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Employment Today, HR Solutions - Thomson Reuters

Employment Today, HR Solutions - Thomson Reuters



Employment Today Magazine

Succession story

Succession planning is a key concern for over one in two HR managers, yet not all organisations have succeeded in establishing effective succession programmes, says Jenni Murphy-Scanlon. She explores the benefits and outlines the best approach.

It was in 2005 that William J Rothwell first published  Effective Succession Planning: Ensuring Leadership Continuity and Building Talent from Within, the text that raised the issue of succession planning firmly into executive’s sights, and which is still widely considered the most authoritative resource on the topic. In the nearly 12 years and four editions since, HR and OD professionals appear to have had varied success in persuading executives to fully embrace succession planning.

According to research published by Robert Half in December 2016, more than one in two (57 percent) HR managers say succession planning is the most challenging part of their HR planning. Possibly anticipating further waves of Baby Boomer retirements, almost half (48 percent) anticipate succession planning will be their primary challenge in three years’ time.

My own interactions with HR managers confirm that succession is a concern, and firmly suggest that not all organisations have succeeded in establishing, or even starting, effective succession planning programmes.

Even if succession planning is highly challenging for most HR managers, there does seem to be a general consensus that planning for succession is a good idea. Some of the benefits of a robust and effective programme can include:

  • • 
    Minimised disruption when there is turnover in a key role;
  • • 
    Understanding of, and continued commitment to, strategies, values, and customers—as opposed to a “new broom” mentality—when turnover occurs;
  • • 
    Less dependency on the external market for key roles, and therefore minimised risk of high costs or long recruitment times;
  • • 
    Less risk of employing people without industry or technical knowledge into key leadership roles;
  • • 
    Talented employees are more likely to stay if they are being developed and can see a career path;
  • • 
    In a tight labour market, access to a succession planning programme may attract talented applicants into the organisation;
  • • 
    Develops a culture where leaders have a responsibility to develop talent across the organisation;
  • • 
    In privately owned businesses, when a business owner is ready to step down or reduce their involvement, they have options besides selling on the open market.

While the benefits of succession planning may be highly appealing, there are organisational cultures that may inhibit planning effectiveness, and where implementation may cause an adverse impact on retention of talent. Some cultural issues likely to restrain the effective establishment of succession planning activities include:

  • • 
    A strong and overt leadership preference to appoint external applicants to senior roles;
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    A highly “siloed” structure, or strong internal competition between segments or divisions;
  • • 
    Repressed budgets for developmental activities;
  • • 
    Low trust in the CEO by senior managers that may result in passive-aggressive behaviour towards potential successors and the programme in general.

FORMAL OR INFORMAL

If succession planning is on your executive agenda, there may be a discussion about whether you need a formal programme, or whether an informal, “each manager develops a successor for themselves” type approach could work. There may be reluctance to publicly name potential successors, resulting in the need to have difficult conversations with those who have not been selected, but feel they should have been. It may be tempting to offer some generic leadership training, and hope that that will suffice.

Generally an informal approach results in little change from the status quo. If you are considering succession planning, it’s likely you are looking for a different result than the status quo. Most managers are probably already developing a second-in-command (2IC) to fill in when they are away, and if they are not doing this, they are unlikely to start without a formal structure.

An informal approach is also unlikely to allow the executive team to address two critical issues that succession planning is designed to prepare for—potential (future performance) of successors; and understanding the future environment, and specifically the competencies, skills and networks that will be needed in it.

If your executive team are unused to strategic thinking, and do not regularly debate together how the future of your industry and operating environment might look, then asking them to think about what the organisation might want from future critical roles and role-holders is likely to be challenging. And however challenging it might be for them as a team, it is unlikely that many managers can adequately envisage this alone.

Equally challenging, for both managers and HR, is how to assess potential. Potential is not the same as current performance. You may have people who are high performers, but who have reached their peak in your organisation—even though it might be tempting to think that because they are high performers they could go further. You may also have people with high potential who are not currently high performing. They may be under-challenged in their current role, or not well-suited to the tasks. Leaving assessment of potential to managers is risky.

In my experience, they will put their 2IC forward, and yet sometimes that person has been selected by them because they fill in the tasks they themselves do not relish. A good leader will quite often be a poor administrator. It is fairly common to find leaders with a 2IC who is a very competent administrator. The leader has recognised their own skill gap and found someone to fill it—a concept recommended in most leadership development training. Although high performing as a 2IC, that person may not be able to fulfil the leadership and strategic aspects of a further role.

