Succession Planning & Management: Understanding the Whole Picture


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Succession planning and management (SP&M) is a fundamental tool for the perpetuation of any organization and its key leadership. Well conceived, systemic, and deliberate SP&M processes do far more for an organization than merely plan for replacements. Strong SP&M processes align organizational goals so that core values are retained and the corporate vision is realized through continued successions. The complete video presentation may be viewed here:

Presented by Paula Cope of Cope & Associates Inc. ( on June 24 2010 as part of the NPO Maven Series presented by Common Good Vermont ( The video program may be viewed here:

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  • Hello! It’s my pleasure to be here today. Succession planning isn’t really a new topic, but it has only recently become an imperative for virtually every business and the public sector. Why? Because, as my generation prepares to retire we don’t see a line of people ready, willing, and able to take our jobs. In fact, we have fewer people in the upcoming generations to take on ANY jobs, with greater competition, more entrepreneurial spirit, and more of a level playing field thanks to technology, than we have ever seen before. So, we will concentrate on helping you understand it from a “whole organization” perspective rather than just looking at it through the HR lens. This view is critical as it provides you with many opportunities to improve your organization beyond human capital planning. The topic of succession planning is relevant for you as Board members, business owners, friends of business owners, and family members. We’ll look at it from a variety of angles to help you understand why this is such an imperative for boards and businesses of all sizes. We’ll also walk through the steps to creating an effective succession plan.
  • For me, succession planning is about perpetuating worthy organizations . So the first question you can ask yourself is, “Is my organization worth perpetuating?”
  • Now SP & M is seen as a mechanism for identifying and cultivating leadership talent. These are two words I really want to emphasize: leadership and talent . Leadership is defined as those people in the organization who have vision and can implement that vision as well as inspire others to implement it. Talent is the inherent quality we have genetically programmed within us . It is not the skills we learn or the competencies we develop, but the DNA we have for a particular job--the way a photographer has perspective and an architect understands scale. It’s what makes an indispensable IT person indispensable. Today, we think, or should think, about SP & M as: A flexible system Ownership at many levels, widely distributed across organization, including the employees A dynamic development tool with far reaching repercussions. Greater potential for recruitment & retention One that identifies opportunities, not just positions, and feeds cultivation A system in which there are expanded options for a talent search, from internal to include external There is also an increase in the role of technology & communications
  • Global competition Technology Retirement of the Boomer Generation with a concurrent decline in the US workforce starting in 2010 By the year 2020, 40% of the US workforce will be eligible for retirement Some adjustments to the predicted impact of retirements are expected due to the current economic climate Workforce shortages Service Sector Health Care Education Even though we have the highest unemployment among young adults we’ve ever had.
  • The U.S. Bureau of Labor Statistics projects a shortfall of 10 million qualified workers beginning this year, 2010, as baby boomers head into retirement. Even though our recent economic crisis and rise in unemployment is still concerning, we should not forget that ultimately we will have a workforce shortage simply based on the number of bodies we have available to work and the industries in which we need them. Having a limited number of available workers can drive up labor costs, force employers to increase benefits, or shift policies in order to fill essential positions. Ex: China’s 1 child/family policy has caused a worker shortage and now workers are dictating pay and benefits in some areas. In another example, some estimates say we will be 10,000 doctors short in primary care in 2013. Not all available workers can fill those positions. Nursing schools could fill every class three times over, but we don’t have enough faculty members to teach them. Who will fill the 30MM open positions?
  • In the past five years, the expected retirement start dates have decreased by nearly 50% indicating that employees are planning to work longer. Of course that has a lot to do with the stock market and other factors. (Use dentists as an example) Many baby boomers are staying in the workplace longer, not only to supplement their incomes, but because working is a big part of their identity and their life. Supporting that, is the fact that Boomers are living longer, staying healthy, and not giving in so easily to the aging process.
  • Now here are some facts worth repeating. Some of them, you may already know, but I’m going to expand on them somewhat One fact not up here that hit me over the head is that every business owner & CEO will leave his or her business eventually . (Quite frankly, even I didn’t consider mortality as a possible exit strategy or a reason to have a successor) Only 50% of public and private boards have succession plans in place Only 23% said they had a plan in progress and expected completion soon Research has show that there are more than 4 million owners of established businesses who are at least 50 years old. Think about your own businesses.
