hr pastime or critical business strategy enabler

Succession Management

HR Pastime or Critical Business Strategy Enabler

“An organization is nothing more than the collective capacity of its people to create value.” Lou Gerstner former CEO of IBM

Largest potential gains in revenue and profitsfor business leaders came from building bench strength when looking at a variety of talent outcomes*

Why Does Succession Planning Matter?

*CLC Talent Management Effectiveness Survey: Corporate Leadership Council Research

According to Marshall Goldsmith, on average, the executives he meets give their succession planning process a grade of C+ and they give their execution of succession plans a grade of D

How are you doing?

What Does Your Succession Management Say About You?

Who Does it Well? And Who Has Opportunity?

Time• To plan• To develop• To fill open positions with the right people• To think further down the road

Getting Feedback and Buy-In from Others

It is Hard• Requires tough and direct conversations

Not Defining the Business Case

What Prevents Us from Doing a Good Job at Succession Planning?

Best Practice Elements

Business Strategy feeds into talent

strategy

Executive Commitment and Accountability - Reinforcement

Identify Critical Positions

Develop competency and assessment

model

Assess Talent and ID Successors; Calibration

Talent Development, Acquisition and

Planning

Metrics that Matter

Manage Ongoing process and Action

Plans

Succession Planning is an

Ongoing Process

Identify the External Trends in your Business Environment

Define your Business Strategy• How do you compete?• What do you do better than the competition?• Can you do this without the right people?• What is needed now and what will be needed in the

future?• What kind of culture is needed to drive success?

Feeds into the Talent Needed

Start with Business Strategy and Develop Business Case

Business Strategy

feeds into talent

strategy

After Sarbanes-Oxley, Boards have become more involved with succession management

Leadership Responsibility should start with CEO

Talent Expectations for leaders and managers

Hold ongoing reviews, consider talent management results as part of bonus plan or performance management ratings

Executive Commitment and Ownership

Executive Commitment

and Accountability - Reinforcement

Critical Positions

Identification of Critical Positions

Direct strategic impact on the business; can drivecompetitive advantage

High variability in performance can have major impact on business

Critical positions may require and receive larger and/or differentiated investment and development

Make sure the discussion is around the position not the people

Identify Critical

Positions

Position Variability in performance

Impact on strategic outcomes

Scarcity of resource

Impact on other strategic activities

Total Score

Job A

Job B

Job C

Identification of Critical Positions Tool

Complete the table for each job using a scale from 1 (low) to 5 (high)

Highest Total Score = Most Critical

List 3 or 4 most important sources of competitive advantage for your company – examples:

Identify relative importance by allocating 100 points among them where no two sources of competitive advantage can have equal weighting

Using this list helps you identify core, technical capabilities/positions Michigan Ross School of Business

Executive Education

Exercise to Help ID Critical Positions

• Innovation• Quality• Branding

• On-time Delivery

• Cost• Distribution

• First to Market• Relationships• Service

Defining Characteristics

“A” Position – Strategic

“B” Position – Support

“C” Position - Surplus

Scope of Authority Has direct strategic impact and exhibits high-performance variability in the position, representing upside potential

Has an indirect strategic impact by supporting strategic positions and minimizes downside risk by providing a foundation for strategic efforts, or has a potential strategic impact, but exhibits little performance variability among those in the position.

May be required for the firm to function but has little strategic impact.

Primary Determinant of Compensation

Performance Job Level Market Price

Effect on Value Creation Creates value by substantially enhancing revenue or reducing costs

Supports value-creating positions Has positive economic impact

Consequences of Mistakes

May be very costly, but missed revenue opportunities are a greater loss to the firm

May be very costly and can destroy value.

Not necessarily costly.

Consequences of Hiring the Wrong Person.

Significant expenses in terms of lost training investments and revenue opportunities.

Fairly easily remedied thru hiring of replacement.

Easily remedied thru hiring of replacement

Source: “The Differentiated Workforce Transforming Talent into Strategic Impact” Adapted from “A Players” or “A ‘Positions’? The

Strategic Logic of Workforce Management,” Harvard Business Review, December 2005

Defining Positions – Another Approach

Assessment of Talent

9 Box Assessment Grid – Performance and Potential

High Needs Development Meets Expectations Exceeds Expectations

Improve in current role or reassign

Improve in current role

improve in current role reconsider

Low High

Pote

ntial

Performance

Prepare for future role

Develop Competency

and Assessment

Model

Company Example - Lisa

Hy-Vee◦ Culture – how it drives◦ Position Identification

Internal vs. External Candidate Development and Assessment Hy-Vee University

◦ Identification of Potential candidates◦ Etc……

Mentors Diversification tool

Example from Hy-Vee

Company Example - Diane

Reviewed External Environment, Trends and Current Performance

Redefined the Business Strategy and what Cultural Capabilities we needed to succeed

Analyzed the # of Director Level and Above Positions that we Hired Externally the Prior Year

Reviewed Current Number of Open Director and Above Positions

Calculated the Cost of Turnover• Search agency costs• Relocation costs• Lost productivity/revenue from open positions

