Assessing the Health of your Succession Pipeline: How many of your General Managers are grown internally?

A key indicator of a healthy talent or leadership pipeline is the ability to promote General Managers from within the organisation. Having a consistent supply of senior managers who can take on the running of a business unit, division, region, country or function is critical to the sustainability of the business and the ability to effectively implement any meaningful growth or acquisition strategy. The success of organisations such as GE or SAB is testament to this, as they have consistently focused on building a pipeline of leaders. Leaders who are immersed in the organisational culture, buy in to the organisations purpose and have been exposed at multiple levels to different components and geographies within which the organisation operates.

One of the key challenges been experienced by many organisations expanding into Africa and the Middle East is the lack of this senior management capability to drive the execution of strategy. Capability that is built on at least 10 to 15 years of experience, and cannot be “learnt” in a classroom. It is the experience that brings confidence in making tough business decisions, managing people, and understanding the mechanics and challenges of execution because they have been part of doing it multiple times.

Critical to this is also the deep institutional knowledge that ensure lessons learnt are not diluted by new managers coming onboard, and repeated unnecessarily. Also linked to this is critical IP related to clients, processes and people that do not sit on any CRM system, or personnel record. So many managers that we engage will share the challenges they have in constantly having to bring new hires up to speed, and the opportunity cost in the amount of productive time this consumes.

Utilising this ability to promote General Management skills from within as a key element in assessing the organisations ability to grow a sustainable businesses and be ahead of their competition within the next 5 to 10 years one should ask the following:

How well does the organisation understand the future capability requirements of leaders and how are they nurturing them?

The skills to deliver on the new strategy do not necessarily sit in the current band of “leaders” very often the future talent sits 1 to 2 layers below. They are the individuals if not identified early will find themselves often frustrated and exit before they have realised the potential within the organisation. Also too often line managers hold onto their talent rather than encouraging or actively championing their career growth.

It is critical to have processes that identify this talent for the broader business, benchmark them against the future competence and then puts them into an active process of development. A process that is ongoing and not event based and links into internal processes and programs. Outsourced programs provide stimulus and exposure, but do not necessarily build internal champions that will drive your culture, vision and truly understand your business. A program that actively exposes them to different roles and components of the business, as well as helps them to understand their personal drivers and areas of development. A program that talks to building a core of engaged leaders that will drive your differentiated culture and way of doing business.

How much of a primary responsibility is it of senior line managers and not HR to ensure there is a pipeline of future leaders?

A key error is to make leadership development processes HR’s responsibility, this is fundamentally flawed. The new generation of strategic HR partners will adeptly put this critical lead indicator of future business performance firmly in the hands of their current leaders. Sustainable high performance organisations are run by leaders who invest time, budget and resources in developing their most strategic future asset “leaders”. This attitude in leaders is a primary litmus test for any analyst on how the organisation will perform going forward and whether one can truly believe in the espoused strategy vs. reality. One of the key questions equity investors ask is: “who the management team?” is, and if they are in it for the medium to long term, “what are we doing about the next generation of leaders?”

Also outsourcing leadership development is fundamentally flawed, because a primary engagement and retention lever is the individual’s direct manager. There is therefore no more critical role in the building of a pipeline than the individual’s direct manager investing time in supporting the growth of their next gen leaders. This does not mean that the line manager will not bring in professionals, or rely on HR to source or develop critical leadership skills. Also they will rely on these professionals to support them in developing their own ability to effectively support, coach and mentor their next generation.

Strong business leaders understand that a business without leaders is a business in trouble, and a business without a pipeline of leaders is a business that will be in trouble in the future.

Written by: John Brodie