Paradigm shift

Companies lack robust succession plans to identify the next generation of leaders

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Our survey suggests that businesses may be on the brink of a leadership crisis.

Only 54% of high performers have a strong pipeline of future leadership talent.

For now, most companies in our survey seem broadly satisfied with their current leadership, with 78% of the high performers and 70% of the low performers agreeing that they have the right attributes and experience in place.

Figure 8

However, when it comes to the next generation of leaders, the gap between these two groups widens significantly. Even among the high-performing companies, there is a real lack of confidence about the next generation of leaders.

Only 54% agree that they have a strong pipeline of future leadership talent, compared with 43% of the low-performing companies. Companies are even less optimistic that they will be able to find leaders with sufficiently diverse experience and backgrounds.

Just 45% of the high performers and 36% of the low performers agree that their organization has addressed these aspects of leadership development.

Groysberg of the Harvard Business School finds a similar gap between current and future leaders in his own surveys, with a significant discrepancy between executives’ views of their top management team today and their views of the next group of leaders.

“Companies are simply not doing what it takes to build the next generation of leaders,” he explains. “They have a capable CEO and executive team, but when you look at the leadership bench, it doesn’t exist.”

There are clear weaknesses in the processes by which companies identify the next generation of leaders, even among companies with the strongest performance. Less than half of our high-performing respondents report that they have robust succession plans in place for leadership roles but, among the low performers, this falls to 33% (see Figure 8).

Companies also struggle with determining the right process for choosing a new leader. Among our respondents, just 43% of high performers and 38% of low performers agree that their organization has a clear set of qualification indicators for leadership candidates.

 


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