Started with Business Strategy and Business Case Business

Strategy feeds into

talent strategy

Senior Leaders have performance goals and objectives specific to talent development and upgrade/acquisition

BU Leaders, HR Partners, CEO, CHRO Review of Succession Planning and Talent Management and Upgrade Process

Senior Leadership Calibrates Talent Assessments and ID’s SuccessorsMANAGERS Perform Talent Assessments

LEADERSHIP TEAM Identification and Alignment of Critical Positions

CEO Active Involvement and Accountability

Gained Leadership CommitmentExecutive

Commitment and

Accountability - Reinforcement

ID of Critical Positions

Understanding of company’s cultural capabilities

Consideration of motivation, ability and engagement

Performance and Potential

Definition of competencies and derailers

Defined promotability and retention risk assessments

Developed Competency and Assessment Models Develop

Competency and

Assessment Model

22

Considerations in Talent Assessments

Motivation

AbilityEngagement

23


MotivationExtent in which an employee wants:• Prestige and recognition in the

organization• Advancement and influence• Financial rewards• Work-life balance• Overall job enjoyment

AbilityEngagement

Motivation

Resources• Employee career goals in

SAP Talent Profile• Regular development

conversations

24


AbilityA combination of characteristics and learned skills to carry out day-to-day work:• Mental and cognitive ability• Emotional intelligence• Interpersonal skills• Functional and technical skills

Motivation

AbilityEngagement

Resources• Employee competency

self-assessment in Skills Profile

• Performance history

25


EngagementIncludes four elements of commitment:• Emotional commitment to the

organization• Rational commitment – a belief that

staying with organization is in the employee’s self-interest

• Discretionary effort• Intent or desire to stay

Motivation

Ability Engagement Resources• Regular performance

and development discussions

26

Promotability Assessment & Next Position

Promotability Scale:

Highly promotable (HP): Seen as having the ability and motivation to be promoted two levels within five years. Include in succession planning.

Promotable within 2 (P2): Seen as having the ability and motivation to be promoted one level within two years. Include in succession planning.

Promotable within 5 (P5): Seen has having the ability and motivation to be promoted one level within 5 years. Include in succession planning.

Lateral Development (LD): Consider for lateral move within the next 12 months to broaden experience base and potentially enhance long-term promotability. Include in succession planning.

Well Placed (WP): Continue development in current role based on employee’s expertise and motivation.

At risk: Not meeting current performance expectations; may be due to poor job fit or poor performance.

27

Employee’s Talent Information – their “voice”

28

Comparing Employees’ Talent Information

29

View Employee’s Skills Profile

30

Assessments:Competencies, Derailers, Promotability, Retention Risk

31

Derailers Assessment

Possible Ratings:

32

Leadership Competencies Assessment

Possible Ratings:

33

Promotability Assessment

Required – Indicate Next Position

34

Retention Risk Assessment

Possible Ratings:

Talent development plans put into place for• Internal successors listed for critical positions• Individuals identified as promotable/lateral development

Talent acquisition plans put into place to diversify existing capabilities and fill in gaps

Action plans put into place for individuals “At Risk” as assessed

“Stay” discussions initiated where retention risks identified

Leaders and managers accountable for owning in partnership with HR

Tools to use throughout the year

Review action plans

Planning and Development Talent Development,

Acquisition and Planning

Consider experiences needed• Manage large groups of people• Make significant decisions• Work on cross functional teams• Work in customer/client facing role• Launch new business, initiatives or programs• Assign a mentor – inside or outside the company• Strong P&L knowledge

Consider knowledge/credentials needed

Create accountability for success in new roles (internal and external hires)

360 assessment tool

Development Planning & Investments

Talent Development and Planning

Metrics that MatterNameTitle

% Promotable: 0%

Name (WP)Title

Bench Strength: .25

% Promotable: 0%

RN and/or 1-2 yrs: 1

Name (WP)Title

Bench Strength: 1.00

% Promotable: NA


Name (WP)Title


% Promotable: NA


Name (WP)Title

Bench Strength: .75

% Promotable: 0%


Name - OpenTitle


% Promotable: 17%


Name (WP)Title


% Promotable: NA


Name (P2)Title

Bench Strength:0.00

% Promotable: 0%

RN and or/1-2 yrs: 0

Name (WP)Title


% Promotable: NA


Name (WP)Title


% Promotable: NA


Name (At Risk)Title


%Promotable: 0%


Name (LD)Title


% Promotable: NA


Name (WP)Title

Bench Strength: .25

% Promotable: NA


Name (WP)Title

Bench Strength: .75

% Promotable: NA


Name (WP)Title

Bench Strength: .25

% Promotable: NA


Name (WP)Title

Bench Strength: 0

% Promotable: 33%


Name (At Risk)Title

Bench Strength: 0

% Promotable: 0%


Name (LD)Title

Bench Strength: 0

% Promotable: 33%


Name (WP)Title

Bench Strength: .75

% Promotable: 0%


Name (WP)Title

Bench Strength: .75

% Promotable: NA


Name - OpenTitle


% Promotable: NA


Name (WP)Title

Bench Strength: .75

% Promotable: NA


Name (WP)Title

Bench Strength: .75

% Promotable: 0%


KEY Indicates Critical Position

Metrics that Matter

Percentage of externally sourced successors versus internally sourced

Total number of internal succession candidates considered for open positions

Critical turnover - % of high potential employees leaving is higher than average or low potential employees

Time to fill critical positions

Cost of external hires versus internal promotions/development

What questions are you trying to answer or what decisions are you trying to make?

