Ernst & Young is one of the largest professional services firms in the UK. About half of their 400 partners and 7,000 staff work in London (which together forms the largest Ernst & Young presence in any city in the world). Ernst & Young draws on a wealth of specialised talent to put together teams with the right mix of technical and relationship management skills to provide solutions to clients based on financial, business advisory, and risk-management knowledge in its core services of audit, tax, and corporate finance.
The leadership challenge
Professional service firms have long recognised the need to find, develop and keep talented leaders. As the name implies, the focus here is services, not products, so the quality of the people employed differentiates competitors. E&Y has focused on building and strengthening its talent pipeline to ensure there are enough high-quality partner-track candidates coming through the system. They have created ‘reach down’ leadership programmes based on a consistently applied leadership ethos at three levels: executives, managers and senior managers. Although there are formal development programmes for each category the emphasis has shifted in the past few years to development through experience (roles, assignments and secondments) supported by coaching. Mentors are assigned to their most outstanding people (‘emerging leaders’) and work with them to ensure they have access to the right variety of career- and work-based development opportunities.
The road to partnership begins with the identification of potential candidates as part of the performance management process and ends with attendance on a pass/fail assessment centre (the Senior Manager Conference). The key steps in between are:
- The presentation of the case for partnership by the candidate and their sponsor to the business unit (BU) leadership team for approval;
- Attendance on an intensive partner-track development workshop, during which the candidate is introduced to the portfolio of evidence designed to capture experiences and achievements in order to support their personal and business case. Evidence is collected against nine leadership capabilities clustered into three groups: ‘leading self’, ‘leading people’ and ‘leading the business’ (E&Y’s ‘leadership ethos’). It includes client testimonials and 360-degree feedback. The ‘journey’ to partnership can take between six months and three years;
- Appointment of a mentor from the BU leadership team whose job is to assess, challenge and support their candidate’s development towards partnership;
- Annual peer review of the candidate’s progress in discussion with the sponsor and managing partner;
- Decision by the BU leadership team that the candidate is ready for partnership;
- Candidate interview by a member of the firm’s executive to check their readiness to undertake the Senior Manager Conference;
- Attendance at the Senior Manager Conference (held twice yearly). Exercises are designed to simulate the partner role (emails, client meetings, sales pitch, coaching etc). The candidate’s performance is assessed by members of the firm’s executive and other senior business leaders.
The positioning of the candidate’s portfolio at the centre of the partner-entry process is considered to be a significant advance on the previous practice of running a first-stage ‘calibration’ assessment centre (the Senior Manager Development Conference). The role of this preliminary assessment centre was to determine how near or far the individual was from the partnership standard (ie six months, one to two years, never). It was sometimes used by sponsors to give the candidate bad news about their partnership potential vicariously. Under the portfolio approach, BU’s are wholly responsible (and accountable) for the development of their candidates and their performance at the Senior Manager Conference. Leaders are now accountable for developing leaders.
Distinguishing talent from leadership
Professional services firms aim to attract and recruit the most talented people so why, they were asked, do they need to run ‘talent programmes’? In response, E&Y has renamed its talent programmes ‘leadership programmes’, signalling that they value and invest in everyone but are looking for people with a particular aptitude for leadership. The assessment centres, an essential part of the selection process, are open to all and are used to identify the people with the greatest aptitude and potential to be effective in future leadership roles. Development follows assessment and combines a mix of formal programmes in core leadership skills (eg business strategy, personal impact) as well as the active management of providing stretch roles and experience. There is a ‘high touch’ approach to developing future leaders and recognition that leadership is best learned in the context in which it is practised. The challenge for E&Y is to ensure that future leaders are exposed to the full range of work-based developmental experiences they will need to grow as leaders.
Lessons for higher education
In their rush to develop talent management programmes many organisations are introducing assessment centres in order to improve the rigour of their leadership identification and selection processes. Although – next to 180-degree feedback – assessment centres are the most robust predictor of future potential, they can be used to shift responsibility for the development of candidates from the line to HR. In pushing the key decisions surrounding candidates’ selection back to the business unit, E&Y’s sponsoring partners have real ‘skin in the game’. It is in their personal interest to ensure that candidates have undertaken the right mix of work-based and programmatic development and that their portfolio of evidence is a powerful and persuasive statement of their readiness to join the partnership.
The success of the Ernst & Young system is based on the line managers’ ability and commitment to identify, support and develop future leaders. E&Y leaders understand that it is their role to prepare the next generation to assume the responsibilities of leadership.
[1] It is anticipated that when the pass rate at the Senior Manager Conference rises to 95% this assessment centre may also fall away and be replaced by assessment of the portfolio alone.
[2] McEvoy, G. M. and R.W. Beatty (1989). "Assessment Centres and Subordinate Appraisals of Managers: A Seven Year Examination of Predictive Validity". Personnel Psychology 42: 37-52.