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

x CONT ENT S

Appraising Performance and Applying Performance Management	192
Creating Talent Pools: Techniques and Approaches	195
Thinking Beyond Talent Pools	200
Summary	202
C H A P T E R 9
Assessing Future Work Requirements and Individual
Potential	203
Identifying Key Positions and Talent Requirements for the Future	203
Assessing Individual Potential: The Traditional Approach	210
The Growing Use of Assessment Centers and Portfolios	221
Summary	224
PART IV
CLOSING THE ‘‘DEVELOPMENTAL GAP’’: OPERATING
AND EVALUATING A SUCCESSION PLANNING AND
MANAGEMENT PROGRAM	225
C H A P T E R 1 0
Developing Internal Successors	227
Testing Bench Strength	227
Formulating Internal Promotion Policy	232
Preparing Individual Development Plans	235
Developing Successors Internally	242
The Role of Leadership Development Programs	251
The Role of Coaching	252
The Role of Executive Coaching	253
The Role of Mentoring	253
The Role of Action Learning	255
Summary	256
C H A P T E R 1 1
Assessing Alternatives to Internal Development	257
The Need to Manage for ‘‘Getting the Work Done’’ Rather than
‘‘Managing Succession’’	257
Innovative Approaches to Tapping the Retiree Base	266
Deciding What to Do	268
Summary	270
C H A P T E R 1 2
Using Technology to Support Succession Planning and
Management Programs	271
Defining Online and High-Tech Methods	271

Contents xi

Where to Apply Technology Methods	276
How to Evaluate and Use Technology Applications	276
What Specialized Competencies Do Succession Planning and
Management Coordinators Need to Use These Applications?	289
Summary	290
C H A P T E R 1 3
Evaluating Succession Planning and Management
Programs	291
What Is Evaluation?	291
What Should Be Evaluated?	292
How Should Evaluation Be Conducted?	295
Summary	306
C H A P T E R 1 4
The Future of Succession Planning and Management	307
The Fifteen Predictions	308
Summary	329
A P P E N D I X I :
Frequently Asked Questions (FAQs) About Succession
Planning and Management	331
A P P E N D I X I I :
Case Studies on Succession Planning and Management	337
Case 1: How Business Plans for Succession	337
Case 2: How Government Plans for Succession	341
Case 3: How a Nonprofit Organization Plans for Succession	354
Case 4: Small Business Case	360
Case 5: Family Business Succession	362
Case 6: CEO Succession Planning Case	363
Notes	367
What’s on the CD?	387
Index	391
About the Author	399

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L I S T O F E X H I B I T S

Exhibit P-1.	Age Distribution of the U.S. Population, Selected Years,
	1965–2025	xx
Exhibit P-2. U.S. Population by Age, 1965–2025		xxi
Exhibit P-3. The Organization of the Book		xxv
Exhibit 1-1. How General Electric Planned the Succession		11
Exhibit 1-2. The Big Mac Succession		14
Exhibit 1-3.	Demographic Information About Respondents to a 2004 Survey
	on Succession Planning and Management: Industries	21
Exhibit 1-4.	Demographic Information About Respondents to a 2004 Survey
	on Succession Planning and Management: Size	21
Exhibit 1-5.	Demographic Information About Respondents to a 2004 Survey
	on Succession Planning and Management: Job Functions of
	Respondents	22
Exhibit 1-6. Reasons for Succession Planning and Management Programs		23
Exhibit 1-7. Strategies for Reducing Turnover and Increasing Retention		26
Exhibit 1-8. Workforce Reductions Among Survey Respondents		29
Exhibit 1-9.	A Summary of Best Practices on Succession Planning and
	Management from Several Research Studies	31
Exhibit 2-1.	An Assessment Questionnaire: How Well Is Your Organization
	Managing the Consequences of Trends Influencing Succession
	Planning and Management?	43
Exhibit 2-2. The Sarbanes-Oxley Act of 2002		49
Exhibit 3-1.	Characteristics of Effective Succession Planning and
	Management Programs	60
Exhibit 3-2.	Assessment Questionnaire for Effective Succession Planning
	and Management	64
Exhibit 3-3.	A Simple Exercise to Dramatize the Need for Succession
	Planning and Management	67
Exhibit 3-4. The Dow Chemical Company’s Formula for Succession		70
Exhibit 3-5.	Chief Difficulties with Succession Planning and Management
	Programs	72

