Building LeadershipBench StrengthCurrent Trends in SuccessionPlanning and Management    Developing the 21st           cent...
What is the compelling case for paying attention to build-ing leadership bench strength?An organization’s capability and c...
potential performers who can move into leadership            Key Drivers for Succession       roles at all levels througho...
Fig. 3 Importance & Rating of Succession Planning Activities                                                            (n...
Fig. 5 Competencies Used to Identify High-Potential Employees                                                (n = 306)    ...
percent of the respondents had promoted up to 25 percent of                                                 º Communicatio...
Where implementation and follow-through has been a tough                   Ground the case with data from thorough busines...
progress of the process, regulatory compliance, the           8 “Critical Crossroads: Developing Leaders in the Public    ...
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Building Leadership Bench Strength: Current Trends in Succession Planning and Management

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Learn from research around trends in succession planning and management; explore a list of key succession planning strategies.

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Building Leadership Bench Strength: Current Trends in Succession Planning and Management

  1. 1. Building LeadershipBench StrengthCurrent Trends in SuccessionPlanning and Management Developing the 21st century workforce TM
  2. 2. What is the compelling case for paying attention to build-ing leadership bench strength?An organization’s capability and capacity to deliver targeted results and sus-tain economic viability over the long term is highly dependent upon itsfocused planning and management in building, deploying, and retainingcritical leadership bench strength.Organizations that fail to identify and prepare current and future leadersare at high risk. Opportunities of many types will be missed or fall disap-pointingly short of expectations.Here are some examples:• Such organizations will not have sufficient leadership strength and numbers to rapidly seize, shape, and capitalize upon business growth opportunities.• They will not be able to readily expand into new market spaces.• They cannot defend as effectively against sudden competitive threats.• They will not have enough leaders who are ready to immediately and effectively execute new strategic initiatives.• They will not have enough seasoned leaders to wisely guide new acquisitions to realizing the targeted results.• They will not have leaders who are able to craft strategic choices in the midst of ambiguous circumstances.1Whether such initiatives are called succession planning and management, build-ing bench strength, or talent management, it is clear that there is a direct connec-tion between such deliberate and systematic identification, engagement, andretention of potential leaders and talented performers, and the achievement oftargeted results. There is compelling evidence that this focused attention pro-duces superior performance and financial strength.2For example:• There is a strong relationship between leadership bench strength— that is, availability and readiness—and financial success.3• A recent study of strategy-to-performance gaps shows that there is an average shortfall, opportunities missed, or performance loss of 37 percent. A significant contributor to such gaps is the failure to have the right leadership resources in place—who can also effectively translate the strategy into actionable priorities.4• Another study has concluded that the long-term viability of an enterprise requires a continuous flow and abundant pipeline of high-
  3. 3. potential performers who can move into leadership Key Drivers for Succession roles at all levels throughout the organization.5 Planning and Management Four primary drivers were reported by organizations that are• Organizations that score in the top 20 percent in engaging in succession planning and management. talent management and leader development produced an average of 22 percent greater total return to shareholders.6 Fig.1 Key Drivers of Succession Planning (n=307)• Another report reveals that up to 70 percent of 100% 81% organizations are suffering “moderate to major 80% 74% leadership shortages,” a condition that not only is 60% 47% “inhibiting growth … but also driving up costs.”7 40% 35% 20%The public sector can also be at risk. Where a strong leader- 0%ship bench is not in place, the rising challenges of public serv- Impending Retention tool Developing Developingice and security will not be as fully addressed. This is com- retirements individuals for bench strength future jobpounded by the imminence of dramatic demographic shifts. In vacanciesthe coming fiscal year, some estimates show that approximate-ly 493,000 people—31 percent of the federal workforce—willbecome eligible for retirement. A high concern reported by 87 These survey results strongly correlate to the observationspercent of public sector leaders in a recent study was the need noted in previous leadership research conducted byto grow leaders from within the current ranks.8 AchieveGlobal and referenced above in other studies.Furthermore, the Center for Workforce Preparation (CWP), Succession Planning anda not-for-profit affiliate with the U.S. Chamber of Commerce, Management Activitieshas reported that “by 2010, the labor force will fall short of A majority of the respondent organizations reported the usemeeting the demands of an estimated 58 million job openings of six types of succession planning and management activi-by more than 4.8 million workers.” These numbers include ties, as shown in the following table.significant percentages of people in leadership roles. It is alsoclear that there will