Some firms' fertile soil grows crop of future CEOs

Taking a different path

Despite the financial sector's size and clout, Winn said he was not surprised that only Merrill Lynch and Citigroup cwere in the top 20 leadership factories, because those employees often aspire to highly compensated jobs at hedge funds and private equity firms.

The study's weakness is that it's a look in the rearview mirror and may not best reflect today's leadership factories. The companies that groomed today's CEOs did so in decades past. Google's goog CEO, Eric Schmidt, came from Novell novl by way of Sun Microsystems java. But Baxter International in the 1990s was the CEO farm system for today's biotech industry, so Google could well be grooming tech CEOs of tomorrow, says Joe Moglia, CEO of TD Ameritrade amtd, who became a Merrill Lynch trainee after 16 years as a football coach.

Companies are like football programs, Moglia says, and the curse of successful head coaches is that the phones of the assistant coaches start ringing with job offers. "Success breeds success," he says.

CEOs who were fished from the best corporate streams cite other reasons why a few companies develop so much leadership. Few invest heavily in leadership training and development, they say, and only a few more excel at identifying highfliers and putting them into stretch assignments, both domestic and abroad. The other companies play it safe. They don't force young talent to sink or swim, so when it's time to find a leader, they look outside the company.

"If people aren't going after your people, you really aren't building a great company," says Yum Brands CEO Novak, a PepsiCo alumni.

CEO factories land the best graduates right out of school, but that's largely because they have established a track record of executive success. Stephen Bennett's mother wanted him to become a doctor, but her second choice was for him to land a job at GE because it produced leaders. Bennett spent 23 years at GE before becoming CEO of Intuit intu.

GE's alumni include the CEOs of Boeing ba, Fannie Mae fnm and Pfizer pfe. When Home Depot hd fired GE alumnus Bob Nardelli last year, they replaced him with Francis Blake, a GE alumnus. Nardelli soon righted himself as CEO of Chrysler. Other prominent GE alumni who did not make the list were Peter Loescher, CEO of German giant Siemens (a non-U.S. company) with 470,000 employees, and Tom Tiller, CEO of Polaris Industries pii (just under the $2 billion market-value minimum as of Oct. 25 that Capital IQ used when examining résumés).

GE is well known for its 52-acre leadership campus, known as Crotonville. But Bennett says he spent only 10 weeks of his 23 years at the campus. He says GE has mastered identifying and grooming talent.

Aart de Geus, CEO of Synopsys snps since 1994, was recruited by GE for his tech expertise, and worked there from 1982 to 1986. He was identified as "high potential" and spent some time recruiting college tech students for GE, conducting 16 interviews a day. He left GE when it got out of the semiconductor business, but found that GE so believed in his talent that it invested $400,000 in his idea for a start-up company. A few years later, when Synopsys went public, GE cashed out for $26 million, says de Geus, who predicts generations of GE alumni CEOs in the decades to come.

Mentoring newbies

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