xiii

xiv	LIST OF EXH IBITS
Exhibit 3-6.	The Seven-Pointed Star Model for Systematic Succession
	Planning and Management	79
Exhibit 4-1.	An Interview Guide to Collect Corporate-Culture-Specific
	Competency Development Strategies	88
Exhibit 5-1.	Strategies for Handling Resistance to Implementing Succession
	Planning and Management	97
Exhibit 5-2.	The Importance of Succession Planning and Management	98
Exhibit 5-3.	Making Decisions About Successors (in Organizations Without
	Systematic Succession Planning and Management)	99
Exhibit 5-4.	A Questionnaire for Assessing the Status of Succession Planning
	and Management in an Organization	102
Exhibit 5-5.	A Worksheet for Demonstrating the Need for Succession
	Planning and Management	106
Exhibit 5-6.	An Interview Guide for Determining the Requirements for a
	Succession Planning and Management Program	109
Exhibit 5-7.	An Interview Guide for Benchmarking Succession Planning and
	Management Practices	115
Exhibit 5-8.	Opinions of Top Managers About Succession Planning and
	Management	118
Exhibit 5-9.	Opinions of Human Resource Professionals About Succession
	Planning and Management	119
Exhibit 5-10.	Actions to Build Management Commitment to Succession
	Planning and Management	121
Exhibit 5-11.	Rating Your CEO for His/Her Role in Succession Planning and
	Management	123
Exhibit 6-1.	A Model for Conceptualizing Role Theory	127
Exhibit 6-2.	Management Roles in Succession Planning and Management:
	A Grid	129
Exhibit 6-3.	A Worksheet to Formulate a Mission Statement for Succession
	Planning and Management	133
Exhibit 6-4.	A Sample Succession Planning and Management Policy	137
Exhibit 6-5.	Targeted Groups for Succession Planning and Management	139
Exhibit 6-6.	An Activity for Identifying Initial Targets for Succession
	Planning and Management Activities	140
Exhibit 6-7.	An Activity for Establishing Program Priorities in Succession
	Planning and Management	146
Exhibit 6-8.	U.S. Labor Laws	148
Exhibit 7-1.	A Worksheet for Preparing an Action Plan to Establish the
	Succession Planning and Management Program	158
Exhibit 7-2.	Sample Outlines for In-House Training on Succession Planning
	and Management	168
Exhibit 8-1.	A Worksheet for Writing a Key Position Description	186

List of Exhibits		xv
Exhibit 8-2.	A Worksheet for Considering Key Issues in Full-Circle,
	Multirater Assessments	191
Exhibit 8-3.	The Relationship Between Performance Management and
	Performance Appraisal	194
Exhibit 8-4.	Approaches to Conducting Employee Performance Appraisal	197
Exhibit 8-5.	A Worksheet for Developing an Employee Performance
	Appraisal Linked to a Position Description	199
Exhibit 9-1.	A Worksheet for Environmental Scanning	205
Exhibit 9-2.	An Activity on Organizational Analysis	206
Exhibit 9-3.	An Activity for Preparing Realistic Scenarios to Identify Future
	Key Positions	208
Exhibit 9-4.	An Activity for Preparing Future-Oriented Key Position
	Descriptions	209
Exhibit 9-5.	Steps in Conducting Future-Oriented ‘‘Rapid Results
	Assessment’’	211
Exhibit 9-6.	How to Classify Individuals by Performance and Potential	214
Exhibit 9-7.	A Worksheet for Making Global Assessments	216
Exhibit 9-8.	A Worksheet to Identify Success Factors	217
Exhibit 9-9.	An Individual Potential Assessment Form	218
Exhibit 10-1.	A Sample Replacement Chart Format: Typical Succession
	Planning and Management Inventory for the Organization	229
Exhibit 10-2.	Succession Planning and Management Inventory by Position	230
Exhibit 10-3.	Talent Shows: What Happens?	233
Exhibit 10-4.	A Simplified Model of Steps in Preparing Individual
	Development Plans (IDPs)	237
Exhibit 10-5.	A Worksheet for Preparing Learning Objectives Based on
	Individual Development Needs	239
Exhibit 10-6.	A Worksheet for Identifying the Resources Necessary to
	Support Developmental Experiences	241
Exhibit 10-7.	A Sample Individual Development Plan	243
Exhibit 10-8.	Methods of Grooming Individuals for Advancement	245
Exhibit 10-9.	Key Strategies for Internal Development	247
Exhibit 11-1.	Deciding When Replacing a Key Job Incumbent Is Unnecessary:
	A Flowchart	259
Exhibit 11-2.	A Worksheet for Identifying Alternatives to the Traditional
	Approach to Succession Planning and Management	267
Exhibit 11-3.	A Tool for Contemplating Ten Ways to Tap the Retiree Base	269
Exhibit 12-1.	Continua of Online and High-Tech Approaches	272
Exhibit 12-2.	A Starting Point for a Rating Sheet to Assess Vendors for
	Succession Planning and Management Software	273

