Abstract
This paper explores good mentoring practices within organizations and the positive impact of profitability within organizations that foster and encourage mentoring. Organizations with cultures of leadership development including mentoring are able to retain talented employees. Mentoring fosters improved leadership abilities and a range of skills that help both the individual and organization increase success and profits. Research by the Career Agent Tracking Study in the insurance industry (Nahorney, 1994), research by Lorinc on the accounting industry (2007) and other anecdotal examples supply evidence demonstrating the positive impact of mentoring. This paper also includes examples of organizations where mentoring is lacking and the void created on both the organization and the individual (Akande, 1993). Overall, the research supports the fact that mentoring is good for the bottom-line of organizations. Organizations become stronger, sustainable, and more profitable by encouraging and fostering mentoring.
Research Paper
For organizations to be successful, they must recruit and retain talented employees. Young employees come to new organizations with certain experience and skills, yet lack experience with the new organization and/or industry. Mentoring is the process of transferring knowledge, experience, and wisdom from one individual in the organization to another. Mentoring fulfills needs for the protégé, mentor, and organization as a whole. In Managers as Mentors, Chip Bell (2002) explains the influence that mentoring has on future CEOs: “When I was in graduate school in the early seventies, one of my professors distributed a research paper entitled ‘Much Ado About Mentors.”’ The thesis of this white paper was that four out of five Fortune 500 CEOs polled by the paper’s researcher reported that their upward mobility to mahogany row was due in part to the positive influence of a mentor” (p. Preface IX). Mentoring allows for leadership development. Talented employees benefit from mentoring to further their career: “Persons who have experienced extensive mentoring reported receiving more promotions, having higher incomes, and being more satisfied with pay and benefits” (Akande, 1993, 14). Organizations that do not encourage or support mentoring often suffer high turnover or the inability to compete on the global market. When mentoring is fostered and individuals develop new skills and abilities, employees, management and the organization as a whole can all benefit. Good mentoring in organizations should improve profitability.
Mentoring takes on many different forms, both formal and informal. It may be a formal union apprenticeship program in which an electrician will learn the skills from a more senior electrician. Or it may take the form of an insurance salesperson with 30 years of experience mentoring a brand new agent within her agency. Adebowale Akande (1993) found that: “Research on the nature of such relationships suggests that mentors may do many things for their protégés” (p. 14). Some mentors provide emotional support and confidence. A mentor might also help a protégé advance their career by helping point to opportunities where the protégé may demonstrate his abilities within the firm (Akande, 1993, 14). A mentor might teach best practices in garnering new clients in order to help a young accountant bring in new business or help the young insurance salesperson sell additional life insurance policies. The attention and guidance of the mentor can help bring the young protégé to the attention of upper levels of management. Mentors can often pass on advice and help the individual avoid the negative repercussions of mistakes they made while developing their careers or adjusting to a new organizational culture.
Akande’s research explains that that mentors: “Suggest useful strategies for achieving work objectives (that) ones protégés might not generate for themselves” (p. 14). One such example is the career of a young successful realtor in Orange County, California who shared his experience interviewing to join a real estate sales office. Most offices tried to recruit him by claiming that he will make a lot of money. Yet, the firm he chose stood out because the owner said, “that if I was accountable and teachable, I would be successful in this career” (I. Herring, personal communication, March 27, 2009). The young realtor took the job with the mentor who promised to teach him and he has since become extremely successful under his mentor’s council. Interestingly, the owner taught him a very traditional style of building a realtor business, which is to walk neighborhoods and knock on doors to meet local homeowners. This young realtor in Orange County, California specifically picked this real estate office so that he could benefit from being mentored by the owner. It has proven to be successful and profitable both for himself, the owner, and the agency as a whole. The young realtor credits his mentor’s advice and strategy of walking the neighborhood to be the tactic that has accelerated his career more than anything else.
