We’re currently witnessing the impact of an emerging new breed of succession management systems. Contemporary systems no longer think just about the replacement of talent, but also focus on development. These new approaches take a more systemic approach toward an organisation’s human capital. Why the new interest in succession? The forces that have renewed interest in succession systems and have changed them in dramatic ways are trends that have affected business in the new global economy. Leadership is and has always been a relatively scarce commodity within companies. To lose a strong, effective leader is a serious blow to any organisation. Companies reward high performers with opportunities for development and not necessarily extended, long-term employment. The internet has enhanced the mobility of leadership talent, making it easy for employees to find opportunities elsewhere and for those opportunities to come knocking on their door.
Executive recruiters and headhunters today possess greater clout and sophistication. No longer is it unfair game to recruit your competitor’s best and brightest workers. Non-stop, unpredictable organisational change has caused organisations to quickly identify growing gaps in talent and emerging needs for new types of talent.
Best practice in succession management
Our research has found that ‘succession savvy’ corporations possess several traits that characterise their winning approaches to succession management. First, their succession systems are easy to use. Winning systems are non-bureaucratic, uncomplicated processes – with a unified approach to ensure consistency and maintain objectivity across business units, organisational levels and geographic areas. The best systems are developmentally oriented, rather than simply replacement oriented. The system becomes a proactive vehicle for managers and executives to reflect on the progress of their talent and the opportunities they require for genuine development. Highly effective systems always actively involve the very top players in the organisation. Senior executives view effective succession management as a critical strategic tool for attracting and retaining talent.
Best practice succession systems are also effective at spotting gaps in talent and identifying important lynchpin positions – the select set of jobs that are critical to the overall success of the organisation. Succession planning does the job of monitoring the succession process, enabling the company to ensure that the right people are moving into the right jobs at the right time and that gaps are being spotted early on. The most successful systems are built around continual reinvention. Best practice companies continually refine and adjust their systems as they receive feedback, monitor developments in technology and learn from other leading organisations. Where old systems were characterised by complete confidentiality and secrecy, today’s systems actually encourage involvement by individuals who are participants and candidates. Under older systems, few participants knew where they actually stood in terms of their potential for career opportunities ahead.
Developmental activities do not dramatically differ from one best practice organisation to the next. In every case, these companies invest the majority of their time and resources in top-tier (executive) talent. There are four major common factors in how best practice organisations engage their current and future leaders in developmental activities:
- They believe that the most important developmental activity is job assignments or work experience, so they spend considerable time balancing the organisation’s need to fill vacant positions with assignments that will help key people grow and develop their potential.
- They use a variety of developmental activities including mentoring, coaching, job rotation, traditional educational programs and formalised feedback processes.
- They try new approaches to development, including special assignments, action learning and web-based educational activities.
- They find that computer-based technology has expanded their ability to effectively monitor developmental activities.
Internal leadership and executive education Best practice organisations all have formal internal programs in place that focus on the further development of their top-tier executives. Dell Computer, for example, focuses most of its development activities on the global corporate talent pool that houses its top talent, identifying its best and brightest and holding business unit leaders accountable for carrying out whatever developmental actions are designated for those future stars. Most best practice companies agree that the vast majority of real learning employees encounter takes place on the job. Consequently, most of these companies have a special assignments or action learning program in place.
One of the most common and effective approaches is a taskforce assignment based on real and significant issues confronting the organisation. High-potential employees at Bank of America are assigned a specific enterprise topic to study and present findings to senior leaders. The company’s Six Sigma efforts also help place these top performers on highly quantifiable and large impact projects. Best practice organisations all participate in mentoring and coaching programs, but typically on an informal basis. Formal coaching is usually reserved for top executive high potentials and is commonly outsourced.
Development plans and courses
Best practice organisations also use a mix of internal and external university-based education and development courses. For example, EnCana, a Canadian energy corporation, offers an internal MBA program called the Management Forum. This program provides management education by bringing best practices to participants, aligning management competencies with strategic direction to meet current and future needs.With the vast and accessible training opportunities available through the web, organisations are making a wide array of courses available to their employees online. A good example is Dow Chemical, which currently has 60 tools and classes available online in its internal development program, including programs on ethics, Six Sigma, and root learning maps that explain strategy, economic profit and so on. More and more emphasis is being put on career planning and individual profiling as it relates to succession management.
