, review and edit the evolving competency model development. These groups would also determine when it was appropriate to move to the next stage in implementing the leadership development and succession processes and tools that would be built upon the competency framework. The three groups were: ! Executive Resources Committee (ERC) CEO, business unit Executive Vice Presidents (EVPs) and HR Vice President (VP). Responsible for selection and development of individuals in the top 500 positions at 3M. ! Human Resources Policy Committee Market EVPs, HR VP and several VPs of corporate service functions. Mandates policies with human resources impacts. ! Operations Committee CEO and 13 direct reports. Oversees 3Ms operations and approves the formation or restructuring of staff or operating units. FIGURE 1: REVISIONS TO LEADERSHIP COMPETENCIES AT 3M
Original Competency Label Revised Competency Label
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Project leaders met individually with each member of the Executive Resources Committee to review current competency materials and discuss leadership philosophy, business complexity and language.
! Building consensus for the leadership model

The project leaders also presented several drafts of the competency model to the Human Resources Policy Committee. Discussion surrounding the phrasing and interpretation of the competency definitions helped clarify leadership philosophy and facilitated consensus-building. At the end of this process, the group had made several revisions to competency labels and definitions (See Figure 1 for examples) and finalized a set of 12 identified leadership competencies.
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Creating a Framework for Revised Leadership Competencies The company further refined the model by organizing the 12 identified competencies into a framework that described how these competencies might be developed over time. A group of HR practitioners from across 3Ms global operations distinguished fundamental, essential and visionary clusters of competencies that would help clarify the applicability of the model to experienced, junior or potential future leaders. The twelve competencies and the competency framework are described in detail in Figure 2 overleaf.

Rationale for Change

! The use of nurturing highlights the importance of proactively creating an environment in

Innovation Nurturing Innovation which staff can freely exchange ideas, challenge the status quo and learn from failures

! Emphasises leaders role of mentoring idea originators through all stages of a products life
Business Health and Results

! Stresses the importance of delivering results; avoiding the implication that growth should be
pursued at all costs

Business Growth

! Encourages leaders to manage all organizational subsystems to be vibrant and flexible ! The removal of systemic was intended to avoid the perception that the competencies were
expressed with jargon

Systemic Change

Integrated Change Capable of Handling Multiple, Complex and Paradoxical Situations Gives and Seeks Open and Authentic Feedback

! The term integrated would be more clearly and widely understood

Effective Analysis of Complex Situations Feedback and Reinforcement

! Acknowledges the existence of paradoxical leadership situations ! Introduces the concept of using judgment in leadership ! Highlights the reciprocal nature of the feedback process, to overcome the one-way, top-down
implications of the original statement

! The term authentic communicates the expectation of candor

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The expression of the competencies as outcomes allows direct demonstration, observation and assessment. In addition, 3Ms work with senior executives in the development stages ensured that the model reflects a third best practice: the competencies are expressed in language that is familiar to those people who will make use of the tool.
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HR SOLUTION (CONTINUED)
3Ms leadership competency framework reflects several recommendations from literature regarding the construction of a useful competency model, including relating the competencies to realistic workplace practices and expressing them as outcomes rather than as procedures.5

FIGURE 2: 3MS LEADERSHIP COMPETENCY FRAMEWORK6

Fundamental Leadership Competencies
Fundamental competencies are those which an individual may possess at the time of hire, but which will develop further as the individual progresses through successive management positions. Ethics and Integrity

Essential Leadership Competencies

Visionary Leadership Competencies

Visionary competencies are those which 3M leaders must possess to assume increased levels of responsibility. They enable leaders to look beyond their locus of control and add perspective to their leadership decisions. Global Perspective

Essential competencies are those that the individual will develop as he becomes responsible for a functional unit or department.

Customer Orientation

! Exhibits uncompromising integrity and

commitment to 3Ms corporate values, human resource principles and business conduct policies. ! Builds trust and instills self-confidence through mutually respectful, ongoing communication. Intellectual Capacity

! Works constantly to provide superior value

to the 3M customer, making each interaction a positive one. Developing People

! Operates from an awareness of 3Ms

global markets, capabilities and resources.

