Change in leadership is an inevitable part of any organization’s lifespan. And yet, without the proper preparation, it’s all too common to rush in an ill-prepared successor, set up to flounder. It’s not enough to just identify potential leaders within an organization—your company’s C-Suiters need to follow through and personally help develop these leaders to increase bench strength.
Matt Paese, senior vice president of leadership insights at DDI, a global leadership consulting firm, offers the key to building solid bench strength: be proactive, so would-be leaders don’t leave for greener pastures.
DDI’s Global Leadership Forecast found bench strength has dropped by a third since 2011, with only 12 percent of HR now saying they have a strong bench to fill leadership roles. What factors do you see driving this decline in bench strength?
Building bench strength is like most high-payoff strategies: it requires ruthless prioritization of limited energy and resources. And in today’s environment with so many competing demands, it’s easy for organizations to get this wrong by placing disproportionate effort on things that seem important, but don’t end up delivering stronger leadership.
The best example is the identification of potential—a necessary starting point for building a stronger bench. It can be a significant effort to build a process that fairly and accurately identifies a diverse pool of individuals with the potential to grow into higher-level roles and responsibilities.
This can involve formal, objective assessments as well as management meeting and discussing people and performance, so that high-integrity decisions can be made about who and how the organization should invest to accelerate leadership growth. Coordination, communication and investment surrounding these efforts can be considerable, but the expected payoff in bench strength is deemed worth the effort.
This all makes conceptual sense, but there’s a trap waiting inside the effort. It goes like this: HR and management collaborate to assess, discuss and name the people who show promising signals of leadership potential. They may even make development recommendations for each person. This takes considerable effort, but the dialogues are nuanced and thoughtful, heightening management’s understanding of the organization’s talent.
All this effort creates a strong sense of accomplishment, but unfortunately, nothing has yet happened to improve bench strength. For many companies, the time and energy spent on identifying potential leaves management with the dangerous misperception that their bench-building work is done. Meanwhile, the accountability and support for actual development are vague or absent entirely.
This misappropriation of energy and focus is increasingly costly in a world with so many competing priorities. It’s essential for HR leaders to steer management toward a balance of identification of potential and developmental action that accelerates skill growth and builds readiness for more challenging assignments. The idea is to create more energy and focus on growth by showing more evidence of it.
What risks do organizations with weak bench strength face? What competitive advantages can organizations gain from focusing on bench strength?
DDI’s research shows convincingly that the highest-potential leaders will soon look for new employers if they are not being developed by their current ones. So, the inability to retain top talent is among the most damaging sacrifices that come with an underemphasis on bench strength. But the risks don’t stop there.
An absence of ready-now successors leaves vacant leadership positions open, often for long periods of time, creating gaps in execution, team engagement, cross-functional partnerships and of course bottom-line results. And because these risks are often anticipated, organizations rush decisions and place inexperienced leaders into roles long before they are ready. These pressure-driven succession moves are at the root of persistently high executive failure rates.
These risks become even more difficult to bear when held up against the performance of organizations with strong benches. DDI’s research across more than 1,500 organizations worldwide shows that strong benches lead to multiples of higher-quality leadership, stronger retention and engagement, less burnout and stronger financial performance. The competitive advantage that these organizations achieve puts great distance between them and their industry peers.
How can HR leaders ensure their organization is proactively planning for future talent needs and building a strong leadership pipeline?
Building a proactive organization that cultivates a healthy leadership pipeline means diverting management’s attention to development action—not simply making judgments about potential and performance.
A common example that brings this to life is how organizations routinely evaluate readiness for promotion. Often, the phrase “ready with development” is used to describe a leader who could one day be a strong successor, but only after some development takes place. Oddly, however, these designations often come with no active engagement by management in supporting that development. Management makes the judgment of ready with development, and then moves on, leaving the actual job of development to the individual and HR.
This sidesteps a crucial accountability in building a stronger bench. The leaders who require more development before being ready for promotion will need new assignments, job experiences and formal learning that expands their awareness and cultivates higher-level skills. They can’t do this on their own, and often HR is unable to make these activities happen without active involvement from management.
The entire mindset for building a stronger bench must be shifted from seeing and understanding people to setting them in motion and stretching their capabilities into areas that expand skills. This is not a function that management can completely outsource. It requires some degree of risk in creating stretch assignments, but it is a far preferable form of risk than placing ill-equipped leaders into key roles, or worse, having no one to place at all.
When confronted with the reality of what is truly needed, most senior managers and executives quickly adopt interest in not only designating ready with development, but also investing their energy to help make that development happen.
What metrics can HR teams implement to assess their organization’s bench strength and track progress over time?
There is one powerful metric that can transform bench strength in any organization. This brief example explains why it works so well:
A CEO whose company had fallen into a period of underperformance wrestled with the challenge of motivating his senior leaders to take more accountability for building bench strength. Change had been too slow and too many leaders had missed targets.
The organization had been running an annual process to identify successors for key leadership positions, requiring at least two “ready now” leaders to be named as potential successors for every critical role. But the process buckled after painful failures made it apparent that named successors were not always as ready as advertised.
This led the CEO and CHRO to confront the reality that there needed to be more development for potential successors, and sooner. Rather than simply express this need and ask for support, they elected to introduce a game-changing metric. C-Suite executives would now be evaluated on their contribution to the corporate talent pool—a measure of the number of successful successors that came from various divisions and groups across the organization.
Goals were personalized to each C-Suite leader based on the size and nature of their organizations, but each understood this new component of their performance evaluation. They would now be evaluated by the frequency with which their organizations produced leaders who would move upward and succeed in higher-level roles in different parts of the organization.
Not surprisingly, this new metric triggered a radical shift in the succession process. It was no longer enough to place names onto succession charts. It was now essential to track the growth and development of successors and the performance of newly promoted leaders. This rippled to leaders across the organization whose learning and exposure to new challenges was shifted into a higher gear because C-Suite leaders now had to “get more leaders ready” for bigger jobs.
The takeaway is simple: the best metrics for building bench strength are the ones that create action. They make real-life learning and growth happen by incenting senior leaders to produce more capability. C-Suite leaders in the example above began creating special assignments, projects, training and coaching that accelerated experience, triggered new skill development and enhanced the performance of emerging leaders. It wasn’t enough to write a development plan—there had to be evidence of actual development, growth and performance.