be fierce competition for highly skilled Fig. 2 Succession Planning Activities Used Most Oftenleaders who can be ready to serve in key roles.8 (n=307) 76% 80% 71% 62% 65% 65%AchieveGlobal Study of Current Trends in 60% 50%Succession Planning and Management 40%In June 2005, AchieveGlobal conducted a survey of 307 20%United States business and government leaders, 65 percent of 0%which were in senior executive roles. The findings reveal a CEO as Identifying Training and Conducting Identifying Identifying strategic competencies development talent critical high-potentialnumber of important insights into the current trends and owner and that are inventories positions employees champion of necessary forpractices in succession planning and management, or building succession current and planning future needs ofleadership bench strength. strategy organizationSuccession planning and management, or a process for build-ing leadership bench strength, is used by 71 percent of the sur- Respondents were then asked to rank the importance of suchvey respondents. Fifty-five percent have used the process at activities and rate the actual performance of their organiza-least three years. Between 70 percent to 78 percent of those tions in those activities. Those results are shown on the fol-respondents focus their succession planning and management lowing page. There are some interesting observations aboutactivities on middle manager and senior executive positions. this set of data. Three activities that are not used by the majority of the respondents—and were given weak ratings in BUILDING LEADERSHIP BENCH STRENGTH | 2
  4. 4. Fig. 3 Importance & Rating of Succession Planning Activities (n = 307) Identifying competencies that are necessary for current and future needs 23% 69% Identifying high-potential employees 23% 68% Training and development 30% 65% CEO as strategic owner and champion of the succession planning strategy 26% 63% Communication of succession planning strategy throughout organization 41% 58% Assessment and gap analysis 35% 55% Measurement 43% 49% Career pathing 41% 43% Job rotation 43% 35% Identifying critical positions 19% NA Conducting talent inventories 36% NA 0% 20% 40% 60% 80% Important/Very Important (6 or 7 Rating) Fair/Poor (1 or 2 Rating)actual practice—were ranked relatively high in importance. Those Leadership Competenciesareas were: In a separate survey question, respondents ranked the impor-• Communication of the succession planning strategy tance of skills actually needed and used to advance to higher throughout the organization level leadership positions. Those with a ranking of “impor- tant/very important” are shown below.• Assessment and gap analysis Survey results showed that 10 leadership competencies were com-• Measurement monly used to identify high-potential employees. Those compe-In further investigation, it appears that these are more diffi- tencies and the frequency of use are shown on the next page.cult activities to conduct, especially in the early launch phasesof succession planning and management. Thus, a smaller per- Fig. 4 Importance of Skills Needed to Advance to Highercentage of respondents have had an opportunity to formulate Leadership Positions (n=307)their approach to these activities or gain successful experi- 100%ence in practice. Yet, it is clear from this survey, as well as 75% 77% 80%other studies, that there is significant importance in clear 58% 63% 60%communication of intent, using the precision of assessment 41% 47%and gap identification for developmental planning, and the 40%need to measure the success of the process and its contribu- 20%tion to the organization. These may be natural target areas 0% Technical skills Coaching skills Project Conceptual Problem- Interpersonalfor seeking outside expertise and guidance. management skills solving skills skills skills Important/Very Important (6 or 7 Rating)3 | BUILDING LEADERSHIP BENCH STRENGTH
  5. 5. Fig. 5 Competencies Used to Identify High-Potential Employees (n = 306) Decision-making skills 74% Degree to which current performance exceeds expectations 74% Drive for results 66% Analytical skills 63% Potential to be successful in another function/department 63% Problem identification and resolution skills 59% Cognitive ability 52% Desire to develop others 44% Emotional maturity 44% Possession of global perspective 43% 0% 20% 40% 60% 80%The survey ranking of the importance of skills needed at ies, the importance of coaching and developing others rises tohigher organizational levels is quite consistent with other a very high importance level and is viewed as a critical role inexecutive leadership research in a study conducted by leadership positions.Stephen Zaccaro.9 The following graphic portrays the risingrelative importance of interpersonal and conceptual skills High-Potential Promotions and Turnovertoday, compared with previous times. The survey also inquired about the rate of promotions, as well as the turnover rate of people who had been identified as Past: Today: high-potential candidates and involved in the succession plan-The exception from the June study is the lower ranking of ning and management process. The results showed that 75coaching skills. By comparison, in other AchieveGlobal stud- Fig. 6 Rate of High-Potential Promotions & Turnover (n=306) 80% 75% 75% 70% 60% 50% 40% 30% 18%* Zaccaro, S. The Nature of Executive Leadership: A 20% 7% 10% 10% 4%Conceptual and Empirical Analysis of Success. Washington, 0%D.C.: American Psychological Association, 2001. 51% or More 26 - 50% 25% or Less Percent HPs Promoted Percent Turnover of HPs BUILDING LEADERSHIP BENCH STRENGTH | 4
