January 17, 2020
More than one-third of HR chiefs are struggling to develop effective senior leaders and only half of 2,800 surveyed leaders believe they are well-equipped to provide the leadership to guide their company in the future, according to a survey by Gartner, Inc. Efforts to tackle the emerging issues of the 2020s and beyond – including public pressure for business transparency, the rise of automation and the creation of never-before-seen jobs – will be fruitless unless HR managers find ways to nurture and retain capable future leaders, the research and advisory company concludes.
“Chief human resources officers are facing a number of emerging challenges, including unparalleled transparency and public pressure, increasing automation and digitalisation changing the skills and competencies that are required for success, and new generations entering or leaving the workforce,” said Sari Wilde, managing vice president in the Gartner HR practice. “In order to succeed, organisations must have a quality bench of leaders to continue driving business outcomes while leading the organisation into the future.”
To ensure a high-quality supply of leadership talent as well as bench strength and performance over time, Gartner says organisations need to address five fundamental succession risks:
Vacancies cause time-critical leadership responsibilities to be neglected
Leading organisations recognise that no candidate may be a 100 percent match; instead, they focus on appointing a best-fit leader who demonstrates the fundamental skills required and pairing them with other leaders.
“Complementary leadership” — the intentional partnership between one leader and one or many leader partners to share leadership responsibilities based on complementary skill sets — enables organisations to fill critical skills gaps dynamically at speed and increase success. Gartner analysis showed organisations who use complementary leadership realised a 60 percent increase in team performance and a 40 percent increase in leaders’ own performance.
Successors are often underdeveloped
A recent Gartner survey showed that 81 percent of HR leaders cite lack of readiness as a top reason that a high-potential candidate was unable to fill leadership positions. Ensuring successors’ preparedness is more difficult today than ever before due to increasingly shorter tenures at organisations, the rise of the gig economy, generational shifts in the workforce, and leadership roles that are constantly changing.
HR leaders need to ensure that their succession pipeline prepares candidates to execute against current as well as future business needs. Organisations can use scenario planning to identify likely future experiences that executives will need to address as the company evolves.
Succession planning based on existing roles misses the mark on future business needs
The average organisation has gone through five enterprise-wide changes in the past three years, and 73 percent of organisations expect more change initiatives ahead. However, HR’s succession management plans usually focus on existing leadership roles, failing 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 double the impact on leadership bench strength as planning for existing leadership roles but only 15 percent of executives rate their HR team as effective in doing this.
Women held only about 27 percent of senior management roles in 2019. Racially and ethnically diverse employees account for only 13 percent of all senior leadership positions.
A homogeneous pipeline can damage company culture and performance
Many organisations still struggle with a lack of visible diversity across their leadership teams. Women held only about 27 percent of senior management roles in S&P 500 companies in 2019. Racially and ethnically diverse employees account for only 13 percent of all senior leadership positions. A recent Gartner survey found that 88 percent of diversity and inclusion (D&I) leaders identified “promotions and/or succession” as one of the talent processes most susceptible to bias.
As evidence continues to mount that diversity improves culture and performance, organisations have realised that a homogeneous succession pipeline poses significant risks to the bottom line. In 2019, more than half of heads of D&I identified influencing succession planning efforts as a top priority. Decoupling the successor’s role from the candidates themselves and considering the qualifications first and the candidate second is one tactic leading organisations are employing to diversify their pipelines.
Failure to provide transparency around succession management disengages employees
Gartner research found that 71 percent of employees think employers should increase transparency. The companies that have responded and 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 candidates of their potential next role can facilitate targeted development efforts, increase their readiness to take on that role and ultimately drive business results. Organisations must consider their corporate culture and employee needs to determine how best to implement transparency around succession plans.
Additional information is available in the Gartner report, Five Succession Risks That Can Derail Your Leadership Strategy (registration required).
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