CHROs Struggle to Develop High-Quality Leadership Talent
“Chief Human Resources Officers (CHROs) are facing a number of emerging challenges, including unparalleled transparency and public pressure, increasing automation and digitalization changing the skills and competencies that are required for success, and new generations entering or leaving the workforce,” said Sari Wilde, managing vice president in the Gartner HR practice. “In order to succeed, organizations must have a quality bench of leaders to continue driving business outcomes while leading the organization into the future.”
To ensure a high-quality supply of leadership talent as well as bench strength and performance over time, organizations need to address five fundamental succession risks:
Vacancies cause time-critical leadership responsibilities to be neglected
Leading organizations recognize that no candidate may be a 100% match; instead, they focus on appointing a best-fit leader who demonstrates the fundamental skills required and pairing them with other leaders.
“Complementary leadership” — the intentional partnership between one leader and one or many leader partners to share leadership responsibilities based on complementary skill sets — enables organizations to fill critical skills gaps dynamically at speed and increase success. Gartner analysis showed organizations who use complementary leadership realized a 60% increase in team performance and a 40% increase in leaders’ own performance.
Successors are often underdeveloped
A recent Gartner survey showed that 81% of HR leaders cite lack of readiness as a top reason that a high-potential candidate was unable to fill leadership positions. Ensuring successors’ preparedness is more difficult today than ever before due to increasingly shorter tenures at organizations, the rise of the gig economy, generational shifts in the workforce, and leadership roles that are constantly changing.
HR leaders need to ensure that their succession pipeline prepares candidates to execute against current as well as future business needs. Organizations can use scenario planning to identify likely future experiences that executives will need to address as the company evolves.
Succession planning based on existing roles misses the mark on future business needs
The average organization has gone through five enterprise-wide changes in the past three years, and 73% of organizations expect more change initiatives ahead. However, HR’s succession management plans usually focus on existing leadership roles, failing to anticipate the leadership demands of evolving business priorities.
Progressive HR functions take a demand-driven approach to succession management that focuses on planning for future leadership needs. Planning for future leadership roles has almost double the impact on leadership bench strength as planning for existing leadership roles, however, only 15% of executives rate their HR team as effective in doing so.
A homogeneous pipeline can damage company culture and performance
Many organizations still struggle with a lack of visible diversity across their leadership teams. Women held only about 27% of senior management roles in S&P 500 companies in 2019. Racially and ethnically diverse employees account for only 13% of all senior leadership positions. A recent Gartner survey found that 88% of Diversity & Inclusion leaders identified “Promotions and/or Succession” as one of the talent processes most susceptible to bias.
As evidence continues to mount that diversity improves culture and performance, organizations have realized that a homogeneous succession pipeline poses significant risks to the bottom line. In 2019, more than half of heads of D&I identified influencing succession planning efforts as a top priority. Decoupling the successor’s role from the candidates themselves and considering the qualifications first and the candidate second is one tactic leading organizations are employing to diversify their pipelines.
Failure to provide transparency around succession management disengages employees
Gartner research found that 71% of employees think employers should increase transparency. The companies that have responded and created a culture that allows for open conversations, awareness and psychological safety see manifold benefits — more customer brand loyalty, more profits and a superior employee experience.
The same principle holds true for succession; informing candidates of their potential next role can facilitate targeted development efforts, increase their readiness to take on that role, and ultimately drive business results. Organizations must consider their corporate culture and employee needs to determine how best to implement transparency around succession plans.
Additional information is available in the Gartner report, ”Five Succession Risks That Can Derail Your Leadership Strategy.”