The successful attainment of an organisation’s strategic intent ultimately depends on robust execution. This in turn is largely influenced by the organisation’s ability to access a sustainable supply of the best possible leaders, both now and in the future. Confronted by continued economic pressure, increasingly competitive markets, and escalating stakeholder scrutiny of their leadership bench-strength, a growing number of organisations globally are realising that their future success will be severely compromised without the requisite leadership capability and capacity.
Despite widespread acknowledgement of the importance of leadership succession optimisation coupled with an increase in associated enabling investment, a significant number of business and HR executives believe that their organisations’ efforts to produce a future supply of talented leaders are failing to deliver the desired outcomes. According to Deloitte, only 14% of the more than 7 000 respondents surveyed for the annual GlobalHumanCapitalTrendsReport2016 believe that their organisations are “strong” at leadership succession planning, indicating a looming leadership capacity deficit.
Similarly, only 15% of organisations participating in the Development Dimensions International Global Leadership Forecast 2014/2015 rated their future leadership bench-strength as strong, representing a decrease of 3% from the 2012/2013 Forecast. A study conducted by KPMG in partnership with global research firm Brandon Hall Group revealed that the top-ranked risk identified by participating organisations was “an insufficient pipeline of future leaders”.
In the same study, when asked how effective their current succession planning processes were, over 39% of these organisations responded that they either had no succession planning process or that their existing process was not at all effective. Furthermore, only 26% were of the opinion that their leadership succession planning was “extremely effective” or “very effective”. Such research findings serve to highlight the basis for the prevailing crisis of confidence in leadership succession planning and management practices that has emerged in recent years. They are also symptomatic of a range of shortcomings associated with contemporary leadership succession programmes, most notably:
Managing leadership succession in isolation.
Failure to translate strategic priorities into future leadership capabilities.
Reliance on performance as the sole predictor of future potential.
Subjective and inconsistent definitions of potential.
Reliance on generic leadership development programmes.
Poor leader transition support.
Lack of robust succession governance and oversight.
All of the above give rise to a range of succession-related risks, the most impactful of which include inter alia the risk of critical leadership positions remaining vacant for extended periods; appointed successors being ill-prepared to take on the responsibilities of their new roles; derailment as a result of poor on-boarding and assimilation into the new roles; and the misalignment of individual capabilities with position requirements. If left unattended, such risks can have dire implications for the effectiveness of leadership successions, causing damage to careers; severely compromising the future supply of leadership talent; and ultimately, undermining organisational performance.
Against the above backdrop of prevailing crisis of confidence in leadership succession planning and management practices, the purpose of my chapter is to suggest how organisations can address the challenge of becoming future-fit in terms of their requisite leadership capability and capacity, considering both the demand for and supply of leadership talent, with the main emphasis on the latter. My chapter covers the following topics: The move in talent-savvy organisations towards a more proactive, strategically aligned leadership talent approach; understanding leadership talent demand in an increasingly dynamic context; defining leadership potential; predicting future potential in a VUCA world; [progress] towards a refined dimensional structure of leadership potential; and key considerations when identifying potential. »