Pause for a moment and scan your company, department or team – do you recognise the potential successors, the individuals poised to assume pivotal roles within the organisation? Where can they be found? Who are these successors, are they well-prepared to assume leadership responsibilities?
In South African asset management firms, a wave of portfolio managers, COOs, CIOs, and investment professionals are on the brink of retiring. With a few possible exceptions, they don’t see raring-to-go successors waiting in the wings. Some have been searching unsuccessfully for successors for over a year.
Facing these challenges is unsurprising; prioritising succession is a formidable task in any industry, but it becomes exceptionally daunting within the complex world of financial services. A mishandled leadership appointment deals a severe blow to investor confidence and client trust.
If I were to identify a central roadblock – it would be that insufficient emphasis is placed on succession planning. It is not being approached, planned, or executed strategically in light of the new post-Covid-19 challenges, technological disruptions, diversity, equity and inclusion (DEI) challenges, and the evolving future of work.
The same outdated strategy is being applied to a radically different future.
What proved effective in the past is proving inadequate now and certainly won’t suffice in the future.
With over 30 years of experience in executive search within financial services, I frequently hear my clients express their frustrations: ‘We had a succession plan, and it failed,’ or ‘We need to consider so-and-so’s retirement, but…’
In some instances, we meticulously map the market to identify outstanding successors, only for it to be relegated to the bottom of the priority list.
Time waits for no one
Succession planning is not an event; it’s a process that requires plenty of time and consideration.
It requires constant review to consider unexpected resignations and re-evaluation of the incumbents who are earmarked for succession. Putting it off will only deepen the disruption and make the entire effort more costly. The groundwork must start early, fostering a preparedness, transparency, and continuity culture.
Of course, the leadership talent you need at any given time may not always come from within the organisation. Time is of the essence when it comes to engaging with and building relationships with external candidates who enrich your pipeline. One of the best arguments for taking a proactive and strategic approach to succession planning is that it can fill leadership gaps and substantially advance your firm’s DEI objectives.
Transparency is foundational to a strong succession plan. All stakeholders must be informed and confident about your organisation’s leadership pipeline.
By involving employees in the succession planning conversation, organisations put inclusivity into practice and foster psychological safety. In a recent engagement with a senior executive, he voiced his reasons for seeking alternative employment: ‘We face a risk as an organisation because we are approaching succession recklessly’.
He stated that his teams feel uncertain about their growth and the company’s success based on how succession is approached. This anxiety could easily be avoided through transparency and a culture where talented individuals feel included, considered and valued. This prevents aspiring employees from disengaging and seeking opportunities elsewhere, emptying your leadership pipeline. Open communication secures the future and boosts current engagement, helping retain employees.
Develop future leaders
Another advantage of a proactive, strategic succession planning process is that it opens opportunities for potential successors to prepare.
Implementing special projects for potential successors allows them to expand their skills and gain valuable experience. These initiatives serve as testing grounds for decision-making and learning from successes and failures.
This approach benefits employees while fostering growth and management and provides a chance for evaluation. It’s a proactive, measurable method to identify skill gaps, offering targeted training and mentorship to enhance strengths and address weaknesses.
Furthermore, succession planning must be an organisational priority at the board and C-suite levels. In a recent discussion, a senior executive shared that their CEO was concerned about finding a successor for her and assigned them the responsibility. They felt uneasy about this approach, seeing it as a risky strategy that raised questions about their team’s future and business continuity if they were to leave before a successor was identified.
So, if you’ve looked around your offices and don’t see the faces of the next generation of leaders, now is the time to consider: how can we ensure open dialogue and meaningful experiences for our upcoming leaders? Your actions today shape the leaders of tomorrow. What steps will you take?