William J. Rothwell - Effective Succession Planning (2005)(3-e)(en)

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Determining Organizational Requirements

All organizations do not share identical requirements for SP&M programs. Differences exist owing to the organization’s industry, size, stage of maturity, management values, internally available expertise, cost, time, and other considerations. Past surveys confirm that these issues—and others—can affect the appropriate design of SP&M programs.4

However, top management goals are always key considerations. What do top managers believe to be essential for a SP&M program? The most important questions on which to focus attention might include the following:

▲How eager are top managers and other decision-makers to systematize the organization’s SP&M process(es)?

▲How much time and attention are decision-makers willing to devote to assessing key position requirements? Identifying leadership competencies? Identifying success factors for advancement in the organization? Conducting multirater assessments? Appraising individual performance? Preparing and implementing individual development plans (IDPs) to ensure the efficient preparation of individuals for advancement into key positions?

▲How stable is the current organizational structure? Work processes? Can either—or both—be reliably used to plan for leadership continuity or replacements?

▲How willing are decision-makers to devote resources to cultivating talent from within?

▲How much do decision-makers prefer to fill key position vacancies from inside rather than from outside the organization?

▲How willing are decision-makers to use innovative alternatives to simple replacements from within?

Begin determining the essential requirements of an SP&M program by interviewing top managers. Pose the questions appearing above. Add others as pertinent to the organization. (As a starting point, use the interview guide appearing in Exhibit 5-6 for this purpose.) Then prepare and circulate a written proposal for an SP&M program that conforms to the consensus opinion of key decision-makers.

Linking Succession Planning and Management Activities to Organizational and Human Resource Strategy

Succession planning and management should be linked to organizational and human resource strategy. However, achieving those linkages can be difficult.

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Exhibit 5-6. An Interview Guide for Determining the Requirements for a Succession Planning and Management Program

Directions: Use this interview guide to help you formulate the requirements for a systematic SP&M program for an organization. Arrange to meet with top managers in your organization. Pose the questions appearing in the left column below. Record notes in the right column below. Then use the results of the interview as the basis for preparing a proposal for a systematic SP&M program for the organization. (You may add questions to the left column, if you wish.)

Questions

Notes on Responses

1.What are your thoughts about approaching succession planning and management in this organization in a planned way?

2.How should we define key positions in this organization?

3.How should we clarify the requirements to qualify for key positions? (Some people call these competencies—characteristics of successful performers.)

4.How should we assess current individual job performance?

5.How stable do you believe the current organizational structure to be? Will it be adequate to use as the basis for identifying key positions requiring successors in the future?

(continues)

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Exhibit 5-6.	(continued)
Questions	Notes on Responses

6.How do we determine the qualifications or requirements (competencies) for each key position in the future?

7.How do you feel that we can identify individuals who have the potential to meet the qualifications for key positions in the future?

8.What do you believe are the essential resources that must be provided by the organization in order to accelerate the development of high-potential employees?

9.How should we keep track of high-potential employees?

10.What other thoughts do you have about the essential requirements for an effective succession planning and management program in this organization? Why do you believe they are essential?

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Linking Organizational Strategy and Succession Planning and

Management

Organizational strategy refers to the way in which a business chooses to compete. Important steps in the process include: (1) determining the organization’s purpose, goals, and objectives; (2) scanning the external environment to identify future threats and opportunities; (3) appraising the organization’s present strengths and weaknesses; (4) examining the range of strategies; (5) choosing a strategy that is likely to seize maximum advantage from future opportunities by building on organizational strengths; (6) implementing strategy, particularly through changes in structure, policy, leadership, and rewards; and

(7) evaluating strategy periodically to assess how well it is helping the organization to achieve its strategic goals and objectives.

Achieving effective linkage between organizational strategy and SP&M is difficult for three major reasons. First, while effective strategy implementation depends on having the right people in the right places at the right times, it is not always clear who the right people are, where the right places are, and when those people will be needed. Second, strategy is frequently expressed in a way that does not lend itself easily to developing action plans for SP&M. For instance, decision-makers may focus attention on ‘‘increasing market share’’ or ‘‘increasing return-on-investment’’—without describing what kind of leadership will be needed to achieve those ambitious goals. Third, organizational strategy as practiced may differ from organizational strategy as theorized,5 which complicates the process of matching leadership to strategy. That can happen when the daily decisions do not match written organizational strategy.

