Implementation - How to make your Succession Planning work

Effective succession planning requires that an organisation invests time, resources, and energy into effectively planning its future and the staffing needs that result from this visioning. Dick Jackson Chief Financial Officer (CFO) of Road and Rail Services Inc in the US (cited Heffes 2002), believes that succession planning is linked to strategic planning, with the strategic planning process itself focusing on the future and what resources (including people and people development) are needed to get there.

Although, succession issues have traditionally been about replacing retiring CEO's it is now being seen as an integral strategy for all organisations at all levels of staff. According to Jackson succession planning for all positions involves knowing who would come behind you, and behind each of the people who work for you "when I was vice president, I looked at my controller, my tax guy, my cash manager, my risk manager, my MIS person etc".

Rothwell indicates that 11 best practices typify productive succession planning and management efforts:

• Clarify the purpose and the desired results of the effort - clarify why the programme exists and what results you seek from it, align your goals for the programme with business needs, and take a hands-on approach to formulating, implementing, and evaluating the programme.

• Determine what performance is required now - use competency modelling to discover the differences between the best performers and average performers.

• Measure performance - use your competency model and measure work results to help pinpoint and eliminate organisational barriers that impede productivity, and to identify areas for feedback.

• Determine what performance is needed in the future - establish a future competencies model that describes the characteristics of individuals who will be aligned with organisational strategies and objectives for the long term.

• Assess potential - compare individuals to the future competency models e.g. use 360o feedback and assessment centres.

• Establish a means to narrow gaps - establish the gaps between an individual's current competencies and performance and between his/her potential, use individual development plans, in-house leadership development programmes, on and off-the-job work assignments and education events, action learning, projects, task force participation, and mentoring to build individual competencies to meet present challenges and to prepare for future ones.

• Follow up - establish a regular follow up system e.g. quarterly 'talent review' meetings to hold both individuals and immediate supervisors responsible for implementing individual development plans.

• Document competence - keep a record of the work-related and company-specific competencies of key staff in the organisation. This inventory can be used in times of crisis or short notice to field the right team of people for the event.

• Create and sustain rewards for developing people - reward both those individuals who are making progress in their development and those who are 'growing talent' in line with organisational needs.

• Evaluate results - although few organisations determine their return on investment of such programmes in a quantitative way, the availability of staff with key skills for vacancies may be a measure of a programme's success.

• Lead from the front - the CEO and other senior leaders should take a hands-on approach and become personally involved in the programme and not delegate it completely to the Human Resource Department.

In discussing succession planning at the Chief Executive Officer (CEO) level within the banking community, Susan Lahey (1999) offers a compilation of the 10 best practices suggested by leading consultants and headhunters:

• Take stock - how is the (bank) going? What are its strengths and weaknesses? Is it going in the right direction and at the right pace?

• Draft a list of possible successors to the CEO, both internal and external - the list should include, but not be limited to, the recommendations of the current CEO, and should include the strengths and weaknesses of the candidates, and the rationale for choosing one person over another.

• Include in the list possible candidates from different time frames - determine who would be the best people who could take over now, in one year, or potentially in five years.

• Appoint a committee, either human resources, compensation, or some other one, to oversee the succession strategy - this committee should regularly review all potential candidates.

• Motivate the CEO - the current CEO should have a succession strategy and their compensation should be aligned to this.

• Increase the company's bench strength - the ideal is to have a number of internal candidates is to have a number of internal candidates who could step in quickly. The creation of such a 'succession friendly' culture gives the opportunity for more people to gain experience in areas required for leadership.

• Expose emerging leaders to the Board regularly - this enables the Directors and Board to have first hand understanding of potential CEO candidates.

• Plan for retention of executives - to prevent the loss of valuable executives through headhunting use strategies such as stock options to tie them to the organisation long term.

• Implement term limits for the CEO - limit the time frame of the CEO position to a 7-10 year period (the CEO should have accomplished what needed to be done in that time, with periods of 12-14 years encouraging the potential for 'the spoils of power')

• Limit the succession timeframe - take no longer than 6 months to complete the transfer of power from one CEO to another as waiting too long leaves a (bank) vulnerable to takeover attempts.

In discussing finding a replacement, Max Messmer (2002), Chairman and CEO of Robert Half International Inc. notes "While the obvious frontrunner as your successor may be the highestranking person reporting to you, don't exclude other employees from consideration. Carefully analyse whether someone is qualified and, if not, how he or she might develop the necessary skills". Messmer comments that "Grooming your successor requires advanced planning and commitment. Invest time in selecting the right candidate, and develop a clear strategy for training". He suggests that it is a good idea to begin training of your successor early using such strategies as:

• Mentoring and regular feedback;

• The establishment of measurable objectives and performance requirements;

• Exposing prospects to situations where they can acquire strategy skills as well as a broad vision of the company and its goals;

• Encouraging prospects to sit in on important discussions and to make recommendations;

• Using opportunities to build their leadership abilities (e.g. negotiation, communication, and diplomacy skills) through such activities as leading high-profile teams, drafting memos on key departmental issues, and resolving disagreements with other company groups.

Conducting a 'gap analysis' may also help in identifying and evaluating staffing or skills and knowledge deficiencies or gaps. This analysis can be used to compare the current performance and needs of your organisation in contrast to the performance levels you desire, and the future knowledge and skills that you expect will be required. This information can then be used in your strategic and succession planning. As issues are discovered these may be documented in an action plan. A gap analysis may also be employed periodically to track changes through monitoring key business indicators over time against a baseline, for example, the number of staff undertaking succession and/or coaching programmes.

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