xvi	LIST OF EXH IBITS
Exhibit 12-3. A Hierarchy of Online and High-Tech Applications for
Succession Planning and Management		277
Exhibit 12-4. A Worksheet for Brainstorming When and How to Use Online
and High-Tech Methods		280
Exhibit 13-1. The Hierarchy of Succession Planning and Management
Evaluation		294
Exhibit 13-2. Guidelines for Evaluating the Succession Planning and
Management Program		296
Exhibit 13-3. A Worksheet for Identifying Appropriate Ways to Evaluate
Succession Planning and Management in an Organization		298
Exhibit 13-4. A Sample ‘‘Incident Report’’ for Succession Planning and
Management		299
Exhibit 13-5. Steps for Completing a Program Evaluation of a Succession
Planning and Management Program		301
Exhibit 13-6. A Checksheet for Conducting a Program Evaluation for the
Succession Planning and Management Program		303
Exhibit 14-1. A Worksheet to Structure Your Thinking About Predictions for
Succession Planning and Management in the Future		309
Exhibit 14-2. A Worksheet to Structure Your Thinking About Alternative
Approaches to Meeting Succession Needs		314
Exhibit 14-3. Age Distribution of the U.S. Population in 2025		317
Exhibit 14-4. Age Distribution of the Chinese Population in 2025		318
Exhibit 14-5. Age Distribution of the Population in the United Kingdom
in 2025		318
Exhibit 14-6. Age Distribution of the French Population in 2025		319
Exhibit 14-7. Important Characteristics of Career Planning and Management
Programs		323
Exhibit 14-8. An Assessment Sheet for Integrating Career Planning and
Management Programs with Succession Planning and
Management Programs		325

P R E FA C E T O T H E T H I R D E D I T I O N

A colleague told me over the phone the other day that ‘‘there have been no new developments in succession planning for decades.’’ My response was, ‘‘Au contraire. There have been many changes. Perhaps you are simply not conversant with how the playing field has changed.’’ I pointed out to him that, since the second edition of this book was published, there have been many changes in the world and in succession planning. Allow me a moment to list a few:

Changes in the World

▲The Aftereffects of 9/11. When the World Trade Center was destroyed, 172 corporate vice presidents lost their lives. That tragic event reinforced the message, earlier foreshadowed by the tragic loss of life in Oklahoma City, that life is fragile and talent at all levels is increasingly at risk in a world where disaster can strike unexpectedly. In a move that would have been unthinkable ten years ago, some organizations are examining their bench strength in locations other than their headquarters in New York City, Washington, or other cities that might be prone to attack if terrorists should wipe out a whole city through use of a dirty nuclear weapon or other chemical or biological agent. Could the organization pick up the pieces and continue functioning without headquarters? That awful, but necessary, question is on the minds of some corporate and government leaders today. (In fact, one client of mine has set a goal of making a European capital the alternative corporate headquarters, with a view toward having headquarters completely re-established in Europe within 24 hours of the total loss of the New York City headquarters, if disaster should strike.)

▲The Aftereffects of Many Corporate Scandals. Ethics, morality, and values have never been more prominent than they are today. In the wake of the scandals affecting Enron, Global Crossing, WorldCom, and many other corporations—and the incredible departure of Arthur Andersen from the corporate world—many leaders have recognized that ethics, morality, and values do matter. Corporate boards have gotten more involved in succession plan-

xvii

xviii	PREFACE TO THE TH IR D EDIT ION

ning and management owing, in part, to the requirements of the SarbanesOxley Act. And corporate leaders, thinking about succession, realize that future leaders must model the behaviors they want others to exhibit and must avoid practices that give even the mere appearance of impropriety.

