Success in Succession

Posted on August 13, 2010 by Judy Mackenzie, One of Thousands of Business Coaches on Noomii.

Success in Succession
With the global GDP soaring to over $ 61 trillion, global businesses overshadowing presence and emergence of multinationals from all over the world and with the widespread family business environment, there is a huge need to streamline succession management to keep ahead of the curve.
Succession Management is an Executive Leadership Accountability
In the aftermath of the recent financial meltdown of many companies, the focus has fallen squarely on the leadership capability of those to be held accountable for the success or failure of a company. Not only is the current leadership in question but what does tomorrows leaders look like. Are they equipped to meet the challenges “head on” and how do we make sure they are prepared? We in Canada have become the financial darlings of the world for our cautious approach to banking and lending practices. However, there are still many lessons to learn. One lesson that is being widely talked about is “Who is leading these companies and how did this happen?” “Who is watching over our interests in the large multinational firms”? We have watched the widespread impact of poor leadership and been horrified and then angered. There is a radical change in the making with how the leaders of today and tomorrow is identified, nurtured and placed. In the US, talk is getting louder of having government intervention in succession management as it is often the case that government financial support is required to bail out failures, which makes them a key stakeholder. As such they require companies to demonstrate the essential planning in the succession management area. Public companies are recognizing the need to have a ready bench of qualified and prepared leaders to meet the high demands of our current economic challenges.

Out of all of the rubble comes a very clear need to build a succession management system that is embedded deeply into the business planning process and moves away from the yearly event status. In the early days of succession planning or more accurately called “replacement planning”, basic leadership competencies would be identified and during the annual performance management review panels would discuss generalities of the participants and determine whether they were still a candidate for a senior position in the next year or 2. Often the assessment was a far cry from objective as each high potential had a supporter that spoke on their behalf and may not be as objective as they could be. Larger, multi national companies had to put more effort into their planning as they had cultural components to layer onto the competency requirements. As in all good things succession management has also come along way. I am pleased to share my experience and my research on the “laws of succession management systems” in the new economy.

There are 10 factors to be considered in building your succession management system to ensure success and a high degree of seriousness and attention by senior leadership. This article will outline these 10 factors and for some it will be affirmation for their hard work and for others I hope the ideas generated by reading this article will move you closer to your goals. The outcome of a solid succession management program is to develop a reliable leadership bench ensuring financial and key stakeholder confidence. In the spirit of change management I encourage you to think of what you’re doing well in your current systems to build on your strengths while looking to adapt additional factors into your system that will have the biggest “bang for your buck”. These factors are listed in some order of criticality. For example, without the first 3 steps in place you are actually not doing succession management. These are necessary first steps for the success of any significant business process to be successful. Here we go.

