Succession management is vitally important to an organisation’s sustained success. But, to drive future strategy, you must develop a robust leadership pipeline. It is clear that succession does not go deep or broad enough. Research shows that only 38% of mid-level managers and 13% of skilled professionals are included in succession programmes. Potential is also not being identified accurately or early enough, so leaders aren’t getting the breadth of experiences to help them make the transition.
Experience and extensive research tell a similar story – the current state of succession management is dismal. Why then do so many organisations lack a cohesive and effective succession plan, and how can they better identify, develop and support the leaders who will drive their future strategy?
To stay agile, healthy and relevant organisations must remain self-aware and committed to growth. Examining the talent they have now against the talent they need for the future will determine the gaps they need to close. Despite all the investment that organisations have made in succession management in the past 20 years, there still remains a disconnect between the succession management plan and the business strategy in most companies.
By not placing the most capable people in priority roles, organisations may falter and risk becoming irrelevant in a fast-changing marketplace. By managing talent holistically, leadership teams will be able to make more informed development and coaching decisions. Stewardship of talent is fundamental – leaders need to own it.
The ability to create strong and enduring leadership is one of the most difficult aspects to get right in talent management. The answer, a solid succession management plan that is designed to meet the changing needs of the business, rather than one static process that produces ‘’generic’’ leaders, designed to match the organisation’s development over time.
The companies that win are those that strategically align the succession management plan with the direction of the business. They identify candidates who can change quickly and have the learning agility to move as the target moves for the business’ success.
While leaders still need to exhibit values, such as integrity and accountability, the future also needs greater diversity of thought, “one enterprise” collaboration, global fluency, and agility. In the past, deep domain expertise was the most important executive attribute. While leadership capacity was important, it came second and there was a big chasm between the two. Now we’re trying to flip that around to achieve a broader and more robust leadership bench – a shift away from a short-term silo mentality to an enterprise mentality, with a systematic focus on talent management, development and succession.
What’s at risk?
Failed promotions and hires can result in exorbitant costs to the organisation due to significant losses in productivity, impact on morale, negative impressions, and disengagement. The top three talent risks are:
- Losing ‘’ready now’’ internal candidates;
- Alienating potential successors; and
- Naming an ill-fit successor.
This goes to show that a good succession management strategy is absolutely key from a future success standpoint. You can perhaps get by without one in the short-term, but in the longer term, if you’re going to perpetuate and grow that success, it’s absolutely essential. Yet, while organisations recognise the dangers of not getting succession management right, more than half believe that they are not addressing the risks they’ve identified. It’s not just the business that is being put at risk, but the people they employ as well. If you select a high-potential leader who’s a great performer, send her and her family to a foreign land and two years later she fails because she wasn’t a good fit for the role, you’ve hurt a promising career and a family.
What does effective succession management look like?
So, what are organisations with successful succession management programmes doing? The most mature talent management practices tend to:
- Go deep – implement programmes at every level;
- Define talent – align talent with business strategy;
- Measure potential – accurately identify leadership potential;
- Provide opportunities – create relevant development experiences;
- Assess readiness – ensure leaders are ready for the next role; and
- Offer assistance – provide transition support when a leader is promoted.
All of these elements ensure minimal disruption when vacancies occur, a consistent transfer of mindshare, and continuity of leadership culture. They also create the conditions for intentional, strategic change and mitigate the risk of loss during an unexpected crisis or sudden absence of leadership.
An effective succession management strategy is not only critical for an organisation, it also ensures that you have the right talent in the right place at the right time to activate, drive and execute your business strategy. As the organisation evaluates its current state of succession management, the following three steps should be followed by leadership:
Step one: Organisations need to align their talent and business strategies so that they can accurately pinpoint those key skill requirements. A talent review should correctly assess long-term potential, identify mission critical competencies, and incorporate development plans through strategic job assignments, targeted learning experiences, coaching and mentoring. An effective succession management plan provides the organisation with a common language for talent, potential, development, expectations and a framework for considering priorities. Through this process a company can learn more about the traits and drivers of employees, key intelligence on the most critical roles and the business impact of vacancies.
Succession management encompasses the entire leadership pipeline, from the senior executive level to deep with the organisation and across functions. It takes into account the second or third generation of individuals who could replace the C-suite, with some development actions. Replacement planning is a formal or informal understanding of who would take over a CEO or C-suite executive’s role in the event of a crisis.
Creating a transparent succession management process is critical, not only in retaining and engaging high potentials, but also in fostering other key talent, within the enterprise. If an individual does not understand his/her career prospect, they are at a higher risk of leaving, which can impact overall employee morale.
Step two: Awareness of the talent gaps will enable organisations to assess and identify their current and future capabilities. They need to know who can fill their most critical roles now and in the future; high-potential talent is not being accurately identified and, as a result, ill-fit candidates are promoted into key roles. Too often high performance is mistaken for high potential, a costly mistake when identifying leaders for future roles. Organisations need to adopt a ‘’whole person” view, which encompasses competencies, experiences, traits and drivers.
Korn Ferry’s Seven Signposts – the unmistakable markers that identify high-potential leaders – refine the indicators of high potential for leadership into seven accurately assessable and quantifiable categories, namely learning agility, formative experiences, self-awareness, leadership traits, the drive to be a leader, aptitude for logic and reasoning, and management derailment risks.
Step three: Execute your talent management strategy and start to fill key leadership roles. For development to be truly effective, leaders must be ready and fully equipped to shape, activate and drive the strategy, culture and mission of their organisation.
Ensuring that leaders have the required experiences is fundamental to the development process, it takes consistency, accountability and a systemic approach. This can be difficult for organisations that do not have an effective succession management plan and lack a clear picture of the current state of their talent’s true readiness. Development needs to be inextricably linked to business goals and strategy. Often leaders spend a sizeable portion of their careers participating in standard development programmes that aren’t customised to their specific needs, detracting from their ability to focus on gaining the experiences that matter most for future success at advanced levels. Senior leadership needs to create development experiences and opportunities for their leaders that are Diverse, Intense, Varied and Adverse. Examples include dealing with turnaround and start-up situations, cross-cultural and international experiences.
Understanding the gaps that need to be filled allows the organisation to target development. You can ruin someone by giving the wrong development and coaching. Correct assessment of readiness helps unlock the differentiated development paths needed for each individual to thrive.
A leader’s motivation to develop is often overlooked. Wrongful assumptions can be made about the individual’s desire to progress into a senior executive role, with little incentive for that person to reveal his/her true aspirations. A highly competent leader who seems like an ideal fit for advancement may not be a match at all. Unless succession management take a whole person approach, organisations run the risk of investing in people who lack the desire or motivation to advance into those vital roles. The individual’s ability to fit into the company culture plays a major role. This is one of the most critical factors that impacts leadership success and why the majority of promotions fail.
There is a need for adaptable, relevant succession and talent management solutions that are anchored in the strategy, mission, culture and purpose of the organisation. Succession matters. The very survival of your organisation depends on it.