Future Leaders Wanted!
03/10/2007
Article published HR Director Magazine
3rd October 2007
Written by: John Ferguson, Head of the leadership development practice at Right Management
Future Leaders Wanted - SUCCESSION PLANNING, TALENT MANAGEMENT, WORKFORCE PLANNING - YOUR CHOICE?
Businesses prepare for the future in many ways - whether through risk management strategies, growth projections or technological advances, John Ferguson, Head of the Leadership Development Practice at global HR Consultancy Right Management suggests that one area of forward planning that many of the UK's successful business leaders still shy way from, is succession planning.
With talent management one of the key challenges facing 21st Century businesses, it is essential that HR professionals encourage company leaders to consider their options for succession at the earliest possible moment. In other words, that they determine precisely who will succeed them when they retire or move on to another position.
The nature of this decision requires direct involvement from a company's executive, but these individuals have great demands on their time and are often uncertain about how to approach the issue of succession, making it critical that the HR professional provides the necessary guidance and ensures there is plenty of time for this business process to evolve.
The concepts of succession planning and talent management are very closely linked, but a common misconception amongst many is that the two are one and the same. They are not; there are differing considerations:
- Succession planning is the process of determining the key positions which support and drive business strategy, with risk scenarios and identifying the appropriate individuals able to step into these roles.
- Talent management is about the health and wellbeing of the future leadership (capacity and capability) of the business. It involves identifying a pipeline of emerging leaders with the skills competencies and capability to move up through the organisation and eventually take on a senior role. Once the individuals have been identified, HR departments can invest in appropriate education and in-house development processes in order to set them on the talent pipeline.
One key question keeping many senior executives up at night is where the leaders of the future are going to come form, and whether they even exist within the organisation. Finding out that there is no natural successor when a senior leader departs poses huge problems for HR directors. They become faced with the choice of promoting someone who is not ready, or investing in head-hunters to bring in external talent who are not au fait with the company culture or strategies, and may not have the leadership skills to drive future competitive advantage. Both options have clear flaws and require a great deal of bedding-in time for the individual involved.
In order to avoid the above scenarios, it is essential to implement both clear succession planning and talent management programmes. However, this is not merely a job that should land on the shoulders of the HR department. Workplace planning, when not executive effectively, can present a real and formidable business risk and, for this reason, succession planning should be viewed as a collective corporate responsibility, with business leaders taking a clear role in developing the succession plan. All too often the finger of blame is pointed unfairly at HR directors for issues which should have been treated as strategic risk management priorities. Just as business implement risk management strategies to deal with buildings collapsing or technology failing, so should leaders lent the same kind of thinking to the talent for the organisation accept responsibility for the risks involved.
Despite popular perceptions to the contrary, succession plans and talent management processes are not just for blue chip organisations or FTSE 100 companies. In fact, it is just as critical that SMEs give serious consideration to their succession planning, as the tight-knit cultures present in smaller businesses means that the los of a manager or senior executive can have a very significant and lasting effect if the gap is not plugged quickly and appropriately. In many cases, companies can find themselves and their bottom line suffering needlessly because the wrong person was placed at the helm.
For those organisations attempting a succession plan for the first time, the best advice is to determine the desired end result first. The process should, therefore, begin with setting out the skill sets required to execute particular growth strategies and achieve the direction in which they want the firm to grow. Understanding where the business is going makes it easier to pinpoint the success factors for the leadership roles of the future and allows the succession plan to have strong foundations, which are connected to the strategic intent of the business. Future leaders must be considered carefully, as the necessary skills will often include strong commercial and management competencies as well as technical knowledge - this makes it critical that HR departments put n place the processes to recognise and develop these rounder skill sets in individual employees at an early stage.
"businesses must be cautious of creating new
leaders in the old model"
Once it is clear what a business might need of its future leaders, the next step is to identify a pool of people with distinct strengths capable of succeeding across several different positions. Attempting to replicate what has worked well before can be fatal, and for this reason businesses must be cautious of creating new leaders in the old model. Instead HR and senior leaders should be watching for team players who have commercial acumen and leadership potential rather than just sector expertise.
