Today’s organizations need a quality bench of leaders to drive business outcomes and satisfy employees, customers and investors who now demand more transparency and accountability. But HR leaders struggle to develop effective leaders and keep the succession pipeline healthy. Relying on the existing hierarchy of leaders isn’t enough.
Having a quality bench of leaders, and a solid succession management process, is critical
Gartner’s Future of HR 2020 Survey shows that HR leaders struggle to develop effective senior leaders (according to 37%) and mid-level leaders (45%). Other research shows that only 50% of approximately 2,800 surveyed HR leaders report they are well-equipped to lead their organization in the future.
“Having a quality bench of leaders, and a solid succession management process, is critical for organizations as they face a number of emerging challenges, including unparalleled transparency and public pressure, increasing automation and digitalization, evolving skills and competencies, and new generations entering and leaving the workforce,” says Sari Wilde, Managing Vice President, Gartner.
To ensure a high-quality supply of leadership talent, as well as bench strength and performance over time, HR must address five fundamental succession risks:
Vacancies mean neglected time-critical leadership responsibilities
HR leaders know that it’s tough to find a candidate, particularly at the senior level, who is a perfect match for a role. Instead, they focus on building “complementary leadership.” Intentionally partner one leader with one or many leader partners to share leadership responsibilities based on complementary skill sets.
Partnering leaders with different strengths and experience enables organizations to fill critical skills gaps dynamically at speed and to increase success. Gartner analysis shows organizations that use complementary leadership realized a 60% increase in team performance and a 40% increase in leaders’ own performance.
Successors are often underdeveloped
A recent Gartner survey shows that 81% of HR leaders cite lack of readiness as a top reason that high-potential candidates were unable to fill leadership positions. Increasingly shorter tenures at organizations, the rise of the gig economy, generational shifts in the workforce and leadership roles that are constantly changing mean that it is more difficult now than ever before to ensure successors’ preparedness.
Use scenario planning — within the specific context of the organization — to identify likely future experiences that executives will need to address as the company evolves. This enables the development of a succession pipeline that prepares candidates to execute against current, as well as future, business needs.
HR succession management plans fail to anticipate the leadership demands of evolving business priorities
Focus on existing roles leads to misalignment with future business needs
The average organization has experienced five enterprisewide changes in the past three years, and 73% of organizations expect more change initiatives ahead. However, HR succession management plans usually focus on existing leadership roles and fail to anticipate the leadership demands of evolving business priorities.
Progressive HR functions take a demand-driven approach to succession management that focuses on planning for future leadership needs. Planning for future leadership roles has almost twice the impact on leadership bench strength as planning for existing leadership roles; however, only 15% of executives rate their HR team as effective in doing so.
Many organizations still struggle with building diversity across their leadership teams
A homogeneous pipeline can damage company culture and performance
Many organizations still struggle with building diversity across their leadership teams. A recent Gartner survey shows that 88% of diversity and inclusion leaders identified “promotions and/or succession” as one of the talent processes most susceptible to bias. Furthermore, in 2019, more than half of D&I heads identified influencing succession-planning efforts as a top priority.
With increasing evidence that diversity improves culture and performance, organizations have realized that a homogeneous succession pipeline poses significant risks to the bottom line. Decoupling the successor’s role from candidates themselves and considering qualifications first and the candidate second is one tactic that leading organizations are employing to diversify their pipelines.
Lack of transparency around succession management disengages employees
Gartner research finds that 71% of employees think employers should increase transparency. Companies that have created a culture that allows for open conversations, awareness and psychological safety see manifold benefits — more customer brand loyalty, more profits and a superior employee experience.
The same principle holds true for succession: Informing a candidate of their potential next role can facilitate targeted development efforts, increase their readiness to take on that role and ultimately drive business results. Organizations must consider their corporate culture and employee needs to determine how best to implement transparency around succession plans.