Ignore these leadership lessons at your peril

October 10, 2013, 11:44 AM UTC
Harish Manwani (left) and Anand Mahindra
Photos: Dario Pignatelli/Bloomberg/Getty; Munshi Ahmed/Bloomberg/Getty

“Attracting the best people is actually easier than it used to be,” says Anand Mahindra, managing director of Indian industrial and services conglomerate Mahindra Group (2012 revenues: $16 billion). You almost never hear a business chief say that, yet the story behind Mahindra’s startling claim isn’t unique. On the contrary, it’s entirely consistent with what’s happening at a markedly different company, Unilever. Both companies, highly successful in their own ways, reveal the same two crucial realities of leadership development today. They are these: In attracting and keeping top talent, the most important thing about a company isn’t what it does but how it does it. The most important thing about a leader isn’t skills but traits.

In Singapore recently I talked with Mahindra and separately with Unilever COO Harish Manwani, who was visiting the company’s brand-new leadership-development center there. Unilever, like Mahindra, is a talent magnet with power most employers would kill for. “Unilever is among the top three employers of choice [in its industry] in 37 countries,” Manwani says. And it is the No. 1 pick in countries as diverse as Brazil, Germany, and Vietnam. He holds no doubt about the reason: “People want to join us not because we make soap and soup. It’s because of the way we do business.” At Unilever that means pursuing CEO Paul Polman’s objective of doubling the company’s size while halving its environmental impact. “It’s really a big draw,” says Manwani.

Mahindra sees the same effect at his company. “The No. 1 reason people come and stay is the atmosphere of integrity,” he says. This is in a country where corruption is rampant and crippling. “The No. 2 reason is empowerment and trust.” Mahindra Group doesn’t just give managers plenty of leeway; it spins off successful businesses into separate, publicly traded companies in which Mahindra Group keeps a stake. The offspring frequently thrive, and the parent’s smaller stake is often worth more than the whole business when it was fully owned by the group.

Both companies find that aptitude isn’t the key to developing the people they attract. Skills — accounting, finance, operations — are obviously vital, but any company can teach them, and increasingly any individual can learn them online. They don’t differentiate excellent leaders from mediocre ones. Personal traits do that, and Mahindra knows exactly the traits he’s after. “Can a person be inspirational? Does a person have global sensibility? That’s the hardest thing to find.”

Mahindra Group has built an extraordinarily thorough program for developing those traits. The group works with the Center for Creative Leadership, the University of Michigan’s Ross School of Business, and other top institutions, and its internal system of evaluations is rigorous. Top leaders search for promising people everywhere in the group’s varied portfolio of businesses, which include tractor manufacturing, banking, and real estate. Mahindra says, “We have a trading floor for talent.”

Unilever does things differently yet much the same. It, too, cares about traits more than skills, and it, too, knows what it’s after: “Being values-led and purpose-driven,” says Manwani. The heart of the company’s leadership development is helping employees connect their personal values and purpose to their work. That’s much of what Unilever does at its original development center in London and at its new one in Singapore. The overall objective is building the global sensibility that Mahindra is also after.

It would be dangerous for other companies to dismiss all this talk of integrity and purpose as eye-rollingly mushy. Unilever and Mahindra Group are alike in one more way: They’re deadly serious about competing, winning, and profiting. “What’s this got to do with the price of tomatoes? A lot,” says Manwani. “It creates energy and commitment.” Those are the most valuable currency in a world where human capital really is every company’s most valuable asset. Mahindra Group and Unilever are telling us something: More than ever, the soft stuff is the hard stuff.

This story is from the October 28, 2013 issue of Fortune.