The advancement of technology imposes daily challenges in terms of how to deal with your business. In the midst of all this, a question arises: how do these changes reflect in business transition planning?
While many traditional companies have embraced the need for change in their functional leadership, few have established business transition plans that put technology and transformation at the heart of the process. But really, for these companies to survive, they need to adjust their current workforce and modernize succession planning.
In ten years, the CEO of a company will likely be someone who grew up with smartphones and social media, playing a critical role in their day-to-day lives. This leader will certainly consider the business model he inherited obsolete. In addition, executives also cite a lack of adequate leadership as a major impediment to achieving their business transition goals, according to a recent survey. Only 35% of these executives reported having the talent in leadership positions to meet their transition needs.
The digital economy places unprecedented pressure on businesses. The workforce and its expectations are drastically different and will continue to change. The traditional approach will not meet business growth priorities, satisfy employee engagement and development needs, or create a sustainable next generation of leadership.
A few questions are important when evaluating how to incorporate workforce changes into your transition planning strategy. One is whether leadership has identified skills shortages and is developing its people. Too many gaps in leadership capabilities spell trouble for future growth. This leadership gap is widening, as existing leaders are not equipped to lead a diverse workforce and the millennial workforce still lacks the skills and capabilities needed to lead at these levels. It needs to include the identification of future skills and capabilities needed, as well as the development needed to close this gap.
Another necessary question is whether leadership is identifying and leveraging the five generations of talent. For the first time in history, the workforce is made up of five generations working side by side. A new generation of executives is emerging in the corporate world. Millennials already make up the largest group in the workforce and hold nearly 20% of executive positions. In addition, people are living and working longer. Never in history have we employed as many elderly workers as we do now. Careers are simply not viewed in the same way as before. It is common today, for example, for a young employee to manage someone who is close to retirement. And many organizations only focus on millennials. However, the strategy involves the dynamics of these five generations, which have different levels of digital capability. There are significant differences in the way these generations view technology, processes and digital transformation.
Considering employee performance is also important in business transition. Next-generation leaders expect more mobility across the organization, as well as transparency about their potential and career growth. Companies are moving towards continuous performance management and it is necessary to manage individual performance differences found between different employees working in the same group. Succession and career development play a central role in this “new” value proposition for employees. A robust and transparent succession plan can help you retain employees, plan for future growth and reduce capacity gaps.
One more important point in the transition planning strategy. What is needed for the company to be able to leverage data and analytics to increase its leadership strength? Organizations that utilize quantifiable metrics and benchmarking in their workforce today outperform those that do not. Leaders need to know who their people are, what skills and capabilities are there or what they lack, to make key business decisions based on real-time factual data. Modern succession planning must leverage technology, real-time data analytics and data insights to create a bank that can help organizations grow and sustain their success.
Finally, it is worth questioning whether the succession strategy is linked to strategic objectives and financial performance goals. Organizations that are most effective at building a sustainable leadership pipeline modernize their succession planning and incorporate it into their business strategy. There is a significant difference between a succession approach more focused on replacement planning, than one driven by strategic objectives, predictive analytics, and a focus on investing in future leadership talent. Companies need to look at growth goals, financial commitments, upcoming market expansion plans, etc., and then proactively structure their talent pipeline.
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