A few years ago the senior management team at Stockland completed a series of ‘leadership success profiles’, a detailed picture of the attributes and experiences that would be required by future leaders of the business. It was part of a larger strategy to clarify the purpose of the business and outline how they needed to change, innovate and mature in an ever-evolving marketplace.

The entire process, which required input and support from every part of the organisation, has become a powerful tool both in terms of regular staff development programs and leadership succession planning.

“Anybody we’re looking to promote is assessed against those experiences and attributes,” says Michael Rosmarin, Stockland COO. “Instead of simply looking at the traditional candidates who have been there and done that, and who tick all the boxes because they’ve been coming up through the ranks, now we think more broadly about the skills and attributes we’re looking for. This widens the talent pool and allows for greater diversity.”

Succession planning involves assessing and identifying internal candidates in advance, to allow for their personal and professional development.

If you don’t do leadership succession planning well, Rosmarin says, then it is difficult to maintain continuity, making it harder to be a sustainable and profitable business.

“You’re going to lose the good people because they’re not seeing their career being supported,” he says. “Plus, it takes at least six months at senior level to get into a role and be operational and effective. If you bring someone in from outside, it takes twice as long. That’s not to say that you shouldn’t do that, but it will entail more disruption in your organisation.”

When Stockland appointed a new CEO for their retirement living business, they made an internal appointment from their commercial property business. “Stephen Bull had been identified and selected as a key talent. We had put specific development programs in place and when the opportunity arose, he was well qualified and well positioned to move into the role. By the same token, the board was confident to offer him the opportunity.”

If leadership succession planning is such a potent force for organisational success, it should be of great concern that only 54 per cent of Australian companies (according to a recent Hudson survey: see box) say they have a clearly articulated leadership strategy in place.

Talent pools

Where leadership succession goes wrong, says Rosmarin, is if an organisation sees it as a practical exercise owned by HR. The HR department should facilitate the process – it should “push and pester to make sure there is proper integrity”, but if the entire leadership team doesn’t own the process then you will never win, he believes.

Susie Mogg, Suncorp’s OD&D manager, executive talent, agrees. Mogg’s role specifically focuses on high-potential staff and succession management.

“We have a rolling, three-year plan aligned to our organisational business strategy and strategic workforce plan,” Mogg explains. “Our high-potential succession management plan should flow down from that. HR ensures we’ve got the right framework, processes and governance in place – but executive support is essential for it to work well.”

Succession management is about future-proofing a business, Mogg says. “The world of work is changing with globalisation and technology, demographics and societal changes,” she says. “These things will have big implications for organisations. In this new world, traditional approaches won’t work. We need an approach that is fluid, agile and different.”

Mogg says succession management requires continuous deep analysis of the organisation and of staff, and clear definition of the requirements of future leadership within the business, aligned to the business plan. Do it well, she says, and the result should be “pools of talent” from which a business can choose future leaders.

“Succession pools mean you can fill any general leadership role,” Mogg says. “So you’re no longer looking at individual successors for specific roles, because those roles may not exist in the future. Instead you’re developing a pool of people who all have strong abilities to embrace new ideas and different tasks.”

Don’t look at me

One of the most difficult challenges for incumbent CEOs and others in leadership roles is not to select carbon copies of themselves as successors.

David Sweeney, director of leadership at the Health Education & Training Institute, says the skills that have landed CEOs in the top job were correct for their time, but future leaders will likely need a different set of talents and experience.

“CEOs of the future will realise it is an important part of their role to be ‘directors of workforce’. What have been thought of as softer skills [in the past] are actually quite hard skills,” he says. “They’re also quite difficult skills to develop. But if you want highly effective chief executives, they need to see this as a key part of their role.”

This means that people currently in senior roles must not only believe in and support the leadership strategy, they must also accept that the kinds of leadership skills or qualities that might be needed in the future, aren’t the same as they possess now, Sweeney believes.

“That can be quite a difficult thing for people to adjust to,” he says. “It’s a future world of work which is much more ambiguous, more uncertain, and one in which there needs to be greater adaptability and flexibility in that senior group – and that can be challenging. But a failure to accept that could be a major blunder.”

Katriina Tahka, co-CEO of A-HA!, says a positive outcome of leadership succession done well is diversity within the organisation. The flip side, when leadership strategy is done poorly, is a homogenous workforce.

Recently, advertising agency Leo Burnett was roasted in the media after publishing a photo of their all-male, all-white team of senior creatives. The men in the picture, of similar ages and all similarly dressed, looked like a group of school friends – boys that had grown up together in the same suburb. Sadly, Tahka says, this is not unusual.

“We’re developing business leaders but are we achieving diversity? All of the current stats in Australia say no,” she says. “There tends to be very little gender, cultural or other diversity among the leaders that come out of the current selection processes. When you look at that cookie cutter outcome you’ve got to ask, what is going wrong? Succession planning is supposed to be a development process but unfortunately it often operates as an organisational filter, and means everybody tends to look and think the same at the end of it.”

The businesses that are doing it well are having thoughtful conversations in which they challenge assumptions about who might be the best person for the job, or what the company or the business environment might look like five years from now, she says.

“Some businesses do leadership strategy as a compliance activity but others do it as a way of truly identifying the best talent and as a challenge to what the business is accustomed to look for in leadership,” Tahka says. “And to tell the truth, I’m not sure whether it is safer to have a poor succession plan or no plan at all. A poor plan can lock you into a poor outcome, but a complete lack of a plan might mean you get a much more agile and relevant outcome.”

This article is an edited version. The full article was first published in the February 2016 issue of HRMonthly magazine as ‘The Kingmakers’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here.