Succession Planning

Recently, more organizations are expanding their succession planning efforts to build better bench strength and create talent pools for a variety of key positions. Research conducted on 260 organizations’ current succession planning processes by Bersin by Deloitte found that for succession planning to have high impact, it must reach multiple levels of the organization and address both pivotal roles and leadership roles to enable both lateral and upward mobility.

Best Practices and Current Trends

Have regular talent reviews (ideally, more than once a year!)

A study by Bersin by Deloitte found it was most effective for leaders to hold regular informal talent discussions in conjunction with a formal annual talent review process. Although informal, regular meetings are important, the formal talent review remains integral to the success of the organization’s strategic operating plan.

Proctor & Gamble (P&G) created a subcommittee that would meet quarterly to review a critical element of leadership development and succession planning (e.g., development of women and minority leaders), in addition to the full board meeting dedicated to executive succession.

Dow Chemical Company uses the Nine-Box grid to structure talent conversations. Their general talent review process includes:

1. High-level review of the talent pipeline by the CEO and his direct reports (yearly).

2. Review of each business function and strategic area focusing on what new capabilities will be needed to deliver this strategy and any new corporate-critical roles that will be needed.

3. Review of top 200 leaders using the “nine-box” grid (See Figure 1).

4. Development and discussion of succession plans for high- and medium-risk corporate-critical roles that exist now and are anticipated in the future.

5. Development planning for this population.

Only identify viable successors for a handful of key “C level” positions

Then, identify “pools” of high potentials for the top levels that can be developed for positions that may not even exist today.

Take a pipeline approach to development

The pipeline approach involves the identification and development of talent at ALL levels of an organization.

Dow Chemical Company still creates successor lists, but focuses more on developing its employees to better prepare them for other jobs at Dow. Dow reaches deep into the pipeline from entry-level professional to director level.

SmithKline Beechum (SKB) reworked their leadership and succession planning process to focus on the developmental needs and potential of a larger group of managers rather than a small, elite group of executives.

Over a 6-year-period, more than 8,500 employees participated in the Leadership and Developmental Review process and over 230 group discussion were held. On average, each group discussed 35-40 managers, allocating approximately 15 minutes per manager.

Hold the executive team accountable

The first step here is to have the commitment and involvement from the CEO and the board. They need to be able to clearly articulate the business case for succession planning.

Subject expert Dan McCarthy found that organizations with successful succession plans measure key activities and results and often tie those to executive compensation.

Assess performance and potential

Companies that do succession planning well do not gamble on past performance as the only predictor of future success in a new role. They use a variety of effective ways to assess potential with relevant, consistent criteria (See Figure 2).

P&G and other organizations have found that they have to go beyond the obvious previous performance and financial outcomes and assess employee potential as well.

Integrate succession planning with performance management, recruitment, selection, development, and rewards

Integration helps to ensure that business strategy is aligned with succession planning.

Don’t forget to reward leaders for their ability to develop and move talent throughout the company.

References

Garr, S. S. (December 14, 2012). Employee development planning: The four critical elements. Bersin by Deloitte. Retrieved from https://www.bersin.com/Practice/Detail.aspx?id=16133

Garr, S. S. (2014). High-impact succession management: Key findings and maturity model. Bersin by Deloitte, Retrieved from https://www.bersin.com/Practice/Detail.aspx?id=18042

Lafley, A. G. (2011). The art and science of finding the right CEO. Harvard Business Review, 89, 66-74.

McCarthy, D. (2013). 10 succession planning best practices. Retrieved from https://www.ivyexec.com/executive-insights/2013/10- succession-planning-best-practices/

Ready, D. A., & Conger, J. A. (2007). Make your company a talent factory. Harvard Business Review, 85, 68-77.

Vay, D. V. (2007). Succession management, not just planning. In F. P. Morgeson (Ed.), Developing leadership talent. Alexandria, VA: SHRM.