Many felt Infosys had a great succession planning and leadership pipeline development strategy. Then recently we found many senior leaders leaving the organisation and Infosys hiring an outsider as CEO.
A large number of Indian organisations is focusing on building a leadership pipeline so that their leaders can take bigger roles and responsibilities. A multinational pharmaceutical company identified ten people as top talent and sent them for a leadership development programme at Harvard three years ago and now six of them have left to take up new roles in other organisations.
The reason, a senior leader who left told me, was that he did not find any growth opportunities even after being identified as top talent.
It is known that strong succession management and development practices translate into improved financial performance, productivity, quality, customer and employee satisfaction, and retention of quality employees - something every CEO dreams about.
Underscoring the importance of talent, PepsiCo CEO Indra Nooyi said, "Perhaps the greatest challenge business leaders face today is how to stay competitive amid constant turbulence and disruption. Today's marketplace is incredibly competitive in every industry around the globe. The difference between success and failure is talent, period." Attracting, nurturing and developing talent becomes the key differentiator in world where the war is for talent.
There are a number of processes and systems available for accelerating the development of leaders at all levels, such as formal training and development, on-the-job learning, special assignments, executive coaching, and job rotations etc. But when it comes to top leaders, organisations should not only develop individual leadership skills, but also enhance the effectiveness of its overall leadership capacity in order to transform the organisation and build the necessary culture. This means we should focus on human capital development, social capital development and cultural capital development.
Human capital includes the skills and knowledge an individual gathers from formal and informal learning. This is the knowledge and skills an individual demonstrates. And most of the time organisations measure only human capital using an assessment centre. Social capital is the trusted networks that an individual is part of and the learnings that he or she could leverage from the network. Social capital is the power of your network. We all know work most of the time does not get done through formal structures but through informal networks.
In Robert Putnam's bestseller, Bowling Alone: The Collapse and Revival of American Community, he argued that while Americans have become wealthier, their sense of community has withered. To demonstrate this decline, Putnam looked at the way Americans play 10-pin bowling, a sport with a big following in the United States. He found that Americans are no longer competing against each other in the once-popular local leagues. Instead, they are - literally - bowling alone. Putnam says that the decline of the community networks that once led Americans to bowl together represents a loss of social capital.
In Bowling Alone, Putnam attributes a large part of the success of Silicon Valley in the United States to formal and informal co-operation between start-up companies in the area.
Cultural capital defines how people engage each other and their resources. Whether the culture of an organisation is good or bad - cultural capital is created when values, traditions, beliefs and language become the currency to leverage other types of capital. Organisations that focus on incorporating their cultural values into their everyday functioning are exercising values-driven leadership and in doing so they are building their cultural capital to successfully meet the demands for higher performance, enhanced adaptability and the attraction and retention of talented staff. Cultural capital is defined as: "The value attached to the collective mental programming (values, beliefs and behaviour) of the organisation that supports its relationships with its employees, customers and society."
So if you are planning to do succession planning and developing your top talent in your organisation, here are some tips:
1. Design the leadership development strategy in alignment with your context and culture
Off-the-shelf programmes offer little or no customisation. It is okay to buy a prestigious American university's programme for your high potential talent as long as the content and methodologies are relevant. It is also important to have an inclusive approach where talent development is holistic and focused on all levels in the organisation. Think about what kind of culture you would like to have and what role these leaders play in building that culture. How would this leadership development directly support the organisations' short and long-term objectives? How will you build shared leadership rather than individual leaders?
2. Integrated learning approach
An integrated approach with on-the-job learning and new exposures, learning workshops, one-to-one coaching, mentoring by seniors and action learning projects is more effective than using just one methodology. While designing their leadership development programmes, organisations need to ensure that its leadership model and values are incorporated into the overall design of the workshop. Design the intervention in such a way that leaders need to collaborate to different parts of the organisation and build networks to get things done in their action learning projects. Help the leaders understand how culture impacts strategy and how they could build a culture that is aligned with their strategy.
3. Top management support and alignment with strategy
Creating a sustainable reserve of top-tier promotable internal talent that fuels the leadership pipeline and is an integrated and systemic approach to talent management. The accountability of these initiatives cannot lie on the HR department or Learning and Development teams alone. The top management needs to take responsibility of creating a talent management culture and developing the next layer of leadership talent for the firm. Have a pool of senior leaders who would act as mentors and support them in their leadership development journey.
Sometimes it is good to recruit people from outside as they bring a fresh perspective but recruiting outside talent for key positions has a low success rate because of
1. Cultural mismatches
2. Lack of relationship networks
3. Resentment of the internal candidates
4. Pressure of learning a new management layer at the same time as learning the new company
Microsoft and Tata managed the succession planning and leadership development process well. So if the difference between success and failure is talent, we must look at development of top talent more seriously.
(Santhosh Babu, a celebrity coach and speaker on leadership, facilitates organisational transformation. Buddha in the Boardroom is his weekly online column for Business Today. Bookmark businesstoday.in/buddhaintheboardroom and follow @BT_India and @hypnobaba to be alerted of Babu's columns.)