It is a well-known fact that leadership experience, and specifically C-Suite talent, is in short supply.
The average tenure of executive leaders is declining, and a new generation of talent is stepping into leadership roles much earlier and with less experience than their predecessors. The COVID-19 pandemic is likely to accelerate this trend.
Consequently, a key element of a HR and/or Talent Director’s role is to demonstrate to their CEO, Board and, in some sectors, their regulators, that they have a robust succession planning process in place that is linked to their business strategy and equips up-and-coming leaders with the skills to thrive in a world of ever-increasing disruption, non-more so than COVID-19.
So, what are the practical steps needed to build an effective succession plan? Basil leRoux, Head of Berwick Partners’ HR Leadership practice, spoke with David Baty, a Partner in Odgers Berndtson’s Executive Assessment & Development practice, who has identified six key steps to creating a succession plan that is dynamic and fit for purpose.
1. Set the strategic context
Set the strategic context for succession and confirm with the CEO and leadership team how that plays into executive and next-level roles, together with other high value positions, for the succession plan.
As well as for executive positions, where are the most valuable roles in the organisation? How they are identified; how are they covered, and do you have the talent to deploy into newly-created roles?
A values-based approach needs also to look for adding critical roles – those at lower levels that carry significantly more weight from a succession perspective than others. Examples include regulatory, technical, reputational and transformational positions, or those key to rapid growth.
The impact of poor succession in these roles is often amplified by a corresponding gain for a competitor business.
2. Define success profiles and identify the succession pool
Define the experience and skills for the C-Suite and other critical positions, and the behaviours and characteristics that differentiate the organisation’s high-performing players, in the context of the strategy and leadership model.
This will confirm the elements within the evaluation process, specific data to be collected, and the design of any individual and collective reports used. It also allows existing data on proposed participants to be mapped into the process.
Using a combination of psychometric profiling, interviews, and existing data, benchmark everyone in the succession pool in terms of their skills, experience and leadership competence, and seek to understand their motivations and aspirations.
A frequently overlooked element of benchmarking is ensuring you understand the external market for key roles, applying equivalent criteria to make fair and meaningful comparisons with your internal pool.
The benchmarking exercise should be able to highlight the following criteria about the individual(s):
Fitness for the future
Motivation and flight risk
Action required to support their development.
4. Answer critical questions
Use the benchmark data to provide analysis and reporting to the CEO and leadership team which answers questions and proposes solutions. For example: the succession map, collective capability reports on strengths and risks, and requirements for pipeline development and resourcing.
Analysis and reports should clearly answer the questions of potential stretch, readiness and future trajectory for each individual and the collective impact on succession. This information can then be leveraged to identify resourcing solutions to refresh, refocus or develop talent.
5. Develop capability
Benchmarking provides insight which can be used to encourage participants to enhance their performance, leveraging their strengths and addressing gaps or de-railers, and identify future pathways to fulfil their potential.
Key to success in this is the co-creation of a development plan with the participant to build ownership together with effective mentoring and coaching support and, where needed, structured leadership development programmes.
Organisations are increasingly moving away from traditional leadership models, embracing a flatter structure with greater levels of autonomy, flexibility and collaboration. However, this can create a challenge for succession planning. With de-layered structures, moving up to a CxO or other ‘mission-critical’ roles can be a very large step, so consideration needs to be given to ensure the individual is set up for success.
6. Make it dynamic
The succession landscape can move quickly. In an accelerating world, how do ensure that your succession plan isn’t overtaken by events? Rapid change and disruption make it vital to build in agility at the core of any leadership succession.
It also requires that you pay more attention than ever to the strategic context, and how changes to the strategy affects executive and other high-value positions.
Succession is a system influenced strongly by human behaviour; experience and executive judgement are essential to make it work. However, that will only get you so far and, done poorly, this may amplify potential concerns about the effectiveness and fairness of the system.
Actively applying the best data you have – psychometric assessment, internal and external performance indicators and insight into experience – will boost the chances of identifying real potential, improve the quality of decision-making and help to address conscious or unconscious bias in the system.
In a world of ever-increasing complexity, change and transformation, resulting in decreasing tenure of leadership positions, leaving succession to chance is no longer an option. Having a robust succession planning process in place can be the difference between organisational success and failure.
If you would like to find out more about our ability to support organisations with succession planning, please contact Basil leRoux, Partner and Head of the Human Resources Practice at Berwick Partners.