  • The average American company spends only 1-2 days per year developing or revisiting its strategic plan (assuming it has one) vs. the average of 9 months that it takes to plan a typical American wedding On 9/11/01, among the thousands who perished were 172 corporate vice presidents, lost on a single day in the same geographic location
  • According to a 2005 survey of 364 CEOs of privately held, fast growing companies, about 65% plan to move on within 10 years or less and have not yet chosen a replacement 83% of 1400 current CFOs recently surveyed said they have not identified their successor chosen a replacement The primary reason identified most was that they believe they will be holding that position for “some time” CFO’s who do advocate succession planning tend to have experienced it elsewhere
  • Would this ad attract you? Unfortunately, this is what most people see when they read the classifieds today.
  • This ad reflects the philosophies of SP&M. This ad may be a bit over-the-top too, but I used them to illustrate a point. The first one is not too far off from where many companies are today. We still fill openings by hiring replacements. We don’t invest in our people enough and we don’t exercise forethought in creating developmental assignments that meet our future needs as well as those of our employees. In the first scenario, companies are doing the typical reactive process to fill an immediate need. In the alternative scenario, they are hiring people proactively to address needs before they even exist. Why change? An organization will never be in short supply of a well prepared workforce if it hires the right people and grooms them to fill current and future needs. We blame budget constraints and lack of time and resources routinely, but the real problem, in my opinion, is that we don’t know the depth and breadth of the opportunities SP&M can bring or how to take advantage of them. Today, we’re going to focus on your whole organization first and then I’ll give you practical strategies for building your succession plans.
  • This is your organization. We call it a “whole systems approach” to SP&M and is intentionally referred to as our “Clock Model.” We’ve “built it as a clock” for a specific reason and that goes back to the influence of Jim Collins, author of “Good to Great” and “Built to Last”. In “Built to Last,” he says, “Imagine you met a remarkable persona who could look at the sun or stars at any given time of day or night and state the exact time and date, ‘It’s April 23, 1401, 2:36 AM and 21 seconds.’ This person would be an amazing time teller, and we’d probably revere that person for the ability to tell time. But wouldn’t that person be even more amazing if instead of telling the time, he or she built a clock that could tell the time forever, even after he or she was dead and gone? Having a great idea or being a charismatic visionary leader is ‘time telling’;” building a company that can prosper far beyond the presence of any single leader and through multiple product life-cycles is ‘clock building’.” We want you to think of SP&M like clock building, not time telling…making a sustainable GREAT organization through great practices . We also want you to feel the pressure of time running out. We need to take action and action takes time. (Ex: Y2K preparations) The goal is to build organizational capacity, not to create moment in time fixes . When you look at the model, think of this as having three tiers.  One :  the foundation (the triangle at the bottom).  Two :  support pillars (the center of the diagram) which are processes that must be in place to function at high performance.  Three :  elements of the organization that are constantly changing and that are interdependent (the circle at the top). 
  • Any plan must coordinate with an organization’s strategic plan The best plans are developed by a representative group of employees-a vertical slice through an organization Successful plans are systemic in nature & take advantage of opportunities across the organization Solid plans align strategies, people, & processes All plans need to have champions, accountability, evaluation methods, & follow-up built in
  • Role of the Board: Devise strategies & policies that provide the roadmap for implementing the organization’s vision, mission, goals, & objectives Role of the Staff: Develop tactics to stay on the course People often act tactically without thinking strategically Success comes when you act tactically while keeping the big picture in mind
  • This is a sample policy a Board or senior leadership team could adopt before embarking on the planning process.
