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Illustration: 123RF/ISMAGILOV
Illustration: 123RF/ISMAGILOV

When it comes to steering an organisation, all too often leadership changes unsteady the ship. There’s a lot at stake, as handing over the wheel can lead to leadership gaps, unsuccessful appointments and strategic misalignments. These issues can disrupt operations and drive away talent, and result in reputational damage and loss of investor confidence.

As if it’s not enough to be contending with a stagnant local economy and the downturn in global competitiveness, SA financial services companies are navigating seismic internal dynamics as the old guard exits the workforce. These changes are focusing attention on the quality of leadership talent pipelines and what organisations are doing to develop and prepare up-and-coming leaders for mission-critical roles.

To mitigate succession risks, some companies focus on finding candidates who can smoothly transition into key roles, causing minimal disruption and facing little opposition, while maintaining the status quo.

But this approach falls short when it comes to thinking about succession planning in terms of presenting strategic opportunities to freshen up the perspectives of the company’s leadership and drive diversity, equity and inclusion so that the organisation is future-fit. It also misses the mark when it comes to updating the criteria that organisations use to identify their future leaders.

So, what makes for a quality leadership pipeline?

Shifts in the industry, such as digitalisation, transformation and the new world of work, including the hybrid workforce, highlight current and future organisational priorities.

When it comes to succession planning and filling the leadership pipeline with new talent, these fundamental changes offer the opportunity to revisit board-level conversations about what needs to be focused on now in terms of competencies, experiences, personality traits and more.

The criteria previously used to assess those potentially fit for C-suite roles have changed significantly, and there are completely different drivers of an organisation that need to be taken into consideration. Companies need to arrive at clarity about what it is going to take to deliver in the present and what they are going to face in the future. These critical conversations include determining current challenges within the organisation and considering these in the light of the likely impacts on the future of the financial services industry. Companies need to take a clear-eyed view of their unique strengths and challenges and identify where they may fall behind their competitors.

The quality of the pipeline can only be as good as the authenticity and effectiveness of the continuous nurturing of talent. Leadership, after all, is a person-to-person endeavour, and incoming executives need help from the incumbents.

These high-level conversations set the tone for updating the criteria a company uses to identify and assess the kind of candidates it needs for the future. This will include defining the competencies the business needs to succeed over the next five or 10 years. It will profile the type of talent that will be able to execute strategic priorities. These granular criteria form the foundation for a succession plan based on the capabilities that are found internally. Once the internal view is established, then an external lens can be adopted to assess the skills that exist out there in the market. This enables the organisation to benchmark the capabilities on hand against the potential of external talent.

The quality of the pipeline can only be as good as the authenticity and effectiveness of the continuous nurturing of talent. Leadership, after all, is a person-to-person endeavour, and incoming executives need help from the incumbents. Executives who see succession planning as an integral part of setting their legacy, rather than a threat, are important drivers of successful succession planning.

Across the board and C-suite, it makes a difference if there are mentors, sponsors and coaches willing to share knowledge and expertise, keen to openly support and engage. As important “human libraries” of institutional knowledge, this is what brings breadth and depth to the leadership pipeline.

Any talk of succession planning cannot ignore the global imperative for improved representation in corporate leadership and local pressures for SA financial services firms to meet new BEE targets. Strategic succession planning can certainly help here. New regulations loom, and new avenues for supervising BEE compliance are on the cards.

Even if the rules weren’t there, it is clear that diversity in leadership reaps many future-fit benefits. Different leadership perspectives drive innovation and shift organisational ideas in ways that improve profitability, risk and social responsibility. There’s no question that these factors are more pertinent to organisational succession planning than a skill set.

I believe that we have reached a crossroads when it comes to succession planning in financial services companies. We can either continue with the status quo and yield predictable outcomes or we can embrace change and steer towards a future-orientated direction. There’s no doubt that succession planning could be so much better, and I’m confident that the effort to modernise and energise succession planning doesn’t need to be onerous.

With focused strategy, inclusive leadership involvement, and sufficient resources, revitalised succession planning can significantly affect the future success of the SA financial services sector.

• Williams is director and founder of Capital Assignments.

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