Rolling the Dice
The Troubling State of Succession Development for High Impact Roles
The fate of organizations rests in the hands of leaders in high impact roles. Yet many companies invest little in preparing these leaders, leaving their future success to good intentions and chance.
“We use the ‘good luck’ strategy of preparation for leaders in key roles. We promote them and then we say ‘good luck,’ throwing them out there to sink or swim.”
VP HR, Fortune 500 Professional Services firm
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The leaders we interviewed were vocal about the untenable situations they witnessed in their organizations or had muddled through themselves. ProjectNext Leadership research reveals that companies:
Tend to overlook the unique challenges associated with high impact roles.
Are hard-pressed to articulate the keys to success for leaders at these levels.
Underestimate the importance of thoughtfully developing, selecting and promoting the right leaders for high impact roles.
Invest less in development as leadership roles increase in importance.
“Chance” has no place in corporate strategies. It is especially risky in today’s business conditions. Our findings highlight the issues that organizations need to address and the pitfalls they need to avoid in building the leadership bench strength that can power their organizations forward.
Over the last 20+ years, corporate America gradually realized that developing its leaders can deliver big payoffs. As a result, many companies have invested in and mastered the selection and development of their largest population of leaders – supervisors, managers, and others in frontline leadership roles.
Most organizations still haven’t cracked the code, however, for leaders transitioning into high impact roles. It’s an ironic and troubling reality. After all, these high impact roles, characterized as being senior in level, managing large numbers of people or leading a critical market or function, are paramount to organizational success. Studies consistently correlate effectiveness at this leadership level with dramatically improved financial results for companies. Conversely, ineffective leaders in these roles can create significant, even catastrophic, damage. In the particularly challenging and unpredictable climate of 2020, strong leadership in high impact roles is more critical than ever.
Executive Summary
What are High Impact Roles?
Typically they have one or more of the following characteristics:
Are considered “critical” or “key” to continued or future organizational success.
Carry responsibility for a significant portion (or all) of the workforce.
Feature titles from Director up to CEO.
Are responsible for an important market segment or function (e.g., a key growth area, an emerging market or a “cash cow” business unit).
Require specialized skillsets, which are particularly difficult to acquire or develop.
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Key Findings
ProjectNext Leadership recently conducted a foundational study to better understand the state of leadership development and succession planning for high impact roles. We interviewed a diverse group of 25 corporate CEOs, board members, Human Resource executives and academic thought leaders.
Three insights emerged from our research:
High impact roles are different. Really.
Leaders feel ill-equipped for the challenges of high impact roles.
Effective succession planning for high impact roles remains an elusive goal.
We’ll take a look at the implications of each of these.
1
High impact roles are different. Really.
Our interviews identified the following differentiators that set high impact roles apart from other mid to lower level leadership roles.
Harnessing Team Power
“If you rely solely on your content expertise as a leader at this level, you’re screwed.” (CHRO, mid-size Technology company)
Many leaders in high impact roles struggle most with the transition from “doing the work” as a mid-level manager to “building the team who does the work” in a high impact role. The stakes are higher. Control is lower. Teams are larger, and in many cases, may possess expertise that is not in the leader’s own wheelhouse. Success requires a tricky, nuanced balance of leaning into certain aspects of leadership (e.g., setting clear direction) and leaning away from the day to day of running the business. As one of our interviewees stated, “your work becomes the work of others.”
Managing for the Long Run
“Show me an effective high impact leader and I’ll show you someone who understands both how to manage time and when to deliver results.” CHRO, Food company
High impact roles are demanding and stressful. In our interviews, leaders who were less prepared when starting high impact roles described feeling that they could never do enough to “keep up.” It’s not surprising, given that they have more stakeholders, more decisions to make, and more expectations to meet. Personal resilience is required, but laser-like focus is the differentiator for their sustainable success. Managing their most precious commodity – time – effectively means ruthless prioritization for the short and long term.
The leaders who thrive in these roles have an intentionality around both time and timing. Knowing what results to prioritize when, understanding the power of early wins, managing the competing demands of stakeholders are all higher-level challenges that successful high impact leaders are able to master.
