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SMD Business-Focused Succession Planning


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While organizations have evolved substantially in how they develop a strong pipeline of leadership talent, some significant gaps still exist. The overall inability to discover and quantify the people-drivers of business outcomes continues to hinder the succession planning process within organizations. We provide you with an approach to create a succession planning process that assesses your talent based on the competencies, skills, experiences and other elements that affect business outcomes, while quantifying the quality of your talent pool. A customizable succession planning scorecard is provided to show you how to have the most impact on the business when planning your next talent moves. This presentation will show you a succession planning process that:,

• Focuses talent decisions on key drivers of business

• Incorporates analytics into talent assessments

• Creates metrics based on the overall quality of your talent pool

• Utilizes performance and potential reports that are business-focused

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SMD Business-Focused Succession Planning

  1. 1. Business Focused Succession PlanningShane Douthitt, Ph.D.Scott Mondore, Ph.D.Strategic Management Decisions
  2. 2. Learning Objectives• Identify and assess employees on the competencies, skills, personality tendencies, etc. that lead to high levels of performance• Utilize analytics to objectively: ▫ Assess High-Potential Talent; Differentiate High From Low Performers ▫ Assess Overall Talent Pool Effectiveness ▫ Uncover Individual and Group Leadership Development Needs• Align succession planning efforts with strategic business goals and demonstrate an impact on bottom line results
  3. 3. About SMD: Linking People Data to Business ResultsOur Platform• Implement Talent Management processes based on analytics, linking people to critical business outcomes• Partner with our clients to create and execute people strategies that drive business outcomes and maximize ROI Our Results • Linkage of Talent Management (e.g., engagement survey results, training, performance ratings, competency assessments) to a variety of business outcomes: ▫ Operations Metrics (e.g., operating margin) Connecting Employees ▫ Financial Metrics (e.g., sales dollars, productivity) to Business Results ▫ Customer Satisfaction • HR Strategy & Planning ▫ Turnover/Retention • Human Capital Measurement • Talent Management ▫ Employee Safety • Leadership Development • Executive Assessment & Coaching • Significant bottom-line improvements and • Organizational Effectiveness return-on-investment for our clients.
  4. 4. Presenter BioScott Mondore, Ph.D.Scott has over 15 years of experience in the areas of strategy, talent management,measurement, customer experience and organizational development. He has internal andconsulting experience across a variety of industries including transportation, healthcare,manufacturing, pharmaceuticals, utilities, and hospitality.Scott is currently a managing partner of Strategic Management Decisions (SMD). BeforeSMD, he served as East Region President for Morehead Associates, a healthcare HRcompany. Before joining Morehead, Scott worked as a Corporate Strategy Director at Maersk,Inc. He also worked as an Organizational Effectiveness Leader at UPS, focusing onemployee assessment and measurement as well working as a consultant to large and smallorganizations in both the private and public sector.Scott is the co-author of “Investing in What Matters: Linking Employees to BusinessOutcomes” (SHRM, 2009) and “Business-Focused HR: 11 Processes to Drive Results”(SHRM, 2011). and has published several articles on various topics, including employeeturnover, employee safety, coaching, litigation and leadership.Scott holds a masters degree and doctorate in industrial/organizationalpsychology from the University of Georgia.
  5. 5. Presenter BioShane Douthitt, Ph.D.Dr. Shane S. Douthitt is a co-founder and managing partner of Strategic ManagementDecisions (SMD). He has more than 18 years of experience in the areas of measurement,talent management, executive assessment and coaching, and organizational developmentacross a variety of industries. Before SMD, he was the SVP of Sales and ProductManagement at Morehead Associates—a healthcare HR consulting company. Before joiningMorehead, Shane worked as a Senior Vice President of Human Resources & LeadershipDevelopment at Bank of America. Shane also worked as a consultant for Towers Perrin andIBM.Shane is the co-author of “Investing in What Matters: Linking Employees to BusinessOutcomes” (SHRM, 2009) and “Business-Focused HR: 11 Processes to Drive Results”(SHRM, 2011). In addition, he has published several articles in leading journals on a variety oftopics, including HR strategy, measurement, teams, individual differences and diversity,employee selection, group dynamics, and careers, and leadership development.Shane holds a masters degree and doctorate in applied psychology from the University ofGeorgia, as well as a master’s degree in industrial/organizational psychologyfrom the University of Tulsa.
