Overcoming the Succession Planning Paradox (1)

Most organisations realise succession planning is an important priority but few orchestrate it well. According to a new study, effective strategies typically consider a balanced mix of human factors and data.

It’s no secret that business success depends on effective leadership, and that requires a proactive and disciplined approach to succession planning. Yet while 86 percent of leaders surveyed for a 2014 Deloitte study said leadership succession planning is an “urgent” or “important” priority, only 13 percent believed their organisations do it well.

A new, follow-up report sheds some light on this paradox. More often than not, companies either avoid succession planning altogether or take a dispassionate, process-oriented approach that minimises or even ignores the very real impact it has on the people involved, the research found. What appears to be most effective is a centred approach that focuses on people first while maintaining objectivity and procedural discipline.

In this first of a two part article, we’ll look at succession planning types and how organisations might need to realign their agenda towards a more balanced approach for the future.

Why It Matters - and Why It’s Hard

The potential gains from good succession planning go far beyond the obvious result of having a steady pipeline of leaders ready to step into new roles. Additional benefits cited by interviewees include a more diverse portfolio of lead- ers, higher-quality decisions around promotion and developmental investments, enhanced career development opportunities for emerging leaders, a stronger organisational culture, a future-proof workforce, and greater organisational stability and resilience.

However, many participants were also quick to give reasons why they weren’t seeing the expected value. Namely: • Succession planning is a long-term dis

cipline in a short-term world. • It can be destabilising and threatening. • It’s often not clear who is accountable. • Good data is frequently unavailable or

ignored. • There is often no clear process.

Within IT, there can be advantages and disadvantages when it comes to succession planning for the CIO. On the plus side, the analytical nature of the function may make it more likely that leaders will be comfortable using data to inform their decision-making. At the same time, however, the rapid pace of change within the technology world can mean they are perpetually playing catch-up and thus are less likely to address long-term planning needs. The fact that IT organisations frequently value specialised technical expertise above leadership skills in their hiring can further stress the succession process by creating a pipeline with many narrowly focused tech experts but few strong, well-rounded leaders.

Striking a Balance

Approaches to succession planning can be classified into four types. Three reflect how most surveyed organisations currently operate, and one represents what the research suggests is most likely to make succession planning a strong lever for growth: Comfortable. Organisations using an informal, intuition-driven approach to succession planning leave these decisions to a small group of leaders who tend to select successors based less on objective data than on reputation and tenure. This approach is often taken by founder-based, private companies that continue to operate in the traditional “family business” style regardless of their current size. While it helps maintain the old culture, it is fraught with bias and can lead to complacency and stagnation. Compliant. Many other organisations recognise the importance of standardised processes, objective data, and a regular schedule of activities to structure their succession planning decisions. But with more immediate priorities competing for leaders’ time, these tools and processes can fall by the wayside, allowing subjective decision-making to take over. This can be particularly evident at organisations where the onus for succession planning rests explicitly with the HR function. Competitive. This style is characteristic of organisations that take succession planning seriously and build objective processes to evaluate and advance chosen successors. While it may be effective at identifying and promoting future leaders, it typically ignores the very real human reactions that can arise. The process can be perceived as a cold and threatening corporate program being done to individuals, not for them. As a result, many participants tend to look for ways to beat the system or question the validity of diagnostics in order to raise their own stock or that of the candidates they support.

Centred. Finally, a centred approach is designed to put the people involved— both the leaders managing the process and the successors being considered—at the centre, and is supported by processes that help decision-makers maintain objectivity. Recognising that succession planning has a huge impact on the careers of the current leaders, who are responsible for its success, and acknowledging the emotions involved for both current and prospective leaders, this approach focuses on creating an environment that channels emotions productively. It uses people-centred design tools that allow organisations to consider objective talent assessment criteria without causing the leader community to feel threatened by the process. The aim is to create a succession program that leaders want to participate in, which can happen only when all participants appreciate its value, feel it is fair and easy to navigate, and believe it ultimately creates more opportunity for all involved.

In part two next week, we’ll look at the five leading practises that can help organisations move their succession planning efforts toward the centred state.