Monday, 3 November 2014 00:00
The sudden departure of a person handling a critical task can cripple business operations. That’s why we need to be conscious of executive continuity.
I was moderating a panel discussion on new trends in succession planning, recently organised by a leading HR solutions provider. Today’s column is all about executive continuity with relevance to Sri Lankan workplaces.
Figure 1: Levels of Succession Planning
Source: Deloitte ConsultingOverview
‘Executive continuity: how to build and retain an effective management team’ is the title of a book by Walter Robert Mahler. It opened the eyes of many executives to the vital aspects of succession planning. It is so vital yet does not receive the required attention.
What is succession planning all about? The Chartered Institute of People Development (CIPD) defines it as a process for identifying and developing potential future leaders or senior managers, as well as individuals to fill other business-critical positions, either in the short- or long-term. In addition to training and development activities, succession planning programs typically include the provision of practical, tailored work experience that will be relevant for future senior or key roles.
We have an interesting scenario in Sri Lanka where family businesses keep leadership changing from one generation to the next. What we mean by succession planning here goes much beyond that. It typically covers the most senior jobs in the organisation, together with short-term and longer-term successors for these posts.
The latter groups are in effect on a fast-track, and may be developed through job moves within various parts of the business.
This focus on the most senior posts, perhaps the top two or three levels of management, means that, even in large organisations, only a few hundred people at any given time would be subject to the succession planning process. The relatively low numbers involved can help make the process more manageable.
While some jobs will always require specialists, there is a growing focus on identifying and developing groups of jobs to enable potential successors to be identified for a variety of roles. So jobs might be clustered by role, function and/or level so that the generic skills required for particular roles can be developed. The aim is to develop pools of talented people, each of whom is adaptable and capable of filling a number of roles.
Importance of continuity
All organisations need to be able to find people with the right skills to fill key and top leadership and management jobs. Traditionally, large blue-chip companies ran highly-structured, mechanistic, confidential and top-down succession schemes aimed at identifying internal successors for key posts and planning their career paths to provide the necessary range of experience.
But with growing uncertainty, increasing speed of change in the business environment and flatter structures, succession planning of this sort has declined. A further problem with traditional succession planning was that it failed to take into account non-managerial roles; a brilliant scientist, for example, who might be crucial to the future of the organisation and who wanted to stay in a research role.
In a climate of enduring skills shortages and a lack of confidence in the leadership potential within the existing workforce, interest in succession planning has revived. For example, our report UK highlights: global leadership forecast 2008-09: the typical, the elite and the forgotten which draws on the global leadership forecast 2008-09 run by talent management specialists DDI, suggests that relatively few leaders rate other leaders in their organizations as good or excellent.
Succession planning can also assist with the retention of talented individuals, as they are aware of internal opportunities available to them in seeking to progress their careers. Modern succession planning, however, looks quite different from the old version, with a broader vision, greater openness and diversity and closer links to wider talent management practices. That’s where a good IT solution can become a handy companion.
According to Deloitte Consulting, there can be four levels of progress with regard to succession planning, in a typical organiSation. Figure 1 contains the details.
As they observe, fewer than 12% organiSations worldwide have achieved Level 3 maturity, while there are no companies that have achieved Level 4 maturity. This highlights the vast scope for improvement. I think a very few Sri Lankan organiSations have move beyond level 2.
Deloitte consulting recommends the following process, in executing a proper strategic planning initiative: Form an interim talent task force comprised of the right stakeholders; Discuss/revisit key success factors of the given position based on the current state of the market and the foreseeable trends in the future; Evaluate your workforce to determine viable internal and external candidates who are “ready” now; Hold an immediate Talent Review to discuss and rank this successor list; Agree to last-minute development experiences and assignments for internal candidates to address gaps and needs; Assess and reinforce your programs; Evaluate your culture and ensure there are effective programs and infrastructure in place to support the success as he or she transitions into the company and/or the new role; Monitor successors closely; Ensure your internal successors’ development is on track and that the relationships with your external successor candidates are strong; and report any oddities or irregularities immediately and adjust accordingly
Such an endeavour on succession planning requires the partnership of HR professionals and Succession Management specialists. In fact, it needs to be ensured that competencies for leaders align with business objectives and strategies, and a selection criterion is widely understood.
We need to align development with individual and organisational needs; promote diverse experiences in functions, businesses and global environments. Metrics advance the Succession Management process by identifying high potentials and tracking their development.
Creating a leadership pipeline
In a wider context, this is related to creating a leadership pipeline. The leadership pipeline is used to create a more systematic, visible system of identifying candidates for succession, combined with the processes for their development.
It was Ram Charan, Stephen Drotter and James Noel who wrote, ‘The Leadership Pipeline: How to Build the Leadership Powered Company’. Reflecting on their work, Jack Zenger, writing to Forbes magazine, proposes several key elements that define a successful workplace pipeline:
1. A simple, non-bureaucratic system. The more complex the system, the more likely it will fail. If the process stakes out too broad of a scope of operation, it will fail. On the other hand, if it limits itself to the top 50 to 200 people in the firm, its chances of success go up.
2. The pipeline is owned by the senior leadership team. Evaluating a person’s leadership talent and potential is too important to be left to any one person. No single leader should make or break someone’s career. That is why the part of the pipeline that leads to senior management assignments, should be owned collectively by the senior team. This provides more than one coach for every aspiring leader.
3. Managers become significantly more involved in people development. Some organisations bring in outside consultants to work with their leaders and create processes by which they receive candid feedback on their performance. It often comes to light that this candid, specific performance feedback is some of the first that these key individuals have received in the past several years. The involvement of managers is one of the key ingredients in successful leadership development outcomes.
4. The greatest pay-offs from a good competency model are its ability to predict future success and to aid in the development of leaders. The performance appraisal, by definition, is a look in the rear-view mirror, and focuses solely on past behaviour and results and does not take into account the demands of a new job or of the future.
5. Pipelines rely on multiple inputs. One key to keeping the pipeline filled is to involve a greater number of people in the development process. Allowing people to nominate themselves to participate is one way to increase the input. Offering development at all levels in the organisation, and picking up leaders in the earlier stages of their careers are other ways of insuring an adequate input.
A leadership pipeline is more than turning a valve and hoping something will gush out. The pipeline demands the right culture in which to flourish. It takes time to build and to fill. We strongly encourage organisations to begin now to take the steps that will provide them with an adequate supply of strong leaders.
The time has come to address continuity concerns proactively in Sri Lankan organisations. An awareness of the need for succession planning and the application of a leadership pipeline is the sure cure. It is up to the Sri Lankan HR professionals to be proactive in progressing in this front.