Succession Planning for Leadership Development
A report on “Global Human Capital Trends 2014” (pdf) prepared by Deloitte, which surveyed 2,532 business and HR leaders in 94 countries concludes that the most important and urgent concern for HR professionals today is developing “leadership” pipeline to achieve strategic objectives. In fact, it has appeared as ‘highly urgent’ at number one in the list of concerns followed by ‘Retention and engagement’, and ‘Reskilling HR’.
The report states that “Building global leadership is by far the most urgent: Fully 38 percent of all respondents rated it “urgent,” almost 50 percent more than the percentage rating the next issue “urgent.” Companies see the need for leadership at all levels, in all geographies, and across all functional areas. This continuous need for new and better leaders has accelerated.”
Now, as an HR professional we have two choices available, first, recruiting from other organizations and second, proactively develop leadership pipeline. We may also look at it as make v/s. buy decision in the form of developing v/s. hire. The most tempting and easier option for HR professionals is off course to hire since developing leaders is time consuming and tedious process. However, many management authors suggest otherwise.
For example Jim Collins, in ‘Good to Great’ says that “Larger-than-life, celebrity leaders who ride in from the outside are negatively correlated with taking a company from good to great. Ten of eleven good-to-great CEOs came from inside the company, whereas the comparison companies tried outside CEOs six times more often.” In the November 2015 issue of Harvard Business Review, Adi Ignatius, has compiled a list of 100 ‘Best-Performing Ceo’s In The World’ and among them 86 have come from within the company to successfully lead their organizations.
Hence, HR professionals have to make serious efforts to address the crucial concern of developing leadership to maintain the flow of business. “Succession Planning and Management” becomes the most suitable option for HR Professionals in this context. It is something like digging the well before you get thirsty. However, justifying such investment of time, efforts, and resources for this purpose in the form of ‘return on investment’ is a complex proposition for HR Professionals.
What is Succession Planning & Management:
William Rothwell (Effective succession planning 2010) states that “A succession planning and management program was defined as a deliberate and systematic effort by an organization to ensure leadership continuity in key positions, retain and develop intellectual and knowledge capital for the future, and encourage individual advancement.”
He further says, “Succession planning can mean more than just finding warm bodies to fill vacancies.” Succession Planning is much more than merely preparing a list of employees for replacement of vacant positions. In fact, “It’s not a replacement issue. It’s a strategic responsibility to be shared among the stakeholders.” – Kets de Vries. The ‘Replacement planning’ typically ask line manager to identify up to three people within the company as backup candidates. However, succession planning is a proactive effort to ensure a continuous flow of business by development of talent within the organization while carefully planning learning and development initiatives.
He includes ‘succession management’ in ‘succession planning’ since it should not stand-alone. He firmly believes that it must be put together to develop talent in real time to meet dynamic business needs. In-short ‘succession management’ broadens the scope by enhancing manager’s role to build talent by coaching, giving feedback and helping employees to develop their potential.
The following quote underlines the positive impact of succession planning. “After working with hundreds of organizations on their talent and succession planning programs we know the benefits of a successful program are broad — from reduced time to fill critical positions and reduced turnover costs, to cost improvements in developing high-potentials and enhanced competitive advantage.” – William Rothwell.
We all know the importance of culture in any organization. Moreover, the leadership of the organization has a major impact on shaping & developing the culture of the organization. Hence having a proper candidate in the leadership position becomes even more crucial. Succession planning and management can certainly address this concern by providing appropriate employees being groomed and developed within the company, who are well aware of the company culture. Normally succession planning is carried out annually in line with the Workforce planning process. However, it must be a continuous process and reviewed quarterly or even monthly in parallel to the workforce planning process.
Kim Lamoureux very well narrates the strategic importance of this process. He says, "By identifying and developing talent, creating a corporate culture that assumes the talent will move to those places where it is needed for the company to meet its business goals and maintaining a broad, nonhierarchical view of talent management, succession programs become part of the business strategy."
Individual Development Plan (IDP):
Succession planning and management is tied to strategic plans through individual development planning processes. Michael Watkins, the author of ‘The First 90 days’, has developed the STARS framework that can be used to develop individual career plans in line with the strategic requirement of the company. (STARS is an acronym for five common business situations leaders may find themselves moving into: Start-up, Turnaround, Accelerated growth, Realignment, and Sustaining success.)
Individual development planning options available for each position would differ in line with the strategic situations mentioned earlier. Hence, integration of individual development plan with the overall Succession plan is crucial for achieving strategic objectives. The following quote underlines the importance of appropriate integration. “A career plan without a succession plan is a road map without a destination.” – William Rothwell.
When it comes to succession planning, the question that is asked most often is whether ‘to tell or not to tell’ the employees about their inclusion in the list. William Rothwell says, “The issue may not be to tell everyone or not to tell everyone whether they are listed on succession plans. A better series of questions relates to when to tell, who to tell, and how to tell.” I had attended several webinars and most of the experts in the field of succession planning advocate the view of communicating to employees about their selection due to advantages for e.g.:
- to motivate successors to learn more.
