SUCCESSION PLANNING: Building Your Talent Bench



Succession: It’s History
What did the Pope, King Henry the VIII and the Godfather have in common?



The Talent Crisis
• What is the Age Bubble?



% change in pop. by age group 2000-2010
60.00% 50.00% 40.00%


30.00% 20.00% 10.00% 0.00% -10.00% -20.00% 5-9 10- 15- 2014 19 24 25- 30- 3529 34 39 40- 45- 5044 49 54 55- 60- 6559 64 69 70- 7574 79



Recent Research Data
• Factors that impact your need to develop your talent bench – Corporate officers reported (40%) that company growth was limited because they didn’t have the right talent. – Corporate officers reported (75%) that their company is chronically short of leadership talent. – Within next 5 years, average company will lose 30% of its executive staff . – Failure rates are high (40-50%) when executive talent is hired from outside. – Two-thirds of employees have low to moderate confidence in their companies’ top executives; threefifths of executives say the same.


Recent Research Data
Factors that impact your need to develop your talent bench (continued)
– Employees say company leadership is a key contributor to job satisfaction, commitment and intent to stay; especially true for top talent. – Recent surveys state that employees value most the leadership qualities of honesty and integrity. – Only 1% of companies rate their succession management plans as excellent; two-thirds rate them as fair or worse.
─McKinsey, The War for Talent, Right’s People Brand Research Report, DDI Exec. Dev. &   Succession Management


Factors You May Need to Consider
– Increased retirements; company demographics – Attrition; promotions; transfers – Market pressures requiring better/different players – Fit issues; changing skill sets (“the man for all seasons?”) – M&A’s; accumulative RIF impact in mid management levels – Weak employment brand; poor retention practices for top talent – Increased board pressures, (e.g. SarbanesOxley Act)


Ask your CEO these top questions
1. Have you lost high potential talent because they didn’t know they were on the list? 2. If your executive team “got run over by a bus,” would their replacements be able to step right in and be productive? 3. Is anyone on the “top floors” or in the Boardroom worried about the status of your “talent bench?” 4. What lost opportunity costs has your organization incurred because it took a long time to replace a key leader?


Key discussion questions …
1. How does someone in your organization get selected to be a potential successor? 2. Do you have leadership development and talent management processes in place to grow successors? 3. If your organization has succession criteria, is it past focused or future oriented? 4. If you have a succession planning process, is it grounded in your business strategy? 5. Would your selection/promotion practices pass a “drop in” legal challenge?


Common Flaws
• • • • Talent planning and placement efforts are not linked to business strategy. Succession planning and talent assignment by default - react only when a position becomes open. Line mangers ignore the “talent pool,” relying instead on their own knowledge/comfort with candidates. Lack of ownership by the “top floors;” Succession planning and key assignment of talent is perceived as a human resources issue.


Common Flaws, con’t.
• Entitlement culture rather than criteria-based promotion process; Halo effect for “chosen ones.” Lack of objective discussions; Limited data points to make good decisions. No formal process to keep track of candidates. No leadership/career development process to grow your own talent.

• • •


What is Succession Planning?
A deliberate and systematic effort by an organization to ensure leadership continuity in key positions, retain and develop intellectual and knowledge capital for the future, and encourage individual advancement.


Replacement vs. Succession
• Reactive • Form of Risk Management • Substituting • Narrow Approach • Restricted

• Pro-Active • Planned Future Development • Renewing • Organized Alignment • Flexible

Traditional vs.
• Driven by an annual bureaucratic HR procedure • Entitlement focus – good old boy payback system decided in secret • “The list” and identified development actions, but no accountability for development


• Driven by current and future business needs • Successors determined by an open process with multiple inputs and factors • Development plans, development discussions and coaching with both candidate, sponsors and others held accountable for progress and monitoring   14

Traditional vs.
• Assumes targeted people will be ready when needed. Little, if any feedback • Hindered by paper process that needs to be updated • Heirs apparent in line for specific positions


• Actively involves candidates in development discussion. Regular, developmental feedback • Aided by on-line assessment and regularly updated talent bank; scales to meet the masses • A fluid pool of qualified leaders to be tapped as needed for the next level   15

Reasons for Succession Planning
Here are a couple – -- ( can you think of others … ?) • Help individuals realize their career plans within the organization • Tap the potential for intellectual capitol in the organization


Reasons for a Succession Planning Program
• Provide increased opportunities for “high potential” workers • Identify “replacement needs” as a means of targeting necessary training, and employee development • Increase the talent pool of promotable employees • Contribute to implementing the organization’s strategic business plans


Reasons, con’t.
• Help individuals realize their career plans within the organization • Tap the potential for intellectual capitol in the organization • Encourage the advancement of diverse groups • Improve employee’s ability to respond to changing environmental demands • Improve employee morale • Cope with effects of voluntary separation programs


Assessment Questionnaire
• Complete the following Assessment Questionnaire to determine how well your organization is presently conducting Succession Planning. • Share the assessment with your organization, use it as a starting point to determine the need for your approach.