To overcome these problems, decision-makers must take active steps to build consideration of SP&M issues into the formulation of strategic plans. During the review of organizational strengths and weaknesses, for instance, decision-makers should consider the organization’s leadership talent. What kind of expertise is presently available? During strategic choice and implementation, decision-makers should also consider whether the organization has the right talent to ‘‘make it happen.’’ Who possesses the knowledge and skills that will contribute most effectively to making the strategy a reality? How can individuals be developed to help them acquire that knowledge and those skills? How can the organization establish an action plan to manage its human assets as effectively as its financial assets? Only by answering these questions— and taking active steps to narrow the gap between available and necessary talent—can the organization link its strategy and its succession planning and management.

Linking Human Resource Strategy and Succession Planning and

Management

Human resource strategy is the means that the organization chooses to make the most effective use of its HR programs and activities to satisfy organizational

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needs. Important steps in this process parallel those in organizational strategy making: (1) determining the purpose, goals, and objectives of the HR function;

(2) scanning the external environment to identify future threats and opportunities affecting HR inside and outside the organization; (3) appraising the organization’s present HR strengths and weaknesses; (4) examining the range of HR strategies available; (5) choosing an HR strategy that is likely to support the organizational strategy; (6) implementing HR strategy through changes in such programs as training, selection, compensation, benefits, and labor relations; and (7) evaluating HR strategy periodically for how well it supports organizational strategy.

Unfortunately, efforts to integrate HR strategy and organizational strategy have met with only mixed success. As Golden and Ramanujam write, ‘‘the lack of integration between human resource management (HRM) and strategic business planning (SBP) processes is increasingly acknowledged as a major source of implementation failures. It is often alleged that companies develop strategic plans based on extensive marketing and financial data but neglect the human resource requirements necessary to successfully implement them.’’6 Numerous theories have been developed over the years to identify ways to link organizational and HR strategy.7 However, little evidence exists to show that great strides have been made in this area.8

To link HR planning and SP&M, decision-makers should examine how well HR policies and practices help—or hinder—leadership continuity, individual advancement, and the cultivation of internal talent. More specifically:

▲How does the organization conduct recruitment, selection, and placement? How much consideration is given during this process to longterm retention and development of prospective or new employees?

▲How does the organization conduct training, education, and development? How much (relative) attention is given to the long-term cultivation of employee talent—as opposed to focusing attention on training individuals to meet immediate requirements?

▲How well do existing compensation and benefit practices support internal placement? Transfers? Promotions? Are actual disincentives established to dissuade employees from wanting to accept promotions or assume leadership roles?

▲How do existing labor relations agreements affect the organization’s promotion, rotation, transfer, and other employment practices?

To integrate HR strategy and SP&M, examine existing HR program efforts— such as selection, training, compensation, and benefits—against succession planning and management needs. Identify HR practices that could encourage or that presently discourage effective SP&M. Then take active steps to ensure that HR practices facilitate, and do not impede, long-term efforts to groom talent from within.

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Benchmarking Best Practices and Common Business

Practices in Other Organizations

Discussions with top managers and other key decision-makers in an organization should yield valuable information about the needs that an SP&M program should meet. But that information can be supplemented by benchmarking SP&M practices in other organizations. Moreover, the results of benchmarking may intensify the interests of key decision-makers in SP&M because they may demonstrate that other organizations are using better, or more effective, methods. As Robert C. Camp explains, ‘‘Only the approach of establishing operating targets and productivity programs based on industry best practices leads to superior performance. That process, being used increasingly in U.S. business, is known as benchmarking.’’9

Benchmarking has also surfaced in recent years as a powerful tool for improving organizational work processes and is frequently associated with Total Quality Management (TQM). Its primary value is to provide fresh perspectives, and points for comparison, from other organizations. It can thereby accelerate the process of introducing a state-of-the-art program by comparing existing practices in one organization to the best practices already in use elsewhere.

Although there are various means by which to conduct benchmarking, Camp suggests that it should be carried out in the following way10:

1.Identify what is to be benchmarked.

2.Identify comparative companies.

3.Determine a data collection method and collect data.

4.Determine the current performance ‘‘gap.’’

5.Project future performance levels.

6.Communicate benchmark findings and gain acceptance.

7.Establish functional goals (based on the results of the benchmarking study).

8.Develop action plans (based on the results of the benchmarking study).

9.Implement specific actions and monitor progress.

10.Recalibrate benchmarks.

