18 March 2013

Nigeria: Building Roadmap for Succession Planning in Organisations

The need for organisations to build a robust succession planning programme that aligns current talent development with future leadership needs has been brought to the fore.

Human resource experts believe that having this process in place is vital to the success of organisations since the individuals identified in the plan will eventually be responsible for ensuring that their organisations are able to tackle future challenges.

In its simplest form, ameinfo.com describes succession planning as nothing more than getting managers in a company to use a systemic process to determine the current training and development requirements of their subordinates.

In an article on 'Why Succession Planning is Important', it emphasised that these "high potential" candidates must be carefully selected and then provided training and development that gives them skills and competencies needed for tomorrow's business environment.

Another reason why succession planning is important, according to the online article, is because "these high potentials will one day become the leaders of the company. This is why their development needs to incorporate a broad range of learning opportunities in your organisation. The individuals should also be exposed to as much of the working environment as possible so that they gain a good understanding of what the company requires to remain successful".

It added that organisations that understand the need to manage the development of their high performers are a step ahead of their competitors, noting that the effort required to establish a development programme for future leaders is worthwhile because it creates a motivated and capable group of employees that are ready to move forward in the organisation when the need arises.

However, despite the importance of succession planning in organisations, many companies often times ignore this key human resource management issue and this had led to the collapse of many big conglomerates.

For instance, looking at a situation where the CEO of a company has a sudden heart attack and the top executives are wooed away to another firm, what happens, if the next generation of leaders to fill the roles is not available? Or worse still, a situation where under-qualified people are moved to take over the leadership roles because there is no better qualified individuals to take over? The result of such action is better imagined.

This scenario better explains the reason why ameinfo's article argued that succession planning is one of the initiatives that many companies do not find the time to start until it's too late, stressing that "if you don't address succession planning now your organisation may end up facing the burden in the middle of a crisis".

Citing the case of one of the most successful business leaders of all time, Jack Welch, who started working at General Electric in 1960, ameninfo.com observed that as Welch moved upward in the organisation he displayed leadership qualities that set him apart from his peers.

"But what did Jack Welch think of succession planning? One of his most admired skills was the ability to develop his subordinates so there was always someone ready to take his place when Jack was offered a promotion.

"How successful was his strategy? In 1981 he became the CEO of General Electric and served in that position until he retired in 2000. Furthermore, in 1991, Jack Welch stated: "From now on, choosing my successor is the most important decision I'll make. It occupies a considerable amount of thought almost every day." That's a pretty strong statement for someone that had the vision and leadership ability to increase the value of General Electric from $13 billion to $410 billion dollars during his tenure," it explained.

Similarly, an article published by Workforce.com maintained that the only way to reduce the effect of lost leadership is through a strong succession planning programme that identifies and fosters the next generation of leaders through mentoring, training and stretch assignments, so they are ready to take the helm when the time comes.

"Research supports sound succession planning. A study some years ago from consulting firm Booz Allen Hamilton concluded that "over their entire tenures, CEOs appointed from the inside tend to outperform outsiders" when it comes to returns to shareholders. Yet many organisations struggle to take their succession planning programmes beyond a static list of names slotted for a few top spots.

"This Roadmap offers human resources leaders a framework and advice on how to create a robust succession planning programme that aligns talent management with the vision of the company, ensures employees have development opportunities to hone their leadership skills, and guarantees that the organisation has a leadership plan in place for success in the future," it stated.

Based on these findings, human resource experts have clearly stated that succession planning and development of future leaders does not exist in isolation as it needs to reflect the company's strategic objective and strategic goals.

Indeed, they pointed out that making succession planning a priority must come from the leadership team, stressing that implementation of that plan is HR's responsibility.

Fundamental Issues in Succession Planning

According to Workforce.com, as companies begin to develop a succession planning process, they should consider some fundamental issues which include:

High potential vs. everyone: It explained that some companies focus all of their succession planning efforts on "high potential individuals," whereas others create a succession plan for everyone from the moment they are onboard.

It stated that "The benefit of focusing on high-potential workers is you can channel more resources and coaching toward those employees with the greatest promise. The risk is that you overlook great people and alienate and frustrate the rest of the employees, which can impact morale and turnover. "Most successful organisation focus on everyone," says Dan Schneider, cultural architect at advisory firm The Rawls Group".

