According to a slew of recent research, more than half of North American companies could not name a successor if their CEO left today. Only about half currently are “grooming” potential CEOs, and about one-third have no viable internal candidates.
Today’s leadership and skills gap crises mean one thing: Organizations have to get better at planning for, identifying, and developing key talent, as well as measuring the effectiveness of succession management and tweaking the process to continually improve its impact on the business.
High-performance succession management (SM) is simple and ongoing. It is about internal recruiting across the global enterprise, offering lateral career moves, investing in accelerated development, and introducing greater levels of accountability for talent development. It ensures bench strength, minimizes retirement and other turnover disruptions, retains key talent, eliminates gaps in critical skills, and, therefore, and most importantly, ensures business performance and continuity. Competition for the most qualified talent continues to rage. At the core of winning the talent war lies succession management. Simply put, succession management, as detailed in the Brandon Hall Group report, High-Performance Succession Management: Building Your Bench for Business Continuity, is an organization’s competitive differentiator.
What Is Succession Management?
If asked to define what succession is, there is high likelihood that the terms replacement planning, succession planning, and succession management will be used and confused. But they are very different.
Replacement planning assumes that the organizational chart will remain unchanged over time and is a reactive process of identifying stand-ins so organizations have people who can assume responsibility for key job roles—usually at the senior management levels only—during emergencies.
Succession planning, a restricted process of identifying key job role replacement, is best used in steady-state cultures. It differs from replacement planning largely only in that targeted development does take place and there is some effort made to link performance management and workforce planning data with succession planning.
Succession management is much more sophisticated than either replacement planning or succession planning. It is the proactive, strategic effort made to identify and continuously manage the accelerated development of high-potential leaders so a large pool of highly qualified talent is available to fill key vacancies in critical workforce segments and in key job roles as they arise and to meet the demands of the organization without interruption to business performance.
Geared to shaping future leadership capability requirements and developing the internal bench strength of an organization, succession management is most often part of a broader talent management initiative intended to attract top talent, retain top talent through individually targeted development plans, and retain top talent for effective and ongoing organizational performance.
A Five-Step Process
Succession management is not a “check the box, complete the steps, done” type of effort. As the needs and performance goals of the business change, the re-evaluation of the current and future talent pool must occur. Specified expectations, roles, responsibilities, actions, timelines, and steps characterize effective succession management and, as always, the approach to implementation of each step varies from organization to organization with organization size, structure, technology, and culture taken into consideration. But Brandon Hall Group has developed a five-step process:
- DEFINE strategic business goals and imperatives. Succession management is only worthwhile and effective when understood and implemented in the context of current and strategic business and talent imperatives. To accelerate and sustain business performance and continuity, succession management practices must support the organization’s vision and strategy while also aligning with the organization’s core values and culture. Succession management is a business imperative, not a talent challenge, and, therefore, must be owned by the CEO and other business leaders, executed by leaders at all levels throughout the enterprise, and supported by HR and Talent leaders. It is integrated with all other talent processes, but particularly workforce planning and management, and leadership development.
- IDENTIFY critical workforce segments and key job roles and define leadership capabilities needed for success in each segment and role. A next step is the identification of workforce segments and job roles that are crucial for the current and ongoing success of the business. For each segment and role, organizations define required leadership capabilities and experiences required for success in the job. As business strategy and goals change, so will leadership capabilities. Leadership capability changes will drive the creation of new leadership competency models, or changes to existing models. The ultimate goal is to continually align the leadership capability and succession needs with the goals and direction of the business.
- REVIEW talent and identify succession candidates, categorizing by readiness level. Next, high-performing organizations conduct talent reviews discussing, assessing, and calibrating on current performance and future potential capabilities for each employee in the organization. Discussions are influenced by the quantitative results of each employee’s current performance on the job and potential in a next-level or key lateral role. As mutually agreed, each employee’s name is placed on a 9-box, or similar, grid. Those employees identified as high potentials (usually the upper right cell of the 9-box) are targeted for accelerated development to assume next-level or other key lateral job roles over some period of time based on their current level of readiness.
