In 2022, as we prepared for our first in-person event since the COVID-19 lockdown, our conference director created what she jokingly referred to as our Designated Survivor list. But unlike the TV show in which a designated member of Congress remained safely in a bunker in order to step into the president’s role in the event of catastrophe, our list was more of a “Designated Successor” plan, where we figured out who would fill each team member’s shoes if someone couldn’t travel to Orlando for the conference.
If there’s one thing the pandemic taught us, it’s the vital necessity for planning ahead, especially in today’s uncertain and constantly changing times. But while many organizations have leadership development programs, they often don’t focus specifically on succession planning, even in the face of The Great Resignation and the looming Great Retirement ofBaby Boomers from the workforce.
Indeed, some 74 percent of businesses say they are successfully attracting and retaining the talent they need, but 79 percent cite inadequate succession planning as a challenge to future transformation, according to a recent Pulse Survey by PwC.
As Quantum Workplace CEOJeff Hicks notes in an April 2023 Training article, “As organizations plan for the long term, they need a succession plan to help guide their future. We have all been caught off guard by the sudden departures of key leaders before and have seen the confusion and disorder that can result from that hole in the organization’s leadership.”
Priming the pipeline with talent that is ready to move into position at any moment gives organizations both fiexibility and continuity. But doing so requires time, investment, resources, leadership buy-in—and, of course, a plan.
Recognized for their excellence in employee training and development, four of our 2024 Training APEX Awards winners share their best practices for successful succession planning.
CASE STUDY: GILBANE BUILDING COMPANY
Gilbane Building Company’s annual talent review and succession planning process focuses on identifying and developing talent who are capable of filling current and future leadership roles in its business units, divisions, departments, and the enterprise. “We strive to have a ready and robust, diverse internal pipeline from which to draw when leadership openings become available,” notes Julie Pingel, Talent Management director.
The standardized talent review process followed enterprise-wide is supported by tools and training, and it outlines critical experiences required for future leadership within specific readiness bands (ready now, one to two years, and three to five years) for all key positions. In preparation for the annual CEO talent review meeting, business unit- and department-level meetings are conducted in each division or department.
Prior to those meetings, Pingel says, managers confirm their employees’ three-year average performance rating and assess their potential to achieve senior leadership roles. The performance and potential ratings are combined, resulting in a 9-box placement that is reviewed and confirmed or updated by leaders during calibration meetings.
Those in the highest performance and potential boxes of Gilbane’s talent pipeline are classified as Top Talent, with a further breakdown of Successor Talent (those on a succession pipeline within five years) and Emerging Talent (high potentials but not yet on a succession pipeline). A second meeting is held in business units and departments with the specific goal of identifying development needs and opportunities for the Top Talent group.
“Career Champions are identified for everyone in the Top Talent group,” Pingel says. “They are tasked with coaching and guiding these individuals to create specific development plans to help them achieve their full potential.” Included in those plans are:
- 360-degree assessments (as a pre-cursor to attending certain development programs in the coming year)
- Individualized feedback and coaching
- On-the-job experience
- Relevant training courses or programs (both inside and outside of Gilbane)
- Identifying mentors to help accelerate growth
“Since the implementation of our new standardized talent review process in 2020, we have continued to see an improvement in the percentage of positions filled internally,” Pingel says. “This figure nearly doubled from 2020 to 2022.”
CASE STUDY: ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
People and Culture business partners, talent management practitioners, and senior leaders across Allianz Life Insurance Company of North America (Allianz Life) make succession planning a top priority. “We aim to be the best and most inclusive place to work, and our focus on developing talent is something we aspire to be known for in the market,” says Chief People and Culture Officer jenny Guldseth. “We develop talent that will sustain our business for the long term, with every director-level people leader role and above creating a succession plan.”
Allianz Life has a long-standing practice around succession management to mitigate the possibility of business interruption resulting from key talent departures. The process promotes inclusive talent pipelines, a health check on successor readiness, and development opportunities that grow talent.
Last year, Allianz Life enhanced its succession process by doubling the number of talent discussions the Executive Leadership Group (ELG) participates in each year. “The enhanced focus gave our leaders more time for thoughtful discussion and increased visibility to cross-company talent,” explains Sumaiyah Krohn, head of Talent Management, People and Culture Business Partners, and Change Management. “The additional discussions allowed executives to go deeper with smaller groups of employees, and identify more meaningful development opportunities.”
These enhancements resulted in executive leader confidence that the company is creating increasingly inclusive talent pipelines, a more accurate assessment of successor readiness, and more robust development actions.
One benefit of being part of a global organization is that many of the local employees in Minneapolis have the opportunity to participate in global leadership programs with their parent company, Allianz SE, in Munich, Germany. These programs bring together leaders from around the globe to engage, develop, and strengthen their skills while focusing on key business initiatives. In addition to these leadership opportunities, many employees can take advantage of international assignments or talent rotations at Allianz companies around the world.
Another critical resource for identifying and developing leaders is the company’s thriving network of Employee Resource Groups (ERGs). The ERGs are made up of highly engaged employees from diverse backgrounds who come together for a shared purpose or initiative to raise awareness, share information, and activate other employees to participate in creating positive change within the company and local community. Each ERG has several leadership positions, which allows employees at any level of the organization to grow and develop their leadership potential. Allianz Life also has an ERG Leadership Academy for new leaders to ensure they have the tools and skills needed for success in their roles.