▲Growing Recognition of the Aging Workforce. Everyone is now talking about the demographic changes sweeping the working world in the United States and in the other nations of the G-8. Some organizations have already felt the effects of talent loss resulting from retirements of experienced workers.

▲Growing Awareness that Succession Issues Amount to More Than Finding Replacements. When experienced people leave organizations, they take with them not only the capacity to do the work but also the accumulated wisdom they have acquired. That happens at all levels and in all functional areas. Succession involves more than merely planning for replacements at the top. It also involves thinking through what to do when the most experienced people at all levels depart—and take valuable institutional memory with them.

Changes in Succession Planning

▲The Emergence of ‘‘Talent Management’’ and ‘‘Talent Development.’’

As is true in so many areas of management, these terms may well be in search of meanings. They have more than one meaning. But, in many cases, talent management refers to the efforts taken to attract, develop, and retain best-in- class employees—dubbed high performers (or HiPers) and high potentials (or HiPos) by some. Talent development may refer to efforts to groom HiPers or HiPos for the future. Think of it as selective attention paid to the top performing 10 percent of employees—that’s one way it is thought of.

▲The Emergence of ‘‘Workforce Planning.’’ While some people think that succession planning is limited to the top of the organization chart—which I do not believe, by the way—others regard comprehensive planning for the future staffing needs of the organization as workforce planning. It is also a popular term for succession planning in government, rivaling the term human capital management in that venue.

▲Growing Awareness of Succession Planning. More decision-makers are becoming aware of the need for succession planning as they scurry to find replacements for a pending tidal wave of retirements in the wake of years of downsizing, rightsizing, and smartsizing.

▲The Recognition that Succession Planning Is Only One of Many Solutions. When managers hear that they are losing a valuable—and experienced— worker, their first inclination is to clutch their hearts and say ‘‘Oh, my heavens, I have only two ways to deal with the problem—promote from inside or hire from outside. The work is too specialized to hire from outside, and the organization has such weak bench strength that it is not possible to promote from within. Therefore, we should get busy and build a succession program.’’ Of

Preface to the Third Edition	xix

course, that is much too limited a view. The goal is to get the work done and not replace people. There are many ways to get the work done.

▲Growing Awareness of Technical Succession Planning. While succession planning is typically associated with preparing people to make vertical moves on the organization chart, it is also possible to think about individuals such as engineers, lawyers, research scientists, MIS professionals, and other professional or technical workers who possess specialized knowledge. When they leave the organization, they may take critically important, and proprietary, knowledge with them. Hence, growing awareness exists for the need to do technical succession planning, which focuses on the horizontal level of the organization chart and involves broadening and deepening professional knowledge and preserving it for the organization’s continued use in the future.

▲Continuing Problems with HR Systems. HR systems are still not up to snuff. As I consult in this field, I see too little staffing in HR departments, poorly skilled HR workers, voodoo competency modeling efforts, insufficient technology to support robust applications like succession, and many other problems with the HR function itself, including timid HR people who are unwilling to stand up to the CEO or their operating peers and exert true leadership about what accountability systems are needed to make sure that managers do their jobs to groom talent at the same time that they struggle to get today’s work out the door.

Still, my professional colleague was right in the sense that the world continues to face the crisis of leadership that was described in the preface to the first and second editions of this book. Indeed, ‘‘a chronic crisis of gover- nance—that is, the pervasive incapacity of organizations to cope with the expectations of their constituents—is now an overwhelming factor worldwide.’’1 That statement is as true today as it was when this book was first published in 1994. Evidence can still be found in many settings: Citizens continue to lose faith in their elected officials to address problems at the national, regional, and local levels; the religious continue to lose faith in high-profile church leaders who have been stricken with sensationalized scandals; and consumers continue to lose faith in business leaders to act responsibly and ethically.2 Add to those problems some others: people have lost faith that the media like newspapers or television stations, now owned by enormous corporations, tell them the truth—or that reporters have even bothered to check the facts; and patients have lost faith that doctors, many of whom are now employed by large profit-making HMOs, are really working to ‘‘do no harm.’’

A crisis of governance is also widespread inside organizations. Employees wonder what kind of employment they can maintain when a new employment contract has changed the relationship between workers and their organizations. Employee loyalty is a relic of the past,3 a victim of the downsizing craze