There are distinct and common phases in the relationships experienced by most mentors and protégés. Akande (1993) addresses these in her research. The first phase is known as initiation during which time the mentoring relationship starts and takes on significance for both parties. This phase can last anywhere from four months to a year. The second phase is known as cultivation and can potentially last from two to five years, depending on the dynamics of the specific relationship. During the cultivation phase the young person makes excellent career strides because of the assistance she is receiving from her mentor. The third phase is separation and often begins with then protégé decides to assert some of her own independence and go out on her own. Or separation may begin if the mentor has a reason to separate due to illness or retirement etc. Separation may be stressful. Or, separation may develop into a final stage termed redefinition where both individuals perceive their relationship as one of friendship. Akande points out that they will now treat one another as equals and the old mentoring roles may fade away completely (p. 14-15). The typical stages of mentoring are measurable and noticeable in most mentor / protégé relationships.
Many organizations have come to recognize that a high rate of employee turnover in organizations is costly to the bottom line and that mentoring can help prevent high rates of turnover. Organizations invest in finding, hiring, and training individuals to work for the organization. Research has demonstrated that organizations that are concerned about retaining good employees ought to place a high value mentoring. Mentoring will help reduce turnover because employees will learn from others in the company and feel like they are part of the organization. Research by the Career Agent Tracking Study, or CATS, tracked more than 4,000 insurance agents for their first four years in the industry. Reporting on the CATS research, Daniel Nahorney (1994) explained the findings: “higher agent retention is directly tied to profitability” (p. 7). The top three criteria for higher agent retention include recruiting from personal sources, getting agents off to a fast start with quality training, and mentoring. In fact, “CATS clearly shows that mentoring does indeed boost life policy sales in the first contract year and does boost one-year survival rates” (p. 9). Survival rates of new insurance sales agents are the critical factor in profitability. If an organization trains a new agent and the new agent stops selling for the company, then there is no revenue for the company. On the other hand, if mentoring is included after recruiting and training the right people, the survival rate of the agent is much greater and thus the bottom line of the organization is improved. Thus good mentoring in insurance organizations should improve profitability.
The specific statistics from the CATS research demonstrate that good mentoring practices ought to be followed in order to garner the best results from mentoring. Simply having a mentor proved worthwhile for the bottom line. Nahorney reported “Those agents with no mentor averaged 26 life policy sales during their first year, while those agents who had an agent in the agency serve as their mentor averaged 35 life policy sales in their first year” (p. 9). This is dramatic evidence to support the need for a mentor and that the mentoring should start at the beginning of employment. Not surprisingly, having an experienced mentor proved to be more helpful than an inexperienced mentor. Yet, regardless of the experience of the mentor, having any mentor proved better than having no mentor at all (p. 9). Having an experienced mentor allowed agents to learn from the knowledge and wisdom that their mentor was able to offer to the new agent. Matching new agents with experienced mentors proved to be an important practice of good mentoring practices. In the absence of highly experienced mentors, it is advisable to have a mentor with less experience who is still willing to help guide and facilitate the learning curve for the new agent.
New agents feel the stress and pressure to sell policies and having a mentor was a key indicator of having success and choosing to stay with the insurance agency. The CATS research found that one reason that agents would leave an agency was in search of a mentor outside of the agency (p. 9). Perhaps the mentor they found was with a competing insurance agency. Loyalty and trust would be transferred from the home agency to the new agency and would eventually lead to the agent transferring to the agency where the mentor is employed. High turnover is costly to the agency. It is in their best interest to find a mentor within their agency who will help foster the potential of the new agents they seek to retain.
The long term health and profitability of an insurance agency also requires mentoring to facilitate growing a few select leaders who will eventually become managers and CEOs of companies. Industry veteran Larry Marsh, who founded the consulting firm Marsh, Berry, & Co. Inc. launched a program titled Leading Young Tigers to prepare young agents for management roles. Elisabeth Boone (2008) reported on Marsh’s efforts, and quoted Marsh as saying:
I want to recruit a dozen or so young apprentices who are absolutely driven to have a future in agency leadership. I want to work with them for three years, then mentor them for an additional two years. My goal is to get them much better equipped to become agency CEOs, and to shorten their time between being newly qualified and fully qualified (p. 76).
