succession planning

CLC HUMAN RESOURCESCORPORATE LEADERSHIP COUNCIL

CORPORATE EXECUTIVE BOARD

High-Impact Succession ManagementAn Overview of CLC Human Resources’ Best Practices Research

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3

From CLC HUMAN RESOURCESwww.clc.executiveboard.com

© 2011 The Corporate Executive Board Company. All Rights Reserved. CLC0232011SYN

UNPACKING SUCCESSION RISK

The Four Succession Risks

Portfolio RiskRisk of poor

deployment of talent against

business goals.

Supporting Organization-Wide Objectives

4

Readiness RiskRisk of

underdeveloped successors.

Transition RiskRisk of poor assimilation of executive

talent into the organization.

Enabling High Performance of Successors

32

Vacancy RiskRisk of critical

leadership positions being

vacant.

Fixing the Succession Planning Process

1

4



Risks Vacancy Risk Readiness Risk Transition Risk Portfolio Risk

Risk Management Imperatives

Safeguard Critical Business Capabilities

Accelerate Full Business Exposure

Overcome New Hire Derailment

Maximize Strategic Talent Leverage

FROM RISK TO OPPORTUNITY

Four Risks: Four Imperatives

5



HIGH-IMPACT SUCCESSION MANAGEMENT

From Succession Planning to Strategic Executive Talent Management

VACANCY RISK READINESS RISK TRANSITION RISK PORTFOLIO RISK

ISafeguarding Critical Business Capabilities

2Accelerating

Full Business Exposure

3Overcoming

New Hire Derailment

4Maximizing Strategic Talent

Leverage

Translating Business Strategy into Talent Strategy

Executive Talent Growth Review

Providing Needed Development Experiences

Experience-Based Succession Management

Defining Needed Behavior Changes

Executive Transition Management

Organizing for High-Impact Talent Utilization

Strategic Human Capital Review

Planning for Key Departures

Needs-Based Succession Planning

Balancing Short-Term Business Risk with Long-Term

Development Benefit

Non-Obvious Development Moves

Onboarding for Organizational Fit

New Executive Career Launch

6



OVERLY DEMOCRATIC PROCESS, WASTED EFFORTS

Overall Comparison of Vacancy RiskVP of R&D and CFO

Source: Corporate Leadership Council 2003 Succession Management Survey.

People and Positions Covered by Succession Management Process1

Position A: VP of R&D

Position B: CFO

Urgency on Time-to-Fill

High High

Overall Impact on Business

High High

Scarcity of Skill Set in the Labor Market

High Low

Short-Term Cost of Vacancy

High Medium

Long-Term Cost of Vacancy

High High

Vacancy Risk High Medium

93%

56%

41%

24%

13%

All

Po

siti

on

s A

bo

ve

a C

erta

in L

evel

All

Hig

h-P

ote

nti

al

Em

plo

yees

All

Po

siti

on

s w

ith

Sig

nifi

can

t Im

pac

t o

n B

usi

nes

s

All

Po

siti

on

s T

hat

R

equ

ire

Sp

ecia

lized

Ski

lls,

Ab

iliti

es, o

r E

xper

tise

All

Peo

ple

or

Po

siti

on

s D

ifficu

lt t

o F

ind

in

Ext

ern

al L

abo

r M

arke

t

n = 234.

1 Respondents could select multiple responses.

7



CORPORATE LEADERSHIP COUNCIL


EXECUTIVE TALENT GROWTH REVIEW

OVERVIEW

Johnson & Johnson protects business-critical capabilities through developing a talent review methodology designed to rigorously assess and plan for senior executive growth.

8



MIND THE TALENT GAP

Embed Talent Growth

Imperative

Conduct Talent Review “Roll-Up” Strategy

Develop an Aggregate

View of Growth Assets

Strengthen Quality of TalentReview Dialogue

Commit to Rigorous

Examination of Talent Options

Drive to $80 Billion in Revenue

54321

Number of Senior Executives1

Revenue

1,000

500

0Year 1 Year 3 Year 5

$100B

$60B

$20B

1 Actual numbers disguised.

9



FOUR LENSES ON EXECUTIVE CAPABILITY

Johnson & Johnson’s “Folio Map”

5

4

4

44

3

3

3

2

Keepers—Soundly performing executives, whose potential matches their level of accountability.

Movers: Blockers—Executives can identify managers with low results or potential “blocking” the development of rising leaders.

