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Ten Key Steps to Effective Succession Planning

By William J. Rothwell, Ph.D., SPHR

or work group by making provision for the development.” Geared to developing the internal bench strength of an organization. Both are projected to become more pressing. Inc. One of the most important is the aging workforce. p. By doing so. Namely. and strategic application of key people over time. and Why Is It Needed? Succession planning. What Is Succession Planning.S.Rothwell & Associates. replacement. succession planning “is perhaps best understood as any effort designed to ensure the continued effective performance of an organization. and how are they used? What ten key steps are tied to effective succession planning? What common mistakes are made in establishing succession planning.3 million)” [Occupational employment projections to 2008 (1999. keep the best through effective retention practices. a result of population change. and a shortfall in the skills possessed by those available for recruitment. these forces are: the aging of the workforce. workforce is aging.S. According to labor economist Douglas Braddock. and develop the best people through well-targeted talent development efforts. But what is succession planning and how will it address these human resource issues? What are the best practices being applied by successful companies today? How does succession planning differ from replacement planning? When do leaders know that their organization needs a succession planning and management program? What are talent pools.7 million) than from employment growth in the economy (20. it provides a starting point to help decision-makers and HR practitioners alike contemplate the ins and outs of a practical succession planning program.75)] What are the practical consequences of this massive shift in the average age of the workforce? Consider: • One in five of all senior executives in the Fortune 500 is eligible for retirement now. As I defined it in my book Effective succession planning (2005. “over the 1998-2008 period. Demographers have long been aware that the U. more job openings are expected to result from replacement needs (34. division. is a process for preparing people to meet an organization’s needs for talent over time. department. • 55% of today’s registered nurses can be expected to retire between 2011 and 2020 2 Ten Key Steps to Effective Succession Planning . There are two forces at work today that are driving organizations to consider some form of succession planning as a component of an overall talent management strategy. and how can they be avoided? This white paper answers these questions. succession planning is usually part of a larger talent management program that is intended to attract the best through recruitment. sometimes called succession management to emphasize the active and continuous nature of the effort. Why is succession planning needed? There are many answers to that question. p. government workforce is eligible to retire now. • About 50% of the entire U. 10).

ready each person is to assume the role of the current job incumbent. A January 2006 study by Manpower [Talent Shortage Survey (p. It usually “backups” for top-level positions.2)]. Nurses 7. Sales Representatives 2. A January 2006 study by Manpower [Talent Shortage Survey (p. Engineers 3. as they are identified on the organization chart. organizational leaders recognize that it is wiser focus beyond replacement succession planning to build the long-term sustainability and viability of the organization. if you do that. the a vacancy occurs.2)]. Machinists 10. Management/Executive 8. Sales Representatives 2.with the right skills – in particular. Administrative Assistants & PA’s 1. you will find that the average CEO confuses replacement planning and succession planning. Call Center Operators 6. in contrast. Engineers 3. finds that 44% of employers are experiencing difficulty today finding employees with the right skills – in particular. Management/Executive How Does Succession Planning Differ from Replacement Planning? How Succession Planning Differ from Replacement Planning? AskDoes a CEO to define succession planning. There is a good chance that. Exhibit 1: A Sample Replacement Chart Exhibit 1: A Sample Replacement Chart -2- Ten Key Steps to Effective Succession Planning 3 . if you do that. planning to succession planning to build the long-term sustainability and viability of the organization. theythat are not the same. Technicians Equally threatening is the current difficulty in finding qualified hires. (See Exhibit 1) (See Exhibit 1) Succession planning. There is a good chance that. there are shortages filling the following roles: 6. In most cases. in contrast. youBut will find the average CEO confuses replacement planning and succession planning. Administrative Assistants & PA’s 7. Drivers 4. and stops there. But they are not the same. Technicians 5. Drivers 9. there are shortages filling the following roles: 1. Machinists 10. A identifies “backups” for top-level positions. A typical “replacement chart” list about 3 people “backups” for top-level position and and will usually “replacement chart” will listwill about 3 people asas “backups” foreach each top-level position will usually indicate how ready each person is to assume the role of the current job incumbent. Succession planning. Call Center Operators 9. has many qualified candidates internally that may be considered for advancement. the organization has many qualified candidates internally that may be considered for organization advancement. Ask a CEO to define succession planning. and stops there. Its build goal is deep to buildbench deep bench strength throughoutthe the organization organization soso that. focuses onfocuses developing rather than merely naming them as replacements. Nurses 4. organizational leaders recognize that it is wiser to focus beyondtoreplacement planning to In most cases.Equally threatening is the current difficulty in finding qualified hires. finds that 44% of employers are experiencing difficulty today finding Accountants employees5. Replacement planning assumes that the organization chart will remain unchanged over time. on people developing people rather than merely naming them as replacements. whenever Its goal is to strength throughout that. Accountants 8. whenever a vacancy occurs. It usually identifies typical indicate how Replacement planning assumes that the organization chart will remain unchanged over time. as they are identified on the organization chart.