“We view talent management, first and foremost, through the lens of equity and inclusion. Our succession and talent development efforts include a focus on diverse successor identification and development of diverse talent deeper in the organization,” Guldseth says.
Currently, the Allianz Life ELG comprises 44 percent women, including the president and CEO, with a strong internal pipeline of potential women successors. In addition, in the last year, 50 percent of ERG chairs and co-chairs have received an upward promotion after completing their terms.
CASE STUDY: APPLE FEDERAL CREDIT UNION
Apple Federal Credit Union has a formal succession strategy for all levels of the organization, including the CEO and Executive Leadership Team, according to Chief People Officer Sharon Camper. “Senior executives are assigned mid-level managers to mentor interpersonal skills and business acumen,” she explains. “A formal profile assessment process that evaluates the readiness for progression and the retention timeline of our mid-level managers was developed using Apple’s Performance Management tool. The results of the profile assessment are used to identify a gap analysis and create a development plan for the manager based on an established C-level talent pool.”
There is also a formal plan to develop the best people through well-targeted talent development efforts. The company developed competency models for each position, and a performance evaluation twice a year determines if employees are performing successfully in their current roles. An assessment process evaluates individual potential for success at a higher level of responsibility.
“Managers rate their direct reports annually on their potential for career growth and also rate the risk or impact of leaving within the next five-plus years and the potential reason for the exit,” Camper says. “Managers are trained on how to complete the assessment, what high potential and readiness means, and how to avoid bias.”
High Potential High Performers (Top Talent) are identified from the staff members’ performance rating and the assessment in the year-end check-in. Managers then create specific development plans to engage and retain top talent. In the last year, Camper says, more than half of those in the Top Talent pool were promoted, and 93 percent remained with the organization.
CASE STUDY: THE UNIVERSITY OF TEXAS MD ANDERSON
Succession planning at The University of Texas MD Anderson focuses on reviewing talent pools and pathways to support critical positions and using those plans to mitigate the risk of loss of knowledge and forward momentum when a leader departs. “We view succession planning as a developmental process,” explains Courtney Holladay, associate vice president of MD Anderson’s Leadership Institute. “Talent reviews are a key component to initiate succession planning. They lead to the placement of individuals along a potential matrix and feed into the succession plans, including development and growth opportunities mapped out for the leaders. This approach requires a focus on individual competency alignment with our organization’s values.”
MD Anderson’s succession planning phases include:
1. Preparation
- The executive leader receives training on the talent review and succession planning process, including content regarding implicit biases. The leader rates each direct report who is part of the talent review process on competencies, identifies three positions the individual could take on in the pathway, and recommends development activities (e.g., training, experiential learning, project assignments, initiative oversight).
2. Talent Review Meetings
- The executive leader presents the talent profiles to a group of peers and an HR consultant.
- The peer leadership group provides feedback on strengths, development opportunities, readiness for suggested pathway positions, and consideration for other pathway positions.
- The executive leader revises the profiles based on feedback. The ratings for each individual are tracked in the HR system of record.
3. Follow Up into Succession Planning
- The executive leader and HR create a preliminary development plan.
- The leader discusses development opportunities with the individual, who takes responsibility for the development plan and personalizing it.
- An executive coach is offered as a resource as the individual works on their development plan.
- To increase accountability for continued development, the leader presents regular updates to the leadership group on development activities undertaken for advancing the individual’s readiness.
Following the talent review process, Holladay says, “an organizational assessment is conducted to review the depth of talent (i.e., pathways) that exists for each leadership position. Metrics of readiness levels, development activities underway, and movement of individuals are tracked to ensure ongoing progress of succession management.”
The percentage of leadership roles filled internally has stayed above 50 percent, reports Tim Jones, director, Executive Recruitment, and “time to fill a position is less than 120 days over the last three years, far lower than external benchmarks of 200 days.”
Quick Tips
By Nanette Miner, Ed.D., Managing Consultant, The Training Doctor (www.trainingdr.com)
Most organizations don’t emphasize succession planning because they are busy accomplishing today’s tasks, but succession planning is not something that can be left for “later.” As you know, changing someone’s behavior is a difficult task, so the earlier you start, the better. Equally as important, your approach should be thoughtful and strategic because there is little room for error.
Here are some tips for ensuring you are successful when developing succession plans for your company.
First, what characteristics or behaviors denote “leadership” in your organization? While most of us think of universal skills such as being a good communicator or inspiring others, every organization will have a set of behaviors that are specific to them. For instance, a hospital might emphasize ethics and empathy more than a construction firm, and the construction firm more than likely will want its leaders to be adept in business metrics and risk management. So when you are developing the list of skills you want your future leaders to possess, be sure to include those skills that are unique to your business.
Next, be strategic. You are developing future leaders, not replacement leaders. You must look ahead five and 10 years to how your industry may change and what will be needed to adapt and stay viable. Remember when the only way to buy a car was to go to a dealership? How many dealerships looked ahead to hiring Webmasters and photographers? You don’t want to have to play catch-up.
Lastly, utilize organic ways of developing your future leaders. This approach is not only affordable but it also can’t be copied (so other employers are less likely to poach your future leaders). Coaching and mentoring are wonderful approaches because they are nimble; they also will be specific to your organization. Develop career paths that incorporate leadership assignments, such as lateral moves. And be sure performance appraisals look to the future, not simply assess the past. Ask employees what they would like to learn about the company or industry and where they see themselves in the future.
Succession planning is just that—a plan. It requires focus and strategic execution.
The best time to start is today!
