December 13, 2022

Transform how you think about succession planning with a skills-focused approach

Transformational leaders, bosses, coaches, and teachers empower others to seek leadership opportunities, regardless of their role or title. While some people are innately drawn to leadership positions, many aren’t born great leaders and need to develop skills through opportunity and experience. Identifying potential — and nurturing future leaders along their journey — is modern succession planning at its core.

Employees at every level crave a clear career path and visibility into their organization’s opportunities. According to Eightfold AI’s recent report, 70 percent of surveyed employees ranked promotion opportunities as a top priority. While 67 percent of HR leaders rated their internal mobility as highly effective, the findings showed it’s likely to be very selective.

HR has always played a key role in succession planning for top organizational roles. But some Eightfold customers are now seeing the benefit of extending succession planning beyond the C-suite to increase visibility and provide opportunities strategically for employees across the entire organization. 

“We started experimenting with succession planning quite a bit,” Brad Cohen, Senior HRIS Analyst at DICK’S Sporting Goods, said during a case study session we delivered at the HR Technology Conference in Las Vegas. 

“There are a lot of organizations out there that manage succession planning on a spreadsheet. We were able to use AI-driven insights and competency assessments to help inform our succession plans and recommend potential candidates who we might not have been thinking about.” And by taking a skills-based, deeper look into the organization, DICK’S was able to consider additional profiles and increase its pipeline diversity.  

Recently, I also spoke about a skills-forward approach to succession planning with Maria Howard, Partner and General Manager at Heidrick Digital, and Nehal Nangia, Director of Research at The Josh Bersin Company. We discussed how to transform succession planning from a moment-in-time, manual process into a dynamic mapping of talent and their skills to long-term business goals.

Based on some key takeaways from the conversation, here’s how organizations that effectively identify leadership potential in top performers are meeting strategic business goals faster.

Make succession planning a business initiative

Making succession planning a shared responsibility between HR and the rest of the organization is an excellent incentive for creating a more inclusive, strategic, and scalable process. Howard shared how the executives at a fintech company she advises are rethinking succession planning with a metrics-driven approach.

First, they set a goal of increasing internal mobility cross-functionally from 5 to 30 percent in the next few years. “They threw away all the rules in the playbooks of how they do succession today or how people get jobs in different parts of the organization,” Howard said. 

They then designed a process around the problem they were trying to solve by increasing mobility, reducing attrition, balancing their build-versus-buy strategy, and increasing diverse talent. “Those are the conversations stakeholders want to hear,” Howard continued.

Consider a broader pool of talent

Undoubtedly, most jobs will change in the next decade. For example, consider careers that have emerged in the past decade, like autonomous design engineers or telemedicine healthcare professionals. 

Even the role of CEO has transformed in recent years. Howard, who works in succession planning and leadership development as part of the leadership team at Heidrick, said executives today have more varied backgrounds than ever. 

Those with experience in strategy, technology, and risk management are joining the CEO ranks alongside those with traditional backgrounds in finance and operations. 

“When companies have a more expansive view of what success looks like at the very top, it only intensifies this larger trend of different career paths across all levels,” Howard said. “How do we plan for the next five years? First, I think we have to tap into diverse talent pools and diverse experiences.”

Transform how you think about succession planning with a skills-focused approach

“If we start considering a broader pool of talent capabilities now, that will help drive our strategies forward,” Howard continued. “We have to look closely at potential and impact rather than role or rank.”

Organizations that don’t start the leadership development process now may inevitably fall behind simply because they limit their definition of leadership success. So, how can you begin to identify and develop future leaders today?

  • Align talent needs with business goals. First, you need a sense of how your organization is evolving and the strengths and weaknesses of your talent. Partnering with business leaders to understand current and future priorities can inform how you plan your workforce to meet and accelerate those business goals. 
  • Understand your skills. Gaining a deeper understanding of the strengths and weaknesses of your workforce requires a deep dive into skills and capabilities across your organization. Then, use that knowledge to inform talent decisions, including hiring, internal mobility, and development decisions. 
  • Lean into potential. Adopt a “hire for potential” mindset — someone who hasn’t done the job before may have the potential to succeed in that role. (Talent intelligence powered by deep-learning AI is uniquely capable of helping organizations make workforce decisions based on potential by understanding a person’s strengths, aptitudes, and likelihood to succeed.)
  • Invest in upskilling. Once you identify business goals and find the skill gaps within your bench of future leaders, create a development plan for them. 

Identify potential leaders for all critical roles

Succession planning can no longer take place twice a year, be managed in a spreadsheet, and be limited to “CEO plus two.” Instead, organizations must plan much more frequently to stay current with the evolving nature of jobs and work. Traditional cycles that only happen once or twice a year make it hard to adjust dynamically to new information.  

In addition, employees are demanding a lot more from their employers. As a result, they are empowered and are more likely to leave without a clear growth path through lateral internal moves or traditional succession planning. So as part of delivering a superior employee experience, organizations need to improve their transparency. 

“Transparency is one of the hallmarks of organizations who do succession planning effectively,” Nangia said. “It enforces that their skills are valuable to the company, which helps you retain top talent and mitigate turnover risks. As situations change and leaders retire, you need to know that the process is fair, objective, ethical, and robust.”

Planning for the future behind closed doors, without empowering employees to be part of the process, could get in the way of achieving these ambitious goals. Without an inclusive succession plan, many talented people — and potential future leaders — are at risk of leaving for better opportunities. Talent leaders and their business partners need to have a stronger pulse on the organization, understand who is excelling and who is at risk of leaving, and then make a plan to nurture them.

