Every organisation, regardless of size, purpose or industry needs talented people with the competencies, skills and behaviours to execute strategy today and in an increasingly unknown future.
Gone are the assumptions about organisational stability and long-term strategic planning. Business strategy is more and more a series of options along a continuum. You can plan, but events will occur that you cannot predict. Companies need to develop the ability to respond. This ability means having a carefully thought out array of responses to be executed – when appropriate – when the opportunity presents or the future becomes clearer. In essence, that is the context that sets the scene for the building of the leadership pipeline and the associated management of talent.
The need for clear focus on ensuring strength in the leadership and talent pipeline – and one that is systemic, flexible and reduces risk – is immediate.
A study conducted by leading management consultants Booz Allen Hamilton as a joint initiative with the Business Council of Australia, found Australian CEOs on average spend only 4.4 years in the position. In 2002, 60% of the CEOs were hired internally. The study, focused on all CEO turnovers of Australia’s top 200 ASX companies in 2002, found that in Australia, succession from within continues to be the main source of CEO talent, making the need for best practice succession planning all the more pressing.
Organisations are highly dependent on the talent, knowledge, skill and commitment of their people. Their clients and other key stakeholders rely on it. Enhancing the Employer of Choice value proposition is something firms cannot be complacent about and need to continually ensure its relevance. The ability to attract, retain and develop talent is critical to business success.
Successful leadership is when talented people are highly motivated, understand exactly what they have to do to create value for clients, colleagues and the firm, can see the results, and have a real sense of belonging and ownership, and wholeheartedly want to stay.
It is easier to retain high performers when they have a clear message that they are valued and being groomed. It is even more critical to provide the right experiences.
In a high performance and inclusive culture, talented and high potential people should feel that their interests and those of the firm are much the same. If so, they will naturally try to do what is best for the firm’s current and long-term welfare, just as they would at a personal level.
They should be self-challenged and motivated around a clear purpose. Their motivation is not primarily about financial reward – after all the best people can always get that. It stems from the sense of having made a difference, doing interesting and challenging work that has a purpose, making a particular choice at a challenging moment with professional integrity; and having done something of which they can be proud.
STEPS FOR A STRONG LEADERSHIP PIPELINE
ASSIGN – accountability starts with the CEO and devolves to managers at all levels.
IDENTIFY – use consistent objective criteria to identify and source high performance and high potential candidates for the talent pool. Validate nominations across the organisation.
ASSESS – understand the people who make up the talent pool in terms of their strengths, potential, personality derailers and drivers plus how these may meet future needs.
DEVELOP – provide the right development, experiences, transitional space, coaching plus actionable feedback to assist the individuals in the talent pool work toward an enhanced capability. Be transparent.
FORECAST – keep the future in mind in terms of business needs, individual potential and development.
EXECUTE – action is needed with discipline and focus to produce ongoing real results.
TRACK – monitor, measure and reality check to ensure that the processes continue to develop a sustainable leadership pipeline over time.
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Holistic approachDeveloping the leadership pipeline is the processes of identifying the key people with the ability to take on greater responsibility in the future, as well as the strategies associated with gap analysis, reduced risks, recruiting,
on-boarding and developing.
It needs to be broader than a pure ‘succession’ approach so that it touches all aspects of talent management – from sourcing to retention; from assessment to people management; from development to deployment. It is equally important that the executive group is involved and that there is a holistic approach so that the sharing of talent or deploying talent against business goals plus the identification of crossfunction or offshore moves can act as a development and risk prevention tool.
The management processes should ensure that the executive group has an ‘informed’ view of key contributors three to four levels down in the organisation. The way to do this is to move away from replacement models to talent pools.
Know and retain the right talentIn many ways this should be simple. The assumption often made is that if you have a good group of talent, you will automatically have strong backup for newly created roles or roles that become vacant.
The problem is, of course, that high potential doesn’t necessarily translate into high performance at the next level; and high performers don’t necessarily have the potential to take on broader responsibilities.
