For years now, leaders and the talent executives that support them have been talking about simplifying the 9-Box. A tool developed by McKinsey to help GE leaders prioritize capital investments between competing business units, the 9-Box evolved into a widely used tool to evaluate talent on the heels of GE’s renowned talent development processes. Its widespread use across businesses of all types certainly suggests it filled a critical need of having some kind of model to apply in thinking about how to differentiate talent.
While better than nothing, the efficacy of using the 9-Box approach to evaluate talent is increasingly being questioned. In the last 10-15 years, in particular, leading thinkers and talent practitioners have begun highlighting the challenges of the 9-Box and exploring other tools or processes to support talent identification and development. Some of the key challenges that consistently surface include:
- Potential is tough to measure, particularly for several roles above where the assessor currently sits; this concern is exacerbated as organizations are increasingly looking for ways to remove bias and there are few reliable data-based measures of potential.
- Many operational leaders (and even HR practitioners) find it overly complex and difficult to implement, a complexity that is not needed for the majority of decisions made around development investments and succession possibilities.
- The 9-Box exercise becomes the end rather than a means to the end. Too often the focus is on which box Ana goes in, rather than what development investments and growth opportunities make sense for the company to make in Ana.
- Many leaders are reluctant to label employees especially since the labels in many 9-Box models are often de-motivating to solid contributors that do the bulk of the work in any organization and who show up and reliably get things done day in and day out.
- Many organizations have linked compensation to 9-Box ratings, leading managers to make placement decisions based on compensation objectives more than true evaluations of performance and potential.
In this article, we highlight the journey of one company to move away from the 9-Box model to a simpler, more effective method of identifying and investing in emerging future leaders and driving needed business outcomes.
CASE STUDY: Mondelēz International
In mid-2018, Mondelēz International was in the middle of a transformation. A new CEO had refocused the organization back on growth through a local-first approach that was predicted to deliver a holistic annual growth rate. Decisions were being pushed down to local leaders instead of consolidated at global category levels. There was new clarity about what truly differentiated the organization as a broad culture shift supported by a new leadership framework emphasizing the importance of understanding and loving consumers.
Senior leaders recognized a leadership gap at the local leadership level that was critical to fill for the strategy to succeed. At the same time, a new SVP and Chief Talent Officer aggressively focused on reviewing and improving the talent management approach. While there were several shifts that he quickly identified, one of the immediate learnings was that the talent process was not working. While over 80% of VP+ talent were consistently identified as high potential/high performing, the business had been underperforming for three years. At the same time, the succession efficacy rate was less than 30% (only one of 3 identified successors was actually able to fill the roles they were identified to succeed) and the development investments (International assignments, development programs, etc.) were misaligned with succession plans, giving a low or no ROI.
Understanding both the current disadvantage the failing process provided and the potential advantage it could/should be delivering, the new CTO identified talent review as a priority for improvement.
Understanding the Problem
To start, he conducted interviews with a cross-section of key leaders in businesses and functions around the world to get their perspective on what were some of the most significant root causes of the current process’ failures. He discovered four critical issues.
First, the business was in a transition phase, turning around a very attractive but struggling business. This led to a hyper-focus on immediate performance and it reflected in every aspect of the organization’s approach to managing the business, including talent. While talking with other organizations confirmed this was not unique to Mondelēz, performance clearly and consistently overshadowed potential in all people decisions, leading to sub-optimal talent decisions.
Second, there were not consistently followed criteria to assess leadership. There was not a consistently defined and communicated leadership framework. The loose values framework was too generic to use as a clear assessment tool and the leadership standards that had been defined and articulated 6 years earlier were not only not fully aligned with the new culture and strategy but had stayed mainly with HR and Talent COE team and never been cascaded or understood broadly in the organization. In the absence of a clear leadership framework and common standards of assessment, there were strong conscious and unconscious biases impacting talent decisions.
Third, the talent process itself was not clearly defined or broadly understood. Leaders were not trained on how and why to get the best outcomes from the talent process. There was a detailed, well-defined, and complicated process that never went beyond the Talent COE and HR function. As a result, talent management was an HR-led process rather than a leader-owned strategic enabler for the business. Leaders ended up having overlapping and/or repeated discussions with the same people, generating limited and inconsistent outcomes. In the absence of process rigor, each region/function had developed a customized approach, leading to a lack of credibility, and compromising the efficacy of the succession process.
Fourth, there was an extraordinary focus on who owns potential ratings. The functional ownership of the potential ratings was often at cross-purposes with performance ratings, creating confusion and friction and reorienting the dialogue to ratings tied to compensation and away from development leading to succession. As a result, development actions were inconsistent and placement decisions were predominantly made independent of agreed successions plans. Additionally, the linkage to financial reward (LTI) before the maturity of the process led to patronage and protecting ‘my people’ compromising the succession focus.
