Are we on the brink of a Leadership Crisis?
Daily news has been flooded with high profile CEO exits from large companies. While some of these exits were planned, most of the CEO turnover is abrupt, attributed to unsatisfactory company performance. Hyper competition and shareholders increasing focus on short term gains have made the CEO job tougher than ever before, CEO turnover is on a rise globally.
A leader influences company culture and impacts the organizations strategic constituencies that lead to better or worse business performance. Hence, it is strategically important to choose the most competent leader.
Companies must have a leadership pipeline in place that is ready and ...view middle of the document...
Successful organizations look at succession planning as an ongoing process and not a standalone event. It takes time to identify potential employees and to develop their competencies that can be effectively employed to lead the organization.
When incumbent leaders leave critical positions, a talent pipeline that is not only knowledgeable of the tasks and responsibilities ahead but also competent to lead the organization minimizes ‘succession risk’. Investor confidence is then augmented and business risks reduced.
A structured plan reduces uncertainty, minimizes overall business risk, discourages internal politics and retains top talent within the company with a strong focus on performance and development.
The benefit of succession planning is not restricted to only large cap organizations. It is as beneficial in large organizations as medium and small enterprises.
Internal employees will accept the succession plan as a part of their own development needs, if carried out objectively. External hiring sends out a signal that developing leaders is a difficulty in the organization and the internal talent bench is not good enough. Limited promotion opportunities lead to lower morale and high executive attrition.
The committee handling the succession planning must include key stakeholders. While the ultimate responsibility lies with the board, the CEO input is crucial. Succession planning must be discussed regularly at executive meetings. Leadership commitment is a must as it increases employee buy-in and reinforces the importance of the process. HR provides the critical support needed throughout the planning process
Key steps include:
* Decide the strategic goals of the organization
* List down the essential competencies that would be required by future leaders to achieve these strategic goals
* Assess current employee competencies
* Develop competencies through training, mentoring, coaching and delegating increasingly complex assignments to potential employees that give them a chance to manage the entire organization
* Reviewing the development of internal candidates is a helpful feedback mechanism that tracks progress and aims to improve the process.
It is important to distinguish between historic performance and future performance potential. Skills and competencies needed at different hierarchical levels vary; hence, care should be taken when evaluating employees for promotional opportunities.
Also, benchmarking internal talent pool with the external talent available will not only eliminate a myopic outlook but also expose the organization to richer expertise that would be needed.
For e.g. there is 3 tier mentoring process at Infosys-Initially, the company has identified 400 leaders on the basis of several parameters: their performance throughout their tenure with the company being a prime criterion for selection.
Tier-1 has about 45 executives and each of the leaders undergoes exhaustive...