An increasing focus on developing skills, behaviours and specialisms
For all financial services organisations, developing internal talent is a core element in succession planning.
Most offer a leadership development programme comprising all, or a combination of, the following: leadership skills development and assessment, job rotations, international assignments, stretch assignments, secondments, exposure to the board, coaching, and education through a business school.
However, those we spoke to made it apparent a shift is in progress with greater priority placed on skills and behaviours. This included programmes on mindset, self-awareness, emotional intelligence, and culture alignment. One global HR Director explained this focus on skills development also “makes succession more individualised.” Another said it enabled them to be more flexible: “we generally look at helping successors get to the next level, not into the next role.” While another added they increasingly focused on the skills angle in succession alongside experience.
Development during and after succession
The nine or four box matrix is a common method of identifying internal talent, and often used alongside performance management metrics. Many financial services organisations have a “high-performing talent profile”, against which they measure potential successors.
Typically, identified successors would be broken down into three development categories: those who were “ready now”, those who would be ready in “one to two years”, and those ready in “three to five years”, as well as emergency cover candidates. Broadly, successor candidates should be individuals who can manage one to two levels up if required.
One people leader told us their succession planning involves identifying “leadership cohorts who are five to six years away from the role and get them working together.” While they recognise some would leave along the way, this is outweighed by the benefit of eventually having a more collaborative and aligned leadership group.
Importantly, development does not stop once the successor had made it into the role. Many HR leaders told us they offer coaching and mentoring post-succession, both as a way of supporting the successor and integrating them into their new team.
The need for two succession tracks
Two succession programmes – one management and one technical specialism – was something financial services organisations had implemented, or knew they needed to. Almost every HR leader we interviewed touched on the growing importance of technical leadership in succession planning. For most, this meant offering a typical leadership management track and a technical specialism.
Technical specialism focuses on developing individuals with specialised technical skills essential for the organisation's operations. From our conversations, these were primarily in technology and digital. Unlike management succession, which prepares individuals for leadership and general management roles, technical specialism succession planning develops talent in specific technical areas critical to the business.
Those not currently taking this approach were vocal about the need to adopt it. “We’re looking for a better separation of specialist and management careers in our succession planning,” one HR Director explained. Another summed up the importance of this separation: “lacking key specialists can hold you back as much, or even more than, senior management roles. Don’t be blinded by hierarchy.”
To tell or not to tell the successor?
Just two of our interviewees said their organisation has not told their identified successors they are successors. While they rated and ranked their internal talent, they have no plans to ask their leaders to communicate these rankings. In these cases, HR were the custodians of this information, and took a neutral position in the development and assessment of individual leaders.
It is important to note these were the exceptions. All other financial services organisations were clear about telling their identified talent they are successor candidates. “All employees who have a set place in the succession plan are aware of this and the topic is discussed in all their personal development meetings,” one Chief People Officer told us. From the conversations we had, this level of transparency was either in place, or something to aim for: “we make them understand early what being on the plan means, and that there is always competition from internal and external candidates."