Low

High

HighLow

Performance Results

THE FOUR LENSES

1. Potential Assessment

2. Performance Results

3. Position’s Level of Accountability

4. People Development Codes

5–Outstanding

4–Superior

3–Competent

2–Needs Improvement

1–Unacceptable

Size of Circle

Po

tent

ial A

sses

smen

t

Source: Fulmer, Robert, “Johnson & Johnson: Frameworks for Leadership,” Organizational Dynamics, Vol. 29, no. 3, 2001.

Growers—Enables identification of high-potential, high-results executives in need of development assignments.

Movers: Underperformers—Employees needing reassignment based on suboptimal performance or people development histories.

10



■■ Time for independent thought—Reviewing executives are given time to consider talent independently before discussion.

■■ Consistent standards for evaluation—Provides opportunity for executives to consider the entire slate of candidates before beginning formal review, thus escaping “evolution of standards” as review progresses.

■■ Everyone can speak—Facilitator ensures that each executive with a comment on an individual has an opportunity to voice that comment.

Executives spend 15 minutes evaluating folio map with initial talent evaluations…

…then “commit” to voicing, in detail, any thoughts or questions concerning the ratings by placing a sticky note by specific ratings.

Results

Po

tent

ial

Liz

■■ David

DECEPTIVELY SIMPLE

Steps of “Talent Scope” Calibration Exercise Output of Calibration Exercise

Benefits of Sticky Note Calibration

• Calvin

• Sapana • Jeremy

• Linda• David

• Judith

• Felix

• Homer

Jeff

Liz

Jeff

Jeff

Jan• Anna • Rob

• Tom

Low

High

HighLow

Performance Results

Po

tent

ial A

sses

smen

t

Reviewing executives may flag talent either to question or validate any aspect of the managers’ ratings.

Jan

Liz

11





NEEDS-BASED SUCCESSION PLANNING

OVERVIEW

Duke Energy guides succession management efforts by focusing on key questions regarding executive talent supply and demand.

12



Annual Succession Conferences

Do we have candidates qualified to assume key positions?

What are the ongoing talent risks to the organization?

What is the best way to move talent in the event of succession?

PLANNING BASED ON ORGANIZATIONAL PRIORITIES

2

43

What are the departure risks we need to act on now?

1

13



Retention OutlookLow Medium High

Cri

tica

lity

High

1% 16% 46%

Medium

2% 13% 19%

Low

<1% 2% <1%

5 91 237

12 70 103

3 15 4

ASKING “WHAT” WON’T BE HERE NEXT YEAR?

Assessing Immediate Turnover Risk: Retention–Criticality Matrix1

Identify Capabilities at Risk

Executives can click on tabs within the matrix to review at-risk talent and prepare specialized retention strategies or plan for loss of talent.

Assess Retention Risks■■ Total compensation

versus market compensation

■■ Future career opportunities within and outside of Duke Energy

■■ Exposure to senior managers and the degree to which that exposure has been favorable

Focus on Critical Positions

By drawing out experience and competency requirements, position profiles provide a means to assess a position’s criticality. More specifically HR considers the following:

■■ High experience or competence requirements

■■ Degree to which critical business processes would stop if left vacant

■■ Barriers of entry to position, stemming from specialization or educational requirements

■■ Position’s impact on customers, revenue, or productivity

1 All examples are hypothetical.

14




FOCUSING MANAGERS ON FIT

HR Successor Slate Evaluation

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HR compares position-specific criteria against the qualifications of identified successors (e.g., competencies, work experiences) to determine a candidate’s “fit” with the position.

Candidates from both lists are considered in all talent reviews.

HR runs query for alternate qualified successors based on position profile.

HR analyzes “fit” of designated successors for position.

Managers submit list of successors for designated positions.

Manager Nominations for VP Strategic Planning

1.LarsUlrich

2.EricWeiss

3.JanetBell

Successor List, VP Strategic Planning

1. J. Bell 93%

2. L. Ulrich 90%

3. I. Smith 85%

4. E. Weiss 65%

Successor Ratio = 4:1

Successor Bench Strength Analysis1

Name Fit

1. L. Ulrich 90%

2. E. Weiss 65%

3. J. Bell 93%

Name Fit

1. I. Smith 85%2. M. Hart 62%

3. S. Reid 57%

4. W. Key 49%

4321

15




MUSICAL CHAIRS

Evaluation of Chain of Moves1

Potential Successor Availability? Successor Ratio Successors Position Fit Move?