- be willing to build their competencies in anticipation of future promotion.
- to be less willing to leave the organization, and,
- to improve employee morale.
Approaches to Succession Planning & Management:
Following are the three approaches suggested by William Rothwell for carrying out this process:
Top-Down Approach: Management Leaders in the organization direct this process from the highest levels through HR Department. They decide on required competence, appraisal process, assessment tests, and learning & development initiatives.
Bottom-Up Approach: In contrast to the above approach, this one is directed from the lowest levels. Employees and their immediate supervisors actively participate in all activities pertaining to Succession Planning & Management. Decisions are closely linked to the individual development plans that help these employees to assess their strengths, weaknesses, and future potential. Employee’s track record of accomplishments becomes crucial for Top Management to monitor the process.
Combined Approach: Integration of the ‘Top Down’ & ‘Bottom Up’ approach result in developing the Combined Approach. Management Leaders are involved in setting up the process, whereas Line Managers and Employees are involved in every step of the process. Efforts are being made to integrate the individual development plans with overall Succession Planning and Management.
Succession Planning and Management Process:
Getting buy-in (and participation) from Top management along with line managers becomes crucial for the success of this process. In fact, it’s the important ingredient for the success of any other HR initiative for that matter. William Rothwell has suggested Seven-Pointed Star Model for Systematic Succession Planning and Management as shown in the following image.
A systematic approach to carrying out this process would be influenced by the Culture, Values, Norms, and strategic requirements of the organizations. However, this model can become the foundation of the Succession Planning and Management process. These seven steps precisely outline the process and can be followed for successful implementation in any organization. Following are the steps involved in this process:
Step 1: Make the Commitment
Step 2: Assess Present Work and People Requirements
Step 3: Appraise Individual Performance
Step 4: Assess Future Work and People Requirements
Step 5: Assess Future Individual Potential
Step 6: Close the Developmental Gap
Step 7: Evaluate the Succession Planning Program
Succession Management Maturity Model:
Level 0 : No Succession Process
Level 1 : Replacement Planning – Companies focus on Senior Level Positions. List of high potential is created however, it is not supported with the formal development plan.
Level 2 : Traditional Succession Planning - Companies focus on critical Senior Level Positions. Carry out their appraisal and establish development plans.
Level 3 : Integrated Succession Management – Only critical Positions at all levels are covered in this process. Focused on integration with other Talent Management initiatives and business strategy.
Level 4 : Transparent Talent Mobility - Companies completely understand the capabilities and potential of their workforce. Talent decisions are based on what is best for the business as a whole.
Companies can enhance the effectiveness of their succession management process by assessing their level and taking proactive steps to move up the ladder from level 1 to level 4.
Softwares with inbuilt option:
Normally companies use traditional organization chart-based programs that focus more on replacement planning using spreadsheets. Hence, software implementation can be a wise option to ameliorate the administrative burden while simplifying the entire process. There are many softwares available for implementing Succession Planning & Management while ensuring integration with other Talent Management initiatives. These softwares become more important because of their ‘scenario planning’ capabilities. They provide accurate details of different possibilities and options available to HR Professionals depending upon the circumstances and facilitate the decision-making process.
Current Trends in Succession Planning:
The white paper, "The HR Guide to Identifying High-Potentials" (2014) prepared by CEB - SHL Talent Measurement states that,
- “50% HR Professionals lack confidence in their HiPo Programs.
- 5 out of 6 HR Professionals are dissatisfied with their HiPo Programs.
- Only 1 out of 7 High performers is High Potential.
- 55% will drop out of the HiPo Program within 5 years.
- 46% of Leaders fail to meet their business objective in a new role.”
The Report “The State of Succession Planning” (pdf) (January 2015) compiled by Halogen Software states that “The overall average succession planning intelligence score for all respondents is 48 percent. Not an impressive result given the importance and impact of succession planning.”
In the book ‘Rise of HR’ Fagan Stackhouse and Neil Reichenberg refer to the 2014 IPMA-HR talent management survey wherein only 27% of the respondents have agreed that their companies have Succession Plan in place. They further outline the reasons, for example:
- “Management being more focused on day-to-day business,
- Lack of sufficient time to make succession planning a priority,
- Lack of resources,
- Fears within the organization that succession planning will result in favoritism and pre-selection, &
- Lack of commitment by top leadership.”
I would like to conclude with a quote from the book ‘The Jack Welch Lexicon of Leadership’s (2005):
“One of the driving factors behind GE’s success. If it wasn’t for GE’s rigorous succession planning, Jack Welch might never have become GE’s eighth CEO. Both Reg Jones (GE’s seventh CEO) and Jack Welch started searching for their successors six years prior to their retirement, and the board played an important role in the process.” - Jeffrey A. Krames
(Download Files from the CD-ROM - Effective succession planning - William Rothwell 2010)