Lilly relying on technology to spot management talent

March 2, 2009

Unearthing managerial prospects who may be toiling in obscurity right under executives' noses can be as challenging as a time-consuming outside search.

That's particularly true for large corporations such as Eli Lilly and Co., which employs 38,000 people worldwide. But an electronic succession-planning system the pharmaceutical firm created roughly seven years ago is sniffing out top talent.

The system is part of an effort to let every employee post a resume for any job for which he or she feels qualified. Those exhibiting management potential ultimately could become executives.

Lilly said it doesn't track the number of employees promoted through the system but instead measures the system's success by its ability to quickly fill open positions and avoid costly disruptions.

"Given the complexity of our industry, it's really important that we have individuals that understand the industry at large and embrace our core values," said Glen Burkhardt, Lilly's human resources manager of global staffing. "The best source for that talent is within our walls."

Most companies embrace that philosophy. But not all have the fortitude to follow through, said Chuck Williams, dean of Butler University's business college.

"Creating an internal labor market is something more companies should be doing," Williams said. "But that's not an easy thing to do when you have the thousands of employees that Lilly does."

Indeed, just 56.7 percent of companies have formal plans in place to identify, grow and retain talent, according to a 2007 survey from SuccessFactors Inc., a California software developer focused on helping companies isolate internal talent.

Lilly certainly isn't the only company to harness the latest technology to identify star power. Yet it's considered a trailblazer of sorts, having been featured in a 2003 Harvard Business Review article about how companies can develop leadership pipelines.

Lilly's succession planning dates to 1957, but the switch to automation came in 2002. Lilly recently contemplated switching to similar software from an outside vendor but simply updated the current product — a decision Burkhardt called a "testament" to its performance.

The system enables all employees to update personal information and lay out career goals from a computer. They then can scour job opportunities.

Managers use Lilly's intranet to fish for workers and are given information on the best candidates and their skill sets.

Lilly even tracks several succession-management metrics, including quality of talent in its pipeline and the number of positions with "ready-now" candidates. For each senior position, the system shows three potential successors.

Human resources experts say the technology helps simplify what can be a complex task.

"This gives an inventory of what the skills and abilities are of the people that already are in the culture," said Karl Ahlrichs, founder of Exacthire, an Indianapolis start-up that aims to produce a high-performing worker culture. "It's really clever stuff."

For instance, Lilly HR managers can download a report showing marketing positions available in Europe, which candidates are being groomed for such positions anywhere in the world, and any skill gaps that might make it difficult to fill the jobs.

The company has identified 3,800 "key" positions — those that will disrupt business if they aren't filled in a timely manner, Burkhardt said. Lilly managed to avoid damage recently when two executives left for competitors.

"For some companies that would be tragic," Burkhardt said. "It was not pleasant for us, but we were ready to replace them with capable successors in an instant. The value in that was enormous."

In the unusual event no candidates exist, the system triggers a search for internal development opportunities as well as additional activities to help recruit executives. Lilly also can uncover hidden vulnerabilities by determining how many employees are on more than three succession plans.

Fortune magazine in 2007 recognized Lilly's efforts by ranking it No. 13 in its top-20 global companies for leadership development.

Still, choosing candidates to climb the corporate ladder may present drawbacks, Ahlrichs said, and can be overcome only if supervisors support the promotions.

A manager may feel possessive of his or her team and not want the company to have a procedure allowing high performers to leave. In contrast, employees need to feel comfortable posting resumes without fear of repercussions from supervisors, Ahlrichs said.

Supporters say the benefits far outweigh any drawbacks.

Williams, the Butler professor, said, "These jobs are complex, they're challenging, and they're stressful. People aren't just ready for these jobs by virtue of being a certain age."

That Lilly doesn't divulge specifics to employees may help alleviate tension. Up-and-comers are not told the level of their potential or the positions for which they may be qualified, Burkhardt said.

Candidates for a particular position still are subjected to interviews and presented an offer. The list is revised annually, so it's not uncommon for workers to move in and out of the system, Burkhardt said.

At the very least, knowing a company values advancement may be enough to keep an employee from jumping ship. But in these challenging times, that's almost a non-issue.

"People are gripping the arms of their chairs and holding on tight," Ahlrichs said. "There's much less movement between organizations."


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