individuals are usually identified as “backups” for specific positions. succession planning encourages managers at all levels to regard talent in any part of the organization as a possible successor for positions immediately above them. disability or resignation. no promises are made to people who enter pools that they will actually receive promotions. In contrast. • Managers at one or many levels complain that they have trouble finding people ready for promotion or else have trouble finding people who are willing to accept promotions as vacancies occur. and other groups protected by law are not adequately represented at various levels and in various functions throughout the organization. minorities. the organization commits to help individuals prepare themselves to qualify for higher levels of responsibilities. the organization will have a pool of internal candidates ready to meet the challenge. High potential candidates being prepared for possible promotion are placed in talent pools. the percentage of high potential workers leaving—is higher than the number of fully successful (average) workers leaving. Of course. it may take a long time to find a suitable replacement. may indicate the need for a more systematic approach to succession planning. Another approach is to apply objective assessment methods—such as multi-rater full-circle assessments to identify individuals who are likely to be worthwhile to develop for future responsibility. Successfully implemented. for reasons of retirement or otherwise. surprise losses of key talent. a process of estimating the projected departure dates for each individual in the workforce or work group. But it is up to individuals to continue to perform well in their current jobs while also preparing themselves to meet the new challenges at higher levels of responsibility. if they appear in an organization. talent pools may be identified underneath each “level” on the organization chart but are not tied to specific positions at the next higher levels. Inc. when a vacancy occurs. • Workers complain that promotion decisions are made unfairly or capriciously. Hence. Individuals to be placed in talent pools may be surfaced by various means. Among them: • The organization has conducted a retention risk analysis. 4 Ten Key Steps to Effective Succession Planning . But replacement planning encourages promotions only in “silos” of specialization. In replacement planning. (See Exhibit 2) In many cases. • Women. • Critical turnover—that is. One approach is to ask managers to assess and nominate people. • The organization has no way to respond quickly to sudden. and How Are They Used? A talent pool is a group of people being prepared for more challenging responsibilities. If a key person is suddenly lost due to death. Talent pools dramatize the difference between replacement planning and succession planning. When Do You Know That Your Organization Needs a Succession Planning and Management Program? Several common symptoms. talent pools are filled from the bottom up. What Are Talent Pools. Instead. • The time it takes to fill positions—what is called the time-to-fill metric—is unknown or is perceived by managers to be too long.Rothwell & Associates.