“I talked to the head of executive talent the other day at a big financial institution, and she said, ‘What keeps me up at night is that I don’t know who is leaving,’ ” Howard said. “ ‘We’re going to be those people who wish we could have cultivated the leaders to grow our organization.’ ”

Then, there’s the question of how to empower middle managers to engage their teams. To have more fruitful career conversations, they need better tools and information to guide those conversations. So rather than chase people out to the parking lot with counter offers, managers need to have data-driven conversations about their careers while they’re still engaged.

Transform how you think about succession planning with a skills-focused approach

“At the heart of it, data democratizes the process by building the bridge of neutrality when someone comes to you asking how to get better, get a promotion, or get a job in another part of the organization,” Howard said. “If we have data at the heart of that discussion, it becomes much easier to have a much more empowering conversation.”

Use data to explore role-based and scenario-based planning

Having tunnel-visioned definitions of job descriptions doesn’t help organizations — and could even hurt them by limiting potential leaders who could excel. Instead, HR leaders should look at everything the role could entail and map out scenarios where different leaders would excel. 

Again, it’s not just a people process. It’s more than knowing that certain employees are excellent leaders in their current roles. Organizations need to deeply understand where the business is heading and how individuals can fill those specific needs. 

This way, talent leaders aren’t locked into one bench of potential leaders for a single role but instead have access to a team of people who could be considered for various scenarios relating to those capabilities. 

“The outcome is not about who leads, but how the business operates,” Howard said. “You can’t plan for scenarios without data to drive an objective process. There has to be a consistent set of information we’re looking at as part of the conversations, so establishing and leveraging data at scale is key.”

Then, as new information becomes available, planning can be dynamic, data-informed, and open to scrutiny. 

“A data-driven digital approach can deliver the goal of effective leadership well into the future even though we don’t know what might come,” Howard continued. “Technology can provide real-time data so that we can spend our time focusing on high-value work in scenario planning, coaching, and development, so we have to shift the paradigm.”

New tools mean a new approach to succession planning

Organizations can look at succession planning differently by adjusting to more scenario-based planning and incorporating talent intelligence, AI, and assessments. 

The kinds of data used to make critical decisions about their future leaders are essential, especially as organizations pivot scenarios, including entering new markets or entirely new industries. They should incorporate organizational data with market data to understand what’s happening in the industry and within benchmark organizations. 

Several technological advancements make the grueling task of breaking down roles into skills both automated and more intelligent. 

“In our experience, one of the biggest barriers that slows organizations down is employee profiles,” Nangia said. “We have to wait on people to tell the system what skills they have or wait for them to update it.”

Nangia explained how different HR tools and systems help organizations take new approaches to succession planning and agile talent management:

  • Skills inference systems read candidate and employee résumés and analyze their roles, experiences, and colleagues. Then these systems can infer skills, dynamically update profiles, and have people validate them.
  • Behavioral assessments help assess soft skills that qualify an individual as a good fit for a particular role. These assessments complement functional assessments that help with skills matching for role-specific skills and provide a holistic view of who organizations should consider for succession.
  • Talent marketplaces democratize access to leadership development and growth opportunities. 
  • Talent intelligence gives the company visibility into people with related or adjacent skills who can develop new skills and move into new roles based on potential.

These tools can unearth opportunities for people to explore career opportunities within their organizations, envision a future, and take steps to strengthen leadership and functional skills. This brings more people into the succession planning process, makes the process inclusive and equitable, and expands visibility into emerging skills. 

“Talent intelligence systems give you visibility into accelerating and decelerating skills in each role, match people with the critical functional skills, and uncover hidden talent pools that you may not be considering in your succession planning process,” Nangia said. “This makes it a bottom-up rather than top-down process by democratizing access to development and growth opportunities, helping organizations identify people with the will and the aspiration to move into critical roles or develop critical skills.”

Transform how you think about succession planning with a skills-focused approach

The shelf life of skills is diminishing — as fast as 2.5 to 3 years in some technical roles — as technology evolves and work changes. Emerging skills will surface in areas that traditional leadership planning may not reach. Especially in a hybrid world, where organizations can’t rely on proximity to choose their next leaders, it’s essential to form relationships and gain deeper views into and across the organization. 

It’s more complex than ever for organizations to predict how skills will evolve, the talent they will need in the future, and what the work will look like when they get there. With the pace of change leading to a “fast-approaching future,” organizations have less time to plan and take action, which requires rapid identification, agility, and execution of talent tactics.

As such, organizations will need to adopt new mindsets around nurturing future leaders and using technology, data, and insights to get a complete picture of the business — and the kinds of leaders who will take it into its next chapter.

Learn more about Heidrick & Struggles’ Heidrick Navigator and The Josh Bersin Company’s Global Workforce Intelligence Project.

Jason Cerrato, Senior Director, Product Marketing at Eightfold AI

Jason Cerrato is the Senior Director of Product Marketing at Eightfold AI. Before joining Eightfold, he was an HCM industry analyst with Gartner and held talent leadership positions at United Technologies for over a decade. Cerrato is the co-host of The New Talent Code, a podcast by Eightfold AI.

Tune into the entire conversation in the webinar, “Succession Planning: How to Identify Potential and Nurture Future Leaders,” to learn more about building a skills-forward succession planning strategy.