Does Organizational Flexibility And Contingent Work Mean The End Of Succession Planning?

Michael Rander

Companies that use contingent workers across the organizational hierarchy – from manufacturing floor employees to a rent-a-CFO – are clearly trying to stay as agile and flexible as possible to face the future demands of the digital economy. Right?

The digital economy is driven by innovation and technology. And as millennials and Generation Z begin to take over the workforce, the rise of contingent workers, robots, and artificial intelligence is destined to transform entire industries and bring organizational flexibility high on the list of executive priorities.

Does that mean that succession planning is a thing of the past? After all, if you are nimble enough to replace any person in the company hierarchy quickly, why take the long-term talent-management approach?

It’s time to rethink succession planning

Without question, the digital economy is driving the contingent workforce and the gig economy. However, it is also driving the rise of digital workers who are becoming intrinsic to a business’ success. Their technological knowledge and use of available tools create competitive advantage, organizational efficiency, and live decision-making processes across their organizations. While technology itself may be a big part of that equation, industry experience, corporate culture, organizational leadership, and management of new technology are also critical to a digital worker’s success. And for that reason, new contingent workers, who are brought in from outside company ranks, cannot instantly assimilate and adopt these components.

To make the most of this fast, ever-changing workforce, businesses should have a clear strategic direction, a compelling corporate culture, and a sense of leadership continuity to truly become – and remain – a successful Live Business underpinned by a digital workforce. Effective integration of a fluctuating contingent and digital workforce calls for management of this constant two-way flow of workers. In the end, that responsibility falls on the executive management team, and they can only achieve this if planned for ahead of time.

As it turns out, the leadership team and associated management skill set might be a problem, though. Recent research showed that 86% of companies believe that leadership is a top challenge. And if that wasn’t alarming by itself, a mere 10% believe that they have a good succession plan in place for the future, which seems to leave the vast majority of businesses with sub-optimal leadership and no clear plans to change that situation. To top this off, a Deloitte study showed that two-thirds of millennials are expressing a desire to leave their current organizations by 2020.

The potential for massive corporate leadership turbulence is clear – unless you plan for it, that is. As the pace of outside influences affecting your company increases, succession planning becomes the glue that can hold your business together through these pivotal changes. Yet, there are a few significant differences to consider.

  • Beyond the mere access to available talent, succession planning for contingent workers should provide measures to ensure cross-functional collaboration, quick ramp-up times, and cultural integration. This approach increases employee engagement and effectively leverages a constant flow of workforce insights coming from a myriad of old and new resources.
  • For digital workers who are critical to a brand’s success based on their ability to enable and make the right business critical, in-the-moment decisions, succession planning is all about reducing organizational risk. Not only does this bring talent continuity, but it also, in fact, ensures the long-term survival of the company.
  • Instead of determining the traits of your ideal leaders, McKinsey suggests focusing succession planning on the specific market and competitive context that new leaders will be facing going forward. With the advent of the next generations in the workforce and the digital economy, market context will be one of constant change and innovation. But, it will also be critically marked by a need for corporate continuity to pull all of the constantly moving pieces of the internal organization, ecosystem, and customers together in a cohesive way.

Even in the gig economy, workforce automation, contingent workers, and succession planning, if implemented the right way, will actually help drive organizational flexibility, employee productivity, and corporate identity. What are you doing to plan for the future of your organization?

Learn more about the rise of the digital worker and the future of work. Read the Digitalist’s executive research white paper “Live Business: The Rise of the Digital Workforce.”

About Michael Rander

Michael Rander is the Global Research Director for Future of Work at SAP. He is an experienced project manager, strategic and competitive market researcher, and operations manager, as well as an avid photographer, athlete, traveler, and entrepreneur.