Examples of MetricsMetrics that

Matter

Business Case: Connects Business Strategy and Needs into Talent StrategyShould be ongoing and dynamic as business is

Executive Level Commitment and AccountabilityReinforce the Importance of Talent Development and Acquisition throughout Organization

Identification of and Agreement on Critical Positions

Assessment of Current Talent and Identification of Successors

Calibration and Discussion

Targeted Talent Investments, Development and PlanningInternal

External

Measure what Matters

Ongoing Management through the Four Succession Risks Vacancy Risk - focus on most vulnerable and critical areas of business

Readiness Risk - provide needed development experiences and enable movement across company

Transition Risk - understand transition derailers, manage expectations of new hires and create accountability for success in roles

Portfolio Risk - ensure talent is aligned and deployed against evolving business priorities

Example of a Succession Planning Checklist

Tool – Checklist

Manage vacancy risk – focus succession efforts by translating business strategy into talent strategy

Manage readiness risk by providing needed development experiences and enabling movement across the organization

Manage transition risk by understanding derailers, manage expectations and create accountability for success in roles

Manage portfolio risk by effectively aligning and deploying talent against evolving business priorities

2006 Corporate Executive Board

Manage Ongoing Process Manage Ongoing

Process and Plans

Employee Information

Name: Current Job Title:

Date of Meeting/Interaction: Individual/s Providing Feedback:

Cultural Capabilities – Provide any feedback on behaviors related to our cultural capabilities

Tenaciously ResourcefulDynamically ResponsivePassionately Aligned

Leadership Competencies: Ratings: (N/A – Not Applicable, IE – Ineffective, SE – Somewhat Effective, E – Effective, VE – Very Effective, O – Outstanding)

Business Acumen: Dealing with Ambiguity: Decision Quality:

Developing Direct Reports and Others:

Drive for Results: Interpersonal Savvy:

Managerial Courage: Managing Vision and Purpose:

Managing and Measuring Work:

Describe purpose for rating/s above, be as specific as possible:

Functional Competencies:

Derailers: List any of the following you witnessed and explain what you witnessed: Betrayal of Trust, Defensiveness, Lack of Ethics and Values, Failure to Staff Effectively, Insensitive to Others, Performance Problems

Manage Ongoing Process – Feedback Tool

Manage Ongoing Process – ToolLeadership Competencies Rating:

N/A – Not Applicable IE – Ineffective SE – Somewhat Effective E – Effective VE – Very Effective O - Outstanding

Name of Individual

Business Acumen

Dealing with

Ambiguity

Decision Quality

Developing Direct

Reports

& Others

Drive for Results

Interpersonal Savvy

Managerial Courage

Managin

g Vision & Purpos

e

Managing

& Measuring Work

Priority

Setting

Problem Solving

Strategic Agilit

y

Cultural Capabilities Rating: N/A, IE, SE, E, VE, ODerailer Assessment Rating:

NP – Not a Problem PNP – Probably Not a Problem NS – Not Sure PP – Probably a Problem DP – Definitely a Problem NEI – Not Enough Information

Name of Individual

Tenaciously Resourceful

Passionately Aligne

d

Dynamically Responsive

Derailer

s:

Betrayal of

Trust

Defensiveness

Lack of

Ethics &

Values

Failure to

Staff Effectively

Insensitive

to Other

s

Performance Problems

Business Strategy - Current and Future Needs, External Environment

Succession Management – Link Business Strategy into Talent Strategy: Commitment, Assessment, Actions, Measurement

Talent Development and Retention - how and where should we target our development investments? What experiences are needed? How are we communicating to employees?

Talent Acquisition - what skills, capabilities and gaps did we identify that we might want to find externally?

Performance Management - how are we defining, measuring and rewarding work performance – does it tie to strategy? Do we consider talent management performance for managers and leaders?

Starts with Business Strategy

In Real Time, how do we keep this front of mind versus quick fix solutions when openings occur?

Not just an HR responsibility

Calibration – does it sound easy? It’s not!

Assessment Tools

Employee Ownership

How and what should you communicate?

How do you build breadth at the entry to mid level roles?

What about positions that aren’t critical?

Generational differences and expectations

Lessons we Learned – Ongoing Journey

Define your culture and business needs• Use your company’s culture – don’t force it

What is your process today?• Can – should you develop internal candidates?

Do you have senior leadership enthusiastic support and accountability?

Discussions are crucial for success – amongst leaders, with employees, etc.

Model Succession Evaluate Plan Review Evaluate

Things to take away…How to apply

hr pastime or critical business strategy enabler

Documents