  6. 6. percent of the respondents had promoted up to 25 percent of º Communicationstheir high-potential candidates since the program inception.Another 18 percent had promoted between 26 percent and 50 º Change managementpercent of such candidates. Only 7 percent had promoted • Organizations use a balance of internal and externalmore than half of their high-potential people. resources for training and development.In additional research, AchieveGlobal has learned that the • There is frequent use of action learning techniquesidentification and expectations for high-potential candidates with real or relevant situations.need to be carefully managed. For example, if candidates con-strue such a designation to be any form of promise for pro- Challenges to Successionmotion or quasi-contract—and they are subsequently not Planning and Managementselected for openings—there may be significant disappoint- Responses to the survey revealed seven common challengesment and risk of turnover. Other studies report that even to the succession planning and management process.with the presence of a succession planning and managementprocess, key openings may or may not draw upon the high-potential candidate lists in final placement decisions. Seven Common Challenges Organizations FaceCommunications of intent and management of opportunities Related to Succession Planningmust be carefully reconciled and positioned to avoid unin-tended adverse effects. 1. Finding the right employees to developTraining and Development Activities 2. Time for the process Fig. 7 Activities Used to Develop High-Potentials 3. Buy-in by senior leaders (n = 307) 4. Organizational issues such as downsizing or 80% 68% mergers 62% 60% 5. Implementation and follow-through 44% 44% 40% 35% 37% 6. Assessment and measurement 20% 7. Losing talented people 0% Role Job rotations Formal training Action learning Project Formal in- shadowing using external assignments house training vendor Respondents were then asked how their organizations are currently addressing the challenges before them. For thoseSurvey results show that a number of activities are currently who need to find the right talent, they reported the use ofin place to develop high-potential candidates, as noted in the more assessment tools, broader recruitment efforts, creationfigure above. of rotational opportunities, laying out career paths, and more explicit internal development of skills. There was a commonWhen responding to how training and development is used in observation about the shortage of talent, experienced andsuccession planning and management, specific patterns emerged. skilled bench strength, and serious challenges in recruitment.• The activities were focused on identified Where greater buy-in is needed, those organizations engage developmental gaps. the CEO in personal persuasion with senior executives, human resources representatives work directly and one-on-• The primary skills for development are: one in such situations to review the process and show positive º Leadership results, and the management team cascades the purpose and importance down and through the organization. º Team building5 | BUILDING LEADERSHIP BENCH STRENGTH
  7. 7. Where implementation and follow-through has been a tough Ground the case with data from thorough businesschallenge, there is greater emphasis in creating formal guide- and organizational assessment.lines and commitment to placements. There is also a focus on 2. Secure a high level of conviction and active involvement increating thorough communications plans and securing out- the process by all senior leaders, led by the CEO.side expertise in implementation planning. Crystallize roles and responsibilities for all players.For those organizations that are struggling with assessment Confirm the intent to use this process for all openings.and measurement, they are seeking external help where need- 3. Set an overarching strategy for building leadershiped to conduct job analyses, competency identification, career bench strength: right people, right place, right time.pathing, leadership assessment and feedback, organizationalreview process steps, career development tools, and retention 4. Define a meticulous, comprehensive, strategically aligned,strategy planning. Others are continuously seeking feedback fair, and equitable succession planning and managementfrom all parties involved in the succession planning and man- process that provides opportunities to everyone.agement process. Some focus on identifying the blockers totheir success. Still others looked for outside help in carefully 5. Create a detailed communications plan to accurately por-planning the communications strategy and setting up effec- tray the full intent of what to expect—and what not to expect.tive developmental plans. 6. Identify an accurate list of leadership competenciesFor those who are experiencing retention problems, the (skills, knowledge, abilities, and motivations)—a talentorganizations are coaching senior management on the impor- portfolio—that will produce superior performance intance of succession planning and the direct links to retention likely future scenarios of the organization.strategies. There is also stronger emphasis on communicating 7. Identify key linchpin positions that can propel orthe long-term benefits of staying with the organization as inhibit strategic initiatives or opportunities.compared to realizing a pay raise elsewhere—use of theemployee value proposition for their organization. 