full-circle assessment. In short. industries. It can be Think of and implementing systematic succession planning as making long-term organizational change. a competency model describes "what should be" for such hierarchical levels as executives. efforts to fill vacancies as they occur. efforts to fill isvacancies assenior they leaders’ occur. have become more active in responsibility for succession planning rests with the CEO. If he or she does not favor systematic succession planning. strategic view of how to meet talent needs than short-term. The idea is to assess 4individuals against the competencies required for success in an organization. what it takes to get good results on the job abilities that lead to exemplary performance. attitudes. A competency a narrative description of that the goes knowledge. competency models may be created for specific departments. and economic sectors.Boards the leadership preferences a succession After Sarbanes-Oxley.) active in succession planning.Exhibit 2: A Sample Talent Pool Chart Exhibit 2: A Sample Talent Pool Chart What Ten Key Steps Are Tied to Effective Succession Planning? What Ten Key Steps Are Tied to Effective Succession Planning? Think of implementing systematic succession planning as making a long-term organizational change. Resources A competency model isor a narrative description the knowledge. After Sarbanes-Oxley. and a formula for disaster. and other be fed by thatprovide pool. and sometimes panic-driven. succession effort on the Human Resources department. salespersons.participate. it cannot be talent to build at present and in the future. The results of a multi-rater. industries. to articulate the organization’s ethics. skills. (See Exhibit 3. Succession planning requires more of a commitment to a longer-term. Step Two: A second step is to establish competency models by talent pool considering the positions that will be fed by Human that pool. and codes of conduct a basis by which tomodel assessisindividuals against a dimension beyond skills. and a formula for disaster. Ethics.individualized multi-rater. and sometimes panic-driven. or other parts of the organization mustcorporate participate. is to dump the responsibility for the succession planning. values and codes of conduct provide a basis by which to assess individuals against a dimension that goes beyond what it takes to get good results on the job Step Three: A third step is to conduct. managers. While the function other parts of theoforganization must the leadership responsibility and other abilities that lead to exemplary performance. values and code of conduct and then rate individuals against that as well as against competencies. A fundamental mistake. or successful. corporate Boards have become more ten key steps that have been field-tested in many organizations. full-circle assessment usually indicate between what competencies an individual competency models may be created for gaps specific departments. Step One: A first step for any systematic succession effort is to clarify the senior leaders’ expectations and While the Humanfor Resources functionprogram. managers. a competency model describes “what should be” for such hierarchical levels Step Three: A third step is to conduct individualized multi-rater. Exhibit 3. expectations It can be established and operated using Step One: A first step for any systematic succession effort to clarify the and preferences for a succession program. full-circle assessment. full-circle assessment usually indicate gaps between what competencies an individual currently possesses and what he or she should possess to be successful. is to dump the responsibility for the succession effort on the Human Resources department. Ten Key Steps to Effective Succession Planning 5 . Alternatively. A recent innovation in some corporations has been to articulate the organization's ethics. assess individuals against the competencies required for successtechnical in an organization. technical professionals. The results a multi-rater. supervisors. strategic view of how to meet talent needs than shortplanningand requires more of a(See commitment term. Alternatively. economic sectors.) to a longer-term. A recent innovation in some corporations has been currently possesses and what he or she should possess to be successful. A fundamental mistake. Succession established operated using ten key steps that have been field-tested in many a organizations. Ethics. salespersons. attitudes. Competency models provide blueprints of the talent to build at present and in the future. other groups. Competency models provide blueprints of the for succession planning rests with the CEO. The idea is to as executives. or of other groups. values and code Two: second step is toagainst establish competency by talent poolvalues considering the positions that will ofStep conduct andAthen rate individuals that as well as againstmodels competencies. supervisors. In short. If he or she does not favor systematic succession planning. it cannot be successful. professionals.

on-the-job assignments to in which to courses participate. in print or online. Once it is clear Step Six: A sixth step is to establish a means of regular. classroom to on-the-job attend. potential assessment provides the means to do just that. incompetency print or online. Exhibit 3: A Step-By-Step Model to Establish and Maintain a Systematic Succession Planning Program Exhibit 3: A Step-By-Step Model to Establish and Maintain a Systematic Succession Planning Program Step Five: A fifth step is to assess individual potential for success at higher levels of responsibility. workers--and their immediate plan to helpsupervisors--devise individuals develop themselves narrowingindividual those gaps. second way is to develop menus. as objectively as possible. Unlike present-oriented performance management. Some means must exist past or present-oriented performance management.There There are are various Step Seven: seventh step isstep to implement individual development plans (IDPs). One way is to establish in-house leadership and management development programs. 6 Ten Key Steps to Effective Succession Planning Step Eight: An eighth step is to establish a talent inventory. competence in new areas.Rothwell & Associates. thereby prepare for possible future promotions. means should established to be help them prepare thethem future by narrowing gaps. One fact Step Four: A Four: fourthAstep is step to establish (or reengineer) an organizational life fact is that seldom eligible for promotion. To that end. potential assessment focuses on the future. Regular potential assessment means must exist tothe examine the talent available for future possibilities--and advancement. developmental if they areinnot successfully in their current jobs. A second way is by which to do that. Once and future gaps existexist for individuals as a result performance assessment and potential it is clearwhat whatpresent present and future gaps for individuals as a of result of performance assessment andassessment. variousways waysby which to do that. online coursestoinseek which participate. of responsibility. other developmental opportunities if they system. potential assessment focuses on the future. that provide specific developmental suggestions programs. Individuals must thus be measured. ongoing individual development planning. or other are not opportunities performing successfully theirperforming current jobs. that provide specific for individuals. Individuals must thus be measured. against the performance expectations for their current level against the performance expectations for their current level of responsibility.oradvancement. for promotion.toand action learning projects that bring together groups seek out. Step Six: A sixth step is to establish a means of regular. thereby develop prepare for possible future Step A Seven: A seventh is to implement individual development plans (IDPs). individual supervisors--devise workers--and theiraimmediate a plan to and help individuals themselves and promotions. as objectively as possible. Some to examine talent available for future possibilities--and advancement. Inc. Examples of developmental mighttoinclude Examples of developmental suggestions might include books to read. decision-makers must be able . Unlike past or Step Five: A fifth step is to assess individual potential for success at higher levels of responsibility. Increasingly.ofand action learning projects that bring together groups of people to solve practical business people to solve practical business problems while simultaneously permitting the means by which to build problems while simultaneously permitting the means by which to build competence in new areas. ongoing individual development planning. assignments out. suggestions classroom courses attend. One way is to establish in-house leadership and management development to A develop competency menus. of One of individuals life is that are individuals are seldom eligible advancement. Step fourth is to establish (or reengineer) an organizationalperformance performance management management system. potential some assessment. Regular provides the means to do just that. books online courses to read. developmental suggestions for individuals. somebe means should established to for help prepare for thethose future by To that end.