- EXECUTE on targeted development plans for high potentials (and other high performers) to close readiness gaps. Growing the leadership pipeline and building bench strength requires commitment to bring high-potential employees to the peak of their potential by accelerating attention to development. A comparison of each high potential’s capabilities and experiences to the job requirements identifies the gaps that need addressed. A variety of developmental strategies are used, including multi-rater assessments, individual coaching, mentoring, communities of practices, peer connects, business case studies, large and small group discussions with external leaders, individual and team feedback, simulations, networking, games, executive exposure, applied learning, job shadowing, rotational assignments, action learning, innovation labs, and personal reflection. Developmental planning also should include a review of possible derailers that high potentials might exhibit. A derailer is a weakness that, if not addressed or improved, likely will prevent a potential successor from achieving his or her true potential. For each high potential, the development experience is customized based on his or her readiness level for the position being groomed. The commitment to executing individual high-potential development plans serves to accelerate the capability and capacity of an organization’s collective leadership. Collective leadership capability drives competitive advantage and premier business performance.
- MEASURE succession strategy impact against success measures and adapt where necessary. The purpose of this step is three-fold:
- Validate the impact of an organizations’ succession management
- Hold leaders at all levels accountable for the organization’s commitment to succession management
- Make adjustments to the succession management program for continuous improvement as needed
Measuring drives the business outcomes set out to achieve. It sets direction for development activities to achieve established performance targets. It identifies possible corrective actions. It ensures readiness to address anticipated and unanticipated leadership changes. And it reduces the risks of losing high-potential leaders. By measuring and continuously improving the succession management program, organizations can respond to today’s transformational market with agility and foresight. Some common measures of succession management program success include:
- Percentage of key jobs filled by internal candidates
- Number of “ready now” candidates to fill key jobs as they become vacant
- Turnover of high potentials (and/or other high performers noted on the 9-box grid)
- Turnover of highly performing employees
- Cost of high-potential development versus the cost of hiring an external
- Number of candidates with critical skill gaps
- Percentage of high potentials who fail, or derail, when transitioned into the new role
- Number of instances that high-performing and/or high-potential talent is overlooked because of lack of enterprise-wide visibility to that candidate’s strengths and desires
The Role of Technology
Winning approaches to succession management are technologically enabled. The most successful succession management programs are able to forecast gaps in key job roles; spot gaps in talent; identify flight risk in high-potential talent; make high-potential talent visible throughout all parts of the business; and capture, track, and report on the common measures of succession management program success. To accomplish this, facilitating succession management with technology is a must. Technology grants immediate, real-time, and enterprise-wide access to succession management information. Web-based systems provide worldwide access and large-scale integration and transparency of succession data, allow real-time updates to development plans, create consistency in program implementation, and embed flexibility into every step of the process, be it the deployment of multi-rater assessments to identify and assess succession candidates or to expose the data on a 9-box grid following a recent talent review.
Integrating Succession Management with Other Talent Processes
High-performance succession management is a continuous process tightly knitted with the organization’s business planning goals and talent lifecycles. While it operates in unison with all talent processes, it functions inseparably from the organization’s workforce planning, performance management, and leadership development processes. By having a clear understanding of current workforce capability and future needs, as well as knowing current leadership supply and future demand (workforce planning); by knowing just where talent has skill and experience gaps with a plan to close them (performance management); and committing to accelerated development plans for high potentials (targeted leadership development), it is clear that the fundamental components of succession management significantly overlap with other processes of an organization’s holistic talent strategy.
Laci Loew is vice president and principal analyst for the Talent Management Practice at Brandon Hall Group, an independent HCM research and advisory services firm. BHG provides insights around key performance areas, including Learning and Development, Talent Management, Leadership Development, Talent Acquisition, and Human Resources.