An informal approach also significantly reduces the likelihood of monitoring the pipelines to key roles across the organisation, and ensuring that each role has adequate bench strength. A formal approach should include six-monthly talent review meetings, where the full executive team review the pipelines to each key role or group of roles, and monitor progress of all individual successors, ensuring each is accessing appropriate development opportunities. It allows the executive team to manage talent and succession across the full organisation.

In a formal programme, you also have the opportunity to approach your successor selection in just as robust a way as you would approach external recruitment to a senior role. You can use a range of assessments to determine potential beyond current performance. Ideally your successors need to meet two key criteria:

1.
Potential: ie, the ability to be high performing in a future key role;
2.
Intent: ie, they want to pursue a further role in your organisation.

No matter how much potential a person has, if they are not interested in pursuing further roles, or not interested in staying with your organisation, there is little point in investing in them. Equally, if your approach to successor development is so informal that your talented staff with potential (high potentials) are unaware that you have identified them in this way, they are likely to move on, in pursuit of further career opportunities.

A NARROW OR WIDE APPROACH?

Typically when discussing succession planning, there is reference to “key roles”. It is important to note that the term “key roles” has a specific meaning in succession planning. Presumably all roles in your organisation are critical or “key”, otherwise you need to be reviewing why you have them! Generally key roles for succession planning purposes will be roles of strategic influence, difficult to fill from the marketplace and/or having a long lead-in time to full productivity. These are the roles you have selected to manage a pipeline of successors for.

Due to the time and direct costs usually involved in a succession planning programme, identifying a limited number of key roles contains costs and makes resource management more viable. The more roles you include in your programme, the more resource-intensive it becomes, primarily because of the possible number of potential successors you could be monitoring and managing development activities for.

In a smaller organisation, your key roles may be just the owners or partners, and in larger organisations it is likely to be the CEO role, strategic leadership roles and a limited number of technically strategic roles that would be difficult to fill externally, eg, highly specialised or industry specific roles. Perhaps the trickiest, but also most interesting aspect of succession planning, is that to get best value from it, it is essential to apply a strategic lens to the decisions made throughout the planning and implementation of any programme.

In the case of key roles, does the organisation’s view of the future suggest that the structure is likely to change? Might the focus or purpose of some parts of the organisation, and therefore the related roles, change? If so, these possible changes should be considered when identifying and analysing key roles.

Where you are unsure how a role might develop in the future, it can be useful to identify key levels or groups of roles, rather than individual roles. For instance, you might be fairly certain that the structure of your executive team is going to change but you’re not yet clear about the details. Rather than select successors for each individual role as it is now, you could select a pool of high-potentials (hi-pos) for the executive level.

In this case, your development programmes will be more general in terms of strategic, leadership and industry knowledge and skills, and you can monitor that you have any technical or specialist skills covered within that pool. Equally if you have two or three specialist roles you have identified as key, but you are uncertain how these roles might look in future, you could pool these and call them a more generic name (eg, technical-specialist roles), and identify hi-pos for that group of roles.

TIPS FOR A SUCCESSFUL PROGRAMME

Whether you are just embarking on the succession planning journey, or you have an existing programme in place, here are a few tips for ensuring its ongoing success.

  • • 
    Get clear about the goals for your succession planning programme and measure results. Adjust your key roles, assessment tools and development activities as needed to achieve your goals.
  • • 
    Make sure your CEO understands how critical the six-monthly talent review meetings are, and ensures that the full executive team attend and participate.
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    Communicate well and often with all your stakeholders, especially the CEO and executive team, hi-pos, and all staff.
  • • 
    Be creative about development opportunities for your hi-pos, including internal and external secondments and project opportunities.
  • • 
    Ensure your people leaders have the skills and confidence to discuss performance and potential with the full range of their team members from hi-pos, to high performing staff and those who see themselves with higher potential than you do. Make sure they have tools and opportunities to offer some form of development to any team members who want that, even if they are not being developed as potential successors for key roles.
  • • 
    Utilise your existing LMS or HRMIS systems to rationalise and optimise data collection and monitoring.

JENNI MURPHY-SCANLON specialises in strategic thinking, governance, leadership and succession. She is CEO of Strategies Direct Limited and teaches part-time in the Centre for Business, Information Technology and Enterprise at Wintec.

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