In a world that’s growing more diverse every day, traditional succession plans risk leaving key talent behind. How can organizations ensure that tomorrow’s leaders reflect the richness of perspectives that drive real sustainable growth?
Succession planning is the vital process of preparing and developing future leaders to safeguard an organization’s long-term success. However, in the current business landscape, effective succession planning must extend beyond merely identifying high-potential employees. Succession plans are expected to be deliberately inclusive, ensuring that leadership teams reflect diverse backgrounds and experiences.
The business case for increased diversity in the workplace is already overwhelmingly well-established, backed by studies from across the world.
Blues Zhao, Managing Partner at Signium China, says, “I believe we’re past the point of debating whether or not diversity lends any value to leadership. Based on facts, this is a given. What we now need to focus on is addressing the challenges that may be keeping organizations from implementing greater DEI initiatives at an executive level. Effective succession planning is one of the most promising avenues that companies can’t afford to overlook.”
Breaking barriers: The state of diversity in leadership today
By embedding diversity and inclusion into leadership development, companies can unlock greater creativity, enhance decision-making, and strengthen employee engagement. Yet, despite awareness of these advantages, many leadership roles still lack adequate representation of women, ethnic minorities, and other underrepresented groups.
The statistics paint a concerning picture. Women hold nearly 44.7% of board seats in FTSE 100 companies, yet the number of female chief executives in FTSE 350 companies has dropped to just 19 in 2024, down from 20 in 2023. Ethnic diversity in leadership is also stagnating, with the proportion of Black directors at Russell 3000 companies declining from 26% in 2022 to 12% in 2024, while white directors increased from 52% to 69%.
Challenges such as unconscious bias, lack of mentorship opportunities, and systemic barriers often prevent diverse candidates from advancing into senior roles. In addition, organizations often fail to recognize the importance of retaining diverse talent, focusing more on recruitment rather than the long-term development and promotion of people already in their workforce.
Zhao comments: “A few years ago, more executive searches had DEI as a high-priority hiring criterion – more so than what we’re seeing now. But confronting the lack of diversity is not necessarily a hiring matter. We should be looking internally at succession pathways for those already in our care. Without a structured and proactive approach, diverse candidates with immense potential remain stuck in middle-management positions, unable to break through to executive levels.”
Safeguarding the future: What are the risks of non-inclusive succession planning?
Tim Cook, CEO of Apple, once said, “We believe that inclusion and diversity are essential to our success as a company and our ability to innovate.”
If diverse leadership sets a business up for success through increased creativity, better decision-making, enhanced problem-solving, and a broadened market appeal, what are the risks that an organization faces when it neglects inclusive succession planning?
- A loss of talent is one of the most immediate consequences of inadequate succession planning. When high-potential employees from diverse backgrounds perceive a lack of opportunities for growth, they are more likely to seek employment elsewhere. This turnover not only increases recruitment costs but also weakens institutional knowledge and business continuity.
- A negative organizational culture can emerge when leadership lacks diversity. Employees may feel disengaged or disconnected from decision-makers who do not reflect their experiences, leading to decreased morale and productivity.
- Finally, businesses that do not build diverse leadership pipelines risk becoming less competitive in the global market. Companies that fail to embrace inclusivity may struggle to attract investors, partners, and customers who prioritize corporate social responsibility and representation.
Six key ways to build a leadership pipeline that reflects the future
“When it comes to DEI, nothing happens by chance,” says Zhao. “It’s human nature to want to surround ourselves with people who look like us and think like us. That’s why implementing inclusivity at the boardroom level presents such a challenge – it requires a tenacious intention to not simply wait for change to happen but to pursue it actively. It requires executives to recognize that diversity is the future of leadership.”
1. Assessing current diversity
Before making changes, organizations should first evaluate their current leadership structures. Performing a diversity audit can help pinpoint gaps and opportunities for improvement. Examining promotion trends, hiring patterns, and turnover rates among underrepresented groups offers valuable insights into systemic barriers within the company.
2. Developing a culture of inclusion
Creating a culture of inclusion begins at the top. Leadership must actively promote inclusive values, ensuring that diversity is more than just an HR initiative; it should be a company-wide priority. Open dialogue about diversity and inclusion should be fostered through internal forums, leadership discussions, and employee resource groups.
3. Implementing fair recruitment and promotion practices
Organizations must take concrete steps to ensure that recruitment and promotion practices are free from bias. Some ideas include blind resume screening and standardized interview questions, which can help mitigate unconscious bias. Expanding recruitment efforts to include diverse talent pools, like historically Black colleges and universities (HBCUs) and women-in-leadership networks, can also broaden the range of candidates considered.
4. Creating mentorship and development programs
Mentorship plays a crucial role in cultivating future leaders. Research on the influence of mentorship and sponsorship for women shows that structured programs greatly enhance leadership representation among women and minorities. Companies should create mentorship opportunities that link emerging leaders with senior executives, offering guidance, sponsorship, and professional development opportunities.
5. Setting Goals and Measuring Success
Zhao encourages organizations to be systematic about implementing inclusivity in leadership roles: “DEI should be more than just another box to be ticked. It should be a sincere commitment to creating a fair, equitable world. However, sincerity alone tends to fail, which is why we create boxes for ticking – setting goals and measuring success fills the purpose of holding us accountable to our sincere intentions.”
