Seven Deadly Sins of Succession Planning

1. Seven Deadly Sins of Succession Planning May 30, 2012 Renu Dadlani, PHR

2. According to the world-class executive search firm Spencer Stuart, boards ranked succession planning as their number one priority, right alongside setting a vision and strategy for the company. Source: Business Insider

3. Why do Most Companies Fail? They don’t know how to develop an overall process that includes accurate leadership assessment. • Over 60% of companies have no CEO replacement identified in the event of an emergency • 43% had no formal CEO succession plan at all • 67% do not have a five-year plan for management succession • Source: National Association of Corporate Directors and the Center for Creative Leadership

4. 7 Awful Succession Policies To Get Rid Of • Awful Policy 1: Only Allowing Planners to Select Successors from the chain of command under a position • Successors should be the best candidates for the role regardless of the current department or position they hold in a company.

5. It’s about Creating a “Fit” • Succession Planning must be driven by strategy • Determine the critical leadership competencies required • Assess talent internally… need to go external?

6. Visualize What your Company Needs • Clone the existing executive…really? • Look to the future…not to the past • What skills are necessary to grow the organization strategically?

7. Real World Succession Planning Bobby Knight, University of Indiana Katie Couric, CBS Evening News Source: Business Insider

8. 7 Awful Succession Policies To Get Rid Of • Awful Policy 2: Heralding super-flat organizations as a nirvana of efficiency • Communication, goal setting, career paths and many other issues are often crippled by the huge gap between levels in a flat organization.

9. Cut the Fat…Not the Muscle • Middle managers and technical and professional workers took the biggest hit • Represented tail-end of the Baby Boom generation and the upper-end of Generation X • Served as the feeder pool that would’ve replaced the first wave of retiring Boomers

10. The Hierarchical Structure Can Get in the Way • Flattening is used as a management tool to address economic stress… • But, is perceived as a negative factor on leadership development and succession planning • Baby boomer retirements… • High executive failure rates… • Ever shrinking and flattening organizations… • Where will successors come from?

11. As a result… • Large increases in the time to fill high-skill, senior-level jobs being vacated by early-retiring Boomers • Notable decreases in the qualifications of younger applicants for high-level, senior positions • Increased instances of filling high-level vacancies with less than fully qualified younger replacements • Increases in salary and benefits demands by younger applicants

12. 7 Awful Succession Policies To Get Rid Of • Awful Policy 3: Allowing performance review scores to be weighted as high as 80% of criteria for placement as successor • Unless your performance management rates and process are perfect AND geared specifically for succession planning, you are setting yourself up for complete failure.

13. Past Performance…Future Success? • High performers in a current role are loaded with talent and capability • It is perceived that they have inherent leadership traits which will help them to excel…but is that enough? • Past performance doesn’t guarantee future success • Will they be able to sustain their performance in leadership positions? • Can they transition to thinking strategically, delegating efficiently, and in the end, leading effectively?

14. A Combined Performance-Potential Matrix Past Performance +Future Leadership Potential = Winning Combination • Proven performance at one level may be completely ineffective at another • An employee with a winning attitude & that produces results can’t necessarily guide a team to similar levels of productivity • Succession decisions should consider one’s intrinsic talent to lead • Executive coaching, development and grooming efforts can help to fill any gaps

15. 7 Awful Succession Policies To Get Rid Of • Awful Policy 4: Only doing succession planning for the top three layers of an organization • There are key positions throughout organizations that need succession plans or replacement plans far more than many in the upper ranks of the organization.

16. Only 47% of Industry Average companies have succession plans in place for upper-middle management and just 34% for middle management. Source: Aberdeen Group

17. Critical Roles Go Beyond the Top Levels • The goal of succession management is to ensure that an organization continues to operate successfully when individuals occupying criticalpositions and hard-to-replace competencies leave. • Identifying the critical positions is essential, but can be challenging • There isn’t a “standard” list of critical positions

18. Prioritize Jobs that are Mission-Critical • Does it directly produce revenue and impact bottom-line financial results? • Does it touch customers? • Does it possess the skills needed to develop or deliver the features that create a competitive advantage? • Does it involve developing strategy, designing new products or creating growth opportunities for the company? • Does it encompass specialized knowledge or unique expertise? • Does it perform a critical task that would stop or hinder vital functions from being performed if vacant?