Janet BellAssumed current role six months ago; currently well placed (!)

1:1 (!) David 93%

Lars UlrichWithin three months; finishing current assignment

3:1Thomas; Lynne; Seàmus

90%

Isabella SmithOne year or more (!); engaged in critical assignment

0:1 (!) (None) 85%

Eric Weiss Immediate availability 2:1 Sylvia; Alberto 65% (!)

Successor List, VP Strategic Planning

1. J. Bell 93%2. L. Ulrich 90%3. I. Smith 85%4. E. Weiss 65%

Succession Risks

D. Roth

VP, Strategic Planning

J. BellFirst-Level Risk

Second-Level Risk

Manager Availability

Managers may be engaged in critical assignments or be well placed and not in need of a new assignment.

Successor Ratios

Insufficient ratio of successors requires close examination of the risks of moving managers out of their current roles.

Quantified “Stretch Risk”

Position fit, by showing the skill gap the candidate will need to overcome if selected, also gives an indication of the “stretch risk” from placing a manager in a position.

16





2Accelerating


3Overcoming

New Hire Derailment


Leverage












Development Benefit






17





EXPERIENCE-BASED SUCCESSION MANAGEMENT

OVERVIEW

IBM improves its executive development by using its succession management system to ensure more effective matching of development experiences to executives.

18



Annual Executive Resources Discussion

Experience-Based Development Models

Development-Based Succession Plans

Executive Talent Management System

Executive Assignment

“Five-Minute Drills”

Ongoing Experience-Based Coaching and

Consulting

ExecutiveCoach

Support from the GEOC—To support the integration of succession planning and executive development, IBM creates a corporate Global Executive and Organizational Capability (GEOC) department integrating experts in succession planning, leadership consulting, and executive coaching, who serve as consultants to the line.

Executive Coaching/Consulting

Executive Development

Succession Planning

VP, GEOC

VP of Talent

SVP of HR

Executive LeadershipCompetencies

Derailment Factors

Long-Term DevelopmentPlan

Ultimate Potential

Business Results

AN INTEGRATED EXPERIENTIAL DEVELOPMENT SYSTEM

6

5

4321

GEOC Support Staff Profile

• Senior HR professional

• 5–10 years experience with executive coaching and consulting

General Managers

Business Value

Selling

Country GM

Technical GM

Moves to Position

PositionFrom

Current Job

One Job Away

Two Jobs Away

VP, Storage

Solutions

• E. Johnson• L. Hasega • R. Lizardi

• J. Hansen • J. Ross• C. Norbin

19



DIFFERENT ENDS, DIFFERENT MEANS

IBM Career Development Models

Sample Country GM Development Model Experiences

■■ Country knowledge■■ Government/political interface

Sample Technical GM Development Model Experiences

■■ Technical/development experience

■■ Manufacturing experience

■■ Technical systemwide view

Integrate Experiences with Competencies

To create a single, cohesive development system, the GEOC team clarifies how each experience relates to the company’s executive leadership competency model.

General Managers

Business Value

Selling

Country GM

Technical GM

2

Identify Senior Leadership Roles

• Senior roles with significant breadth and business impact

• Roles for which internal successors are critical

• Differentiated by unique, critical skill requirements

1

Identify Development Experiences

The GEOC interviews both successful and average executives to identify critical experiences for success in each senior leadership role.

3

Sample General Manager Development Model Experiences

■■ High-stakes assignments

■■ Handling external pressure

Sample Business Value Selling Development Model Experiences

■■ Industry experience■■ Services experience■■ Software experience

20



Moves to Position

PositionFrom Current

JobOne Job

AwayTwo Jobs

Away

VP, Storage Solutions

■■ E. Johnson■■ L. Hasega■■ R. Lizardi

■■ J. Hansen ■■ J. Ross■■ C. Norbin

TARGETING DEVELOPMENT NOT REPLACEMENT NEEDS

Succession Planning Chart

Source: “How No. I Big Blue Builds Leaders,” Chief Executive Vol. 179 (June 2002).