In short, there was lots of activity with little to no impact on the business.
Building the Case for Change
While the current talent management process was clearly not working, its importance to the success of the new business strategy could not be ignored. The business needed the best people it could find leading from the bottom all the way up to meet the growth projections.
Building on these conversations with leaders across the organization and enhanced by perspectives from external thought leaders as well as peers in other large, global organizations, the talent team built a plan that would deliver a robust talent program.
First, we started by clearly defining what good looks like in the new organization by launching a clear and simple leadership framework that we called Values and Commitments. The CEO took a hands-on approach to clearly and consistently defining the three values every employee at Mondelēz needed to live every day and the 9 behaviors that needed to be demonstrated in a way that others could see. This initiative clarified and created consistency globally about what it would take to be successful so you could have a conversation about what high-performing and high potential employee looks like at Mondelēz.
Next, we created a new and simplified approach that was future-ready and could accommodate an evolving business strategy. We threw out the 9-Box approach we had been using for the last 18 years and introduced a simplified, development-focused “Talent Call” framework that gave managers 4 ways to evaluate potential. These “Talent Calls” were explicitly linked to development strategies and leaders were empowered to develop people in a differentiated way with clear and simple options they could easily use. There was an outcome for everyone—to grow where they were, to move up, to be on the succession plan for general management roles. We also disconnected the long-term incentives from the potential ratings—a challenging but critical decision we handled with sensitivity that avoided significant distractions or issues.
At the same time, we increased the global investments needed to truly develop an international pipeline of leaders. We repurposed investments in international assignments. We built succession plans for the top 100 roles from the results and aligned development to gaps in experience needed to succeed in those future roles.
Finally, we worked aggressively to build alignment, sponsorship, and accountability at the top and created tools and playbooks for leaders at all levels to ensure knowledge-building, capability, and ownership with line managers. We wanted them to really own the talent agenda and leverage the process to meet their goals. The 3-year rollout began as a pilot with the top 100 leaders in year 1, country leadership in year 2, and all mid- and entry-level leaders in year 3. The cascading rollout included playbooks and live virtual sessions that were designed to build knowledge and capability in the countries and in HR professionals supporting them in the process.
At the same time, we established analytics to measure our success at different levels in the organization. This included a mechanism to measure progress of development for those on the top 100 succession plan. It also included a bottoms-up line of sight that cut across geographies to see if leaders at all levels were getting the developmental experiences they needed and to empower business leaders to take action.
This created process created momentum and “stickiness” that led to the process becoming engrained in the broader organization. After three years, it is consistently and successfully applied across markets and functions, covering over 7,000 in-country and region/global leadership roles. Talent differentiation reflects the business impact and bench success rate has significantly improved (almost doubled and still improving), with a diverse pool of potential leaders identified and being developed with focused actions to build a robust pipeline. And perhaps more importantly, it has supported our ability to reverse over 8 years of declining year-over-year quarterly growth and the overall business is over-delivering on all counts.
Interestingly, the new process rolled out almost at the same time as the pandemic. While we had to adapt some of the roll-out strategies, it remained a priority precisely because leaders knew and understood how it would help support the kind of fluid changes that would be needed to compete and win in the even more challenging business environment. The more deliberate focus on development that was part of the new talent process was also prescient of the increasing expectations from employees for more opportunities to learn and grow at work, supported by their leaders, and for greater flexibility.
An additional important benefit was the impact the process had on our ability to meet diversity, equity, and inclusion goals. Without a consistent process, we only saw the result, but we did not have a meaningful way to change that result. So while we knew, for example, that there weren’t enough women leaders at Mondelēz, we had not been successful in improving that. With the new process, we could build transparency and rigor around leadership representation by gender, ethnicity, age, etc., and begin to really make progress. As leaders started talking about it and being asked about what actions they were taking to improve the numbers, we began to really see results, and using the above example, women in leadership positions at Mondelēz almost doubled.
There are a few key principles that we believe other organizations can take away from our journey at Mondelēz and implement in their organizations to help improve talent management:
- Focus the time you get from leaders during the process on identifying and delivering the right development experiences for key talent more than on assessing which box to put them in.
- Find a way to articulate a compelling case for why the current system isn’t working in a language that business leaders will understand and care about.
- Facilitate opportunities for leaders to actively engage with leaders in their organization and to own the talent process and its results.
- Use data to proactively challenge unconscious bias in identifying key talent.
- Decouple pay from potential ratings until the process is mature and leaders own it.
The impact that simplifying and focusing the talent evaluation process at Mondelēz had on the business will have long-lasting impacts. We have built a process that will allow the business to aggressively build the kind of leaders we need for the future. Active engagement in development matters to enable true potential to reach that potential—far more than hours spent dithering over which box to place someone in.