Alternatively. for cultivatingtheir their talents time andand closing developmental Otherwise.the the results time to fillofdoes into financial Step applicants? Ten: A tenth and step is to evaluate the translate systematic succession planning effort. To that end. they have information about the pools of talent that the organization is developing and has readily on tap so that teams can be marshaled on short notice to fight fires. the terms. and senior executives may report be CEO heldorinthe which report onhave howbeen wellprogressing they are implementing their individual development plans. Often. and supervisors their developmental objectives. An example of ahow talentmany grid appears Exhibit manage individuals in different talent grids.Often. and supervisors be given bonuses if their workerstheir achieve their developmental objectives. Productivity is lost. it may also be useful to create depth and development charts to show how many opportunities. the time to fill does translate into financial terms. outdraw and fillmust vacancies. thenotice organization’s on short notice. and so are opportunities. financial incentives for talent development can incentives for talent development can help. How long does it take to fill positions with qualified While notfinal directly a financial measure. Different HR strategies may be needed to manage individuals in development charts to show peoplein fall into4. individual development plans will plans not be Often. Tocompetitors. individual development willrealized.talent seize opportunities. Step Ten: A tenth final step development is to evaluate the results of the systematic succession planning effort. the time-to-fill metric is a key measure of success. Alternatively. For instance. may report to the CEO or the Board on how well their employees have been progressing toward realizing theirand individual plans. for cultivating talentsover over time closing developmental gaps. Individuals—and Step Nine: A ninth step is to establish accountability for the systematic succession planning effort. -6- Ten Key Steps to Effective Succession Planning 7 . individuals can be given bonuses if they achieve help. Often. Exhibit 4: A Talent Grid Exhibit 4: A Talent Grid Step Nine: A ninth step is to establish accountability for the systematic succession planning effort. it may also be useful to create depth and people fall into different categories. their bosses—must be heldbe accountable. decision-makers must be able to find of talent the organization developing and has readily on tap so that teams can be marshaled on short to fight fires. when vacancies exist in today’s right sized corporate time-to-fill metric is a key measure of success. periodic meetings may be held in which individuals must report can be given bonuses if their workers achieve their developmental objectives. and so are opportunities. that end. Increasingly. when vacancies exist in today’s right sized corporate settings. As part of this step. Productivity is lost. they must have information about the pools Step that Eight: An eighth isstep is to establish a talent inventory. not directly a financial measure. individuals can be can given bonuses if they achieve developmental objectives. How long does it take to fill positions with qualified applicants? While settings.different categories. An example of a talent grid appears in Exhibit 4.gaps. not be realized. financial Otherwise. outdraw competitors. and to the Boardindividuals on how well must their employees toward realizing their individual seniordevelopment executives plans. seize As part of this step. Individuals--and their bosses--must held accountable. Different HR strategies may be needed to different talent grids. and fill vacancies. For instance.to find the organization’s talent on short notice. periodic meetings may on how well they are implementing their individual development plans.

