Succession Planning When the Future Is Foggy

In a volatile and uncertain economic environment, businesses still need succession plans, and HR leaders are called upon to provide them. According to Evanta’s 2024 Leadership Perspective Survey, succession planning is the second highest priority for CHROs this year. CHROs need an actionable, flexible, and realistic roadmap to identify and develop the next generation of leaders despite an unpredictable future.

In a recent Town Hall discussion, members of the Dallas CHRO Community came together to discuss succession planning in the current economic climate. Maria Konat, Partner & Global Head of Go-To-Market Integration at Heidrick & Struggles led the discussion, and Governing Body Members Vanessa Dupuis, CHRO at Celanese; Courtney Kolar, Chief People Officer at Neighborly; Jonathon Frampton, Interim CHRO at Baylor Scott & White Health; Katherine Neverdousky, SVP, HR, at the American Heart Association; and Shawn Williams, EVP and Chief People Officer at Sabre Corporation served as discussion leaders. 

They led small breakout groups of executives who discussed considerations for succession management in today’s economic climate, how to assess, identify and develop a diverse slate of successors, bringing a succession plan to execution, and the metrics needed to measure success.

Maria Konat of Heidrick & Struggles started the discussion by introducing the challenges to today’s succession planning, many of which are outside executives’ control. From economic uncertainties to geopolitical volatility, and from cybersecurity risk to technological and supply chain disruptions, she noted that “predictability is a relic of the past.” 

The increased uncertainty makes assessing the timing of business shifts difficult. She explained that the hardest problems for the C-suite used to be “what” problems – such as what markets or products – and now, it’s important to focus on the “who” and the “how” to solve problems.

Talent and leadership teams are also changing fast. Konat talked about how there are bigger leadership teams with people in new roles. She cited findings that the average size of the Fortune 100 leadership team has increased by half since 2020 and said there’s been a 21% YoY rise in first-time or step-up to CHRO positions. She pointed out that recent research shows the percentage of brand-new roles HR executives are conducting searches to fill has jumped from 40 to 60%.

In addition, research indicates that three-quarters of executives are “very open” to a job move in the short term. One main reason is that they accepted their current roles for leadership development potential that has not happened. Konat noted that organizations can retain these executives by creating development programs and paths to promotion and including them in succession planning discussions.

Konat also shared that according to a recent Heidrick & Struggles survey around developing future leaders, only 11% of executives are being assessed as part of the hiring process. Assessment data is crucial to feed into leadership intelligence tools that can help provide necessary visibility into an organization’s leadership bench and assist in making strategic leadership decisions.

She also noted that organizations need an integrated talent supply chain, not just a replacement pipeline. They need to act with agility, develop objective and data-driven views utilizing AI and other tools, scale for the organization, and build dashboards for internal and external talent.
 

Key Takeaways from the Discussion

• Succession planning challenges are similar across organizations
  Succession planning processes are currently very manual, with many organizations managing plans in Excel, and CHROs agreed they need better technology. Other executives noted they had some employees prepared for a new role in 3-5 years, but were unsure if their trajectory could be accelerated if the company needs them in 1-2 years. 

One CHRO shared that they had qualified people who are happy in middle management that they need to convince to reach for bigger roles. Some participants have mentorship and “leaders leading leaders” programs to encourage talented employees to stretch for higher roles.
 

• How to increase succession planning visibility and success
  CHROs suggested changing succession planning from a one-time event to an ongoing one, possibly with quarterly meetings where C-suite executives report on progress. Other executives commented that culture plays a huge role, especially on the senior leadership team. Who owns succession planning and how the organization evaluates people are also factors. One executive noted that no succession planning technology would help if the culture, board, and leaders don’t support the process.
   

• What else helps succession planning effectiveness
  HR leaders agreed that succession planning needs C-suite sponsorship, a strategy that identifies critical roles, stability in strategy, measurable goals and alignment on priorities. Accountability meetings should be challenging, intentional, and include discussion on progress. 

As leadership teams start aging out, some businesses are evaluating their leadership development programs and processes and how they can offer more on-the-job learning. One executive noted they are using the 70/20/10 model, which says that 70% of learning happens through on-the-job learning and much less (10%) through formal education. Some HR leaders are creating experience maps, in which they work cross-functionally to map which leaders have experience and in what areas.

• The potential for AI to help with succession planning
  CHROs said that they are at the very edge of AI technology, but are optimistic about its potential. One noted that they need quality input data for AI, and their organization is not there yet with data. 

In the future, companies may use AI for a real-time sense of their talent inventory and where individuals are on the succession pathway. HR leaders believe AI could also be helpful in identifying strengths and gaps and mapping out skills. Embracing AI will be “next world,” they agreed, and one wondered if companies need a talent transformation leader.

CHROs agreed that post-pandemic, organizations need to catch up on succession planning and strengthen their focus. While there has been enormous growth in many companies, a need for more strategic focus on succession planning is a concern. CHROs must consider how the C-suite, technology, and strategy work together to lead to effective succession plans.

For more conversations with your peers on succession planning and other top priorities for CHROs, apply to join a community of your CHRO peers. If you are already a member, sign in to MyEvanta to register for your community’s next gathering.
 

by CHROs, for CHROs
 

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