This is an important point. Set out what is meant by high performance, and communicate it. When you look at performance, crosscheck it against the potential to take on a greater responsibility in the future. Also crosscheck performance against cultural values to ensure that the people who produce results are not causing fault lines in the culture. What would you do with the high performer or revenue producer that tests the culture or values of the firm? It often takes a lot of effort to help them adjust, but the inappropriate behaviour cannot be ignored.
It is useful to think about talent in terms of both performance and potential and to really think about what development and retention strategies are needed.
1 High performance and high potential individuals need accelerated development, strong reward and opportunities to keep them learning and growing. They are often the targets for headhunters so giving them a very personal reason to ‘stay, belong and contribute’ is necessary.
High potential individuals who are not yet at full performance are often at this level because they are new in the role. With coaching, training and experience their performance increases. The retention and development connection comes into play. Yes, they value reward and career advancement, but they also appreciate the investment in their learning and attach a personal value to it.
People who are high performers but will not progress to another role are needed in the business. Their contribution should be recognised. They could be involved in teaching others. You need to make sure they are productive and motivated and do not feel they are being taken for granted.
Low performers with low potential need analysis. If it is that the person is in the wrong role or at the wrong level there may be some action needed to retain the person. If not, it is better to part ways.
One of the benefits of globalisation is the placing of high value on meritocracy, knowledge and innovation. These are the factors that do create a level playing field and do travel ‘well and intact across cultural boundaries’. They are the factors that promote diversity – in fact, not just diversity in the ideal. Merit, shared knowledge, innovation and diversity are tightly connected.
Discussions on talent are opportune to also do a ‘reality check’ on your diversity profile and how this connects to your client, business and community activities.
Diversity is not only limited to gender or cultural background, but also of experience, style and thinking. It is important that the leadership talent pool reflects the diversity of the client base and of the communities in which the business operates.
Professor Amanda Sinclair from the Melbourne Business School points out that experiences in ‘crossing borders’, whether they be physical, cultural, linguistic, socioeconomic or emotional borders, are a key ingredient for successful leadership in today’s global world
2. This experience also helps produce ‘diversity aware’ leaders.
Do not lose sight of the value of these ‘border crossing’ experiences – either locally or globally – when you look at how you can develop future leaders.
“People who are high performers but will not progress to another role are needed in the business. Their contribution should be recognised.”
THE PERFECT CV FOR A GLOBAL LEADER
Envisioning, empowering, energising, designing and controlling, rewarding and giving feedback, team-building, outside stakeholder orientation, global mindset, tenacity, emotional intelligence, life balance and resilience to stress are all capabilities for the future global leader. In more detail they are:
- Articulating a compelling vision, mission, and strategy with a multi-country, multi-environment, multi-function, and multi-gender perspective that connects employees, shareholders, suppliers, and customers on a global scale.
- Giving workers at all levels a voice by empowering them through the sharing of information and the delegation of decisions to the people most competent to execute them.
- Energising and motivating employees to actualize the organisation’s specific vision of the future.
- Creating the proper organisational design and control systems to make the guiding vision a reality, and using those systems to align the behaviour of the employees with the organisation’s values and goals.
- Setting up the appropriate reward structures and giving constructive feedback to encourage the kind of behaviour that is expected from employees.
- Creating team players and focusing on team effectiveness by instilling a cooperative atmosphere, building collaborative interaction, and encouraging constructive conflict.
- Making employees aware of their outside constituencies, emphasising particularly the need to respond to the requirements of customers, suppliers, shareholders, and other interest groups, such as local communities affected by the organisation.
- Inculcating a global mentality in the ranks – that is, instilling values that act as a sort of glue between the regional and/or national cultures represented in the organisation.
- Encouraging tenacity and courage in employees by setting a personal example in taking responsible risks.
- Fostering trust in the organisation by creating, primarily through example, an emotionally intelligent workforce whose members know themselves and know how to deal respectfully and understandingly with others.
- Articulating and modeling the importance of the need for life balance and the long-term welfare of employees.
- Paying attention to work, career, life and health stress issues, and balancing appropriately the various kinds of pressure that life brings.
Source: The Global Leadership Life Inventory by Manfred Kets de Vries, Pierre Vrignaud and Elizabeth Florent-Treacy. (INSEAD Knowledge 2002).