  6. 6. RETHINK Your Approach to HR! Make HR a Profit Center • Quantify the impact of employees on business outcomes • Calculate an expected ROI for investments in employees • Define the relationship between HR processes and business outcomes Connect Key HR Processes • Provide a single, integrated view of key HR processes • Reduce your HR related costs through integration and strategic alignment • Connect HR processes to business results Spend More Time Driving Results • Align HR professionals, organizational leaders, & employees to focus on actions that drive results • Provide customized analytics and simplified reporting through business-focused scorecards
  7. 7. Talent Link Key HR Processes Performance Examples of Management Business Outcomes People Training Selection • Turnover • Employee engagement Service • Customer satisfaction • Wait times Quality Career Business EmployeeDevelopment Outcomes Survey • Clinical outcomes • Product Defects Finance • % to budget • Cost reduction Growth Competency 360 Feedback • Sales growth Builder • Margin growth Succession Planning
  8. 8. Key HR Processes in One Place
  9. 9. SMD Publications Published by The authors’ practical SHRM (2009) approach, “Focuses HR leaders on where to put their limited time, energy, and resources to maximize both individual and organizational #3 SHRM Best-Seller performance.” Published by SHRM Vicki Escarra, President and (2011) CEO Feeding America
  10. 10. Session Agenda• The current state of succession planning• Building a business-focused succession plan ▫ Performance versus Potential ▫ Assessing the Business Impact of People Data ▫ Examining Organizational Strengths & Gaps ▫ Identifying Top Talent through Comprehensive Talent Review Sessions ▫ Aligning Development Planning with Business Needs
  11. 11. Applied Research and Trends
  12. 12. 2011 SHRM Poll426 Organizations of all sizes• Less than a quarter (23%) of organizations currently have a formal succession plan in place• More than one-third (38%) have informal succession plans• Almost one-third (30%) of organizations evaluate or update their succession plans once a year.• Almost one-half (43%) of the respondents indicated that more immediate requests take precedence in the organization over developing a formal succession plan.• Other organizations stated that they have not yet given consideration to succession plans (16%) or feel that their staff size is too small (15%).
  13. 13. Succession Planning Obstacles Study of 29 Multinational Companies (Guthridge, Komm & Lawson)…Senior leaders not spending high-quality time 54% on talent management Line managers not committed to people 52% developmentOrganization is siloed; limitations in sharing of 51% resources Line managers unwilling to differentiate top 50% and bottom performers Senior leaders not aligning talent mgmt. with 47% business strategy Succession planning processes not rigorous 39%enough to matching right people to right roles
  14. 14. What Our Clients Are Saying…“We just don’t “We move “Our high- “Employees “Our ‘9-box’spend much people around potentials are have to be talent reviewstime on when we have often identified ‘noticed’ by a are dominatedsuccession to.” by their senior leader by the biggestand talent likeability.” to get any real titles andplanning.” development loudest opportunities.” voices.”
  15. 15. Typical Approach to Succession Planning• Focuses only on replacing the CEO• Provides generic leadership development opportunities• Produces highly subjective ratings of performance• Creates subjective pools of ‘high-potentials’• Is misaligned with career aspirations of talent• Does not leverage employee data to focus on key business drivers
  16. 16. The Opportunity• To discover the competencies, skills, experiences, etc. that drive business outcomes• To identify top talent based on performance on key business drivers• To make succession decisions based on analytics and data—not on likeability• To align succession planning with the business strategy and drive results across the organization• For HR to take the lead in making the process business-focused
  17. 17. Aligning the Business Strategy, People Development Strategy,and Program Design
  18. 18. What is Succession Planning?A comprehensive approach to ensuring the right people arein the right jobs at the right time. Succession Planning *Succession Planning should not occur in a vacuum* Career Leadership Assessment/ Development Development
  19. 19. Succession-Planning Process Identify Critical Roles Develop Assess Leader Ready NowLeaders and Performance & ReplacementsTalent Pools Potential when Needed Calibrate Identify Ratings Based Potential on Business Replacements Drivers
  20. 20. Employee Provided Information
  21. 21. Identify “Critical Positions”
  22. 22. The Foundation of Succession Planning:Performance vs. PotentialGoal: To predict future performance• The best way to predict future performance is to look at past performance (i.e., the “what” and the “how”) and systematically assess future potential. Sample Performance Scale: Sample Potential Scale: 1 – Fails to Meet Expectations 1 – Placement Issue or Unacceptable 2 – Grow in Position Performance 3 – Promotable 2 – Sometimes Meets 4 – High Potential Expectations or Needs Improvement 3 – Meets Expectations or Quality Performance 4 – Consistently Exceeds Expectations or Superior Performance