8. Use the competencies to assess the current talent pool. Analyze the results to identify high-potentialConclusions candidates and create pinpointed developmental plans.A variety of forces—sharp demographic shifts, downsized 9. Align the succession planning and managementmiddle management ranks, renewed economic growth, new process with the employee value proposition—whybusiness opportunities, and competition for critical talent— a promising leader will want to grow, develop, and con-has significantly raised the importance of the strategic lever tribute with this organization over the long term.of building, deploying, and retaining critical leadership bench Incorporate appropriate messaging in recruitment strategies.strength. Furthermore, organizations that fail to identify andprepare leaders run considerable risks in missing mission crit- 10. Create a set of training and developmentalical opportunities and suffering financial consequences. experiences that are directly connected to building skills in the leadership competencies.While a majority of organizations are now pursuing someform of succession planning and management, developing 11. Tie the process to the organization’s performance managment,bench strength, or talent management, the formation of best promotion, reward and recognition, and related humanpractices is still in the early stages. On the basis of these sur- resources systems, processes, and policies.vey results, previous leadership development research, and 12. Engage in at least annual reviews with the process andpractical experience, AchieveGlobal observes that the follow- all candidates. When there are triggering strategicing guidelines are essential: circumstances, conduct an immediate review.1. Create a compelling case for the purpose, 13. Look first to succession planning or leadership bench importance, and expected impact of a succession strength inventory for promotional opportunities. planning and management process that fits the explicit current and future needs of your own organization. 14. Periodically measure and evaluate the integrity and BUILDING LEADERSHIP BENCH STRENGTH | 6
  8. 8. progress of the process, regulatory compliance, the 8 “Critical Crossroads: Developing Leaders in the Public movement of high-potential candidates, turnover and Sector.” AchieveGlobal research paper, 2003. retention strategies, impact of developmental 9 Zaccaro, S. The Nature of Executive Leadership: A Conceptual activities, and other metrics that tie to strategic fulfillment. Communicate and celebrate results. and Empirical Analysis of Success. Washington, D.C.: American Psychological Association, 2001.15. Include the board of directors, shareholders, or other key stakeholders in critical communications. About the AuthorWith deliberate succession planning and management, the Joyce A. Thompsen, Ph.D., Executive Consultantorganization will develop a broad and deep leadership bench Dr. Joyce Thompsen is an experienced corporate executive,that can seize and capitalize upon spontaneous opportunities, consulting practice leader, and educator. Her primary role isrealize strategic targets, and rise to the toughest challenges. to help organizations clarify and execute strategy to achieve desired results. Other areas of emphasis include designingAbout the Research customized leadership, sales performance, and customer serv-In June 2005, the AchieveGlobal Research Group conducted an ice programs, providing guidance in complex organizationalonline survey on the subject of succession planning with a sam- development situations, designing performance managementple of U.S.-based leaders in 17 vertical sectors from business and systems, competency-based systems and assessments, succes-government. Forty percent of the respondents were from manu- sion planning, and managing organizational talent.facturing, banking, and health care. There were a total of 307 She has a decade of experience as a human resource executiverespondents, of whom 65 percent were executives. Eighty-five in an engineering and manufacturing organization. She haspercent of the organizations have 1,500 or more employees. The been a member of the board of advisors, faculty, and lecturersurvey included opportunities to supply both quantitative and for three university graduate schools of business in the area ofqualitative data. In addition, a number of relevant published strategy and policy. Her publications include topics such asarticles and research reports were reviewed. the measurable impact of people, leading high-velocity organ-References izations, building organizational capacity for change, leader- ship for virtual enterprises, achieving Return on Critical1 Courtney, H. 20/20 Foresight: Crafting Strategy in an Uncertain Knowledge© and Return on Critical Talent.World. Boston: Harvard Business School Press, 2001. Joyce has earned a Ph.D. in applied management and decision2 “Strategy to Results: Achieving Greater Return on Critical sciences, an MBA, and a B.S. in business education. Her pro-Talent.” AchieveGlobal research paper, 2004. fessional affiliations include The Institute of Electrical and3 Fitz-enz, J. The ROI of Human Capital: Measuring the Economic Electronic Engineers, the Engineering Management Society, The World Future Society, and the American Society forValue of Employee Performance. New York: AMACOM, 2000. Training and Development. She has been a director of the4 Mankins, M., & Steele, R. “Turning Great Strategy into Great Research Advisory Board of the Greater MinnesotaPerformance.” Harvard Business Review, July-August, 2005. Corporation; a gubernatorial appointee to the Elementary- Secondary-Vocational Computer Council of the Minnesota5 Charan, R., Drotter, S., & Noel, J. The Leadership Pipeline: State Department of Education; on the executive committeeHow to Build the Leadership-Powered Company. San Francisco: of the American Electronics Association and the MinnesotaJossey-Bass, 2001. High Technology Council; and has served on a number of6 Michael, E., Handfield-Jones, H., & Axelrod, B. The W for ar foundations and community service boards.Talent. Boston: Harvard Business School Press, 2001.7 “The Leadership Benchstrength Challenge: BuildingIntegrated Talent Management Systems.” Executive World HeadquartersDevelopment Associates study, 2005. Developing the 21st 8875 Hidden River Parkway, Suite 400 Tampa, Florida 33637 USA workforce century TM Toll Free: 800.456.9390 www.achieveglobal.com © 2009 AchieveGlobal, Inc. No. M01096 v. 2.0 (01/2009)7 | BUILDING LEADERSHIP BENCH STRENGTH

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