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The next war for talentThis is where further analysis forecasts demand trends. Identify those roles or skills that will be in demand. Note the positions that are difficult to recruit externally and are business-critical.
Look for gaps in the leadership pipeline. Look at key people who may be ‘at risk’ due to plateau, motivation, reward expectations or work-life balance. Make sure you can retain high performers who may be headhunted. Examine your
turnover statistics.
It has been noted that Australia will have a shrinking labour pool. There will be a declining proportion of people entering the workforce in their first job and an increasing proportion of those potentially leaving. Trends are already showing a decline in the proportion of young people, that is, under age 20 in the workforce and there will be a decline in the proportion of the population in the typical working years of ages 20 to 54.
Notions around retirement are also changing. The concept of transitioning from full-time employment is gaining momentum as some people aspire to change the way they participate in the workforce by the time they reach their mid-50s.
All of this needs to be accounted for in the talent planning process.
Retention strategiesRetention strategies do vary. Career structures need to work well, levels of reward and benefits should be well-positioned, the culture should create a good sense of belonging and collegiality, autonomy and a leadership oriented approach in addition to management is a motivator and people want clarity around vision, purpose and execution.
Employer of Choice is more than just the reason why someone would want to join the firm; it should also be the reason for them to stay. Articulating what people regard as the ‘value proposition’ for retention and to achieve a sense of belonging is essential.
Transparency around development objectives helps people know they are valued and the organisation is investing in their career.
Learning experiencesLeadership is intellectually simple, but behaviourally complex. Therefore, experiential development is an important catalyst. Successful people are often intuitive and what they do from moment to moment really cannot be written down. In a rapidly changing environment they constantly diagnose, respond to what is happening and make judgements with choices and trade-off. However, this intuitive or instinctive leadership is really based on accumulated wisdom that has been shaped by experience, knowledge and a set of core values.
Working with executives, I have found that when you ask them to identify the events, situations or role models that have assisted them in their personal development what they highlight are the ‘right’ experiences. That is, challenging experiences that stretch, broaden skills, build expertise, test judgement, give autonomy and promote visibility are the ones that have been most valuable.
It is interesting that this mirrors some research done by McKinsey, several years ago now, when it asked 6000 executives in the top 200 positions at 50 large US corporations what were the most important experiences in their growth paths. The results showed three things dominated: experience in roles, constructive feedback and mentoring.
The right learning is therefore a key vehicle for development. It aims at helping people manage in the moment. The issue is to build a ‘culture of development.’ It can range from making sure emerging talent is given the right developmental activities; or accelerating development for a high performer; or support needed to help a successor make the transition; or seasoned executives given new learning to remain current; or giving others an off-shore secondment. Self-discovery and ‘learning communities’ also play a part.
Coaching and transitional spaceOne of the biggest challenges of coaching and feedback is communicating information in a motivating manner. In many ways it covers an entirely different dimension to the performance-related review discussion. It builds on that. It is about actionable feedback on technical and soft skills. It is giving future leaders multiple role models to observe. It is helping them accurately interpret what they see. It is providing support or a safety-net when they are in stretch assignments or roles. It is showing interest in their long-term development.
It is giving support through the ups and downs of learning.
It can be difficult to get through to people – even those who are smart and intelligent – to assess their values, level of emotional intelligence, where skill sets have changed, to make adjustments to how they spend their time or if they are operating at the right level. Effective coaching and mentoring is about giving people behind the scenes insights.
Self-awareness should help an individual ‘look in the mirror and out the window.’ The real catalyst for change will only occur if there is both a cognitive and emotional need to do so.
Executive coaching, if done correctly, helps the individual envision the future and its possibilities while shaping concrete goals and prioritising concrete action. It provides reflection time – something rare within fast-paced organisations.
Executives often need a ‘transitional space’ to help them understand and evaluate their inner theatre that drives their behaviour and actions. They also need help to think about what could derail them from the ‘fast track’ such as narcissism, lack of vision, poor execution or lack of emotional intelligence. It helps them experiment with changes in their leadership in a safe environment and to realise that they do have options and can make choices.
