As technology continues to disrupt the way we all do business, a new leadership question has surfaced: What does all this change mean for business transition planning?
Though many traditional companies have embraced the need for change in their functional leadership, few have established business transition plans that put technology and transformation at the center of the process.
But for companies to survive, they must transform to transition. In order to do that, you need to adjust for today’s workforce and modernize their succession planning.
In 10 years, the average CEO will be someone who grew up with smartphones and social media playing a critical role in their day-to-day lives. These leaders will be the ones who make legacy business models obsolete.
In addition, executives cited a lack of adequate leadership as a major impediment to achieving their business transition goals, according to recent research.
Only 35% of these executives said they have the talent now in leadership positions to sufficiently address their leadership transition needs.
Adjusting for today’s workforce
The digital economy has placed unprecedented pressure on many companies. The workforce and its expectations are drastically different and will continue to change. The traditional approach of “replacement planning” for open roles or “moving up the hierarchy” won’t meet business growth priorities, satisfy employee engagement and development needs, or create a sustainable next generation of leadership.
As you evaluate how to incorporate workforce changes into your transition planning strategy, ask yourself the following:
1. Have you identified your talent and skills shortage, and are you actively developing your people?
Gaps in leadership capabilities spell trouble for future growth. This leadership gap is growing wider and wider as existing leaders are not equipped to lead a diverse workforce and the incoming millennial workforce does not yet have the skills and capabilities necessary to lead at these levels.
It is imperative to include both the identification of future skills and capabilities needed, as well as development, in your succession planning approach in order to narrow this gap.
This is an opportunity to grow and leverage learning programs to actively grow your talent. Otherwise, a company will struggle to proactively meet future growth demands.
2. Are you leveraging all five generations of talent?
For the first-time in history, the workforce is comprised of five generations working side-by-side. A new generation of executives is moving up through the corporate ranks. Millennials already make up the largest group in the workforce, and they hold nearly 20% of executive positions. In addition, people are living and working longer. We have never in history employed as many aging workers as we do now. Careers just don’t look the way they did before.
It isn’t uncommon to see a millennial employee managing someone who is close to retirement. And, many organizations focus on just the millennials. However, it is more about the dynamics of these five generations, who have different levels of digital capability. There are meaningful differences in how these generations view technology, processes and digital transformation.
This creates an opportunity for things like cross-generational mentoring and greater diversity and collaboration. It calls for increased transparency about career growth and future roles.
3. Are you considering the evolved employee value proposition?
Today’s high performers have a better understanding of their own value and are heavily recruited, especially those with specialized skills. Next-generation leaders expect more mobility across an organization, as well as transparency about their potential and career growth.
Companies are shifting to continuous performance management, and there is a need to manage individual differences in performance found across different employees working in the same group.
Managing differences in employee contribution is critical to maximizing company performance.
And employees are more comfortable now moving on from organizations rather than having a “lifer” approach to their career. The average tenure in a professional job is now just six years.
Succession and career development play a pivotal role in this the “new” employee value proposition. A robust and transparent succession plan can help you retain employees, plan for future growth and narrow capability gaps.
4. What is needed for your organization to start leveraging data and predictive analytics to build your leadership bench strength?
Organizations who leverage quantifiable metrics and benchmarking in their workforce outperform those who don’t.
Business owners need to know who their people are, as well as what skills and capabilities exist or are lacking, and make key business decisions that are based on real-time, factual data versus the age old “gut feel” approach.
Also gone are the days of large binders full of excel spreadsheets that are outdated as soon as they are printed.
Modern succession planning should be leveraging technology, real-time data analytics and data insights in order to build a bench that can help organizations grow and sustain their success.
Organizations need to build a sustainable model that incorporates data into the methodology of building leadership pipeline.
Don’t let your organization avoid using data to drive decisions. This includes looking at data around flight risk, employee aspirations, mobility and agility.
5. How is your succession strategy linked to your strategic objectives and financial performance commitments?
Organizations who are most effective at building a sustainable leadership pipeline modernize their succession planning by embedding it with their business strategy.
Simple replacement planning will no longer work.
There is a significant difference between a succession approach that is more about replacement planning, versus one that is driven by strategic objectives, predictive analytics and a focus on investing in future leadership talent now.
Companies need to look at growth targets, financial commitments, upcoming market expansion plans, etc., and then proactively structure their pipeline of talent accordingly.
How Wipfli can help
When considering the changes that come with digital and workforce transformation, carefully choose the assessment methods that enable this change and support succession planning.
The leadership gap that exists has the power to cripple growth and put your organization at risk of not achieving strategic priorities. It can also result in expensive costs related to external hiring, lower employee engagement, higher attrition, and overall talent management challenges.
At the end of the day, succession planning must be tied to business results, used as a way to empower and build leaders, and, most importantly, tackle the pending leadership gap facing organizations across all industries and regions.
Work with our Business Transition Group to put the big binder away and shift your thinking toward a modern succession model, supported by insightful technology and positioned to enable leadership growth and a sustainable workforce.
We provide objective and customized advice to help you achieve your transition goals. Learn more at wipfli.com/BusinessTransition.