(May 10, 2021) All too often, especially in organizations with long-tenured leaders (including founder-led), the leader’s focus tends to be on themselves rather than on the organization’s succession plan. Unfortunately, when succession planning takes a back seat, often so does emerging leader retention. Thus, there is a direct correlation between succession planning and employee retention and although this correlation has always existed, the effects of the COVID-19 pandemic have only exacerbated it.
Without knowing when the pandemic environment will end, many organizations are afraid to make a move because they want to maintain some semblance of stability. Tenures that may have ended prior to March 2020 have been lengthened. Thus, opportunities for up-and-coming leaders in these organizations are being delayed, forcing the truly ambitious among them to look elsewhere to meet their Highest Career Goals and Aspirations (HCGA)®.
Had these current leaders, together with their Boards and C-Suite occupants, worked out a succession plan by supporting individuals they have groomed, these organizations would be well-positioned to weather the remainder of the pandemic as well as future challenges. By defining the ideal candidate profile for the next leader and laying the appropriate groundwork, boards and C-Suite leaders can protect the organization’s best interests while developing an effectively timed and well-devised succession plan that supports emerging leaders.
While managing and leading through a pandemic is a badge of honor, so is preparing for and recognizing the right time for a leader to plan his/her exit from the organization. Quite simply, a leader’s effectiveness starts to dissipate over time. In our experience, the perfect CEO tenure is between five and seven years. Ideally, five years is good, seven is great, and ten is excellent. Very seldomly, do leaders whose tenures exceed ten years have the energy, creativity and innovation to strategize and stay on top of emerging trends.
Generally, long-tenured CEOs have not defined their next chapter, thus hanging on longer than ideal. However, no leader is bigger than the organization or its strategic goals. That is where a Board’s best-practice leadership must emerge. The Board’s goal is to protect the organization’s short- and long-term health and well-being, ensuring that even the most revered leaders do not hang on longer than they should.
All too often, leaders fail to identify and protect all emerging leaders consciously and strategically. Instead, they get focused on two or three people who are great self-promoters or relationship managers. Executive leaders should partner with HR Talent Management for bi-annual check-ins with all rising stars and emerging leaders. This includes those individuals who are classified as high-potential or succession planning eligible based upon consistent performance equity. Topics of conversation should include: “What are you highest career goals and aspirations? Do you think you can accomplish these goals here? If so, what is the role that you seek? If not, let us unify and align around your exit plan under the proviso that you will groom or hire your successor.”
The latter approach is rarely utilized but can prove beneficial in both the short- and long-term. Some “boomerang” organizations have found these conversations may even lead to the same leaders returning at a higher level later in their career. This type of proactive, transparent, and vulnerable engagement with emerging leaders will help organizations be more strategic and prepared about leadership succession.
More importantly, one of the emerging individuals with whom you engage, could potentially be the next leader in your organization. Boards and C-Suite leaders often talk about this, but rarely execute. Non-profit organizations and affordable housing entities in particular need to pay attention. They tend not to have restrictions on a leader’s age or number of years in a role.
When emerging leaders see their careers stall with limited upward mobility, they become disillusioned. A truly ambitious leader is always looking for opportunity to challenge and stretch themselves. If slow-moving conditions prevail, these leaders will be vulnerable and inclined to look externally (discreetly and confidentially) to accomplish their HCGA.
Organizations must have healthy, progressive, and timely conversations about emerging leaders’ ability to achieve their HCGA. Without this, you risk losing talent, a move that costs 2-3 times salary to replace, taking away both time and momentum from the organization and, worse, leading to low morale and unstable organizational leadership.
Conversely, do not give artificial hope to people if they do not have the chops to achieve their HCGA within your organization in a two- to five-year time horizon. Ultimately, it’s okay to concede and admit that your organization might not be the best fit long-term and to part as friends. Doing so can provide sufficient time to fill the current role and for the emerging leader to identify their next role, all in the form of a partnership.
So much movement is happening in the sectors within which we work because organizations cannot effectively strategize about a succession plan. When you lose the emerging leaders you wish you had retained, you will incur regretted losses, in many ways a preventable mistake. Keeping those individuals is often simply a matter of having honest conversations about their HCGA and the realistic possibility of achievement thereof in your organization. This movement towards employee retention and satisfaction can directly affect your succession plan and thus, the success of your organization in the decades to come.