When you promote next-level leadership from within, you keep institutional knowledge in place. Perhaps more importantly, you demonstrate to your team that you value employees who work hard and are committed to making themselves and those around them better. Although every business hates to see executive turnover, it does create opportunities for employees who are ready to “play up” to new challenges and bring their own thoughts and ideas about improving company functions. This can revitalize your organization and ease the burden when an executive resigns.
Executive turnover had been climbing for a few years, but the pandemic, as with many areas of business, had a leveling effect on this unfortunate trend. Senior leadership teams felt a sense of obligation to maintain stability in the midst of so much uncertainty, and C-suite turnover took a dip (61%) in the second half of 2020, according to a report by Bain & Co. and Spencer Stuart. This same report, however, asserts that 2022 will usher in a new wave of executive resignations 30% above pre-pandemic levels.
Part of the great exodus can be traced back to the pandemic, which simply wore out those in the C-suite. Keeping companies on the rails required a ton of mental energy and led to high levels of stress and anxiety — and that’s not accounting for all the effort and strategies put into keeping employees safe, transitioning to a remote work environment, maintaining data security, dealing with supply chain issues, and so on.
With everyone working remotely, senior leaders had time to reflect. Some found themselves in good shape financially for retirement, and the timing seemed right to call it quits. Others decided they wanted to explore new career opportunities, and the time at home provided room to put their feelers out. With executive turnover increasing, many companies had openings and attractive offers at the ready to pull in these leaders.
Besides, being away from the traditional workplace for months (if not years) has made it difficult to get back on the treadmill, so to speak. Commuting back and forth to the office alone can now feel taxing, and then executives are looking at schedules filled with client meetings, visits to suppliers, travels to other offices, and more. When all combined, it’s no wonder we’re seeing a spike in C-suite turnover.
Unfortunately, this puts the company leaders left behind in the lurch.
Retaining Institutional Knowledge to Combat the Effects of Executive Turnover
Although you can certainly try to convince your fellow senior leaders to stay put, they will eventually leave. That’s why you must create a robust succession-planning process and develop strategies for capturing often decades of institutional knowledge before it leaves your company. Here’s how to retain this information and use it to prepare your next class of company leaders:
- Engage in succession planning.
Back in the ’60s, a shift took place where the use of knowledge became an important foundation of business. People began relying on information more than ever before to improve products, services, processes, and the workplace itself. Enter the knowledge economy that companies, by and large, still operate in today. Therefore, when an operation loses institutional knowledge, its growth can slow. Should that institutional knowledge loss occur at the executive level, companies can quickly begin repeating mistakes of the past. Those mistakes can be costly hits to the bottom line.How many senior leaders are routinely executing mental checklists each month? They know what needs to get done and when, but it’s not always written down. Their past experience serves as a reminder that preparing or executing something in a certain way keeps the company’s operations on the rails. Then, when those leaders leave and employees approach the given tasks differently because they don’t have the same knowledge, the change has a ripple effect. Without that institutional knowledge, other people in the organization find themselves with more work to do.
So a spike in executive turnover underscores the importance of succession planning as an organizational strategy. To start the succession-planning process, first identify the knowledge, skills, and abilities that will be lost if senior leaders exit the company. Then, develop a plan for consistent knowledge transfer. If you wait to do this until a leader announces their resignation, it’s too late. Tap multiple individuals within the organization, making sure to match aptitude to function. Also, consider instituting an implementation team to not only oversee the succession-planning process, but also monitor its practices, standards, and metrics.
- Establish a cross-training program for employees.
Cross-training can sometimes be difficult at large companies, but you can achieve success in smaller organizations or even within two or three departments within a large organization. It all starts with the project selection process. Choose projects that require cross-functional participation, and then assign high-potential leaders to the project team.One of the benefits of cross-training these employees is that it offers future leaders opportunities to lead in different ways and experience other aspects of the company’s functionalities. The approach also gives you and your fellow executives a good view of mid-level leadership performance and where potential gaps might develop in functions of operations should executive turnover increase in the organization.
Our company is very focused on high-potential mid-level leaders right now — making sure we keep them engaged and challenged with new project leadership assignments. We’ve certainly seen the benefits of cross-training these employees, as the skills, experience, and knowledge they’re gaining will allow them to be more active members of the executive team now and in the future. After all, with the way businesses are evolving, senior leaders are often pulled in to advise CEOs on key decisions and asked to consult on other areas of operations.
- Deploy external leadership development training.
Currently, 72% of organizations offer some type of leadership coaching, and 41% have plans to increase their budget for developing leadership skills through this method. So you’re putting your employees — and company as a whole — at a disadvantage if you don’t do the same.
Although most leadership development training helps groom rough edges, professional coaches from outside your organization offer a different perspective. They can expose blind spots that are holding your highest-potential next-level leaders back from becoming even better leaders. There are a lot of leadership coaches out there, so explore all your options — and invest in leadership development training before C-suite turnover becomes a serious issue for your organization.
When you promote next-level leadership from within, you keep institutional knowledge in place. Perhaps more importantly, you demonstrate to your team that you value employees who work hard and are committed to making themselves and those around them better. Although every business hates to see executive turnover, it does create opportunities for employees who are ready to “play up” to new challenges and bring their own thoughts and ideas about improving company functions. This, in turn, can revitalize your organization and ease the burden when an executive resigns.
Written by Chris Burke.
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