Hiring from within vs. bringing in someone new: Developing leaders internally, it stated, takes time and effort, but these homegrown candidates are more likely to be successful than external candidates. "According to a 2012 study by Matthew Bidwell, an assistant professor at the University of Pennsylvania's Wharton School, external hires are 61 per cent more likely to be laid off or fired, and 21 per cent more likely than internal hires to leave a job on their own accord. These outside hires also get paid more, but get lower marks in performance reviews during their first two years on the job".

However, it argued that "internal hires are not always an option. Fully 38 per cent of firms anticipate they will need to recruit externally for C-level roles in the next 12 months. Internal candidates are also not always the best choice. If a company wants to move in a dramatically different direction, or its current leaders leave before the next generation is ready, companies need to be open to bringing in someone from the outside".

Factoring diversity into decision-making: It explained that "Managers often seek people who are like them for mentoring and promotion, which often leads to a plethora of white men leading organisations, stressing that "If companies want diversity in their leadership, the succession planning initiative should include steps that actively promote women and minorities for leadership opportunities, and train managers on how to encourage diversity on their teams".

Making sure you have support from the top: The article explained that HR can build a great talent development plan, but without active support from leadership, it won't have the desired impact. HR leaders can't force executives to support their efforts but they can align talent management efforts with strategic plans and educate executives and managers about the business value of succession planning efforts.

Roadmap to Succession Planning

Making succession planning a priority must come from the leadership team, but implementation of that plan is HR's responsibility, says Workforce.com. It argued that "HR's role in succession planning is to find people who fit the culture and to help them develop the skills to lead the organisation so it stays viable in the future. To do that, HR has to create a succession plan that links talent development with the strategic goals of the board, the business and the staff members".

It explained that "succession planning programme compiles the skills, abilities and goals of each employee, compares them to the needs of current and future roles, and tracks employee progress toward being ready to fill those roles". It added that building a strong succession planning road map involves the following steps:

The article emphasised the need for the HR to create a specific model for every job that defines the behaviour, attitude, skills, knowledge, experience and talent, or Basket, necessary to succeed in the role. These models, the article noted will help employees understand what's expected of them in their current role and what it will take to be ready to move forward.

It further harped on the need for the HR to ensure that Basket assessments consider the skills necessary to fulfill future roles not just present ones. For example," if the company plans to expand globally, the next generation of leaders should be comfortable working abroad; or if growth plans involve rapid acquisitions, someone with finance skills and change management experience may be the best choice for leadership positions", it stated.

As part of the talent assessment process, the article stressed that HR should assess everyone in the organisation with an eye toward who is ready to take on key leadership roles today, in 36 months and in 72 months. It added that the HR should "Use the Basket assessments to do a gap analysis with employees to help them see what they need to do to be ready for the next level and how long that should take and report those findings to the C-suite and the board as part of his succession planning updates".

It continued: "As part of the assessment, the HR should talk to employees about their career goals and aspirations to be sure you are prepping them for a job they want, adding that "Part of HR's responsibility is to make sure people have enough exposure to know where they want to be in the future."

Identify roadblocks: It explained that once the assessments have been completed, the HR should, look for any bottlenecks in the development process that could prevent candidates from moving forward. This, it stated, may include executives who block the way for the next generation, or glaring gaps in readiness for critical roles. "Ideally, you will have two to three candidates for every leadership position in varying stages of readiness".

Make sure the board is onboard: The online article added that once the assessments are complete, the "HR, the CEO and the board of directors should come together to review the assessments and create a list of the top candidates for each role. By working with the CEO and the board, you ensure that everyone is on the same page about succession plans".

Keep your eyes on the road: It explained that "Once you have a succession planning list in place and you know where your next generation of leaders are in their development process, use talent management tools, performance assessments, mentoring and stretch assignments to close the gaps. Make sure employees are onboard with setting their own development goals, and track their progress through regular performance assessments.

"Review the succession plan with the C-suite and the board at least every nine to 15 months, and whenever there is a major change in leadership or in corporate strategy. This ensures that you are always up to date on the development of your top talent and that you identify any changes in direction that might require a tweak to the plan", it added.

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