Organizations should establish clear, measurable diversity targets within their leadership pipelines. These goals must be realistic and data-driven, focusing on metrics such as the percentage of leadership roles filled by diverse candidates or retention rates among underrepresented groups.
To ensure these objectives lead to meaningful change, organizations must implement strict tracking and accountability measures. Regular quarterly reviews, along with publicly shared progress reports, help maintain transparency and demonstrate a genuine commitment to inclusion. These diversity goals should be monitored regularly through quarterly reviews and shared openly with stakeholders to demonstrate a genuine commitment to inclusion.
6. Engaging employees in the succession planning process
Employee input is essential for shaping effective succession planning strategies. Organizations should actively gather feedback through surveys and focus groups to gain insight into employees’ views on leadership development and career advancement opportunities. These insights can help pinpoint obstacles and guide policy adjustments to create a more inclusive framework.
Additionally, fostering direct employee involvement can empower individuals to shape their own leadership pathways and set their own milestones. By integrating employee voices into the succession planning process, organizations not only gain valuable insights but also cultivate a workplace culture that prioritizes inclusivity and professional growth.
“Companies shouldn’t assume they know what people want,” urges Zhao. “One might identify a young woman as a brilliant future leader in the technology department, and design an elaborate career pathway for her, only to find that her passion is people management and her ideal role would be within executive HR. It might even be that she’s happier in middle management, where work-life balance allows her greater freedoms as a mother. Decision-makers will only know these things if they actively engage with their people.”
Procter & Gamble: A blueprint for inclusive leadership development
Procter & Gamble (P&G) exemplifies a company that has seamlessly integrated DEI into its succession planning framework. Recognizing that a diverse leadership team fosters innovation and mirrors its global consumer base, P&G has instituted comprehensive strategies to cultivate and promote talent from varied backgrounds.
1. Leadership development and internal promotion
P&G is renowned for its robust leadership development programs, which emphasize internal talent cultivation. A striking testament to this commitment is that nearly 99% of the company’s senior leaders have risen through internal promotions. This approach ensures that leadership is well-versed in the company’s culture and operations while also providing equitable growth opportunities for all employees.
2. Embedding DEI in corporate culture
Diversity and inclusion are not mere buzzwords at P&G; they are integral to the company’s ethos. The organization conducts quarterly webcasts and meetings where DEI is a focal point, ensuring continuous dialogue and reinforcement of inclusive values. Additionally, P&G’s annual survey solicits employee feedback on cultural and inclusivity initiatives, allowing the company to assess and enhance the effectiveness of its programs.
3. Transparent communication and accountability
Transparency is pivotal in P&G’s approach to DEI. The company prominently features diversity and inclusion in its annual Citizenship Report, highlighting progress and areas for improvement. This openness not only holds the company accountable but also fosters trust and engagement among employees and stakeholders.
“When organizations take the sort of approach that P&G does, they’re viewing DEI and inclusive succession planning as a long-term objective,” says Zhao. “Instead of focusing on recruiting an executive for a role that needs to be filled tomorrow, they’re cultivating a diverse and dynamic leadership pipeline that could potentially fill executive roles for years to come. They’re positioning the company to adeptly navigate the complexities of a global market, well into the future.”
Future-proof leadership through inclusive succession planning
At its core, succession planning is about securing the future of an organization. But what kind of future are we building if leadership continues to be shaped by the same molds? Inclusive succession planning isn’t just a nice-to-have – it’s the key to unlocking untapped talent, building more effective teams, and ensuring businesses reflect the diverse world they serve.
True inclusion demands an ongoing commitment to breaking barriers, creating space for new voices, and holding leadership accountable for meaningful change. It means shifting from a mindset of ‘who fits the role’ to ‘who brings value in new and necessary ways.’
The future of leadership is being shaped today. The question is: will your organization be ahead of the curve, or will it be left behind?
Ends
About Blues Zhao
Blues Zhao is a global leadership expert advising clients on their most complex leadership issues. He helps clients build teams of transformational leaders who can meet today’s challenges and anticipate the future trends that are reshaping the business environment. Covering Hong Kong and Mainland China, Blues has a proven track record of aiding clients to successfully achieve strategic and long-term goals in the Greater China region and globally.
With over twenty years of experience in executive search, leadership advisory, and general management with P&L responsibility, Blues has built expertise in executive search, human resources management and strategic consulting. He has worked with global Fortune 500 companies and leading Chinese businesses, delivering impactful results and insights.
- A Boston Consulting Group study finds that companies with above-average diversity scores are 19% more innovative than those with below-average diversity scores.
- McKinsey’s Delivering Through Diversity study suggests that companies in the top quartile for gender diversity at the executive level are 21% more likely to generate higher profits and 27% more likely to have superior value creation.
- A more recent study by McKinsey shows that organizations that prioritize diversity on executive teams are now 39% more likely to outperform their industry average.
- HR Dive research further indicates that companies that prioritize diversity at all levels are twelve times more likely to engage and retain employees and 8.5 times more likely to satisfy and retain customers.
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