The biggest mistakes in succession planning

The evidence suggests that we are struggling to develop leaders and to have successors identified within organizations. A worrying survey reveals that 58% of organizations report a significant shortage of leaders for key positions (PWC, 2013) and almost a third are not sure their leaders have the skills needed to carry the business forward (Kiddy & Partners, 2020).

HR directors are well aware that weak succession planning is bad for business. Unplanned changes in executive leadership can cause a significant drop in share price and hurt organizational performance. In addition, given the increased risks associated with external appointments to senior roles, organizations expect to rely more on internal promotions for key positions in the future.

Clearly, there is work to be done to strengthen internal talent pipelines. Identifying who has the potential to be a future leader in your company is one of the biggest challenges HR professionals face.

Understanding and identifying leadership potential is fundamental to this. This short article presents the main challenges and associated pitfalls that every talent management professional should be aware of and address in their talent management practices when it comes to identifying future leaders.

1. Choosing your future leaders based on past performance: Equating current (or past) performance with future capability is a mistake. Only 30% of high-performing employees also have high potential (Martin & Schmidt, 2010), yet many organizations base their decisions about future leaders largely or exclusively on evidence of past performance. The future demands on leaders will be different, and what worked in the past will not necessarily be as effective in the future.
2. Basing pipeline decisions on informal management views: Informal, unstructured assessments of an individual’s leadership potential allow biases, stereotypes and assumptions to determine high-potential talent pools.

Internal candidates are often overlooked, labeled because of others’ fixed assumptions about their ability, and biases such as the so-called ‘like me’ bias can lead to favoritism toward candidates who resemble existing leaders in their values and habits, beliefs, and demographic and cultural variables.

3. Neglecting the impact of your organizational context: Many assessments of leadership potential neglect the importance of context. They evaluate an individual’s characteristics but fail to consider them in relation to the critical question: potential for what?

Performance is context-specific, so a leader who succeeded in one context will not necessarily be the most effective leader in another. Assessing leadership potential must consider how an organization’s external environment, and the strategic, operational and organizational responses to it, will challenge its leaders in the future. You must then determine the mindsets and skills leaders need to adapt and succeed in each unique environment.

4. Failing to support individuals in realizing their potential: once identified, potential is not realized automatically. In fact, some studies claim that 40% of high-potential promotions end in failure (Martin & Schmidt, 2010). Individuals need the opportunity to stretch, learn and develop if they are to realize their potential. A leader’s potential will only be realized if the right conditions are created, placing the onus not only on individuals but also on organizations to create those conditions.

We must recognize how much organizational movements and their context affect what it means to be a high-potential professional for a given company, always looking at its management model, culture, strategies and business needs. There are many myths we need to clear up and raise awareness about in conversations with top leadership regarding succession mapping and the view of potential, especially now, when we are in a period of intense organizational transformation.

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