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« Back to the Winter 2006 Explorer newsletter
Getting Ahead with Succession Planning
By Jeff Weekley, PhD., Senior Research Director, Kenexa
Traditional succession planning often starts with a mandate from the CEO to develop a plan. The HR professional given the assignment often begins with his/her baseline of knowledge, usually supplemented with some benchmarking of other firms’ processes, and begins to set up the necessary meetings. Data is gathered in advance and forms are prepared. Once all of the review meetings have taken place, the HR executive prepares the final succession plan complete with replacement charts, developmental plans for “high potentials,” and other similar outputs. After review with the CEO and, sometimes, the board of directors, the plan assumes its customary place on the shelf where it gathers dust until roughly the same time next year. If this sounds familiar, then read on...
Fortunately, there has been an extensive amount of research conducted on succession planning in recent years, and the collective experience of others can help organizations avoid the fate just described. Before embarking on a succession planning effort, consider the set of issues raised below.
One truism of succession planning is that it cannot succeed without top management support. In particular, the CEO needs to be both an avid supporter of the program and, more importantly, an active participant. The most successful programs are those in which the CEO is frequently reviewing the succession plans and ensuring that progress is being made. In one case, the CEO personally reviews the progress of the top 200 managers in the company on a quarterly basis. This significant commitment of time clearly signals the importance of the process to others within the company. A related issue is ”ownership” of the succession planning process. The message here is equally clear—line management must own the process with HR playing a supporting role. Line managers are truly the only ones capable of identifying and developing talent within the organization and, therefore, must be responsible. In a support role, the HR professional should be available to provide any needed guidance and tools, but successful programs are driven by the managers who manage the people. Succession planning works best when the CEO holds line management accountable for developing future leaders and, simultaneously, models the process him/herself.
Succession planning is, by nature, “future-oriented.” Unfortunately, too many companies develop plans as if the future will mirror the present.
Research suggests that this step is often omitted because it’s an ambiguous and difficult task. In order to achieve this goal, executives must be prepared to project (some would say “guess”) the future. Further, once consensus has been reached about these new skill requirements, they should be communicated to the people expected to develop them. To summarize, identifying gaps between current and anticipated future skill requirements is an essential step. It is not enough to simply focus on filling positions as they exist today.
Succession planning must be developed within a similar framework of additional people management programs. Does the performance management program provide the types of evaluative data needed to support succession planning? Does the compensation system support succession planning? Let’s examine two common conflicts. As organizations “delayer” and flatten as a means of becoming faster and leaner, promotional opportunities disappear. The obvious solution for high potentials is in lateral moves, giving them a breadth of experience. Unfortunately, pay grades in many organizations are too narrow to support this type of movement. Broadbands (where the organization adopts fewer, fatter pay grades), on the other hand, give the organization ample flexibility to reward people for making lateral developmental moves. Another common conflict occurs between the objectives of succession planning and short-term incentive or bonus programs. From a succession planning perspective, it is ideal to fill key positions with high potentials who don’t have all of the skills needed to do the job. In fact, if the person had all of the skills to do the job, then the job does nothing for the development of the person. However, given the choice between an unproven high potential and an experienced “pro,” the executive with a substantial bonus riding on the performance of his/her business unit may opt for experience over potential. Some organizations have gotten around these types of conflicts by (a) centrally controlling who is eligible for movement into key jobs and (b) making employee development a significant determinant of bonuses. In some companies, for example, when a key job becomes open, the hiring executive can select only from a slate of candidates identified from the planning process. Succession planning must be internally consistent with and mutually supportive of other HR programs.
Another key to the success of succession plans is the development and execution of individual development plans (IDPs). Ideally, the IDP is developed by the employee with input from his/her supervisor and possibly a management development professional. Having the employee develop his/her own plan serves two purposes. First, it ensures the employee has input into his/her own development. Second, it reinforces the belief that development is the employee’s responsibility. Input is important because it allows the employee to express his/her career preferences (it does no good to plan particular career moves for an employee if that person’s aspirations point in a totally different direction). Further, employees are more committed to plans they have personally crafted. To optimize the impact of the IDP, it should include specific work experiences, as well as appropriate training and mentoring relationships. Most experts agree that the majority of development occurs on the job. Therefore, the IDP should provide specific job assignments of sufficient duration (e.g., three years) to optimize learning. This makes succession planning and management development interdependent components of the same overall process. Just as development supports future succession, planned job moves support development.