They have a stake in what happens to people. product names do matter.” or even “talent program. It is also worthwhile to describe some ways to avoid these common mistakes. Inc.” Hence. As any marketer knows. and the best way for them to compete is to prepare for future challenges rather than expect promotions for past performance at a different level of responsibility. Hence. Indeed. 8 Ten Key Steps to Effective Succession Planning . workers have seen what pressures their bosses have to deal with. some bosses do not want to see their best people promoted for fear of an inability to replace them. What Common Mistakes Are Made in Establishing Succession Planning. They are worth enumerating. Mistake #4: Trying to Do Too Much Too Fast. Mistake #3: Assuming that Promotions Are Rewards. Mistake #5: Giving No Thought to What to Call It.” Mistake #6: Assuming that Everyone Wants a Promotion. it is unwise to assume that everyone wants a promotion—or even to assume that money will convince everyone. But business decisions must be based on who will do the best job. Find out what people want to do. Mistake #2: Assuming that Bosses Are Always the Best Judges of Who Is Promotable. Workers must continually be reminded that doing jobs at each level requires different competencies. The strong results-orientation of many organizations today emphasizes quick results. Many organizations choose alternative names--such as “leadership development program. Some bosses grade people by their own standards—with the result that some individuals who are quite unlike the boss are not considered for promotion.Rothwell & Associates. That is not always true. It is not necessary to call a spade a spade. many organizations launch both a top-down succession planning program and a bottom-up career planning program to galvanize development efforts both among managers and among individuals. It will not. An individual’s success at one level is no guarantee of success at higher levels of responsibility. For that reason. The reason is simple: the competencies required for success at each level are different. That is not always true today. Some say “leave me out of that. bosses are always the best judges of who is promotable. it is important to separate thinking about how well someone does his or her current job and how well he or she might do a job at a higher responsibility level. not who is “owed” a promotion because of greatest seniority. for purposes of succession planning. In many downsized organizations. Bosses are self-interested players in the succession game. Some employees have an entitlement mentality in which they feel that long service with an organization should always be rewarded with promotions. Check first. While the support of a boss is useful in developing individuals. It is advisable to think of implementing systematic succession in a phased way—either from the top down or else starting in specific divisions or locations with greatest need. A fifth mistake is to devote no time to considering what to call the succession program. and How Can They Be Avoided? Many mistakes are commonly made in establishing succession planning programs. Mistake #1: Assuming that Success at One Level Will Guarantee Success at Higher Levels. A sixth mistake is to assume that everyone wants a promotion.” “human capital management program. such as multi-rater assessment are excellent in aiding the manager’s assessment. Senior leaders expect to see all the components of a comprehensive succession system in place immediately. more objective assessments. That is not always realistic. A second mistake is to assume that.

com) is Professor of Workplace Learning and Performance in the Workforce Education and Development program on the University Park campus of The Pennsylvania State University.com for more information. He is also an active consultant specializing in succession planning and management and issues related to it. who are more likely to stay with the company and who’s skills are better aligned with their strategic plans. 2005).. 2000). Author’s Biosketch William J. Career planning and succession management (Greenwood. SPHR (see www.halogensoftware.rothwell-associates. CEOs. building in-house leadership and management development programs (Quorum. 1999). 2005). As the global workforce ages and the skills gap increases. human resource practitioners and even individuals have important roles to play in that effort. 3rd edition (Amacom.D. Rothwell. The competency toolkit (HRD Press.Conclusion The world faces a quiet crisis of succession. Visit http://www. Send to a friend Ten Key Steps to Effective Succession Planning 9 . 1999). The strategic development of talent (HRD Press. Halogen eSuccession™ Halogen Software offers a practical and affordable automated succession planning tool that fully supports the advanced practices presented by Dr Rothwell and other experts in this area. Halogen eSuccession makes it easy for organizations to focus on developing people rather than merely replacing them. 2003). Ph. Among his best-known publications are Effective succession planning. managers. You can also take a Product Tour or sign up for a Free Trial today. increasing attention will be paid to establishing and maintaining effective succession planning programs. and The action learning guidebook (Wiley/Jossey-Bass Pfeiffer. It helps organizations establish a larger number of promotable employees. There is a practical approach to the work that must be done if organizations are to establish and sustain systematic efforts to ensure that the right people will be in the right places and at the right times to do the right things so as to achieve the right results.