  23. 23. Clearly Define Potential
  24. 24. Provide Even More Clarity
  25. 25. Traditional Succession Planning Process Assess Identify High Our Business-Focused Critical Potential Approach takes succession Positions Talent planning to the next level by: • Utilizing analytics to differentiate high from low performers • Assessing both individual and systemic development Assess needsMonitor & Development • Aligning development Review Needs plans with the business strategy Build & Execute Development Plans
  26. 26. Assess Business Impact:Business Partner RoadMapTM 1. Determine Critical Outcomes 2. Create Cross- 6. Measure & Functional Data Adjust Team Business Partner RoadmapTM 5. Build 3. Assess Program & Measures Execute 4. Analyze the Data
  27. 27. Assess Business Impact: Succession-Focused Assessment• A best practice in Skills/ succession planning and Competencies leadership development programs is to include leader assessment, feedback, and development planning. Experience Integrated Personality• The assessments are Assessment intended to identify strengths as well as gaps in leaders’ skills, abilities, competencies; particularly to expose gaps in critical Employee competencies identified Survey Results earlier.
  28. 28. Assess Business Impact:Potential Assessment Tools• Behavior-based assessment ▫ Quantitative 360 feedback; ▫ Competency Ratings from performance reviews• Personality ▫ Hogan Personality Inventory ▫ 16PF• Professional/Leadership Experiences ▫ Experience Profiler• Employee Survey Results (management style/effectiveness)
  29. 29. Assess Business Impact:Analytic Approach – Structural Equation Modeling• Traditional data analysis includes: • Qualitative analysis or gap analysis (strengths/weaknesses) • Correlation • Regression• Advantages of SEM: • Consider multiple independent & dependent measures concurrently • Imply causality • Calculate ROI • Correct for measurement errors• SEM is commonly used in other industries (econometrics, market research)
  30. 30. Assess Business Impact:Executing the Analyses• “Apples to Apples” Comparison: Line up each leader’s individual data (e.g. 360, employee survey) with their performance outcomes (e.g. percent to goal on business outcomes)• Identify Key Drivers: Run statistical analyses (i.e., SEM) to identify the individual factors that evidence the strongest relationships with performance outcomes• Get help on the analyses—don’t let it be a barrier to executing the process
  31. 31. Assess Business Impact: Linking People Assessments to Business Metrics Identifying Critical Competencies/Experiences that Drive Business OutcomesThe linkage analysis will Leadershipdemonstrate the level of Competenciesimpact that eachcompetency, experience, Personalityskill, etc. has on individual Factorsperformance and businessoutcomes. Technical Critical BusinessThis allows leaders to Skills/Abilities Outcomesfocus on the mostimportant competencies,skills, experiences and Experiencedetermine the appropriatelevel to invest indeveloping each area. Employee Attitudes
  32. 32. Examine Strengths and Gaps: Business-focused Ready Now ScorecardTMUtilize the Ready Now Scorecard to Assess Overall Talent Pool Health… Key Drivers of Business Outcomes• Refer to the scorecard during talent review sessions; incorporate stakeholder ratings of performance and potential to identify true Ready Now talent• Assess performance strengths and gaps across the entire talent pool
  33. 33. Calibrate Performance & Potential 9-Box Report
  34. 34. Identify Top Talent:Goals for Facilitating Talent Review Sessions• High Potential Assessment ▫ Evaluate ‘expandable’ talent based on performance on business drivers• Comprehensive Talent Review ▫ How much and what type of talent do we need to sustain success and execute on our strategy? ▫ Have we made a sufficient number of talent moves and filled necessary gaps from the last time we had a talent review? ▫ What lateral moves/promotions/special projects have we moved our high-performers and high-potentials into in the last year?• Achieve diversity goals and/or organizational goals, as needed
  35. 35. Identify Top Talent:Goals for Facilitating Talent Review Sessions• Role Clarity ▫ What jobs ‘feed’ the role; what jobs come next? ▫ Focus on creating career paths for critical jobs• The “9-Box” Discussion ▫ Using analytics, it differentiates talent based on business driver performance ▫ Great companies continue to leverage its effectiveness• Performance Management ▫ Hold leaders accountable for individuals in “does not meet expectations” categories ▫ Make decisions of “up or out” on talent in critical roles
  36. 36. Selecting Ready Now Replacements