What sort of job moves are developmental? The key is in ensuring the move is challenging for the individual. People develop best/most when they are in “stretch assignments” where their current skill set is insufficient (when skills are adequate, little incentive for development exists). Typical stretch assignments include line-to-staff or staff-to-line moves, start-ups, turnarounds, and significant increases in scope of responsibility. Other “in-role” types of developmental activities include special projects (e.g., in areas new to the employee), cross-functional task forces, and non-authority roles (where influence must be exercised without position power). Transitions of these types, in and of themselves, are insufficient. It is important that the organization provide the individual with feedback about his/her performance and development. Mentoring programs, 360-degree feedback programs, and executive coaching are several of the ways many organizations have built feedback into their succession planning process.
This brings us to another question related to the IDPs: feedback on what? Fortunately, many organizations have developed competency models. The competencies the organization wishes to develop should be based on its business strategy. In other words, given its intended means of competing in the marketplace, what competencies must the organization have now and in the future? Assessment, feedback and developmental efforts focused on these mission-critical competencies will help ensure the organization has the talent necessary to execute its strategy.
What about training? Formal training programs should have a role in talent development. Unfortunately, too many organizations believe that because they require all supervisors to attend an in-house “Management 101” course, they have addressed their need for developing future leaders. The well-documented reality is that experience is simply the better teacher. Formal training however, comes upon the executives’ return. While the university program may have imparted knowledge, this becomes a skill only after it is successfully put into use. The IDP should include not only a specification of the course to be taken, but how the knowledge gained will be put into action.
One final issue relative to IDPs is that of plan execution. Creating an individual development plan is only the first step. The plan has to be executed to achieve any results. Unfortunately, too many organizations fail to monitor this obvious requirement and simply have no idea whether its future leaders are actually developing. Accountability for plan execution must be made clear to the developing executive. Accountability for ensuring this happens should be made clear to those supervising the executive. Building employee development into the performance management and reward systems is an important part of executing IDPs.
First, in putting together their individual development plan, people need to know where they stand. It does no good for an individual to plot a career path that the organization does not support. Second, a look at most organizational charts reveals a simple truth—fewer jobs exist at the top than in the middle, and developmental job assignments, or stretch assignments, are simply not available for everyone. It is in the organization’s best interest to steer those opportunities to those with the greatest potential. Relatively open, candid communication is best. This includes ensuring that those designated as high potential understand that their presence on the list this year does not guarantee their presence on the same list next year. Access to key developmental assignments should be continuously earned.
Succession planning also works best when it includes a heavy emphasis on selection. In “internal labor markets,” where entry is at the bottom of the organization and advancement is almost exclusively from within, selection plays a key role because it establishes the raw material with which the organization has to work. Similarly, in “external labor markets,” where jobs at any level can be filled from the outside, selection plays an equally key role. In either case, organizations that invest in thorough and rigorous selection processes, based on the critical competencies required by the job now and in the future, are likely to find they have more to work with.
Succession planning is an ongoing process, not a one-time annual event. Regular reviews of the plan should be a part of the process. Are people making satisfactory progress on their IDPs? Have the assumptions underlying the plan changed (e.g., the organization’s strategy, structure? What changes have occurred that require updating the plan (e.g., turnover)? It has been wisely suggested that the goal of succession planning should really be to continuously improve the process. Part of the regular reviews should be a re-evaluation of the process itself. Does the process meet its stated objectives? Are there parts of the process which can be improved, automated, simplified or eliminated? The point is simple: Review and refine, and then do it all over again.
Complex, paper-intensive succession planning processes usually fail quickly, suffocated by their own bureaucracy. Fortunately, advances in technology have made the development and maintenance of succession plans much easier. Several organizations (including Kenexa) offer web-based products aimed at facilitating the collection, organization and use of succession planning information. The features common in such systems include performance appraisal, 360-degree feedback, developmental resource libraries, individual development plans, backup charts, mentor matching programs and standard reporting. These systems not only make it easier to collect relevant information and assemble a plan, they, more importantly, make the plan easier to use and maintain. Since most succession planning efforts fail at the execution stage, as opposed to the plan development stage, this is a significant contribution. In conclusion, most successful planning programs share these common elements:
- CEO commitment and line management responsibility.
- Future-orientation and internal consistency with other HR programs.
- Integration with individual development planning and staffing.
- An open, continuous process.
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About the Author
Dr. Weekley has designed many organizational development programs, including succession planning processes, performance management systems, equal employment opportunity programs, leadership training and internal customer satisfaction surveys.
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