Focusing on identifying and managing the talents of high potential candidates will rise to the top of the agenda, predicted the survey.  Organizations that are able to identify, develop, and promote their leaders from within will find themselves better positioned than their peers to win the war for leaders—and to safeguard their organizational futures. 

The 2006 Top 20 Best Companies for Leaders:

Top 20 Companies for Leaders
2006	2005
1. General Electric	1. Procter & Gamble
2. Procter & Gamble	2. PepsiCo
3. PepsiCo	3. IBM
4. Citigroup	4. General Electric
5. Johnson & Johnson	5. Johnson & Johnson
6. HSBC Holdings	6. Dell
7. BASF	7. Microsoft
8. Home Depot	8. Home Depot
9. IBM	9. JPMorgan
10. Coca-Cola	10. Motorola
11. Dell	11.Pfizer
12. Microsoft	12. FedEx
13. Novartis	13. BASF
14. Verizon	14. Verizon
15. Nestle	15.BAE Systems
16. Lockheed Martin	16. Johnson Controls
17. GlaxoSmithKline	17. Siemens
18. Amgen	18. BP
19. Hewlett-Packard	19. L'Oreal
20. BAE Systems	20. Colgate-Palmolive

These companies' average five-year total shareholder return beat the S&P 500 over the same period by 3.53%. This period covers both the bleak years following the downturn and 9/11 as well as the recent surge in the S&P.

Hay Group research shows it takes about three years to identify a high potential, and another 10 to prepare them for the executive suite. 

2006 Best Practices for Leadership Development

• Having leaders at all levels who focus on creating a work climate that motivates employees to perform at their best.
• Ensuring that the company and its senior management make leadership development a top priority.
• Providing training and coaching to help intact leadership teams, as well as the individual leaders, work together more effectively.

• Rotational job assignments for high potentials.
• External leadership development programs for mid-level managers.
• Web-based self study leadership modules for mid-level managers.
• Executive MBA programs for mid-level managers.

Practices that waste resources include: The study also flagged activities that do not add value—at least not if your goal is to identify and develop leaders.

• Outdoor activity-based programs
• Paper-based self-study leadership modules
• Job shadowing for senior managers
• Executive MBAs and web-based self study modules became worst practices when implemented too late in the executive’s career

"An estimated 75 million workers will retire in the U.S. in the next 5 to 10 years , including 50% of CEOs from major corporations," said Mary Fontaine, vice president and general manager of Hay Group's McClelland Center for Research and Innovation. "There's an urgent need for leadership with only 45 million younger workers available to fill those roles. Some sectors and markets are already battling for talent and leaders. Within a few years it will be a full-scale war. Those companies that are not already preparing are putting their futures at risk."

About the Study

For the Best Companies for Leaders study, Hay Group surveyed 564 companies with at least $8 billion in revenue from around the world. Data were collected from three sources: surveys of leaders within the companies, surveys of leaders from peer companies, and interviews with relevant academics and search firm executives.

Also check the discussion at Chief Executive website.