Succession Planning is Changing – Here’s How to Keep Up
Key Takeaways:
- Succession planning is vital for maintaining organizational stability and progress. Without it, the sudden departure of key decision-makers can leave a company vulnerable.
- By integrating data gleaned from assessments into succession planning, organizations can make more informed decisions, ensuring the promotion of individuals who are well-suited for advanced positions and leading to stronger leadership and organizational performance.
Succession planning is critical to any organization’s drive for stability and advancement. If something were to happen (e.g., a retirement, an illness, a change of heart) and key decision-makers within an organization suddenly departed, who is prepared to fill that role? Often, it requires careful planning and a pipeline of high-potential employees to make plans (and backup plans) to address this challenge. The lack of a strong pipeline for future leaders will undermine an organization’s ability to stay focused and relevant over an extended period of time. Yet many organizations have little to no succession plans in place, and many of those that do are relying on plans with outdated frameworks.
Most organizations are not well prepared for succession
A 2021 survey of 580 human resources professionals conducted by the Society for Human Resource Management (SHRM) found that 56% of respondents had no succession plan in place1. Only 21% of respondents said their organization had a formal plan in place, and 24% reported an informal plan.
The same survey noted the main reasons cited for not having a plan in place were a lack of time and resources to develop one (31%), not having a large enough business (18%), and having a business that was family-owned and operated (15%)1.
Beyond the issue of not having a plan, many succession plans are predicated on frameworks that predate the transformative impact of technology and AI on our work environment. These outdated plans often fail to account for modern business operations and shifts in workforce dynamics. If organizations rely on succession plans that don’t keep up with these changes, they risk being ill-prepared for a rapidly changing world and losing their competitive edge. In order to keep current with best practices, key considerations for successful succession planning are outlined below.
Inclusive leadership
Companies with a diverse group of employees better reflect the populations they serve. More importantly, research shows that embracing diversity leads to increased innovation and better decision-making, which in turn translates to better financial success2.
A 2015 study on 366 public organizations conducted by McKinsey & Company2 found that those with greater levels of ethnic and racial diversity in their leadership were 35% more likely to have financial returns greater than their industry average. Similarly, companies that scored high on gender diversity were 15% more likely to have returns greater than their industry average.
Fostering inclusion strengthens an organization by paving the way for diverse ideas, opinions, knowledge, and skills. It also creates a more diverse selection pool featuring a myriad of talents for when a company is looking internally for a succession candidate.
Being ready to embrace technological change
With seemingly greater frequency, new technologies emerge to replace the old. Often, these changes make processes more expedient, convenient, or accurate, but they can also create skills gaps that necessitate further training to bridge them. This constant upskilling and reskilling is resource-intensive and can be challenging for organizations to implement effectively. It isn’t always easy for companies to identify which skills are critical for the future or which new technologies should be implemented, so having an agile workforce that is flexible to acquire new skills and understand the impact of new technologies can help save time, money, and potentially help expand the horizons of the organization.
In the same vein, it is also important to have an agile leadership team that can adjust well to new demands and business needs, translate those needs into action for their business, and effectively lead their teams through the change that is inherent.
In the evolving work landscape, it can be challenging for organizations to predict the future’s in-demand skills and thus identify the ideal qualities in potential employees. Consequently, it’s essential to consider not only technical abilities but also personal attributes that align with a forward-thinking perspective. Candidates who exhibit qualities such as resilience, adaptability, flexibility, and curiosity are well-equipped to embrace change and proactively acquire new competencies. These individuals are poised to thrive in dynamic environments, seamlessly transitioning into roles that demand continuous learning and adaptation. Therefore, a balanced emphasis on both technical skills and positive character traits is crucial, creating a robust workforce that is prepared to swiftly adapt through upskilling or reskilling when necessary.
Emerging technologies and the utility of data
Identifying the right candidates for leadership roles within an organization can be complex. It necessitates evaluating potential leaders, ideally over an extended period of time, to assess their suitability for advanced positions. This process is crucial for ensuring that those promoted from within or developed for senior leadership truly fit the demands of such roles.
By integrating technology like artificial intelligence and machine learning, companies can streamline the process of selecting the right leaders. These technologies offer a faster way to spot high-potential employees, forecast talent requirements, and create tailored growth strategies. The use of data not only speeds up the decision-making process but also leads to more precise choices regarding promotions and training, closing the skills gap efficiently.
Assessment tools such as MHS’ Emotional Quotient Inventory® (EQ-i 2.0®) can help employers identify which employees possess the requisite competencies for future leadership. The EQ-i 2.0 measures various factors that make up emotional intelligence, such as self-awareness, empathy, stress management, and interpersonal skills. With 25 years of research backing it, the EQ-i 2.0 is one of the world’s most widely used measures of Emotional Intelligence (EI) and is regarded as the gold standard of emotional intelligence testing.
Here’s how the EQ-i 2.0 can help:
Identify Leadership Competencies: Organizations should first define the specific EI competencies they believe are critical for leadership roles. These might include abilities like Stress Tolerance, Decision-Making, Empathy, and Reality Testing.
Assess Current Talent: Use the EQ-i 2.0 to assess these competencies in current employees. The assessment will measure various aspects of EI that are deemed vital by the organization for effective leadership. Look at the assessment results to identify employees who already exhibit strong leadership competencies and those who may need development in certain areas.
Tailor Development Plans: Create personalized development plans for potential employees based on their EQ-i 2.0 results. If someone scores low in stress management, their plan might include training on resilience or mindfulness.
Monitor Progress: Regularly re-assess these employees using the EQ-i 2.0 or EQ 360® to monitor their progress and adjust their development plans as needed.
Make Informed Decisions: When a leadership position opens up, use the accumulated data to make informed decisions about which internal candidates are ready to step up, ensuring a smoother transition and a better fit for the role.
In an age when, in some cases, more than half of employers surveyed by SHRM feel like they lack the time or the resources to plan for succession effectively1, having tools like the EQ-i 2.0 can help to ease some of that burden and make succession planning more accessible.
By systematically integrating the EQ-i 2.0 data into the succession planning process, organizations can make more accurate and timely decisions, ultimately leading to stronger leadership and better organizational performance.
Have questions? Get in touch with a member of our team.
References
1 Tyler, K. (2022, March 9). Succession Planning is Critical in Uncertain Times. SHRM. Retrieved June 26, 2024
2 Hunt, V. (2015, January 1). Diversity Matters. McKinsey. Retrieved June 26, 2024