Navigating a Bigger World
“As you move into these high impact roles, the number of your important stakeholder groups increases exponentially.” (CHRO, mid-size Technology company)
In most cases, roles of this scope have significantly more stakeholders. A newly minted CEO, for example, has not only their own management team to engage, but also their broader workforce, a board of directors, key customers, community representatives, shareholders, strategic partners and so on. Learning to effectively influence these groups (who hold potentially competing interests) can be daunting. Yet it’s a core skillset that needs to be acquired quickly if leaders are to be successful.
One technology HR executive effectively described the importance of this. “For these high impact leaders, it’s critical that they leverage both social capital and human capital. Your reputation is about you, but the ‘contagion’ of your reputation is key – what will others say about you when they’re asked? Are others all in on you as a leader when a crisis comes up and you want to take action? Have you built followership? It’s actually more important to look at how others perceive you versus what you actually do.”
Creating the Right Ripples
“In high impact roles, the way other people see you is different than the way you see yourself.” (CEO, Fortune 500 Retailer)
Leaders who move into high impact roles quickly learn that every action they take is magnified in perception. Everyone is watching and interpreting what they say (and don’t say), how they react, and even their body language. One recently promoted CEO said, “I’ve realized that if I’m having a bad day, everyone in the company has a bad day. I need to show up as optimistic and confident as possible, every day.” This leader realized that his reach was long and his actions carried weight.
Leading the Way
“A key leader’s primary role is to create clarity and simplicity – always conveying where we are going and why.” (CEO, Professional Services company)
Leaders new to high impact roles are sometimes taken aback by how quickly their teams look to them for clear direction. While they may want to get the lay of the land to increase their comfort with higher levels of decision-making authority, those around them are eager for quick answers on how they are going to fix, turn around, accelerate or reengage. And the need for direction isn’t a one-time or infrequent activity. It never stops, requiring frequent course corrections and realignment of all stakeholders. As one new medical device CEO put it, “Your degrees of freedom go way up. No one will tell you how to do your job – you’re expected to figure it out. There are no answers to the test, and you have to figure out what the questions are on the test too.”
2
Leaders feel ill-equipped for the challenges of high impact roles.
Experience Isn’t Enough
“What executive coaching did for me was to make me realize that I needed to treat myself like an individual business – that I needed to take the time to work on my strengths and blind spots with intention. I needed to learn about myself, plan and to have the discipline to actively work on my own leadership.” CEO, Medical Devices company
What development approach is most common? Many leaders talked about the experience of broadening and deepening their capabilities through previous roles, projects or rotations. Some characterized these moves as strategically orchestrated by their employers, while others described a more random acquisition of useful experiences. Very few leaders described any other development resources or methods.
Nearly all the leaders interviewed expressed a hunger for senior development programs, effective executive coaching, data-driven feedback experiences and other resources that would recognize the unique dynamics of leading in high impact roles. And when asked to rate the effectiveness of leadership development efforts for high impact roles, they scored their companies an average of 2.3 on a scale of 1 to 5 (5 being highest). Hardly a formula for sustainable personal growth and organizational success.
“Most of these leaders have the smarts and work ethic, but don’t have the routines or tools to do these bigger jobs well.” (VP HR, Technology company).
We found a remarkable lack of intentional development offered by companies to make sure that leaders selected for high impact roles felt ready to drive performance. Leaders in our interviews often bemoaned the need to “sink or swim.” Solo.
The Most Important Roles Get the Least Support
“We spend a lot of time putting people into boxes to plan for succession. But at the end of the day, it’s coaching and development that will make the difference. We should have spent more time on this, versus putting labels on people. Boards like labels and pat themselves on the back for the process. So what? The key is to develop these leaders.” VP Learning & Development, E-commerce company
The chart below illustrates the lack of development that higher level leaders receive. As the level of challenge and impact goes up, companies tend to offer decreasing support for preparation.
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3
Effective succession planning remains an elusive goal
Lack of Objectivity
“We tend to focus on a “risk management” orientation, versus a more “quality of leader” orientation. We struggle with considering a more broad and diverse set of leaders for future roles.” VP Learning & Development, Global Consumer Products company
Succession decisions recounted by our interviewees were often characterized by personal preferences and in-the-moment choices, driven by impressions, opinions and familiarity. At the same time, the leaders expressed the need for a more data-driven method which could drive broader, more diverse pools of talent being considered and developed for high impact roles.