19. 7 Awful Succession Policies To Get Rid Of • Awful Policy 5: Producing future workforce strategies without reviewing the data of historic workforce trends and external market conditions • History will repeat itself. It’s a famous adage and it applies to the lessons you need to learn in your own employee base as well. What can history prepare you for now?

20. The U.S. Census Bureau shows that 4.6 adults will turn 65 each minute during 2012…and by 2025 that figure will increase to 8 adults each minute

21. Strategies to Prepare for the “Brain Drain” • A typical 40-hour work week may no longer be appealing…offer flexible work schedules • Structure opportunities for retirees to return to work as independent contractors or training consultants • Provide incentives and establish procedures that entire Baby Boomers to delay retirement • Offer a wellness and benefits program suitable for all employees, including older workers • Develop mentoring programs to increase knowledge sharing and groom younger talent

22. 7 Awful Succession Policies To Get Rid Of • Awful Policy 6: Avoiding line managers and business unit leaders when it comes to making employee policies, because they “don’t understand HR” • Help them understand their workforce • Distribute the input gathering to include the management in the fields from succession planning, to compensation decisions, to team structures, and other • If they don’t understand the impact of their decisions on the big picture, then shame on you, not them.

23. A Shared Responsibility • Identifying successors isn’t just an HR function • The best successor candidate may not necessarily be someone’s direct report… but HR might focus energies there • Line managers and business unit leaders know the in’s and out’s of both the position and the employee

24. Benefits to Involving the Business • Provides greater insight into an employee’s skill sets, interests and readiness • Increases accountability to help groom successors • Offers input in the development plan necessary for that position and for the employee • Provides managers comfort in knowing that senior management IS planning ahead

25. 7 Awful Succession Policies To Get Rid Of • Awful Policy 7: Accepting that hard-to-use software is better because it’s more complex and will do more for you…or that cheaper software is merely simpler and will give you a faster, yet lesser return • You need to select software that fits your organization’s needs and the way your people think and process their requirements

26. Don’t be Fooled…. • Organizations naively feel that they “know” their leadership talent and thus make accurate subjective determination of “fit” and “readiness” of potential successors for key roles. • There are limited attempts to bring in objective data beyond personal observations and opinions. • The Result: High Failure Rates.

27. What to Look for in a Succession System • Is it intuitive and easy-to-use? • Can we search for talent across the organization with specified skill sets? • Can it help us facilitate talent review meetings? • Does it provide visibility into the data we require to make accurate successor decisions? • Can it accommodate OUR process?

28. Check-List For First-Rate Succession Planning • Set the right tone at the top. • When the board and CEO embrace succession planning, he or she sets the tone at the top, and this attitude is contagious. • Focus on the attributes that matter for leadership success. • The first step in succession planning is to get an accurate assessment of leadership potential. • Don’t let assessment reports sit on a shelf and collect dust. • The best organizations insist that leadership development and leadership assessment be tightly linked. • Source: Business Insider

29. About Aquire • Founded in 1994- Headquarters in Dallas, TX • Strategic Alliances with Leading HCM solution providers • Domain expertise in workforce reporting and management • Trusted Innovator in HolisticWorkforce Planning and Analytics Solutions • 2,700+ Customers Across the Globe • Wholly owned subsidiary of Peoplefluent, the largest private talent management vendor

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32. Thank You! Renu Dadlani, PHR Regional Sales Manager renud@aquire.com + 1 214.278.5113 Aquire 400 East Las Colinas Blvd Suite 500 Irving, Texas USA 75039 www.aquire.com United Kingdom: 0845 371 7085 Outside the UK: + 44 1582 463489 Switzerland/Schweiz/Suisse: 044 5007159 Outside Switzerland: + 41 44 500 7195 Germany: 0221 92042 430 Outside Germany: + 49 221 92042 430