Archive for December, 2010

Effective Succession Planning

17/12/2010

Recommended Reading

Effective Succession Planning. Ensuring Leadership Continuity and Building Talent from Within, William Rothwell, 2001

Succession Planning and Management

Businesses have always needed some form of succession planning. After all, no one lives forever, or heads a company or a division forever. Now more than ever, succession planning is a must. Because rapid turnover has become a way of life in corporate circles — from the top down through every level of employment — businesses that don’t plan strategies for meeting their future talent needs will face disruption when key employees retire or leave.

Every business needs to create, revitalise or even re-evaluate its succession planning and management (SP&M) program. A proven, step-by-step approach can ensure that you:

• Identify competencies and clarify values for planning and managing succession.

• Plan for and quickly fill crucial vacancies at all levels.

• Develop and retain top talent.

• Build and preserve your organization’s intellectual capital.

• Assess current needs and future resources.

• Use online and other technological tools to organize and implement SP&M programs.

• Anticipate — not just react to — changes in the increasingly variable business environment.

Succession planning and management is vital for four basic reasons:

1. The continued survival of the organization depends on having the right employees in the right positions at the right times.

2. As a result of economic restructuring in organizations, fewer people are available to advance to the top ranks from among current employees.

3. Succession planning and management encourages organizational diversity.

4. Succession forms the basis for communicating career paths, establishing development and training plans and creating a better human resources planning system.

Organizations create SP&M programs to provide increased opportunities for employees with high potential, to identify replacement needs, to target necessary training and to increase the pool of promotable employees.

 Creating Your Program

Creating a systematic SP&M program is a multi-step, on-going process. Even when you have a plan in place, you should continually re-assess it as your company’s needs change.

In creating or evaluating a succession program, your company should:

• Assess current problems and practices.

• Link SP&M activities to existing organizational and human resource strategies.

• Determine organizational requirements.

• Create a mission statement.

• Benchmark SP&M practices in other organizations.

• Write policies and procedures.

• Obtain and build management’s commitment to systematic SP&M.

• Set program priorities and clarify program rules.

• Address the legal framework.

• Identify target groups.

• Establish strategies for rolling out the program.

• Prepare and disseminate the program’s action plan.

• Conduct SP&M meetings and training.

• Conduct on-going counseling with managers about succession planning in their areas.

 The Developmental Gap

For your succession planning and management program to succeed, you need a method for replacing key employees who leave. Promotion from within is always an option, but it must be accompanied by planning. To prepare people for promotion, you have to do more than identify present and future requirements and evaluate performance. You must also identify and close the developmental gap between what possible successors do now and what they must be able to do to be ready to be promoted. Use internal development — planned training, education, development and other means — to close the gap so you can be confident that chosen successors are ready.

Your organization should take these steps regarding succession and the development gap:

• Test your organization’s bench strength — it’s ability to fill vacancies from within.

• Create your organization’s internal promotion policy.

• Prepare development plans for individual candidates.

• Develop successors internally.

• Assess alternatives as necessary.

 Alternatives to Internal Development

Sometimes, no successor is needed because a position can be left vacant. This alternative is only viable if the organization can answer yes to one of these questions:

• Is the key position no longer necessary?

• Can it be rendered unnecessary by finding new ways to achieve comparable results?

• Can the duties be redistributed to a team in the same part of the organization?

• Can the work be outsourced?

• Can the duties be reallocated to other parts of the organization?

• Can the key position be rendered unnecessary by using flexible staffing?

• Can a combination of these approaches obviate the need for a replacement?

 

Evaluating SP&M Programs

After you implement a SP&M program, you must monitor it to determine how well it functions and what changes may be needed. To evaluate the program on four levels — overall reaction, program progress, effective placements and organizational results — ask these questions:

• How well does succession planning match individual career plans?

• How satisfied are the internal customers with the succession planning programs?

• How well are individuals progressing through their development in preparation for future promotion?

• How well does the succession planning program work based on its objectives?

• Can some vacated positions be left vacant?

• How quickly can internal replacements perform in their new positions at the level required by the organization?

• What percentage of key vacancies can the organization now fill successfully?

• How quickly can the organization fill these vacancies?

• What percentage of vacancies can the organization fill internally?

• What organizational successes and failures can be attributed solely to succession planning?

• How is succession planning contributing to organizational results?

You can conduct the evaluation of your succession planning and management package anecdotally, periodically or programmatically.

Anecdotal evaluation examines the operation of the SP&M program on a case-by-case basis. As vacancies occur, the appropriate manager should document how they are filled.The organization’s SP&M committee can then review and discuss reports on each case. This method provides a solid foundation for troubleshooting and can provide a basis for handling similar concerns in the future. Anecdotal evaluation draws attention to particularly good and bad practices, providing a catalyst for change.

Periodic evaluation examines the components of your SP&M plan at different times, focusing attention on the program’s operations at present or in the recent past. Unlike the more global anecdotal evaluation, this method focuses only on isolated program components. For example, evaluation may focus on mission, program objectives, policy, philosophy, methods of determining work requirements for specific positions, employee performance appraisals, evaluation of employee potential and individual training and development. Periodic evaluation can be conducted during regular SP&M meetings, SP&M committee meetings or special evaluation committee meetings. Periodic evaluation can provide occasional formal monitoring of the program. This builds involvement while creating an opportunity to focus attention on operational problems. However, the main disadvantage of periodic evaluation is that it makes SP&M improvement an incremental rather than a continuous effort. This has the potential of letting problems fester for too long before they are addressed.

Programmatic evaluation examines SP&M comprehensively, measuring it against its stated mission and objectives. An appointed committee or a consultant usually carries out this in-depth program review. Committee members generally include the CEO, the SP&M program coordinator, representatives of pivotal management areas and members of the corporate board of directors.

 The Future of Succession Planning and Management

Changing external environmental conditions affect all organizations and play a role in succession planning. In the future, succession planning and management will:

• Prompt efforts to create flexible strategies to address future talent needs.

• Lead to retention policies and procedures that identify high-potential talent earlier,

retain that talent and preserve the involvement of older high-potential employees.

• Be influenced increasingly by real-time technological innovations.

• Become an issue in government agencies, academic institutions and nonprofits.

• Lead to increasing organizational openness about possible successors.

• Increasingly become intertwined with career development issues.

• Be heavily influenced by concerns about the balance between work and family, and by spiritual issues.

• Become a management issue to companies around the world.

Succession issues are front and centre in the United States, since the number of people expected to join the workforce between the traditional entry-level ages of 25 and 34 will decrease 8.8% by 2006. At the same time, the age category between 55 and 64 is expected to increase by 54% as more people reach traditional retirement ages. This trend is reflected in global population predictions. Because of these demographics, succession issues will emerge as a major challenge in many countries by 2025, leading organizations of every size to devote unprecedented attention to these issues, particularly the employment of older workers.