SUCCESSION PLANNING
By Jeff Grenzer, Director, Leadership and Organizational Development, Paychex
A little over three years ago, we reached a critical juncture in our company’s history. Several executives retired, while others left the company—all within a 15-month period. A succession planning process existed at that time (successors were identified by only a handful of officers in a closed session), but it was far from effective and not executable. When it came time to replace departing officers, nearly every new executive had to be hired externally, including the CFO, CIO, SVPs of both Sales and Operations, as well as the top jobs in HR and Marketing. This posed a daunting challenge jam-packed with risks for our newly promoted CEO and our company in general.
It was clear to our CEO and the Board of Directors that we did not have an adequate leadership bench. Succession planning and the strategies behind it had to change—fast.
A New Talent Management Process
The new vice president of Human Resources reorganized the HR function and carved out a Leadership and Organizational Development group charged with creating an internal talent pool of leaders to ensure future officer positions were filled internally. This meant a clear and targeted focus on broad and deep succession planning that was integrated into a new talent management process aligned with our business strategy. That process had to leverage a leadership competency model, effectively assess leadership gaps, and identify successors for leadership roles.
Creating a new talent management process came with its own challenges as all senior management (approximately 1,100 managers) had to learn the process to assess more than 4,400 managers and individual contributors, conduct and lead 80-plus calibration sessions, and assemble succession plans for every manager. To execute this across the company, a standardized 9-box was created to assess performance and potential; a talent and succession system was leveraged; and training had to be simple, short, and effective. We accomplished all that. Our succession planning strategy included the following critical steps:
- Assessing the most appropriate set of leadership capabilities; this is outlined in our Leadership Competency Model.
- Selecting the right successors from across the organization. We identify them through our 9-box process that yields leaders with the highest performance and potential. Potential is captured by three key factors: agility, ability, and aspiration, which are required to be effective at the next organizational level.
- Succession candidates are enrolled in two developmental programs: Leadership Edge and Leadership Evolution.
- Based on the initial assessment and feedback from their manager, we target a specific Individual Development Plan (IDP) for each candidate. The purpose of the IDP is to develop and effectively prepare candidates for the next level. IDPs are strategically designed to close business and/or competency gaps through Education, Exposure, or Experience activities identified in our 3E Catalog and are segmented further by activities within our leadership competency model. Those activities must be completed within a given time frame. A dedicated Leadership Developer works with the individual and his or her manager through one-on-one coaching and assists with building the IDP and monitors progress.
- Diversifying and balancing the leadership bench for a variety of future roles. We are moving people across functions and organizational boundaries to provide a broader business perspective.
Results
From a company perspective, we need to guarantee a workforce capable of delivering on our strategic plan. This requires a ready supply of internal talent mixed with the proper supply of external talent in key positions. Our succession planning process assesses, identifies, and develops a “bench” of viable executive and senior management successors to deliver a ready-now internal talent pool of leaders who have the ability, agility, and aspiration to successfully lead and execute the Paychex strategies and goals. Last year, we assessed 1,732 managers (executives, senior managers, managers, and supervisors) against our leadership competency model for overall performance and potential. This represents a 200 percent increase from the previous year. This yielded the following:
- Some 26 percent of senior managers, 26 percent of managers, and 32 percent of supervisors were identified as top talent, ready for the next level within 12 to 24 months.
- Bench plans exist for all officer and senior manager positions in the company.
- Some 55 percent of senior management positions were filled internally vs. 37 percent the previous year.
Tips
- Have a clear and focused strategy. The deliverable should align to a company-wide strategic plan.
- Define and communicate the operational components of a plan to the leadership. It needs to be clear what the benefit is to those executing the plan.
- Keep the process simple.
SUCCESSION PLANNING
By David B. McLaughlin, M. Ed, SPHR, Training Manager, American Fidelity Assurance Company
Succession planning is a fundamental part of doing business at American Fidelity Assurance. The idea of managing risk comes naturally to the company. We have been providing supplemental health insurance benefits and financial services to our customers since 1960. Managing risk internally is a different type of challenge.
The task of enhancing the succession plan was assigned in 2007 to Senior Workforce Development Specialist Jamie Owings, who notes, “It’s human nature to put things off when times are prosperous or to wait until ‘busy season’ is over. We knew we could not wait to be more formal with our succession plan. We had to force the issue.”
Prepared for Unforeseen Circumstances
The American Fidelity succession plan involves selecting an incumbent position and working with the person in that role to identify potential successors based on several criteria. Those potential successors then are ranked based on their readiness to fill the role. All of the information is entered into a database. Then the information is revisited and updated regularly.
According to Owings, “There is no way we can plan for a natural disaster, an unanticipated illness, or a colleague winning the lottery. What we can do is put into practice a sequence of contingencies that would allow us to function in the event of unforeseen circumstances.”
It is also important that the company develops the colleagues in the successor roles. It is the responsibility of both the manager and the organization to prepare the successors for success.
Like most companies, American Fidelity has struggled with the issue of whether to tell colleagues they are being considered as successors. We currently do not. However, there are many development opportunities for colleagues to grow, such as a Leadership and Management training program, mentoring program, cross-training, and individual coaching from their managers and leaders.
