Internal leadership succession is beneficial, but with strong forces interrupting business strategies there is often a need to look outside for fresh leadership talent. This requires alignment of organisational goals with the skills needed, as well as aligning hiring approaches and rewards to increase the chances of success.
The competitive, disruptive and tech-driven environment of today’s business world often means that the skills, capabilities and perspectives needed in leadership positions may not pre-exist within a company.
While it is a positive to have a clear succession plan for key roles, and to be able to cultivate leaders from within, as explored in Supporting leadership transitions, there are times when organisations need to reach into the broader talent pool.
“A company might be entering new markets, and they need people that understand those markets,” says Liz Crawford, Head of Executive Search and Selection, KPMG. “Or they might decide to build efficiencies through Artificial Intelligence or automation, and need leaders with technical expertise for those circumstances.”
Tim Nice, Partner, Partner, Performance & Reward, KPMG, says these examples show how strongly leadership succession and hiring must be linked to strategy.
“The Board and management need to be aware of the fundamental shifts in their sector and tie that to leadership conversations,” he says. “Ask, if our business landscape is going to be turned on its head in the next 5 years, do we have the people to not just respond, but to position us for that future?”
He adds that company investors increasingly want assurance that leadership is front of mind.
“Investors are asking, ‘what are the succession plans?’ It is not a static event but an ongoing activity that companies need to plan for to have more control,” he says.
Long-standing employees have priceless knowledge of a business – but there can be many advantages of reaching outward, Crawford says.
“New leaders can bring total objectivity – there’s no ownership of what’s been there before, and so the ability to cut through that, and challenge the status quo, is valuable.”
Crawford says they may bring methodologies or approaches that have worked in other sectors, which could result in unexpected outcomes.
“When a person has had multiple experiences in multiple environments, they are more likely to be able to take different perspectives on a problem,” she says.
Dr Jane Gunn, Partner, People & Change, KPMG, says when hiring new leaders, it is advantageous to look for people who are adaptable and comfortable in complex, ambiguous environments.
We know that dealing with ambiguity, dealing with difficulty and dealing with fast-paced change is actually more on the emotional intelligence side,” she says.
Crawford says leaders with these ‘softer skills’ are extremely effective in helping teams to navigate through business transformation.
“It’s that ability to really read and understand people, and to tap into their motivations when the world is changing rapidly,” she says.
When exploring candidates, Crawford says the goal is to mitigate the potentially costly risk of selecting the wrong person, or giving them a false impression of the requirements.
“Organisations often fail to invest the right amount of time and money into ‘unpacking’ people. They want to rush through the interview process. The companies that take time to know the candidates properly can reap longer-term rewards.”
She says to have very clear conversations to “unpack assumptions” about a role.
“People throw terms around quite loosely. We all talk about collaboration. But what does this actually mean in the role that you hold?” she says.
Once new leaders are hired, it is advantageous to integrate them well and set them up for success. Crawford advises that mentoring from other senior team members can smooth the process.
“They can help a new person by being a sounding board,” she says.
Again, transparent conversations help, especially regarding the timing of delivery on strategic goals.
“Set clear expectations on both sides with well-defined measures, so that both parties know when they’re meeting them,” Crawford says.
Gunn adds that helping new leaders to understand the workplace culture and political environment is beneficial.
“They can look at the structure, the financials, the strategy documents – but the bit that is often difficult to read is the politics of it,” she says.
This issue is increasingly prevalent as work becomes more globalised and leaders take up positions around the world.
Crawford explains: “Look at multinationals that are moving people around the world. There’s a lot of time spent in developing those people, in supporting them, to help them translate whatever skills they bring to a new context.”
Nice says when bringing in new leaders, it is also a good opportunity to rethink reward structures. If leaders are coming in to execute specific transformations, or perhaps their tenure will be shorter due to a planned shift in strategy, traditional financial rewards may not fit.
“We are seeing evolving thinking in the market in response to the changing nature of executive leadership and stewardship. (For example) it might be practical to offer short-term incentives based on very specific project milestones. Or to offer a fair base salary plus equity or shares that they can’t touch for 5 years to recognise that transformational results are realised over a longer term,” he says.
It all ties back to the importance of linking strategy, succession planning, hiring new talent, and reward – as each aspect influences the other, and increases the potential for leadership success.