Leadership Transition: Addressing Risks and Challenges with Organizational Network Analysis

Leadership change rates significantly dropped across all industries for two consecutive years after the pandemic. As many leaders across the globe had to maintain their roles and guide the companies through turbulent times. In 2022, according to Spencer Stuart’s report, the number of CEO transitions nearly matched that of pre-pandemic years. Despite global economic and political trends, the tendency will likely remain at the same rate in 2023.

Leadership transition is a high-stake yet essential step when it comes to growing and evolving your business. New leaders offer new views, inventive thinking, and diverse experiences, which may result in strategy adjustments, better decision-making, and the pursuit of new possibilities. Transitions allow for cultural change while re-energizing employees and encouraging innovation and engagement. They also promote learning and professional development, diversifying perspectives and skills. 

Considering the importance of leadership transition, it’s not something that you can leave out to chance. It impacts every aspect of the business and requires meticulous planning. Specifically for HR professionals that have to specify the guidelines for the new and former leaders as well as the company as a whole. 

In today’s post, we will discuss organizational network analysis (ONA) ‘s critical role in preparing successful leadership transitions. As companies undergo leadership changes, ONA can provide priceless insights to mediate underlying risks and enable a seamless transition process.

Finding the Perfect Fit

Leadership transitions can take various forms, such as succession planning, internal promotion, and external hiring. According to the recent Spencer Stuart CEO Transition report, 80% of new C-level management positions were internal promotions, with only 20% attributed to outside hires. Finding an employee fit for the executive role within the workforce has proven to be less disruptive to the business processes as it allows for continuity and familiarity with the organization’s operations, culture, and goals. As people perceive prospects for advancement inside the organization, this approach can help increase employee enthusiasm and morale. 

However, C-level executives generally have limited awareness of the range of internal candidates. Here’s where the help of Organizational Network Analysis (ONA) and accurate data can’t be underestimated. 

Considering succession or internal promotion

ONA allows for identifying and grooming potential leaders within the organization who can seamlessly step into key positions. With its help, the organization can examine its current leadership network and identify possible successors within it. ONA tools assist in assessing potential candidates’ relationships, impact, and collaborative tendencies. The corporation can discover who has the strongest connections, most extensive reach, and most important position inside the organization by studying the network of possible successors.

ONA insights assist in identifying individuals who are well-connected, respected, and capable of effectively moving into a leadership role. The company can establish an employee’s capacity to navigate and lead successfully by examining their network and knowing their function in the organization.

Keeping a potential candidate 

Top-performing employees that might be considered for an executive position can be poached by other companies. That’s why companies must efficiently track employee engagement levels, job satisfaction, and general well-being through ONA. These insights enable businesses to proactively spot indicators of disengagement or unhappiness in top-performing employees who may be prospective leaders. Companies may take specific measures using this information to address concerns, communicate opportunities and build trust in the leadership transition process. 

Assessing the gaps

Preparing a cohesive leadership transition strategy requires in-advance planning. HR executives may find any possible gaps in the candidates’ network connections by evaluating the ONA data, especially in areas important for executive positions. It enables HR leaders to provide targeted development opportunities, such as assignments in various positions or cross-functional projects, to increase the applicants’ abilities and fill any detected skill gaps to prevent similar gaps from occurring in the future.

Challenges To Leadership Transition

Managers may experience extreme stress during a leadership change, which presents substantial obstacles. A startling 83% of HR experts believe that a manager’s career’s leadership transition is its most challenging stage. This statistic illustrates the difficulties and requirements for a new leadership position.

Another alarming finding from McKinsey’s workplace study is that 27–46% of newly appointed CEOs fall short of their goals in the first two to three years after taking charge. The enormity of the difficulties encountered during leadership changes and the potential effects on organizational performance is highlighted by this failure rate.

Corporate politics, people, and culture are noted as significant contributors to top leadership failures in Spencer Stuart’s CEO Transition report. It may be extremely challenging for new leaders to navigate business politics and forge strong connections.