This becomes particularly relevant for organisations operating under a partnership model, such as law firms or accountancy practices, or in cases where a business is divided into various streams. The traditional partnership model means that many firms have no clear definition of leadership, with old-school partners often only taking responsibility for their area of expertise, or the department they run, rather than taking an interest in the firm overall. This presents a particular challenge to those leading the succession plan.
Fortunately, many successful law firms have now crated a 'New Deal' whereby partners have a collective responsibility for a firm's performance. This interdependence is a fantastic chance for senior partners to identify and develop junior partners and provide the motivations needed to retain star talent for years to come. I believe that this principle can be applied just as effectively to any organisation which is being held back by a lack of cohesion amongst senior staff. By removing silo leadership, firms can increase opportunities for cross-selling and create a strong team to drive the business forward.
"it is never enough simply to create the plan and move on"
Succession plans must be part of a company's long-term development and growth strategy, whilst being adaptable and reactive to change. And shows companies must remain loyal to the succession plant, is it never enough simply to create the plan and move on under the assumptions that a box has now been ticked. Even if the company perceives to have a successor to a current position lined up, this may be subject to change, as when the time comes it may no longer be suitable ether for the business or the individual. If companies remain objective and are willing to accept diversity and change, this will go a long way to creating years of stable leadership.
Given that internal promotions form the basis of any strong succession plan, it is vital today's leaders and HR managers do all they can to nurture and prepare the talent of tomorrow. Over the past few decades there have been countless great books written on leadership, with a different model for every minute of the day. However, a good leader, in partnership with the HR team, needs to go back to three basic principles in order both to inspire employees and drive the business forward.
- Context and clarity - Leaders must ensure each of their team members are absolutely clear about their role and what is expected of them. They need to know why they are there, what they are supposed to be doing and what they need in order to be effective.
- Progress/optimism - Individuals need to feel they are making progress. If they are working without making any progress they will enter a downward spiral that they will find it hard to get out of. And it should eb stressed that employees don't have to be achieving huge milestones - small pebbles of progression are sufficient in order for employees to feel they are doing well.
- Recognition - A good leader needs to recognise the contribution a team member has made. This does not necessarily mean by paying out large bonuses but instead using informal but genuine recognition such as saying 'thank you', 'well done' and so on, as well as making sure an individuals' achievement is recognised among other senior leaders.
Succession plans and talent management processes are intended to utilise internal resources to the best effect, as current staff tend to possess a far more in-depth understanding of the business than those external recruits, and therefore contribute more easily to the company's success. Internal recruitment also makes it easier to align the plan with the corporate strategies of the organisation. However, companies must also build in the flexibility to embrace diversity and consider external recruitment as an intrinsic part of the plan. This will ensure the company is recruiting the best person for the job, and allows for the injection of new energy and ideas should they be required when the time comes.
If a succession plan is to be executed successfully it must be viewed as a company-wide issue, not solely an HR issue. However, this also presents a challenge to HR directors, who must become effective at strategic partnerships in order to be perceived as competent and capable of engaging in collaborative risk management. For too long, HR has been viewed as a function of the organisation, rather than a strategic management partner, but this must change if the organisation is to determine the strategic direction of the business and identify the emerging leaders to drive it forward. It is, therefore, essential that HR directors develop the gravitas to work with business leaders across all areas of the business and gain the trust and respect o the board. Only this way will they begin to be viewed as a peer to other directors, rather than a function or advisor to be used or ignored at will.
FIVE TIPS FOR SUCCESSION PLANNING & TALENT MANAGEMENT
1. Determine which roles drive business strategy
2. Identify individuals with the skills to step into the position
3. Create a pool of skilled junior employees and provide development opportunities to set them in the talent management pipeline
4. Ensure HR has a genuine voice at a senior level and the executive board is engaged with the process from the start
5. Plan for all risk eventualities associated with leaders leaving the business.
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