Evolving leadership in the social enterprise

Developing social entrepreneurs

Posted by Stacey Philpot on March 13, 2019.

The relationship of the organization to its communities has moved beyond a social responsibility program or a marketing initiative to become a CEO-level business strategy—defining the organization’s very identity. We characterize this shift as the rise of the social enterprise about which we have published a comprehensive discussion in the 2018 Deloitte Global Human Capital Trends report. The social enterprise is a product of the impact of technology and evolving talent models that are leading companies to redesign their workplaces, their workforces, and work itself. The social enterprise requires leaders who can manage the daily needs of the organization while recognizing and embracing change. These women and men need to become, in short, social entrepreneurs. An important element of this new leadership is understanding the role of succession planning as an integral component of the workforce of the future.

The social enterprise demands an unprecedented level of cross-functional vision, connectivity, and collaboration from C-suite leaders. And, in fact, the 2018 Trends report found that 85 percent of respondents said that C-suite collaboration was important or very important. This recognition of the importance of collaboration is a dramatic shift from previous ideas of C-Suite leaders as functional experts and further illustrates significant change in what organizations demand from their leaders.

Successful organizations still require business leaders with strong financial acumen, who can direct teams. But today, companies need leaders who understand that they are responsible for building social networks and ecosystems that extend beyond hierarchies or even their organization’s former boundaries.

Most organizations know that current and future success depends on having the right leaders in the right roles at the right time. Still, few of these same companies have found ways to take a proactive and disciplined approach to orchestrating succession planning; to identify social architects and entrepreneurs. Succession planning processes may be in place, but they aren’t perceived as particularly helpful.  According to Deloitte research, 86 percent of leaders in one survey felt that succession planning was urgent or important. Yet only 14 percent felt their organization did it well.

To build a truly social enterprise, organizations must establish succession planning processes that focus on identifying individuals who can inspire, collaborate, and empower the workforce. The process must focus on people first while maintaining objectivity and procedural discipline. Such an approach can make it an effective part of the organizational growth strategy and a signature feature of the corporate culture.

Taking a “centered” approach to succession planning can have specific benefits to the organization as a whole. It can create a steady pipeline of leadership talent that draws on a more diverse portfolio of candidates. It will almost certainly lead to more informed decisions around promotion and development offering enhanced opportunities with a stronger organizational culture populated by a better prepared, “future-proof” workforce.

There are numerous challenges in achieving this more mature type of succession planning. First, the introduction of attention to human factors coupled with objective decision-making demands long-term discipline in a short-term environment. For most organizations, there is not yet a clear process for introducing this model.

There is a paucity of data that can be used to offer accountability for decisions that might be made. Possibly the greatest barrier is engaging current leadership in supporting a new way of handling a complex effort to the satisfaction of multiple constituencies and stakeholders. Succession planning can be threatening and destabilizing.

But effective succession planning can be put into place. The first step is to make succession planning worthwhile for those most affected. Tying assessment or high potential identification to targeted and highly relevant development initiatives is one way to do this. The second step is to ensure senior leaders understand how a more rigorous and valid process will benefit them.

Succession planning must be championed as a critical growth lever by senior leaders or it risks being sidelined as “nice to have.” It must also function at all levels of the organization. One fast-growing tech company in San Francisco has made a major performance metric of the rate at which managers develop and promote their own people.

At its core, succession planning is about building the social enterprise where people, performance, and purpose come together and thrive. It will be led by men and women who empower the workforce; who listen and respond to the broader workforce ecosystem. These leaders will encourage flexibility and team-based collaboration and take a stand on social issues. They embrace diversity and inclusion at every level.

Stacey Philpot is a principal in the Human Capital practice of Deloitte Consulting LLP, with more than 20 years of experience consulting to companies on leadership development, succession planning, and talent strategy implementation.

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