Owings adds, “In the last five years, our business practices have transformed and revolutionized the way we do business. Because of that, our succession planning changed and evolved. It is no longer a plan that is retrieved when management changes. Now it is used to build strong leadership and prepare our leaders for what can happen in the industry.”
Expanding the Plan
One of the main challenges American Fidelity faced early on was the realization that the succession plan needed to be much more than a senior management plan. The senior management team knew they were not involved with the day-to-day operations of the business. For the succession plan to be successful, it would have to expand to include the people who knew every aspect of the company. “If we lost that institutional knowledge, we would be in trouble,” Owings explains. “So we expanded the depth and width of the succession plan. It took a lot of work and time, but it has been worth it, and the company is safer because of it.”
We believe this expanded version of the succession plan has generated a culture of strength. We have deeper bench strength because of it. More of our colleagues have more knowledge than they might otherwise have had. It also helps us continually refine our Leadership and Management training. As the business needs of the company evolve, we can change with them.
Tips
Owings has some advice for companies trying a similar plan: “What works for Company A may not work for Company B. Our plan is not perfect and is always evolving. It will be different by year-end than it is now. Gather ideas and find what fits your organization. I also would recommend plenty of face time with the incumbents. You cannot just get an update and leave the plan alone. You have to ask them how things are going, how they are developing their successors, and how they are developing their plan. You must remind them constantly how important this work is to the company. It is the type of work that goes undone because it does not seem urgent. You have to make it urgent for them.”
COACHING
By Joe Marques, Manager, Organizational Development & Learning, University Hospitals
Everyone may need a coach, as noted by Eric Schmidt at Google and others, but coaching is only successful with people who want a coach. Dragging the unwilling through a coaching process is a waste of time and resources. Finding the right candidates shouldn’t be such a challenge; after all, it’s often the strong performers who have the greatest self-awareness and willingness to continue to learn and grow. “Build it and they will come,” as the saying goes. Well, it’s not so easy.
The challenge is the negative stereotype of coaching—that it’s often used only for problem performers. This harkens back to the days when emotional intelligence was “nice to have” and as long as you delivered results, it didn’t matter what mess you left in your wake. We now know that a self-aware leader, who sets a positive emotional tone, achieves the best results by tapping into the discretionary effort employees reserve for when they feel respected and valued. Sure, there are still unenlightened leaders “driving results,” but the progressive leader achieves something much more—employee loyalty—which often translates into customer loyalty. So the “soft stuff” isn’t so soft any more when it produces hard results.
UH Leadership Academy
At University Hospitals (UH), we attracted the right candidates by making coaching exclusive—reserved for strong performers who were committed to development. We introduced coaching as a critical part of a nomination-only, 15-month executive development program called UH Leadership Academy (UHLA). It was designed for 24 executive leaders—a mix of physician and operational leaders from Human Resources, Legal, Finance, Nursing, and more.
The participants not only received intensive one-on-one coaching from a Master Coach, they each became certified coaches through our partnership with Case Western Reserve University (CWRU) Weatherhead School of Management. This coaching certification allows them to serve as formal coaches for other high-potential leaders.
The coaching model was based on the Intentional Change Theory of Dr. Richard Boyatzis, professor, Organizational Behavior, CWRU. Intentional Change Theory provides the foundation for optimal development through a series of five discoveries:
- Discovering your ideal self
- Understanding your real self
- Creating a learning agenda
- Experimenting with new behaviors
- Leveraging trusting relationships
The coaching included the Emotional and Social Competency Inventory (ESCI) 360 feedback tool developed by Drs. Richard Boyatzis and Daniel Goleman in conjunction with the Hay Group. The 360-degree feedback provided vital insight into the “real self” as participants sought to achieve their “ideal self” as outlined in the model. The gap between the two was addressed through the learning agenda—which emphasized continuing to use strengths and encouraged experimentation with new leadership behaviors that needed strengthening.
Shortly after the successful completion of UHLA, coaching became a sought-after commodity (and continues to be used selectively). Leaders saw the effect coaching had on their colleagues in UHLA, and they wanted to experience it, as well.
Results
The impact of coaching was profound. There was collaboration at a level not often seen in a highly complex organization such as an academic medical center. After experiencing the journey toward the “ideal self,” these leaders transferred that to envisioning an “ideal UH.” This fueled their collaboration on several key projects during the UHLA program that had a meaningful impact on processes, the patient experience, and bottom line. All of these projects were strategic in nature, and the financial impact is already low seven figures and continues to grow.
The transformational experience went well beyond professional development and organizational impact. Most participants shared personal examples with our Executive Council (the CEO and his team, who sponsored the program) at their UHLA graduation. They spoke of how coaching helped them become better spouses, partners, friends, and parents in their personal lives.
It’s significant when coaching has a measurable impact on business results, but it’s powerful when it has an immeasurable impact on people’s lives. It was rewarding to see how our coaching strategy helped to achieve both for a number of our valued leaders.