The profitability and revenue of an agency is dependant on having qualified new young agents who can grow into management positions. Marsh’s intense training and mentoring program is designed to fill this need and protect the long-term profitability of agencies. Without young leadership to take over, it is impossible for companies to survive the inevitable reality that older leaders and CEOs will eventually leave their positions. Apprenticeship and mentoring are the keys to survival. The coursework of the Marsh’s program is designed with this concern in mind :
MAPYLT coursework is structured so that apprentices learn agency management principles by looking through the eyes of a chief executive officer, chief operating officer, chief financial officer, sales manager, and IT manager. Formal classroom study is supplemented with opportunities for hands-on application of principles so that participants learn to use working tools to solve the problems an agency CEO routinely confronts (p. 77).
A company who would engage in putting their young recruits into Marsh’s program are clearly concerned with keeping young agents learning and productive. It serves the interest of both the agents and the agencies. This is congruent with the evidence of the CATS research which found that “high-retention companies have a more planned approach to mentoring” (p. 9). They recognize the impact of planning and implementing good mentoring practices, epitomized by Marsh’s plan to retain agents and build leaders who can carry the organization into the future.
Evidence from successful business people in financial organizations has demonstrated that nurturing talent has led to more successful and profitable careers. In an article discussing why some accountants become partner at a young age, John Lorinc (2007) points out that becoming partner at a young age is “no small accomplishment” (p. 26). Lorinc explains that “Those who have pulled it off attribute their success to a rage of factors – standout technical skills, maturity, poise, strong mentors and an opportunity to work in a high-growth practice area” (p. 26). Strong mentors can help bring out the latent potential of a young accountant, helping them recognize the talents and poise that they bring to their work. When a young accountant makes partner, they are in a position to increase their paycheck, and also the revenue of the firm. They are in the position to bring in more clients and contribute even more to the bottom line of the company. Lorinc explains that accountant Beth Wilson was assigned to a team with more experienced accountants and can point to the effect that mentoring had on her career: “They are thought leaders. I had some brilliant mentors in that group. The experience helped accelerate my career” (p. 26). Wilson is now a partner at her firm. As partner she makes more money, and the firm makes more money because she can bill at a higher rate and bring in more clients. Another article about the growth and potential of mentoring in the financial industry points out that high achieving corporation “nurture talent within the firm” (Selby, 1990, p. 70). Organizations ought to emphasize a culture of nurturing talent so that individuals are drawn to the organization. Such individuals will be drawn by the opportunity for mentoring, knowledge, and rewarding careers. Such individuals are likely to be the retained by the corporation after they become partner. Good mentoring creates good employees. When organizations invest in their employees, both the organization and the employee benefits financially.
Organizational behavior is interested in why organizations make the choices they do and the answer can often be found in the corporate culture of the organization. Organizations that value developing leaders will demonstrate this ethic by facilitating growth and learning opportunities for their people. Steve Arneson (2008) writes that these organizations “spend valuable time sponsoring, supporting, and leveraging Leadership Development because they make it a priority and ‘ground’ Leadership Development as a core element of their culture” (p. 8). Arneson goes on to recommend some of the best practices in Leadership Development. He suggests establishing a “CEO Leadership Lunch” (p. 8 ) where a few select mid-level leaders join the CEO for lunch. This will give the managers an opportunity for interaction and facilitating rapport. Arneson also recommends that organizations leverage leaders as teachers and mentors. Arneson asserts that: “A company wide commitment to Leadership Development is often sparked by leaders serving as teachers and mentors” (p. 8). The effect of such efforts can have considerable impact. He recommends, “document how they (leaders, CEOs etc) stay current, and let their enthusiasm and passion shine through” (p. 8). Leadership development ought to be part of the organizational culture in organizations that wish to nourish and enrich the careers of their management and employees.
Research on mentoring has demonstrated that structural barriers in the workplace culture prevent women and minorities from accessing mentors. This has negative consequences for the careers of women. It also has negative consequences for the bottom line of the companies who employ women. Akande (1993) points out: “Mentoring for women has not occurred to a sufficient degree in the workplace in part because women do not seek mentors or mentors may not like to select females” (p. 15). Akande explains that there are many reasons for the “glass ceiling”:
The barriers can be characterized as follows: women lack access to the network within organizations, women may be viewed as tokens who cannot reach top management stereotypes and misattribution about women’s abilities to manage may reduce the view of their performances, women may be seen as having been socialized to develop personalities alien to management success; cross-gender relationships may be viewed as taboo; and women may rely on ineffective sources of power, reducing their success (p. 15).