Typically, then, benchmarking begins when decision-makers make a commitment. They clarify their objectives and draft questions to which they seek answers. Comparable organizations, often but not always in the same industry, are chosen. A suitable data collection method is selected, and written questionnaires and interview guides are frequently used for data collection. Site visits (field trips) are arranged to one or more organizations identified as being ‘‘best-in-class.’’

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Benchmarking should not be pursued as a ‘‘fishing expedition’’; rather, it should be guided by specific objectives and questions. Participants should start out with some familiarity with the process, such as succession planning and management practices. (That may mean that they have to be briefed before participating in a site visit.) Several key decision-makers should go on the site visits so they can compare practices in other organizations with their own. That is an excellent way, too, to win over skeptics and demonstrate that ‘‘the way we have always done it here’’ may not be the best approach.

Most Fortune 500 companies are well known for their effective succession planning and management practices. Blue-chip firms such as Motorola, Xerox, IBM, AT&T, General Electric, Coca-Cola, and General Motors—among oth- ers—are recognized for conducting effective succession planning and management. They may rightly be considered ‘‘best-in-class’’ companies. Appropriate contacts at these organizations should be located through such professional societies as the Human Resource Planning Society (P.O. Box 2553, Grand Central Station, New York, NY 10163), the American Management Association (1601 Broadway, New York, NY 10019), the American Society for Training and Development (1640 King Street, Alexandria, VA 22313), or the Society for Human Resource Management (606 N. Washington Street, Alexandria, VA 22314).

Always develop questions before making a site visit. (See the list of possible benchmarking questions in Exhibit 5-7.) Then contact representatives from two or three of those organizations and ask if benchmarking visits to their locations are possible. If so, send them the questions in advance of the visit so that they have time to prepare their responses. Sometimes they may wish to see the questions in advance before they commit to a visit.

It may be difficult to arrange benchmarking visits on SP&M. Many organizations consider the process sensitive to their operations—and revealing of their corporate strategies. Consequently, one approach is to seek access to organizations where you or others in your company have personal contacts. If necessary, begin with local organizations that have successfully established SP&M programs. Identify them by talking to your peers in local chapters of the American Society for Training and Development (ASTD), the Society for Human Resource Management (SHRM), or other professional societies.

Obtaining and Building Management Commitment

Securing management commitment to systematic SP&M may not occur rapidly. Skeptics are difficult to convince in short order. It will take time and proof of tangible evidence of success to win them over.

Opinions About Succession Planning and Management

My 2004 survey of SP&M practices revealed sharp disparities in opinions about systematic SP&M programs. Examine Exhibit 5-8. Then consider how you

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Exhibit 5-7. An Interview Guide for Benchmarking Succession Planning and Management Practices

Directions: Use this interview guide to help you prepare questions in advance of a benchmarking visit to another organization. Share these questions before your visit to an organization known for its effective SP&M practices. (Add questions as appropriate for your organization.) Pose the questions appearing in the left column below. Then record notes in the right column. Use the results in formulating a proposal for improving SP&M practices in your organization.

Questions

Notes on Responses

1.What mission statement has been established for succession planning and management in your organization?

2.What goals and objectives have been established for succession planning and management in your organization?

3.What policy and philosophy statement has been written to guide succession planning and management in your organization? (Would it be possible to obtain a copy?)

4.How does your organization define key positions? What positions, if any, are given special attention in your succession planning program? Why are they given that attention?

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Exhibit 5-7. (continued)

5.How does your organization identify, describe, or clarify the requirements of key positions?

(For example, has your organization made an effort to identify job responsibilities, competencies, or success factors by level?)

6.How does your organization assess current job performance for succession planning and management purposes? (Do you use the organization’s existing performance appraisal sys- tem—or something else?)

7.Does your organization use replacement charts based on the current organization chart? (If not, why?)

8.How does your organization determine the qualifications, requirements, or competencies for each key position in the future?

9.How does your organization attempt to integrate succession planning and management with organizational strategy? With human resource strategy?

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Questions Notes on Responses

10.How does your organization identify successors for key positions?

11.How does your organization identify highpotential employees (who are capable of advancing two or more levels beyond their current placement)?

12.How does your organization establish Individual Development Plans (IDPs) to plan, guide, and accelerate the development of high-po- tential employees?

13.What special programs, if any, has your organization established to accelerate the development of high-potentials?

14.What special computer software, if any, does your organization use in its succession planning and management activities? Why was it chosen?

15.How does your organization evaluate the results of succession planning and management activities?

(continues)