  • Increases the chances of having a competent & available workforce Ensures there are strategies in place to transfer knowledge Minimizes disruptions when people join or leave the organization Provides an opportunity to supplement recruitment & retention efforts Decreases the financial impact of bad hires Promoting from within decreases the need & expense of using headhunters to replace key contributors with fees that can range from 20-40% of the placed employee’s annual salary
  • The essential first steps to take are straight forward: Develop a policy on succession planning. This shows its importance and let’s people know you are consciously working on it which helps you uncover opportunities Find the heroes. We recommend having a steering committee of employees, not just managers, oversee the process. If you can’t, a senior leadership team can accomplish the same oversight. In micro businesses, all of the same principles apply. Prior to putting together a steering committee, we conduct interviews at all levels of the organization. One of the questions we ask is: “Who are your heroes?” We want to know that because those people have the trust of their co-workers already and usually the positive attention of management. They may not be the rock stars, but they play a critical role. Also, employees are more likely to listen and trust their decisions than those of management chosen or self-selected steering committee members. Make sure the final group is representative even if that means 1 or 2 are “President-appointed.” Educate the Steering Committee . In order for them to make sound decisions, you must educate them about SP&M in general and then within the context of your organization. Set goals that align with the strategic plan . Determine the major milestone events, and finally, Develop a communications plan. Telling clients, or in some cases, the public, has implications, both positive and negative. You want to prepare your messages, choose their placement, and determine the timing to get the best result. Remember, this is a marathon, not a sprint.
  • When we kick off a steering committee, we charter them. Charters are like job descriptions for an entire group. This helps them know what is expected and is a vehicle for telling others. Sometimes, we suggest having a “ Chartering Ceremony ” as part of the kick off of the initiative. It is the idea of celebrating the potential you have in people and you organization that makes this idea lose the hokey factor.
  • Don’t let this amount of analysis scare you. The rule of thumb with collecting data is only collect what matters . Don’t collect data that you are not willing to address. OA explain… Workforce analysis explain… A whole systems approach to SP&M gives you the greatest opportunities to improve your organization. If you just look at people, for example as most SP&M plans do, you might miss the opportunity to bring in technology such as robotics or to change policies like telecommuting. If you go straight to looking at positions and exclude looking at systems & infrastructure, you will have lost tremendous potential to improve effectiveness and profitability. Think about moving a controller to the CFO position so the CFO can become the future CEO. You must take the time to ask, “Do we need to refill the controller’s position or can we redesign this job?
  • Identify key positions to be addressed in the plan Key positions are defined as those that will affect the future of the organization and are linked to profitability, productivity, stability, or are essential in helping the organization reach its goals Decide how far down in the organization the plan will extend. Recommend including 4 levels: senior leadership, managers, supervisors, & their potential successors Review current job responsibilities and position descriptions Review competencies for each position If none exist, develop them. Sometimes this is easily done through your performance management system, especially if you use software like Success Factors or Knowledge Point Select the competencies required for each position
  • Using a sorting tool, the Steering Committee, with the help of HR, will sort employees to see who meets the competency requirements of the positions and include other forms of data called “ multi-rater feedback .” This is when the trouble starts. As soon as you put names on the paper, it becomes a highly sensitive process. Once you do this, gaps will be identified in available talent, necessary skills, or positions needed to meet future organizational goals. Remember, if you are looking at the whole organization, you should be considering the jobs you have now and the jobs you will or won’t have in the future. FYI: Demand Analysis looks at the systems & processes including short and long term initiatives, marketplace shifts, industry trends, & work flow to determine staffing Supply Analysis looks at a variety of HR metrics, certifications, education & training, & bench strength to determine the supply of ready candidates
  • This is a wonderful grid that Country Financial uses in assessing talent. I love the simplicity of it. Other sorting tools are readily accessible such as the one in Pipeline Leadership (see resource page) 1. Assess Talent Assess using competencies, performance history, change response, versatility, attributes & derailers Focus is on readiness for potential larger role, and on development to prepare for such a role Target population – managers and above (suggest going deeper) Process: Supervising management view, group assessment 2. Plan for Critical Need Executive Talent Growth Review: review readiness and developmental need of those “on the bench” for mission critical roles Identify individuals who could assume greater roles Management Committee Validates Talent Assessment 3. Develop Talent Strategically Executive Management Competencies Leadership Development Program 4. Have the right person in the right seat at the right time In addition to the other information I will give you, I want you to use this grid as additional information you discuss the CEO Succession case.