Development Needs

Experience Required

Cross-Border Partnerships

Global Project Development Team

Team Leadership Leadership Role in 10–50 Person Unit

Ability to Build Relationships

Cross-Cultural Role

Possible Next Jobs:■■ VP, European e-Business Integration Team■■ VP, Asia Data Services

Talent Profile

Development Needs Lenses Executive Development Plan

Experiences

Competencies

Derailment Factors

Potential Successor Shortlist

When the position becomes vacant, people on this list will be evaluated for their readiness to assume the role.

Vitality of Bench

Enables an assessment of the breadth of bench and the depth of the talent supply available to fill a position.

Shifted Burden for Development

The focus on needed jobs creates a need to ask “what experiences do we need to deliver to this person for them to develop and to prepare them for their ultimate position?”

3

2

1

21



MAKING THE TOUGH CALLS

Chairman’s “Five-Minute Drill” Rules■■ Senior talent viewed as corporate, not business unit, assets

■■ Everyone is fair game—no hoarding of talent

■■ The group approves all moves for the top 300 positions

■■ All decisions are made by consensus

■■ Focus is on the capability of individuals to drive results

SVP, Server Group

CFO

Chairman

SVP, Software Group

SVP of HR

Five-Minute Drill AgendaAugust 4, 2003

1. Recap last month’s moves2. Discuss and approve appointments to known

opportunities and new positions in the top 300 positions

PositionPrioritized List of Candidates

Others Candidates Considered

VP, Storage

Solutions

1. Rafael Lizardi

2. Ashley Gigandet

3. Lisa Hasegawa

■■ Lisa Screeton—insufficient time in current role

■■ Kenny Baer—vital in current position

3. Identify development jobs for key talent

PersonProjected

Rotation DateDesired Development

Experience

Joe Ross Q1, 2004

Needs P&L responsibility and exposure to complex financial challenge

Chairman’s “Five-Minute Drill”

Forcing the Hard Discussions

The Chairman’s expectations are designed to ensure a candid debate about the short- and long-term costs and benefits for each executive move.

Benefits Considered:

• Network building

• Best-practice sharing

• Innovation

Costs Considered:

• Temporary performance drop

• Executive burnout

Full Slate Transparency

A list of other candidates considered but not selected is included to demonstrate that there can be no hoarding.

Executive Talent Profile

The group reviews the executive’s talent profile and development plan to discuss development areas and possible assignments.

Development Model Experience

Competency Score

22





NON-OBVIOUS DEVELOPMENT MOVES

OVERVIEW

As part of the succession planning process Schlumberger identifies “non-obvious” cross-business development move opportunities for a selected group of rising high-performing leaders.

23



Promote and Identify Non-Obvious Development

Move Opportunities

Balance Long-Term and Short-Term

Benefits and Risks

(NON) OBVIOUS DEVELOPMENT BENEFITS

Potential Gains from Non-Obvious Development Moves

Total $

Increased HIPO

Retention

Improved Performance

Transfer of Best

Practices

Realization of New Cross-

Business Opportunities

Tota

l Do

llar

Val

ue

Analyze “Stretch Errors” to Improve Future Risk Taking

Support Individuals in Non-Obvious

Development Moves

Identify HIPO Successors Early in Their Careers

5

4

321

24



STARTING EARLY

Schlumberger’s HIPO Reservoir

HIPO Reservoir 9 Percent of Exempt Population (4,300 in 2002)

Schlumberger, Ltd. 78,500 employees

Annual HIPO Identification Process■■ Minimum three years tenure

■■ High performer

■■ High potential

Global Talent Pool (50 Percent)

Talent Profile Name: Eva Vasquéz

Position: Integrated Project Management

Location: Jakarta, Indonesia

■■ 68 percent under age 35■■ Entry-level to senior executive–level staff

■■ Global development move every 2–3 years

Development Strategy

Candidates for Non-Obvious Development Moves

Expert Talent Pool (50 Percent)

Name: Larry Roth

Position: Geophysicist, Oil Field Services

Location: Paris, France

■■ Hard-to-get functional skills

■■ Premier expert in function

■■ High tenure within one function

Functional Expert Path

25



GOING AGAINST GUT FEEL

Development Move Risk–Return Analysis

Succession Plan, Oil Field Services

Non-Obvious Move Discussion Items

■■ Non-obvious move opportunities for “ready in the future” candidates

■■ Business benefits■■ Business risks■■ Chain of moves

CEO EVP

VP of HR

Low Medium HighLow

High

Medium

Long

-Ter

m B

usin

ess

Ben

efit

Short-Term Business Risk

Obvious Moves■■ Direct vertical move within same function

■■ Move of “ready now” successor into business-troubled position

■■ Move into a role with limited development benefit

Non-Obvious Moves■■ Cross-business or cross-geography move

■■ Developmental stretch move■■ Manageable risk to business

Excessive Risk Moves■■ Cross-business move into business-challenged position

■■ Developmental “over-stretch” move■■ Excessive, non-manageable risk to business