Yet, the tendency to underestimate the intricacy of the process often overshadows the strategic approach resulting in the following disruptive outcomes for business operations.

Loss of Institutional Knowledge 

There is a chance that crucial knowledge and communication nodes will be damaged during the transition if the leaving leader holds important knowledge, expertise, and connections. New executives need some time to properly understand the nuances of the company, its culture, and the market. This information gap might make it difficult to make decisions and impede development.

Cultural Shifts 

It might be difficult to control cultural change and make sure the new leader upholds the organization’s core principles. In contrast to their predecessors, new leaders frequently bring their own leadership ideas, beliefs, and personalities to the table. It may cause cultural adjustments inside the company, which may arouse resistance from workers who were used to the techniques of the prior leadership.

Employee Morale and Retention

Employee morale and motivation can decrease during leadership transitions because of the uncertainty they can cause. Employee turnover may increase or productivity may decline as they start to wonder about their futures inside the company. In order to keep employees engaged and loyal, it is critical to address their problems, ensure transparency of communication, and offer assistance.

Resistance to Change 

Numerous teams and departments frequently oppose change, especially leadership transitions. Some staff members could oppose the new leader’s objectives by contesting their authority or calling into doubt their credentials. Building connections, using good communication, and addressing issues positively are all necessary for overcoming resistance to change.

Addressing challenges with ONA

ONA is able to assist in mitigating the risks and difficulties that come along with leadership transitions when the process is already underway. ONA offers insights into the social and communication networks that exist inside a company, providing information that is both relevant and useful for guiding the transition process. 

Identifying Key Influencers

ONA helps spot influencers that have strong interpersonal ties inside the company. Gaining their support would greatly benefit the newly appointed leader in managing change and promoting efficient communication. These employees can assist new leaders in sharing information, responding to concerns, and fostering a seamless transition.

Analyzing Knowledge Flow

ONA reveals how knowledge flows within the organization and identify employees who act as knowledge brokers or hubs. This insight is critical during leadership transitions to preserve valuable corporate knowledge. By understanding how information is exchanged and consumed, new leaders can proactively engage with these knowledge brokers and ensure a seamless knowledge transfer.

Pinpointing Communication Gaps

ONA uncovers potential communication gaps or bottlenecks within the organization. This understanding enables emerging leaders to spot potential communication gaps and put measures in place to close them. By establishing efficient communication channels throughout the transition, leaders can alleviate concerns, maintain transparency, and minimize interruptions.

Revealing Team Dynamics

New leaders can make informed decisions regarding team structures, spot potential workplace conflicts or silos, and promote easier integration across the company once they know how teams communicate and function. ONA provides data regarding team dynamics, including social connections and collaborative patterns. The creation of cross-functional teams and the promotion of cooperation throughout the transition has more potential to be successful with appropriate guidelines powered by ONA insights. 

Evaluating Engagement and Resistance

By monitoring employee engagement levels, ONA tools spot any possible opposition to the change in leadership. New leaders may proactively address employee issues, offer assistance, and develop focused tactics to increase engagement by evaluating patterns of interaction and sentiment. 

Fostering Cultural Fit

ONA provides insight into the current company culture and potential effects of the leadership transition. New leaders may evaluate cultural fit, identify possible conflicts, and create strategies to match corporate culture with desired leadership style by having a thorough understanding of the informal networks and social conventions inside the company.

Conclusions

Intangibles related to corporate politics, people, and culture remain the critical threat to successful leadership transitions. More often than not, the newly appointed leaders have to navigate these aspects by the feel. They lack accurate, recent ONA metrics that enable evidence-based decision-making.

By providing access to actionable comprehensive data, Organizational network analysis tools can significantly increase the chances of a smooth and successful handover of duties. The invaluable insights into employee relations will help untangle the corporate network and make the new managers and executives more confident in their roles.