WHERE SUCCESSION PLANNING CAN GO WRONG
Although executives understand the importance of a strong leadership pipeline and succession planning, often the outcomes go off track – here are some reasons why.
FAULT 1 – Inaccurate information and recognition of talent. Where personal relationships and subjective experiences are relied on to identify future leaders what results is a strengthening of the ‘established network’ rather than a broader recognition of talented but less visible or diverse people. By diversity this means not just gender or cultural background, but also diversity of experience, style and thinking. Therefore use a clear set of uniform criteria to assess performance and contribution then search through the breadth and depth of the organisation. Do a reality check within the division, across the firm and at all levels. Avoid the 'halo' effect.
FAULT 2 – Focus only on specific roles. Traditionally executives would select their own replacement as they approached retirement and then started to develop that person into the role. This tends to limit the thinking to within the one business silo and may not ensure development is aligned to business strategy. Focus on, and development of, a talent pool ensures flexibility and more options for all executive roles generally.
FAULT 3 – Poor experiential development. Although development activities are often part of a future leader’s training it is often based on current needs and not future requirements. The right experiences, that is, challenging experiences that stretch, broaden skills, build expertise, test judgment, shape emotional intelligence, give accountability, produce diversity awareness and promote visibility are the ones that tend to be most valuable.
FAULT 4 – Lack of understanding of what is needed for future success. Often there is an assessment of past and current performance capabilities. There are assumptions that the individual’s strengths, style and motivators will automatically carry them into success in a future role. Helping the individual understand what is needed in the future, plus an awareness of their own style including potential personality derailers will be key. Accurate personal insight, actionable feedback plus clear perspective on capabilities may be gained through a coach or mentor.
FAULT 5 – Failure to execute and follow through. Seeing succession planning as an ‘event’ rather than an ongoing process can mean that its execution stalls under the day to day pressures of transactional business. To avoid this the development plan and actions should be integrated into other management systems and responsibilities.
FAULT 6 – Lack of accountability. Like any other critical business strategy, strength in the leadership pipeline needs discipline, focus and commitment at all levels. To ensure its effectiveness, the senior executive group needs to be held accountable with the building of a talent pool as a key performance indicator and be involved in mentoring and talent development across the whole organisation.
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Reality checksSometimes critical positions cannot be filled internally, or an opportunity exists to ‘buy in’ some top talent. The selection process is critical, but so too is the support needed to help these people navigate through the culture, decision-making structure, and relationship networks to be successful. So how you handle on-boarding to assist new people is going to help speed up their effectiveness or reduce the risks of their derailment.
Promoting the wrong person can also cause issues. It is often wrongly assumed that the skill sets in one role will be the same ones that will be needed in the new role.
Sometimes out of loyalty or a sense of compassion the wrong person is left in a role too long. It is better to help them find a better fit in another role or elsewhere. If this is needed, use the organisation’s power with restraint and compassion. It is also critical that people remain relevant in their skills and are given opportunities to adapt or develop new skills.
Business strategy and people strategy does need to be in synch in order to provide the growth opportunities or roles to maximise talent capabilities and
meet expectations.
Executives can rely too much on the same small number of people. In the talent planning processes limit the number of roles a person can be earmarked for to only two. This forces executives to think through the strength, breadth and depth of the talent pipeline.
Executives can incorrectly read signals that key talent have the same career growth ambition, as they would want them to have. Burn-out, boredom, lack of challenge, dissatisfaction with work-life balance or a sense of is that all there is? can effect the most talented. Some work their own way through the slump, while others need help. It is important to watch for the signals and mentor the person through this phase.
ReflectionsThe ‘war for talent’ continues and will continue in the future. Its combatants may change but the battles will not stop. Continue to think through, talk about and decide on actions to build your firm’s talent. The talent pipeline process needs to be continuous and ongoing. Its strength will determine competitive advantage, core competency and corporate distinctiveness.
- 'The Leadership Pipeline', R. Charan, S. Drotter, J. Noel. 2001, Jossey - Boss.
- 'New Faces of Leadership' by A. Sinclair and V. Wilson, 2002, Melbourne University Press.
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