Critical Considerations for a Successful Succession Process
Let’s discuss….. Examples: • Common values on the why’s and how’s are communicated. • True commitment to only the best people getting nominated. • Focused on future strategy and emerging business needs. Others?


Critical Considerations for a Successful Succession Process
1. 2. 3. 4. 5. 6. 7. Common values on the why’s and how’s are communicated. True commitment to only the best people getting nominated. Focused on future strategy and emerging business needs. Accurate research information on retirement and attrition. Good communication between line and HR on promotions and transfers. Senior level commitment, involvement and ownership; alignment with key stakeholders. Horizontal and vertical communication at appropriate levels


Critical Considerations, con’t.
1. 2. 3. 4. 5. 6. 7. Key criteria understood; competency identification and validation; “Leadership Profiles” for targeted positions. 360, multi-rater and other objective assessments and methods. Feedback rich process; development culture. Fluid in design; pools high potentials for possible next jobs. Established committees to oversee the review and placement process. Rigorous talent review team process includes individual, manager and/or sponsor, objective sources and organization. Promotions evaluated against the succession candidate pool.


Critical Considerations, con’t.
1. 2. 3. 4. 5. 6. Aligned/linked with other practices of talent development and performance management throughout the organization. Relevant development opportunities and assignments. Executive coaching for key players or those in accelerated roles. Accessible e-based talent bank to manage candidate data, assignment and relocation needs, and identify ready candidates. Built with checks and balances; diversity and legal considerations. Defined outcomes and ongoing review process to measure effectiveness.


Sample: Succession Planning Process
• Phase I: Review Business Issues • What is your organization’s mission and vision? What are your organizational values? • What competencies are necessary in your employees to support current and future mission, vision and values? Why link succession with strategy?


Overview of Process and Tools
Org.Strategic Initiatives, Mission Vision & Values Manager and Self Evaluations Decision-Making Matrix Executive Profiles & Organization Chart Dev. plans focus on both strengths And dev.areas

Determine Competencies For Leadership

Identify Key Leadership Candidates & Assess Against Competencies

Determine Gap between Actual Performance & Behaviors vs. Required Competencies

Assess Organizational Risks and Develop Strategies

Monitor & Track Employee’s Performance

Process Design

Process Implementation

Process Management



Functional and Leadership Competencies
Integration and Balance The ability to pull together diverse views and conflicting information into a comprehensive direction for the business. Balances today’s business requirements with tomorrow’s vision for where the business is heading. Management of Budget and Metrics Emphasizes profitability, financial viability and performance potential to ensure business performance. Develops financial measurement frameworks, and identifies key metrics to drive business performance. Market Knowledge Understands business and regulatory environment, major industry players, and the business dynamics. Has in-depth knowledge of the full range of FCC business products and key competitors in the market place. Cutting-Edge Technology and Business Methods Understands and takes action to maintain, develop, and apply specialized knowledge of technology and business methods relevant to one’s role. Takes the initiative to keep abreast of key technological changes and trends. Business Strategy and Planning Formulates appropriate business strategies and supporting plans that drive the success of the business areas and support Fairbanks’ overall business plans.

Cross Boundary Perspective Maintains balance between enterprise-wide, global thinking and a focus on the functional areas within Fairbanks. It includes connecting with initiatives in other areas and proactively sharing relevant resources with others. Drive for Results The ability to continuously raise performance standards and drive outstanding organizational performance. It includes achieving superior performance not only for one’s own area, but also for FCC performance as a whole. Adaptability Adaptability relates to taking action to improve current approaches or solutions. Facilitates a creative or innovative approach to working. Responds with agility to changing goals, processes or environments. Organizational Alignment The ability to rapidly align people, processes and organization structure with strategic direction. This includes the active identification and removal of barriers that block change and impede desired behavior. Communication and Influence The ability to effectively communicate and influence others inside and outside the organization to build commitment to Fairbanks objectives. Developing and Motivating Self and Others Efforts to apply and grow one’s expertise/knowledge (and to help others do so) within and across specialized technical/functional areas.  


Sample, Sally Controller
Date of Hire: 1/7/2002 Talent Code: Solid Citizen Performer Potential Positions: Chief Financial Officer

POSITION HISTORY 2002-Present, Fairbanks Capital Corp., Controller 1998-2002, Independent Consultant 1990-1998, Household International Inc. •V.P. Specialty Finance •CFO •Deputy Controller EDUCATION Northwestern University, Kellogg School of Mgmt., M.S. Purdue University, B.S. STRENGTHS • Strategy and Planning • Budget Management • Good Judgment • Good communication/interpersonal skills • Driven to improvement and success DEVELOPMENT AREAS • Development of treasury/technical skills • Working effectively across departmental lines to accomplish goals • Build knowledge of FCC and servicing operations • Training and development of staff