1. There must be visible interest by the CEO and the top management. I know we are all tired of Jack Welch stories but he did some things extremely well. One of them was his deep interest in the succession management system for GE and development plans for his leaders in transition team. Those leaders (at various levels of their development) got to see Jack on a regular basis for leadership development work and feedback. If you want your leadership development group to take their work very seriously, treat it seriously and give them exposure to real work issues that have risk and challenge to them. Let the CEO know what he/she has in the pipeline, what the opportunities and risks are. It is essential for leaders to understand that a key outcome of their position is to grow future talent as well as run their division. That is the shift here.
2. Succession management is held closely with line management. Human resources (HR) and organizational development (OD) partners in the development and the integrity building of the system but is not the owner. This is a key point. HR or OD cannot drive the program as it will not demonstrate the executive level commitment needed to gain buy in to the program. HR and OD bring their tools and research to the table to fine tune the “how” of the process.
3. You must understand your people. This means that robust 360 tools must be used to determine strengths and developmental areas in a wide range of competencies. It is important to understand “derailing behaviour” early in the process so you can work to reduce these behaviours or eliminate them all together. An example of a derailer is arrogance. This behaviour stops the leader from active learning from experience, creates an unwillingness to take feedback and will be unapproachable to the majority of staff. If this behaviour is not dealt with early in the leadership program you are condoning it and therefore risking failure.
Also not all competencies are the same in terms of ease of learning. Competencies like managerial courage and innovative thinking are very difficult to teach so you want to ensure that you have hired people with these capabilities in order to develop them. Understanding what you have and what you don’t have gives you concrete ideas of skills you need to hire for to make certain your leadership program has the caliber of talent required.
4. There must be a very clear understanding of what is required in the actual role being considered. Is this a turnaround, a new product division, realignment or a sustained growth situation (First 90 Days, Michael Watkins). Each of these business stages require competencies that must be addressed. What are the cultural implications of the host country or province; does the incoming candidate understand how the cultural impact will affect their personal style of leadership? Each of these factors play a major role in selecting the right candidate for the job as well as are you giving your leader the right stretch opportunities to continue their development?
5. The succession management program follows a very clear strategic plan. This is the stake in the ground for the goal setting and development training to be understandable and actionable. How clear is your strategic plan to all levels of employees?
6. You must have a thorough performance management system which will drive your succession management program. Performance management is a system whereby the employee (at all levels) is given the opportunity to review their performance and plan for the next development opportunities. In all situations where you have people in stretch assignments or roles, there is more frequent coaching or consulting to ensure the learning and output are on track. Having objective measures to assess employees is central to the program as well as ensuring key indicators are identified early. Key indicators are metrics such as turnover rate in teams, employee engagement, productivity metrics, and retention of employees, and of course productivity measures. These indicators tell you costs associated with the leadership position as well as the leader’s ability to engage the work force they are accountable for, while creating a compelling vision that is understandable and employees are willing to work towards.
7. Employee engagement is easier achieved by offering employees an opportunity to be involved in giving input into processes and changes. There has to be a genuine desire to hear what your employees have to say as operating under the “illusion of participation” will backfire and create an environment of mistrust and hostility. Employees know when they are being duped. I recently spoke with an HR professional who was telling me that the front line leadership group was put into focus groups to discuss how a significant change activity should be rolled out to the field. After much great work, a real sense of accomplishment was felt by those who were involved, only to be issued a memo the following day from the senior leader of the division with a different direction entirely mapped out and dated the day before the actual meeting. You can only imagine the impact this had on the line staff group. Irreversible damage can happen in these types of situations. Unfortunately these stories are not rare!
8. It is imperative to have clear accountabilities at all levels for the candidate within the development program. Follow up is regular and goal oriented. Using the “Ten Foot Pole” approach to leadership development is an outdated method. This strategy gives a high potential employee a volatile project or a troubled group and then stands way back to see if Darwin’s theory of survival of the fittest works. Don’t laugh, I have seen this alive and well in too many organizations? No one will admit that is what they are doing but when you look at from another angle you discover that you are guilty of this approach.
9. Having a human resources information system that has active succession modules is a wonderful way to track your talent across the province, country or globe. This is a whole other conversation but one well worth investing in.
10. Make your process simple and manageable. I have seen wonderful successes by using executive panels to discuss high potentials performance management, development planning strategies and next move planning. This allows the company to have access to strong players whereas in the past these folks weren’t exposed to all opportunities. It also allows for informational discussions to occur which often surfaces either strengths or additional development areas. This is the place to have these discussions rather than as part of a post mortem when a favoured leader has failed in a new assignment.
When companies go global, the importance of culture cannot be minimized. Culture includes the way things are done in a particular environment, and the expected and accepted norms of behaviour. Geert Hofstede’s work on cultural dimensions is believed to be one of the significant works on culture, which takes into account five dimensions (power distance, individualism, masculinity, uncertainty avoidance, and time dimension) on which people from different cultures differ. For instance, people from Asian cultures are generally low on individualism whereas people from American culture usually are high on individualism. These and other factors related to host country culture must be looked at very carefully in your succession management program.
In some cultures, overusing managerial courage by seeking clarity on all costs would be undermined where uncertainty is accepted as part of the normal circumstances. Another example could be where you have a small office in a key territory that is struggling or failing. You send in your big guns out there. Can you be sure that they will assess the existing talent objectively, can they create a vision that will be compelling for others to follow, can they prioritize what needs to be done first, second and third rather than boiling the ocean. Would such person be able to deliver a tough message in the organization while listening actively and observing at the same time, so that you don’t throw the baby out with the bathwater? I am sure you are able to add lots of examples to this discussion but the point remains that a carefully planned and executed succession management program is a vital as the computer system that ties your employees, customers and key stakeholders together. Are you spending the same kind of energy, money and executive resources in this area?
Conclusion
It has been my intention to literally give you a check list of factors that will shed some light on key components in the development or revision of your succession management program. Each of these areas warrants a paper on its own. This is the start to a process that will keep your business productive, profitable and highly respected by key stakeholders. Simple is best and clarity is the key
Judy Mackenzie, MBA, CHRP, PCC, CEC
Background

Judy founded TEVO Consulting Inc. in 2007 to focus on leadership development and talent management. Judy’s background has been primarily in human resources where she spent the last 10 years as an Executive. Combined with her strong strategic HR background she has combined Executive and Leadership Coaching to her winning formula. Judy can be reached at judy@tevoconsulting.ca