Lack of Commitment
“The value of not missing a beat in top jobs is critical – we see it in our investor confidence. It takes time, energy and mindshare to do succession planning well. And our shareholders expect it from us.” VP Learning & Development, Global Consumer Products company
Efficient succession planning still requires time and effort. Those companies that appreciate the ROI of investing in succession planning are the very same ones who tend to see the payoff through having consistently strong leaders in high-impact roles. Without commitment, succession planning will be filed in the corporate dustbin.
What’s the implication of this finding? Lack of confidence in leaders who are placed in high impact roles. The leaders we interviewed articulated two nagging questions:
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Have we selected the best leader for this high impact role?
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Have we effectively prepared the leader to excel in this high impact role?
They also talked about witnessing “spectacular failures” – of leaders who were wrong for high impact roles. And, given the nature of these roles, consequences were often felt deeply for the companies that experienced these failures.
“If we have the wrong people in place, it makes a huge negative impact. We had better make the right call. I can’t imagine anything more important than succession planning.” CEO, Consumer Products company
Some might argue that anemic leadership development isn’t as much of a risk if the right people are picked to fill high impact roles. (We would disagree.) Regrettably, while most of the leaders we talked to appreciate the power of succession planning, as the chart below illustrates, few felt they actually did it well. When asked to rate the importance of succession planning for long term growth, leaders rated an average of 4.4 on a scale of 1 to 5. But when asked about how effective their current companies are in doing succession planning, they averaged a disappointing 2.6.
What’s driving that gap? Leaders described the following missing pieces.
Lack of a Simple, Clear and Consistent Approach
“I wish we had clean, uniform language for how to do succession planning well.” CHRO, Technology company
A lack of common language and framework for succession overcomplicates and weighs down any efforts to follow an organization-wide, efficient process. Companies often talk about past mistakes in overreaching on succession planning – either overcomplicating the process or taking on too large of a scope too fast. In either case, failure rates have been high.
Lack of Effective Processes and Tools
“How effective are we at succession? Can I give it a negative number? Our method is just sitting down and picking names. We have no process or rigor behind it. We always have a name ready, but is it the right person?” VP Talent, E-commerce company
While most leaders understand the ROI of good succession planning, few are clear on how to get it done easily. While a plethora of tools exist, few are considered effective, practical or showing the ROI for time invested. There is ample opportunity to supply leaders with a way to do succession planning that is both easy and objective.
Everyone seems to agree that organizations which effectively choose and prepare the best leaders for high impact roles will dominate their competition. Yet ProjectNext research suggests that few have converted that belief into regular practice. The implication: far too much risk and vulnerability to long term organizational success.
The year 2020 has demonstrated that corporate resilience and agility are more essential than ever. Those strengths depend on effective leaders in the roles that matter most. It’s time that companies realize the unique demands of high impact roles and commit to investing in smart succession and development of these leaders. According to the leaders we interviewed, those efforts will yield dramatic results both today and tomorrow.
“The companies who look at succession as highly important invest in their talent, particularly leaders for high impact roles. Through boom and bust, that commitment is always there – it’s sacred. And top talent is drawn to those companies who have a track record of investing in their leaders. These are the same companies who retain that top talent. Why would anyone want to go to a company that’s less committed to development and succession?” CEO, Medical Devices company
By Molly Rosen and Jeff Rosenthal, Co-CEOs of ProjectNext Leadership
Molly Rosen has worked with leaders in tech, entertainment and biotech for over 20 years as an executive coach, facilitator and consultant. Her clients have included Pixar, Airbnb, Samsung, Google Ventures and Seattle Genetics. She contributed to the significant growth of firms BlessingWhite and NinthHouse before starting her own consulting business. Molly is a specialist in women’s leadership and was Managing Editor of Knowing Pains: Women on Love, Sex and Work in Our 40s, a popular anthology featured on the TODAY Show.
Jeff Rosenthal brings a wealth of experience in helping organizations prepare senior leaders for high impact roles. He most recently built and led the Executive Readiness practice at Deloitte Consulting, focused on both creating robust succession processes and developing senior leaders. He was formerly CEO of the UC Berkeley Center for Executive Education, and before that led the Tech sector globally for Korn Ferry’s Leadership & Talent Consulting business. He also consulted for firms BlessingWhite and Forum Corporation. Jeff also brings executive search experience to his role, having served at Russell Reynolds as the Western US lead for the Human Resources practice.
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