Competency Assessment Functional Leadership Integration and Balance Management of Budget Market Knowledge Technology and Business Methods Strategy and Planning Cross-Boundary Perspective Drive For Results Adaptability Organization Alignment Communication and Influence Develops Self and Others

Key Exceeds Standard
At Standard Needs Development



Results: Talent Summary by Competency
Functional competencies
Management of Budget Strategy and Planning Integration and Balance Technology & Business Methods Adaptability Market Knowledge

Leadership competencies
Drive for Results Cross-Boundary Perspective Communication and Influence Organizationa Alignment Developing Self & Others

This graphical representation indicates how the high potential group scored on each competency. It is compiled so that the competencies are listed from left to right in the order in which there is the greatest need for development according to our data collection. It is most useful for looking at the talent needs of the group (rows do not represent an individual's scores in this grid). - Exceeds Standards - At Standard


- Needs Development


Decision Making Matrix
SOLID CITIZEN PERFORMER (High Performance/Low Potential) •Gets all important things done •Is a pro in his/her position •Is seen as a leader in his/her area •Has reached potential Action Required: Continue developing in current position; is in the right job STRONG PERFORMER (High Performance/Med Potential) •Gets all important things done •May act at level of capability of one level above current position •Acts as leader and role model •Exhibits many strengths or competencies beyond current role •Some leadership development issues Action Required: Look for opportunity to display leadership in current job SOLID CITIZEN PERFORMER (Medium Performance/Medium Potential) •Gets most important things done •Shows signs of leadership and role modeling •Exhibits many FCC executive competencies •May be new in position Action Required: Leave in current job; continue developing skills and improving performance QUESTIONABLE PERFORMER (Low Performance/Medium Potential) •Isn’t getting most important things done •Capable of making higher contribution •May be in wrong job or occupied with nonwork distraction Action Required: Focus on improving performance STAR PERFORMER (High Performance/High Potential) •Gets all important things done •Acts at a level of capability of at least one level above current position •Acknowledged as a skilled leader and role model •Exhibits many strengths or competencies beyond current role •Has wide spread influence beyond current role Action Required: Stretch assignments to prepare for larger role STRONG PERFORMER (Medium Performance/High Potential) •Gets most important things done •Acknowledged as a leader and role model •Exemplifies FCC executive competencies •Acts at level of capability of next level in the organization Action Required: Focus on performance short term and development opportunities long term SOLID CITIZEN PERFORMER (Low Performance/High Potential) •Isn’t getting most important things done •Has been acknowledged as a team player and role model •Has exemplified FCC executive competencies •May be in wrong job or occupied with nonwork distraction Action Required: Address root cause performance issue; worthy of investment in development


QUESTIONABLE PERFORMER (Medium Performance/Low Potential) •Gets most important things done •Is very proficient in his/her current position •Is not seen as a leader in his/her area Action Required: Work on improving performance in current job; may be candidate for lateral move

LOW PERFORMER (Low Performance/Low Potential) •Isn’t getting most important things done •Difficulty performing to standards in his/her current position Action Required: Consider reassignment to more appropriate position; including lower level or exit option



Decision Making Matrix
SOLID CITIZEN PERFORMER (High Performance/Low Potential) STRONG PERFORMER (High Performance/Med Potential) STAR PERFORMER (High Performance/High Potential)



STRONG PERFORMER (Medium Performance/High Potential)


QUESTIONABLE PERFORMER (Medium Performance/Low Potential)

SOLID CITIZEN PERFORMER (Medium Performance/Medium Potential)


QUESTIONABLE PERFORMER (Low Performance/Medium Potential)


LOW PERFORMER (Low Performance/Low Potential)

SOLID CITIZEN PERFORMER (Low Performance/High Potential)



Results: Talent Summary by Individual
Functional Competencies
Integration and Balance Participants Participant 1 Participant 2 Participant 3 Participant 4 Participant 5 Participant 6 Participant 7 Participant 8 Participant 9 Participant 10 Participant 11 Participant 12 Participant 13 Technology and Business Methods Market Knowledge Cross Boundary Perspective Management of Budget Strategy and Planning

Leadership Competencies
Organization Alignment Adaptability Develops Self and Others Communi action and Influence Drive for Results

This graphical representation is a comparison of each individual’s performance by competency (each row on the vertical axis represents an individual's score).
- Exceeds Standards

  - At Standard

- Needs Development


Lessons Learned
• It is an ongoing process where the players will change continuously • In smaller less stable organizations, the organizational direction may also change • Competencies need to be constantly monitored to ensure they are measuring what you want to measure


Refining the Program
• Prepare a program action plan • Communicate the action plan • Conduct Succession Plng. meetings • Training on Succession Plng. • Counsel managers to deal with Succession Plng. issues affecting them and work areas


Goal: Build a Development Culture
“The strategic objectives of the company lead to assessment of talent to determine future staffing needs and bench strength, which in turn determine development needs and actions.”
─ “Promoting A Development Culture,” Right Management Consultants, Peggy Simonsen



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