! Exerts global leadership and works

respectfully in multicultural environments to 3Ms advantage. Vision and Strategy

! Selects and retains an excellent workforce

within an environment that values diversity and respects individuality.

! Promotes continuous learning and the

development of self and others to achieve maximum potential.

! Assimilates and synthesizes information

rapidly, recognizes the complexity in issues, challenges assumptions and faces up to reality.

! Creates and communicates a customerfocused vision, corporately aligned and engaging all employees in pursuit of a common goal. Nurturing Innovation

! Gives and seeks open and authentic

feedback. Inspiring Others

! Capable of handling multiple, complex and

paradoxical situations. Communicates clearly, concisely and with appropriate simplicity. Maturity and Judgment

! Positively affects the behavior of others,

motivating them to achieve personal satisfaction and high performance through a sense of purpose and spirit of cooperation.

! Creates and sustains an environment that

supports experimentation, rewards risktaking, reinforces curiosity and challenges the status quo through freedom and openness without judgment.

! Demonstrates resiliency and sound

judgment in dealing with business and corporate challenges.

! Leads by example.
Business Health / Results

! Influences the future to 3Ms advantage.

Building Alliances

! Recognizes when a decision must be made

and acts in a considered and timely manner.

! Deals effectively with ambiguity and learns

from success and failure.

! Identifies and successfully generates

product, market and geographic growth opportunities, while consistently delivering positive short-term business results.

! Builds and leverages mutually beneficial

relationships and networks, both internal and external, which generate multiple opportunities for 3M. Organizational Agility

3M includes this fundamental competency to remind leaders that the company expects sound judgment from those in whom it places trust, and that this should be demonstrated to the staff.

! Continually searches for ways to add

value and to position the organization for future success.

! Knows, respects and leverages 3Ms

culture and assets.

! Leads integrated change within a 3M intends this competency definition to focus leaders on building an enterprise that creates profit and generates business with the ultimate objective of delivering an attractive return on shareholder investment.
business unit to achieve sustainable competitive advantage.

! Utilizes teams intentionally and

appropriately

By including this competency, 3M aims to develop leaders who can see around corners to anticipate changes in market conditions and proactively position the company for future competitive advantage.

2000 CORPORATE EXECUTIVE BOARD

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Linking the Leadership Competency Model to Leadership Development and Succession Planning The three primary applications of 3Ms new leadership competency model are presented below:
! Leadership Talent Review Tool

HR SOLUTION (CONTINUED)
Anchoring Leadership Competencies in Behaviors In order to ensure that the organization could utilize the competency model effectively for the purposes of assessment, development planning and succession planning, it was important to anchor the identified competencies in observable leadership behaviors. This would enable current executives to pinpoint which aspects of leadership they were delivering on, what their development needs were, and would clarify for more junior employees the paths to executive roles at 3M. The project teams objective was to describe, in behavioral terms, what is a high degree of leadership competence. In order to identify relevant behaviors at different levels of competence, the global HR team conducted critical incident interviews with 70 executives across 3Ms operations. Critical incident interviewing is a long-established method of identifying the characteristics of effective job performance. Individuals in the position being analyzed are asked to identify behaviors or activities that can be demonstrated to be critical to either effective or ineffective performance.7 The process used by 3M to identify definitive behaviors indicating leadership competency is described below.8 1. Members of the global HR team met in pairs with individual participating executives and discussed with them descriptive examples of individuals or incidents associated with a high degree of competence in two of the identified competency areas. 2. The discussion yielded a range of behaviors associated with each of the two competencies. 3. The team identified three to five of the revealed behaviors which were observable on the job and generalizable across the worlds regions and markets as definitive indicators of highlevel leadership competence. As an illustrative example of the types of behaviors that were identified at 3M, the anchors for the global perspective competency are presented in Figure 3.9 FIGURE 3: BEHAVIORAL ANCHORS FOR 9 GLOBAL PERSPECTIVE LEADERSHIP COMPETENCY ! Global Information Sourcing Respects, values and leverages
other customs, cultures and values. Uses a global management team to better understand and grow the total business; able to leverage the benefits of working in multicultural environments.

