Cappfinity recently partnered with Stepping Out from the Top Team, to discuss the growing need to refresh succession planning, why stepping out conversations are often regarded as taboo and what we can do to change that, as well as the need for a more balanced approach to stepping in and stepping out at the right time.
Hosted by Celine Floyd, Co-Director of Cappfinity’s Talent Practice and Oliver Johnston, Founder of Stepping Out from the Top Team. They were joined by esteemed talent leaders Johanna Tross, HR Lead at Pinsent Masons and Teresa Kilmartin, Chief People Officer at Irish Life/Canada Life Group.
Why does succession planning need a refresh?
Deloitte reports that 46% of transitions are regarded as failures or disappointments and Harvard Business Review state that $1 trillion each year is lost from not getting leadership positions right.
This is hardly surprising when we consider that 74% of leaders moving up into the next level of leadership feel unprepared (McKinsey & Co). This suggests that the transition to senior leadership positions is not managed in the right way.
Succession planning is about managing transitions effectively – by helping senior leaders to step out successfully at the right time and having the best talent ready and prepared to step in.
Why is sustainability of leadership so important?
Sustainability of leadership is important because our leaders are there to navigate the ship. They surround themselves with people who share their perspective, but also test and challenge their business decisions to ensure the right choices are made.
Despite the clear impact of poor leadership, many organisations fail to give enough recognition to the impact of senior leader transitions. People often think that the most senior transitions are a one-off event, rather than something that is ongoing. They therefore do not invest in ensuring a proper process or mechanism is in place to make sure this happens well.
Oliver explained that for many organisations, stepping out at the end of a successful career remains unmentionable. In a law firm for example, a leader’s final settlement is based on the profit of the last three years, so they’re scared to mention stepping out in case it negatively impacts the settlement they receive.
What information is helpful for effective Succession Planning?
The retirement of one leader and hiring of a new one needs to be visible for all parts of the business. Teresa explained that when it comes to succession planning people often assume it will be an internal candidate that takes the top job. There’s nothing wrong with an internal candidate taking the position, but we should also have an external candidate to benchmark internal talent against.
We also tend to consider past performance only rather than future potential. This goes for existing leadership as well as potential new leaders. Understanding a leader’s strengths is the best indicator of potential as we know what an existing leader is capable of, as well as what to look for in the next leader.
What needs to be done?
Keep talking to normalise conversations around stepping out. Ask leaders about their ambitions, their aspirations and what’s important to them to make these topics discussable, rather than playing a guessing game later. Never assume what a leader wants to do and don’t make decisions based on age.
One person could be 52 and want to step out and another could be 75 and still want to carry on. So, don’t be binary around retirement. A previous leader could still be useful to the organisation in other ways because of the knowledge they have, as a consultant, for example.
Approach stepping out from a human perspective, keep the person and their needs at the front of mind. People can become ill going from a structured high-pressure environment to something much more relaxed. Keep talking to gauge how to best manage the transition of them stepping away from their position.
At Pinsent Masons, Jo explained they have implemented a ‘Next Steps Programme.’ Having a programme prevents stepping out from becoming a difficult conversation because being able to signpost to an existing programme makes things less awkward than asking for a separate conversation.
When something is discussed verbally and regularly it takes a lot of the fear and worry away from it.
How can a strengths-based approach to leadership pipelines help?
For some leadership roles, in traditional law firm structures for example, leaders are elected rather than selected. If an individual knows their strengths, they will feel empowered and motivated by what they are naturally good at and enjoy regardless of whether they are then selected. This pays off for the organisation too, as their strengths can be matched to new opportunities.
Strengths are not about age, gender, race or disability, therefore assessing for strengths for leadership positions will remove the risk of bias in the process and ensure they are judged on the requirements of the job only.
Strengths are also the best indicator of potential, because selecting future leaders is not about what they are capable of today, it’s about the strengths that will be needed going forward and having those adaptable and curiosity strengths to be able to adapt to what is needed in the future. That is how we will ensure true sustainability of leadership.
You can watch the full webinar here. You can also find out more about how Cappfinity can help your organisation with succession planning by emailing email@example.com