Question:
I am the CEO of a small manufacturing company. One of the issues that has come up is management succession. Who will lead our company in the future? How will we identify individuals with leadership potential? How will we prepare them for their future roles? Up to this point, we’ve been pretty informal and unstructured. We’ve also promoted from within in many cases. For a number of reasons, I just don’t think our approach to developing managers will be good enough as we move ahead. I think we need to be more formal moving forward. I’d appreciate hearing what you have to say about the dos and don’ts of succession planning. Thanks.
Answer:
While you may not take much solace in my initial observation, let me begin by noting that my recent experience with my organizational clients tells me you are not the only CEO troubled by your organization’s lack of preparedness for management succession. Let’s face it; management succession planning is one of those items that can be put on the back burner. As a priority item, it can be deemed less important and/or less urgent than the latest customer crisis, the current project, etc.
But, in an Information Age, the consequences may be particularly high when organizations fail to adequately prepare for the inevitable “passing of the torch.” We live in complex times and fast-paced ones. Change is all around us. Competition is fierce and getting more fierce. Customer satisfaction is a must — in each and every transaction. Being nimble and adaptable are important characteristics for organizations that want to compete effectively in today’s business marketplace. Sound leadership is an absolute must under these circumstances. Ensuring that it is present in the future may be essential to guaranteeing an organization’s survival.
Additionally, the demographic data tell a very clear story: we are an aging workforce. The 2000 U. S. Census documented that the baby boomers (i.e., those born between 1946 and 1964) outnumber the generations that follow them, Generation X (i.e., those born between 1965 and 1981) and Generation Y (i.e., those born after 1982). Baby boomers are the leaders in many organizations today. They occupy key managerial roles. Yet, within just a few short years (beginning about 2010), they will be departing from the workforce in unprecedented numbers. Interestingly, Wisconsin stands to be particularly hard hit because the baby boomer percentage of our workforce is one of the highest in the nation.
I’m sure you see where I’m going with all of this. NOW is the time to get serious about management succession planning. You cannot wait any longer. As the old adage relates, “Failing to prepare is preparing to fail.”
So, how do you go about creating
a succession plan? Here are a
few suggestions.
First, it is important to set forth an organizational policy regarding succession planning. This documents the approach to be used and serves as a point of reference as the program is designed and implemented. Elements of a sound policy include a clear statement of purpose, desired results, and procedures for carrying out the succession plan.
Generally speaking, the following four components typify most succession planning programs:
1. Creating infrastructure.
This foundational step involves identifying who will be responsible for designing and carrying out the succession plan and its related activities. In larger organizations, succession planning is typically “owned” by the human resources department. In smaller organizations, the responsibility typically falls upon the executive team. Regardless of where the program is situated, it is essential that top leaders offer their explicit support. This is essential to the ultimate success of the succession planning initiative.
Additional considerations have to do with the scope of the program. Which positions will be included in the succession planning process? In which positions is movement foreseen? Which employees are anticipated to be moving? What vacancies can be projected? Developing a clear understanding of workforce trends by answering these and related questions helps the planning process to be more targeted and responsive.
2. Identifying talent
Talent identification is a key component of a succession plan. As a starting point, most organizations consider an employee’s interest in assuming additional responsibility. Individuals may be asked to formally state their desire to assume management responsibility. Or, they might be invited to apply for inclusion in the program. In any event, the idea is to have people step forward who really want to be managers.
It is important to note that not everyone who wants to be a manager has what it takes to be one. That’s where talent assessment comes into play. With managerial success factors (i.e., competencies) as focal points, most organizations that pursue formal succession planning use some type of objective assessment program to gather data regarding individuals’ managerial-related capabilities. Assessment approaches are quite varied and can include review of biographical statements, executive interviews, performance appraisals, 360-degree surveys, assessment centers, employment tests, etc.
The output of this stage is a group of individuals (i.e., program participants) who are deemed to possess the characteristics that will lead to success as they assume additional responsibility. Often, using something called a replacement chart, individuals are slotted on the organizational chart relative to their identified capabilities and in relation to upcoming or anticipated vacancies. A simple example of this is what the Green Bay Packers are doing right now as they prepare for next season. Brett Favre is the starter at quarterback. His back up is Aaron Rogers. The process is repeated for all of the positions on the team. So, too, in some business organizations who are serious about succession planning.
3. Offering developmental
programming.
Obviously, with assessment data in hand, organizations are able to identify individual and collective strengths and developmental areas. With this knowledge, organizations can move forward to offer learning programming to help participants enhance their managerial repertoires.
Leadership development opportunities are plentiful these days, encompassing activities such as classroom-based training, individual development plans, mentoring and coaching, off-site lectures and workshops, self-directed reading, rotational work assignments, etc. Formal degree programs are available, as well, at a host of accredited colleges and universities, including more and more that are offering their programs in worker-friendly formats such as on-line programs, distance learning courses, and accelerated degrees.
An important point is that you need to specify how your organization will develop its leaders. Participants don’t have to engage in all of the activities highlighted above. Choose the approach that best meets the needs of your participants and best fits your corporate culture. In this way, the developmental program becomes your own.
4. Evaluating program
effectiveness.
Ultimately, organizations have to determine if the effort associated with Steps 1-3, above, “pays off.” Many organizations measure participant interest and satisfaction with the succession planning process. Monetary investment is also frequently tracked, on both an individual and aggregate level.
In the final analysis, perhaps the best evidence of whether the approach is working is the success that “graduates” have when they finally occupy the position for which they have been preparing. In my Packers example, the extent to which Rogers becomes a successful NFL starting quarterback will validate the team’s efforts in selecting and developing him as the successor to Favre (good luck, Mr. Rogers!).
I should note that some organizations take a very quantitative approach to evaluating the success of their programs. For an increasing number of our clients at ODC, we statistically study data from all of the key sources attached to the succession planning and leader development program. In doing so, we are able to identify the “critical” success factors that differentiate the best leaders from the rest. Subsequently, the idea is to find and develop other leaders who “look like” that statistical benchmark.
In summary, I support your efforts to adopt a formal approach to management succession. As I’ve highlighted in this article, critical to the success of your efforts will be: (1) obtaining top leaders’ support for the program; (2) making sure you have a good grasp of your workforce trends and organization’s emerging needs; and (3) deploying a consistent, objective program that is fine-tuned over time.
Daniel Schroeder, Ph.D., of Organization Development Consultants, Inc. (ODC) in Brookfield provides “HR Connection.” Small Business Times readers who would like to see an issue addressed in an article may reach him at (262) 827-1901, via fax at (262) 827-8383, via e-mail at schroeder@odcons.com or via the internet at www.odcons.com.