In order to build the use of the competency framework into a talent review process, the project team designed a personal interview process that asked senior executives to rate the degree of competence of each of their direct reports (against the identified behavioral anchors) as not a strength, sufficient or a strength. In a pilot program, the members of 3Ms Operations Committee rated their direct reports, a total of 70 individuals. The CEO then led a review of leadership talent among this group at a monthly meeting of the companys Executive Resource Committee. This talent review is now an annual process at 3M.
! Targeting Leadership Talent Development

3Ms comprehensive competency model helps executives to consistently communicate to the employee population the competencies and behaviors that 3M expects its future leaders to display. Current and potential leaders and their managers have a clear view of those criteria against which their performance will be judged and can take targeted action to gain experience and improve in these areas. Employee performance is assessed against the competency model and individuals receive feedback on their strengths and needs.
! Long-Term Leadership Succession Planning

3M examines potential appointments to leadership positions by considering individuals strengths against the competency model, on the basis that high-potential employees who consistently exhibit effective leadership behaviors will progress to leadership career paths. This progress is validated and closely monitored by observing business results and the results of objective performance assessments, and the company provides appropriately targeted developmental opportunities to allow individuals to refine their leadership competencies with the objective of fulfilling the profile specified by the competency model.

LESSONS LEARNED
3M has not published results directly attributable to the creation of its leadership competency framework. However, the companys leadership development executives perceive that the model has been well-received internally, and are confident that it will deliver tangible results. Because the competencies and behaviors in the framework are articulated with reference to 3M culture and values, development executives believe the newly-developed competency model to have vitality and relevance for those using it.10
"[Although] much work remains to be done we are well on the way to deepening bench strength and developing stronger incumbent leaders. With further development of leadership and talent assessment and succession applications, 3M leaders expect the extra time invested in customizing these solutions to result in measurable business success."11
3M Executive Director of Selection, Assessment and Leadership Development, and Development and Measurement Center Manager

! Global Resourcing Optimizes and integrates resources on a

global basis, including manufacturing, research and businesses across countries, and functions to increase 3Ms growth and profitability.

! Global Customer Orientation Satisfies global customers and

markets from anywhere in the world.

! Global Awareness Actively stays current on world economies,

trade issues, international market trends and opportunities.

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1 2 3

Les Pickett. Competencies and Managerial Effectiveness: Putting Competencies to Work, Public Personnel Management (22 March 1998). (Obtained through Lexis-Nexis). Cited in Faye Cope, Current Issues in Selecting High Potentials, Human Resource Planning (January 1998). (Obtained through Dow Jones Interactive). Stephanie Craig, Using Competencies in Career Development, in Designing and Achieving Competency, 1992, McGrw-Hill (UK). 4 Margaret Alldredge and Kevin Nilan, 3Ms Leadership Competency Model: An Internally Developed Solution, Human Resource Management Vol. 39, Nos. 1 and 2 (Summer/Fall 2000). 5 Les Pickett. Competencies and Managerial Effectiveness: Putting Competencies to Work. 6 Margaret Alldredge and Kevin Nilan, 3Ms Leadership Competency Model: An Internally Developed Solution. 7 Rajvinder Kandola and Michael Pearn, Identifying Competencies, in Designing and Achieving Competency, 1992, McGrw-Hill (UK). 8 Margaret Alldredge and Kevin Nilan, 3Ms Leadership Competency Model: An Internally Developed Solution. 9 ibid. 10 ibid. 11 ibid.

PROFESSIONAL SERVICES NOTE

The Corporate Leadership Council has worked to ensure the accuracy of the information it provides to its members. This project relies upon data obtained from many sources, however the Council cannot guarantee the accuracy of the information or its analysis in all cases. Further, the Council is not engaged in rendering legal, accounting or other professional services. Its projects should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from any errors or omissions in their reports, whether caused by the Corporate Executive Board or its sources. The views expressed herein by third-party sources do not necessarily reflect the policies of the organizations they represent.

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