  37. 37. Launch Leadership Development Program:Alignment with the Business Strategy Step 1: Explicitly outline the organization’s Business leadership strategy; The leadership strategy Strategy and goals will provide the “blueprint” for the actual program • Factors that influence a leadership strategy: ▫ External business trendsLeadership Strategy ▫ Key business strategies ▫ Required organizational capabilities and competencies ▫ Leadership and business prioritiesLeadership ▫ The organization’s culture Program ▫ Performance objectives Design
  38. 38. Launch Leadership Development Program:Alignment with the Business Strategy Step 1 Continued… Business Strategy • Create a Leadership Development committee or conduct a series of key stakeholder interviews to provide the necessary input. Key factors to consider: o How will the business strategy impact theLeadership organizational design in the next 3-5 years? Strategy o Given the business strategy over the next 3-5 years, what types of leaders are needed? (Experiences Required? Competencies Needed?)Leadership o How will future leadership roles be filled? Program (internal, external, or a mix) Design
  39. 39. Develop Top Talent:Program Design and Components• Your business-focused leadership strategy and program goals determine the program’s design and content.• Consistent with best practice, potential program components include: ▫ Assessment, feedback, and development planning ▫ Coaching and/or executive mentoring ▫ Action learning teams focused on real business issues ▫ Exposure to the strategic business agenda ▫ Job assignments or rotations ▫ Group learning activities ▫ Team building/development
  40. 40. Develop Top Talent: Sample Leadership Program OverviewPhase 1. Phase 2. Phase 3. Phase 4 .Design Program Assessment & Group Learning Coaching & Feedback • Execute group Program• Define program objectives and create • Kick-off program and learning sessions. Review “blueprint” orient participants; • Execute learning • Provide coaching complete action team projects during periodic 1:1• Select and build assessments customized program • Observe and provide meetings components • Aggregate feedback & coaching • Participants have, as assessment data and needed, access to• Build customized produce an overall leadership coaches throughout leadership report the process assessment process • Provide feedback to • Wrap-up program• Match & train participants and assessors build development • Evaluate program plan effectiveness
  41. 41. Business Focused Succession Planning:Success Metrics• Business-focused assessment of the organization’s Talent Pool• More “Ready-Now” Candidates in the Leadership Pipeline• Overall Talent Pool Health Assessment & Tracking• Expanded Opportunities for High Performers: ▫ Lateral Moves ▫ Cross-Functional Projects• Reduced High Performer Turnover• Increase Perceptions of Career Opportunities on the Employee Survey
  42. 42. Integrating Succession Planning and Compensation Potential and Position in Pay Range Director Level Employees 0-20% 20-40% 40-60% 60-80% 80-100% John Doe High Potential Matt Madson Mary Matlock Jane Doe Mitch Daniels Meggin Gowen Carol Johnson Scott Donovan Sam Smith Billy Ryan Tom Tuberville Amy Andrews Jill Rogers Jim Johnson Promoteable Katie Bradford Sasha McDonald Carter Smith Julie Jones Shane Donovan John Mondore Jason Kidd Sam Bradford Grow in Erin Dry Position Marc Ward Ricky Bobby Gena Vantuyl Tommy Timmons Brett Favre Sherry Hartnet Chris Payey Jason Murry Placement Issue Bobby Bean Jerry Jones Janice Smill Billy Simmons Mike Roberson Kim Klover Jill Vantuyl Mike Kelly Jodie Johnson Performance ratings are integrated with your compensation philosophy to pre-populate merit, incentive and equity recommendations
  43. 43. The Art & The ScienceART SCIENCE▫ Customizing the approach to ▫ Linking employee data to the organization based on business outcomes current/future business ▫ Assessing Talent Pool Health challenges (which can come with assumptions) ▫ Creating leadership programs based on true talent pool▫ Facilitating Talent Review development needs and meetings with leaders individual needs that drive▫ Getting high potential talent business on the right career path outcomes
  44. 44. Practical Tips• Engage stakeholders early in the process: ▫ Ask stakeholders to identify the critical business outcomes ▫ Use stakeholder interviews to engage leaders across functions• Focus on mid-to-upper level management positions— not just the CEO• Develop pools of talent for critical roles• Make all leaders responsible for talent planning• Remember to include a comprehensive approach to career development and leadership development to build the most effective pipeline of talent
  45. 45. What We Have CoveredHow to make succession planning business-focused by:▫ Using analytics to discover key talent performance on elements that drive the business (individual and group)▫ Assessing and tracking talent pool effectiveness— using the Talent/Succession Scorecard▫ Making succession planning decisions based on facts and data▫ Effectively facilitating talent review sessions▫ Aligning succession planning with career development, leadership development, and the business strategy
  46. 46. To Contact Us: Scott Mondore, Ph.D. Managing Partner (404) 808-4730 Shane Douthitt, Ph.D. Managing Partner (704) 975-6820