HR, know your c-suite succession risks
Companies are ill equipped to respond when a key leader leaves, says research and advisory firm Gartner. Sari Wilde, managing vice president of HR insights, shares five key succession risks all HR leaders need to consider in response
HR needs to take a more active and strategic approach to managing succession planning in the c-suite, concludes research and advisory company Gartner having surveyed 900 c-suite executives on the state of succession planning in their organisation. Shockingly, 42% of these executives said their organisation does not have a comprehensive plan should a c-suite leader step down – and 77% did not have an internal candidate ready to take the role today.
Worse still, only 15% of executives feel their HR team is effective in developing leaders of the future. It’s no surprise when one third of HR leaders report difficulty developing effective senior leaders, 45% struggle to develop effective mid-level leaders and 81% cite lack of readiness as a top reason that high potential candidates were unable to fill leadership positions.
There is a crisis at the top of businesses. Last year 18% of CEOs from the world’s largest 2,500 companies left their post – a record. For the first time in nearly two decades, the majority of these departures resulted from ethical lapses, such as fraud, environmental disasters or sexual misconduct rather than from poor financial performance or board struggles.
Meanwhile, only 50% of 2,800 leaders surveyed separately by Gartner report they are well-equipped to lead their organisation in the future.
Traditional hierarchical succession processes are clearly not working in today’s business environment, says Gartner’s managing vice president of HR insights Sari Wilde.
“The average organisation has gone through at least three to five big changes in the last several years. The kind of skills that employees and leaders need to get their jobs done today are changing really fast. The result is that leaders don’t feel confident about leading their teams in the future, which is something we haven’t seen before.”
To ensure a high quality supply of leadership talent, HR should rethink succession planning by addressing five key risks, says Wilde:
1. Vacancy risk
Source your successor internally and you cascade vacancies down the chain and the pressure to fill the gaps mount up. But source externally and the process is usually challenging, costly and slow. New roles take a median of 72 days to fill and executive level leaders can take more than 26 weeks to get up to speed, says Gartner. The answer is to recognise no candidate is likely to be 100% match so focus on best-fit and support with ‘complementary leadership’.
“The most effective leaders and HR organisations employ what we call complementary leadership, where leaders partner with others who have complementary skillsets to help them lead their businesses and their organisations. So, you may have one leader with more institutional knowledge, one with specific technical skills, another particularly effective on the people side, another expert at change and they're able to come together to collectively have the skillset that's needed. It’s a big mindset shift for a lot of leaders who are used to doing everything themselves, but we have seen it leads to a lot more success. HR can take an active role in structuring this.”
2. Underdevelopment risk
The gig economy, generational shifts, shorter leadership tenures and constantly changing leadership roles – ensuring a successor is ready for the role is harder than ever as candidates may not be exposed to the development experiences required for the role. In addition, Gartner estimates that 69% of what a manager does today will be automated by 2024 while only 9% of chief human resource officers agree their organisation is prepared for the future of work.
Filling a role with an underdeveloped leader can quickly derail performance. To ensure executives are prepared to take on leadership roles, you must give them the right development experiences at the right time.
“Leading organisations are not just doing replacement planning. This person left, they were great, you want someone just like them. Instead there needs to be more scenario planning to think about how the position is likely to change, how can you find candidates who are likely to have some of the skills and capabilities needed in the future,” explains Wilde.
It’s not easy, there are some big questions when approaching succession planning this way.
How far ahead should you plan when thinking about skill development? How do you balance the need to be ready to take on the next position versus the fact the business may have changed exponentially by the time you’re ready to get there?
“You have to go a bit deeper in thinking about scenario planning and development. If you have a set of leaders who you think might be able to take on that role, what kinds of development experiences can you give them to expose them more to change, what different perspectives can you bring in?”
3. Static planning risk
Organisation strategies are changing fast. But succession plans are not. Two-thirds of HR leaders agree that succession plans need to better align with changing organisational needs. HR leaders need to ensure their succession pipeline prepares candidates to execute against current and future business needs. Planning for future leadership roles has almost doubled the impact on leadership bench strength as planning for existing roles. Yet, while as many as 31% of senior leaders end up in newly created positions, most HR functions create pipelines based on existing roles.
“You need to move from creating a succession strategy based on existing roles and business plans and make the HR processes feel a bit more flexible so you can respond and adapt your succession plans as needed,” Wilde notes. “For example, instead of one person for a position you may consider a few different people based on the different directions the business may go.”
4. Conformity risk
Bias is deeply ingrained in most leadership succession. “One of the most common ways people identify successors is by having the person in the role now or one step ahead of them identify who they think will be best for the role. And guess what? You tend to choose someone who's like you, which is not always the best for the company,” says Wilde.
Businesses need to be more active in mitigating that bias. Global healthcare company Novo Nordisk, for example, has someone from its diversity and inclusion team in every succession planning process to wear the ‘bias’ hat. That person’s role is to call it out when they think there’s some bias. “Just having somebody who's constantly thinking about it matters. Even if you believe you're not biased, having a more objective person in there who's not as familiar with the candidates and who can help call it out has been really useful for them.”
5. Culture-process misalignment risk
How do you ensure your succession planning process mirrors the culture you're trying to promote in your organisation? If your succession planning process does not align with your culture it can do more harm than good.
“ For example, if you are trying to promote a culture of transparency and you're trying to push that up and down the company, then having a totally closed succession process that feels very secretive is not in alignment with that message. If you’re trying to promote a culture of risk taking and innovation but the people you are putting on your succession plan are all ‘ safe bets’ you're not kind of aligning with the culture that you're trying to promote in the company.”
For HR leaders to help their organisations develop a sustainable succession planning process, Wilde recommends they take three actions:
- Understand the risks: not every organisation will have the same risks so make sure you take a hard look at your own process and identify which of these risks you are facing today
- Realise that you are never going to have what Gartner calls the ‘purple unicorn’ leader that everyone is looking for. That person doesn’t exist. Leaders will only be successful today if they share skills and responsibilities. Try employing a complementary leadership approach in your organisation
- Push the complementary leadership mindset down your organisation. This is not just about senior leaders but also managers. Set managers up to succeed: help them realise they won’t have all the answers but the only way they will help their employees develop is by connecting them with others who can help them. In other words, promoting peer-to-peer skill sharing.