In the Industrial Economy, succession planning was about ensuring continuity at the top. It was about staying the course, not rocking the boat. Stability was the goal. Executives were often judged against their predecessor’s strengths and groomed to follow in their footsteps.
In the Connected Economy, succession planning is about identifying and developing top talent across the entire organization. It’s about enabling diversity to flourish and ensuring leaders are equipped for future challenges, not history.
Succession Planning Needs to Assume Strategic Importance
According to Deloitte’s 2015 study of Global Human Capital Trends, high-performing companies spend 1.5 to 2 times more on leadership than other companies and reap results that are triple or quadruple the levels of their competitors.
However the same study reveals that far too few organizations are making succession planning the strategic imperative it needs to be in a talent-driven economy, with 51 percent of respondents admitting their succession programs were weak or non-existent, and only 10 percent describing their programs as excellent.
Diversity in Succession-Planning
One of the key objectives of any succession planning program must be to identify and develop diverse talent to assume the leadership roles of tomorrow. A globalized economy requires global leadership, and a growing about of evidence is emerging to support the development of diverse leadership teams.
A McKinsey study of European and Asian businesses revealed that companies with a higher-than-average number of female executives were as much as 47% more profitable than their competitors.
A study by the American Management Association found that companies with senior managers from non-European descent reported sales growth 13% higher than their competitors.
Moving from Diversity to Inclusion
Succession plans must also embody a corporate culture that values and embraces the unique strengths of diverse candidates, rather than just identifying candidates from minority groups which conform to the status quo.
The value of having more women in leadership positions is compromised if you only promote those women who behave like men. Similarly, talent from overseas is less valuable if it is judged on its ability to conform to US thinking.
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Nicole R Brown
Vice President, Go-To-Market and Operations
Pearson English Business Solutions