Executives who are serious about delivering value should spend more time identifying their organizations’ top performers and most critical roles. Succession planning is the new competitive advantage for businesses that want to thrive in the global economy.
At the same time, organizations are facing a significant talent gap at the executive level.
With millions of Baby Boomers approaching retirement, there is an alarming shortage of C-suite talent across the private and public sectors.
To add to this quandary, the next generation of leaders are stepping into their first executive roles 10 years before previous generations, and three roles early — as “premature leaders” — forcing employers to significantly accelerate their development.
How should organizations respond? A report by Eric Beaudan at Odgers Berndtson lays out keys for the development of a succession talent pool made up of mid-career leaders who have the potential to step into an executive role. “The key is the development of a succession talent pool made up of mid-career leaders who have the potential to step into an executive role over a defined time period — usually two to three years — and to give these leaders high-visibility assignments and developmental opportunities to broaden their leadership capability,” Mr. Beaudan said.
The report says to consider these examples:
- A large transport authority needed to identify potential successors to the CEO from a group of more than 90 leaders who were two steps removed from the C-suite. Using customized assessment tools, Odgers Berndtson worked with the HR team to develop a talent map that tied development work to individual performance, including regular check-ins with the CEO and VPs.
Eric Beaudan is partner and global head of the leadership practice at Odgers Berndtson, based in Toronto. Using the proprietary LeaderFit assessment method he designed, Mr. Beaudan works with organizations to assess and develop the leadership potential of their executives and high-potential talent.
- A financial institution appointed a new CEO and was looking for ways to identify internal talent who could immediately step into VP-level roles and help drive a significant culture shift. Odgers Berndtson created a customized set of assessment tools to determine who had truly bought into the culture shift and could quickly step into lateral roles or more senior roles over a two- to three-year horizon.
- Each of these initiatives also involved a formal leadership development cycle — with one organization sending high-potential leaders to a customized leadership development program at a university, and the other translating the aggregate analysis of assessment results into concrete coaching and mentoring programs.
HR as the Process Owner
As succession planning and development practices evolve, HR needs to position itself as the trusted advisor in the process, said Odgers Berndtson. HR, the report said, can lead the way by delineating the challenges and accountabilities of the business in three different ways:
- Vision: Paint a clear picture of the leadership and organizational capabilities required for long-term success. Working with consultants or its internal organizational development group, HR needs to identify the leadership capabilities it expects high-potential executives to master and take the organization to its next performance level.
The Benefits of Strategic CEO Succession Planning
Many boards replace CEOs, but relatively few implement robust succession processes. A new study by Russell Reynolds Associates explains why taking a strategic approach ultimately gives boards more and better choices when the time comes for a CEO transition.
- Methodology: Offer a structured yet flexible methodology and tools to develop the next wave of leaders. The process must be transparent and reviewed with the business to ensure buy-in. The HR committee of the board must also provide oversight and guidance with respect to the process and desired outcomes.
- Follow-up: Leaders love the initial attention they get as they receive assessment results and create development goals — yet routinely fail to follow up. HR can be the voice at the table reminding the business that follow up is critical. More importantly, HR needs to determine the lessons the organization is learning from both successes and failures.
Finding the Best Leadership
“Knowing what to look for in future leaders is not always easy,” said Mr. Beaudan. “Employers often wonder if they should only assess employees who are seen as high-potential by their business leaders. Invariably, the answer is no.”
“Many high-potentials, once assessed against key competencies and leadership capabilities, do not make the cut,” he said.
To ensure employers have the right people on the right leadership track, they should do the following:
- Always use assessment as part of the process: People who are labeled as high-potentials without a formal assessment are simply high performers in their individual roles or people who stand out from a very short talent field.
The CEO’s Important Role in Succession Planning
The CEO’s role is straightforward: driving management succession at senior levels, including the early identification of any inside CEO contenders, ensuring that the organization is developing succession-ready executives for all senior roles.
- Focus on future leadership potential: Performance ratings are situational and limited to a certain time period, with lots of external contributing factors. Once a high-potential is identified and redeployed, it is striking how often her contribution to the organization is multiplied.
- Recognize diversity: Not all strong performers are alike. Some high-potentials will thrive when presented with opportunities to deepen their expertise in their field. Others would rather sample multiple experiences and learn about different parts of the business. Not all will follow identical career paths.
- Provide guidance and feedback: There is a misconception that high-potentials are self-guided rockets who can naturally achieve their goals. In fact, many are in the early stage of their leadership development, so structured development and coaching are required to help ensure they don’t burn out.
“With the Millennial generation expected to make up three quarters of the global workforce by 2025, HR and business leaders need to drive the succession and talent agenda with the same rigor they apply to finance or marketing,” Mr. Beaudan said.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media. Original post here.