Individual development plans are used by all best practice organisations. These firms look closely at employees’ career preferences and try to match their interests and career development to a future job within the company. Employee career preferences can influence the development process and employee preferences are honoured where possible. Performance management and 360-degree feedback are linked throughout the succession management process and are the main tools used by best practice organisations to place employees into development plans. The tools are tied together and based on core and leadership competencies. Most of the organisations also employ the results of 360-degree feedback for development purposes.
Measuring long-term success
Developing leadership talent is a long-term investment. The effectiveness of today’s systems is determined by their ability to move talented individuals at an appropriate pace into the right development opportunities over the span of their careers. Tracking the progress of individual participants is a necessary dimension of a best practice succession process. The most successful systems must also measure their own record, identifying developmental opportunities, filling them with the right people at the right time and spotting looming shortages or gaps in both talent and developmental positions to rectify these gaps quickly.
Best practice organisations employ a variety of qualitative and quantitative methods of measurement and assessment to ensure that desired outcomes are achieved and to provide the broadest and most fine-grained range of perspectives on the system’s real effectiveness. The long-term success of these processes is the product of the owners’ willingness to constantly revisit and redesign the systems themselves. Continuous improvement in both process and content is required for true success.
What is measured? The most frequently used quantitative measurements of system effectiveness are the organisation’s ability to fill key jobs with internal candidates, rather than outside hires; ethnic and gender diversity in promotions; retention/attrition rates; and positive job evaluations following promotion. Qualitative assessments tend to be based on issues such as: the participants’ transition experience into their new role; the quality of their preparation beforehand; reasons for attrition; and qualities of bosses in developmental assignments.
Some Companies do not perform any statistical analysis of their own succession planning processes. Instead, their HR departments support a functional measure of the system to determine whether candidates are being placed in appropriate open positions and whether they are successful in those positions. One organisation, when the company implemented its process, reported a 75 per cent saving in time, compared to time spent in previous years. In addition, another company reported an 80 to 90 per cent success rate in performance and promotability.
One of the primary metrics reviewed by Dell Computer is ‘bench strength’. Each business unit is responsible for reporting the percentage of positions with a current successor and with identified successors. The succession planning process at Bank of America, for example, is a twofold process. Through measurement of performance goals, the bank tracks whether it is achieving its talent goals and whether it is positioned to do so in the future. In addition, the bank tracks and monitors the number of ‘ready now’ replacement candidates for the company’s top 50 jobs.
Other lessons for success
While the succession management process differs from one organisation to another, there are certain characteristics of an effective program that are universal:
1. Smooth transitions. Having someone to step into an important vacancy is a critical measure of the effectiveness of succession management. However, helping that person transition in a positive manner with all the necessary skills and knowledge is as important and often more challenging to execute.
2. The ‘ right ’ developmental assignments. A successful process includes job assignments that properly prepare candidates for their new positions, as compared to a sink-or-swim approach.
3. Meaningful appraisals and feedback. Objective assessments are essential in order for management to specify what’s required for a successful promotion.
4. Appropriate selection criteria. A successful succession management system depends on the development of competencies for each job, giving everyone involved a clear picture of the skills, values, behaviour and attitudes required to succeed.
5. A range of good choices. A working succession system results in having more than one good person available for a key job. Real success requires choices between two or more qualified people.
Trends in succession management
There are several critical trends that will further strengthen the transformation of succession management from a replacement tool to a development and leadership capability tool, thereby ensuring that systems and processes are responsive and less bureaucratic. Succession planning will continue to become more integrated into the everyday life of organisations, moving from a formal ‘annual event’ to become a part of the daily fabric of doing business.
Technology will also integrate succession processes into the desktop computers of managers. A single icon will grant immediate and widespread access to succession planning information. Additionally, all of the components of HR management are being looked at, appropriately, as fully integrated, aligned systems, rather than as a set of disconnected activities. Gone is the silo mentality that kept HR from other business units. The hyper-competition of the contemporary world makes such an approach outdated and dangerous to the bottom line.
Technology can improve planning with increased access to and use of succession planning. Best practice organisations continue to use technology as a critical facilitator of the process. Web-based succession planning systems enable companies to run their process online and ensure continuous access to data. Employees can then take ownership of their own development plans through their own desktops. While subjectivity will always be part of candidate assessment, great progress has been made toward more objective assessments, including 360-degree feedback.
As the use of raters expands, the array of raters will broaden to include administrative staff, support staff, internal and external customers. Best practice organisations will increase their efforts at training line managers and executives to perform more objective assessments when providing 360-degree feedback. In conclusion, successful succession management is not a static target. Outstanding practices stay outstanding by continuously refining and adapting to meet changing circumstances.