The glass ceiling which women face is a serious concern for organizations concerned with finding and retaining the best people for their organization. Whenever companies ignore the talent within their organizations, everyone looses. Since good mentoring should lead to increased profitability for companies, organizations who maintain a glass-ceiling forfeit profits: “Lawler believes that if today’s firms hope to meet the high-tech challenges of the modern world, they must be managed more effectively” (Akande, 1993, p. 17). Globalization and all of the challenges of the modern business world demand that companies seek to maximize talent and reduce waste. Unsatisfied employees will often leave and look for opportunity elsewhere, thus increasing a company’s rate of turnover. The negative consequences of ignoring talented employees because of the glass-ceiling will takes a toll on corporations profitability and performance: “Today’s employees (especially female employees) are unsatisfied with organizational structures that separate thinking from doing, that deny them autonomy and self-concept, and their dissatisfaction exacts a heavy toll on corporate profitability and performance” (Akande, 1993, 18). To compete effectively in highly competitive global markets, organizations must utilize all the talents and resources at their disposal. Thus, organizations ought to create mentoring programs that specifically address the barriers created by the glass ceiling and ought to work to create solutions that benefit individuals and the organization alike.
Mentoring for start-ups and entrepreneurs is common in the United States, but in much of the world, encouraging and helpful networks and mentors are rare. Research has demonstrated that lack of networks and mentors for entrepreneurs outside of concentrated locations like Silicon Valley make starting and building a successful business difficult. The Economist (2008) reported on a non-profit organization named Endeavor that was created to “promote entrepreneurship in emerging economies” (p. 68). The organization pairs emerging business leaders outside of the United States with successful business leaders in Silicon Valley and elsewhere: “The aim is to identify those who can succeed on a scale that will make them into national role modes, and then provide them with every possible support” (p. 68). The system of mentoring has been extremely successful in helping many start-up businesses succeed. In fact, Endeavor has created a “give back” program where successful entrepreneurs who have been assisted by Endeavor donate 2% of their equity to Endeavor to help them continue the organization’s work into the future (p. 69). The work and efforts of Endeavor demonstrate both the need and impact that mentoring has on helping business leaders to create successful, profitable, and sustainable businesses around the globe.
Mentoring is a continuous evolution for organizations. They will always have new talent getting started, older talent retiring, and the combination of skills and generations evolving within the organizational culture. Organizations ought to seek to maximize the talent of all individuals within the organization and encourage mentoring as part of the process of leadership development. This allows for retaining talented employees who contribute to the growth and success of the organization. Mentoring is useful in most all organizations, as evidenced by the insurance sales agents, accountants, real estate agents and others analyzed above. Without opportunities for growth and mentoring, talented employees will leave for better opportunities. Competing in today’s global marketplace requires retaining talent and encouraging leadership growth. This keeps the individual and company best able to maximize talent and profits. Companies in today’s global marketplace ought to continuously strive to encourage good mentoring, assured in the knowledge that they will be well equipped to chart a successful and profitable course into the future.
References
Akande, Adebowale. (1993). The glass ceiling: Women and mentoring in management and business. Equal Opportunities International, 12(4), 14-21.
Arneson, Steve. (2008, October). Developing Leaders. Leadership Excellence, 25(10), 8.
Bell, Chip (2002). Managers as mentors: Building partnerships for learning. San Francisco: Berrett-Koehler Publishers.
Boone, Elisabeth. (Nov 2008). Building Agency Leaders. Rough Notes, 151 (11), 76.
Business: Spreading the gospel; Entrepreneurship. (2008, August). The Economist, 388(8591), 68-69.
Lorinc, John. (2007, January). Invite to PARTNER. CA Magazine, 140(1), 24-26, 28, 30, 32.
Nahorney, Daniel J. (1994, September). Planning to succeed? Manager’s Magazine, 69(9), 7-9.
Selby, Beth. (1990, December). Wall Street: The Steve and Bob Show. Institutional Investor, 24(16), 68- 74.