  • So now you know where people are on the grid and it’s time to build your bench. Bench Strength is a sports term used to denote who is sitting on the bench and ready to be called in to play. In an organization, it implies those people who are ready to move up to leadership positions versus those who will take time to develop or need to be exited. Hiring right the first time Onboarding-improving orientation so that new hires become more productive sooner Building a Talent Pool goes beyond list-making for single jobs These are people who are being prepared for leadership at different levels in an organization, but necessarily for specific positions Creating Individual Development Plans are personalized road maps to guide individuals to reach their potential. It is also a valuable tool for managers to connect learning opportunities to budget and resource realities. Mentoring & Coaching can begin right from the first day with the assignment of a buddy or peer coach. These programs can range from simple to elaborate. Too often we forget how valuable orientation is as our first step to culture building and reinvestment. How we orient new staff says a lot about how we’ll treat them later. Like the old adage says, “You never get a second chance to make a first impression.” Training & Development is critical and unfortunately, it is often the first to be cut when budgets are tight. Successful SP&M programs are based on the premise that nothing is more important than your human capital. I often ask, “If no one came to work today, what would get done?” The answer is “nothing.” Training improves competencies and closes performance gaps, but training alone won’t be enough to prepare successors Move away from “one size fits all training” Consider “Hi-Po” programs (Also called Peak Performers)-This will be important information for the case When you identify “hi-potential” people, be careful not to include people who “look the part” and seem to have the right credentials or pedigree (Wharton, St. John’s, Harvard). We must define “potential” as the work they can do in the future.” If you hire “Hi-Po’s,” you’ll pay big bucks, but that doesn’t mean you’ll keep them . Peak performers leave organizations simply because they can. They have the most options, they know it, and they often leave when change gets bumpy. That also means they sometimes have difficulty finishing what they started. An interview question I sometimes use with Hi-Po’s is, “How often do you start a book and not finish it?” In SP&M, emphasize developmental assignments in addition to training. This is one of the key ingredients to an effective succession plan. (Discuss United Way Key people and Loaned Executives)
  • There is a huge array of developmental opportunities available and they are totally scalable to fit your needs, your culture and your budget. Highlight: Job rotations Community assignments (United Way Loaned Executives) Self-study (takes personal responsibility) Exit interviews (often not seen as an opportunity)
  • Focus on performance Keep the pipeline continuously filled Pipeline elements must be clearly understood Talent and potential Development of people Positions Competencies Balance long and short-term needs
  • Organizations can approach SP&M differently and still get a great result. Talk about WITHOUT USING NAMES: Wall-Goldfinger OA Co-op Steering Committee Country Financial NAMIC Board of Directors Boot Camp
  • I’ve already talked about many of these things, but in real life they should also feel redundant because they should be ingrained in everything. Stakeholders must be involved and engaged. Some of the pitfalls you may encounter include: Lack of support from the top Lack of effective communications to all stakeholders Perpetuation of myths about SP&M Not managing the risks or going too slowly because you are risk adverse or not making the time to really plan and implement Inadequate representation in the process or inadequate participation Lack of or minimal documentation of the plan and its components
  • No funding for training & development Lack of accountability & follow through to get the plan off the paper Focusing only on the top rung of leadership Not revising the plan often Assuming that success at one level in an organization plus training & development guarantees success at higher positions
  • Cues that board members & senior leadership are supporting the SP&M approach They fund it They discuss it They participate in it at the appropriate times They speak the language Strategic planning sessions include SP&M as a key topic Trend data & metrics related to SP&M are included in the strategic plan
  • The best SP&M systems have two main purposes: Serve the organization by providing a continuous supply of appropriate talent Serve the employee by helping them reach their potential Provide a continuous stream of opportunities for growth Give them a reason to stay engaged over a long period of time Provide ongoing feedback Companies that grow their leaders will never be in short supply. Companies that actively and thoughtfully develop their people will build loyalty and a culture of stability and innovation. On the other hand, companies who fail to establish leadership as a special job requirement and fail to differentiate different leadership requirements for different jobs, will continue to have at best, a simplistic process for identifying leaders and developing them.
  • Simple, easy to use and maintain But, never lose sight of the fact that people are complex. Developmentally focused Clearly identified champions Pay as much attention to the gaps as to the main events Create and strengthen system-wide linkages Use metrics carefully and deliberately to monitor and modify the system Best practices in SP&M ARE STRATEGIC
  • New books are coming out all the time.-PLUG OURS! In conclusion, an effective succession plan is a comprehensive leadership development plan that will touch virtually every part of an organization and you will want it to. It will provide opportunities for developing people, redesigning jobs, making processes more efficient, and adding value to every aspect of your organization. Note to self- The pure elements of succession planning relevant to the people in the pipeline: Identify people early Provide development opportunities and growth assignments Give them useful, relevant feedback Coach and mentor Monitor the pipeline often
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