“Ready in the Future” Successor Characteristics

■■ Have been identified as high-potential

■■ Are considered for “non-obvious” move opportunities when vacancies appear in other BUs

■■ Are lacking experience and exposure in function or businessrisk to business

Position “Ready Now” “Ready in the Future”

VP, Drilling and Measurement

Director, Drilling and Measurement, Ann King

Recruiter, Drilling and Measurement, France, Young Lee

Manager, Drilling and Measurement, Africa, Lisa Gil

Manager, Seismic, U.S., Tom Smith

26



BUILDING A SAFETY NET

HR’s Individual Risk Evaluation

Team Strength Risk Mitigation

Position-Based Risk Assessment

Potential Risk Factors■■ Avoids conflict■■ Micromanagement tendency

■■ Weak communicator

Hire Assessment

Performance Assessment

Profiles of Past Moves

Profiles of Individual

Constraints

1. Strengthen Direct Reports

3. Use Internal Training and Coaching

2. Delegate High-Risk Responsibilities

Hiring Manager

Past Position Holder

A World WithinPast Holders of Position

NameCurrent Position

Telephone Extension

Rob Crist SVP, Sales x4567

Jan Miller Director… x4123

Matt Reif Manager… x4890

27





2Accelerating


3Overcoming

New Hire Derailment


Leverage












Development Benefit






28



LOW SUCCESS RATES

Internally and Externally Hired CFOs Promoted to CEO, President, or COO Roles

Failure of External Candidates

40% Failed Within 18 Months

60% Successful

in Role

Internal Hires External Hires

31

11

n = 200.

29





NEW EXECUTIVE CAREER LAUNCH

OVERVIEW

Beginning in 2001 American Express launched a suite of initiatives to overcome the problem of early external hire departure, in particular the company focused on three key components of the onboarding process.

30



AVOIDING NEW HIRE STALL POINTS

Key Elements of New Executive Career Launch

■■ Uses onboarding interventions to proactively manage new hire expectations across the first year.

■■ Overcomes performance-damaging peaks and troughs in attitude toward the new role.

■■ Focuses the individual on long-term development and uses coaching to overcome potential early derailers.

■■ Communicates acceptance of development needs and ensures that the new hire understands the organization’s long-term commitment to them.

■■ Goes beyond exposing individuals to critical stakeholders to fostering meaningful relationships.

■■ Provides new hires the networks they need to succeed in company consensus–driven culture.

Managing the Expectation–Reality Gap

1

12 Months4–7 Months1 Month

New

Hir

e P

erce

pti

on

o

f N

ew R

ole

Highly Pessimistic

Highly Optimistic

Initiating Development at the Point of Hire

2 Build Key Relationships for New Executives

3

31



“THE EXPECTATION–REALITY ROLLER COASTER”

Change in New Executive Hire Attitude Toward CompanyFirst Year of Employment

Highly Optimistic

Highly Pessimistic

New

Hir

e P

erce

pti

on

of

Org

aniz

atio

n

1 Month 12 Months4–7 Months

Typical New Hire Experience

Desired New Hire Experience

High Potential for Performance Errors

“Reality Check”Managing Down Expectations

■■ No “Duty Free” Onboarding

■■ Immediate Development Requirements

“These Things Take Time”Managing up Expectations

■■ 360-Degree Feedback

■■ Feedback in Context

“We’re Betting on You”Ongoing Solutions for Success

■■ A New Plan

■■ Emphasis on Organizational Commitment

32



AN IMMEDIATE FOCUS ON LONG-TERM DEVELOPMENT

American Express Parallel Development Focus

Early Focus on Long-Term Development

Leader Benchmarking

From Assessment to Development

Long-Term IDP Within 30 Days

Individual Development PlanGoal One: Manage cross-functional reorganization

Goal Two: Work toward AEXP “innovation” leadership standard

Parallel Focus

on Role-Based

Learning

On-Call Assimilation Assistant

■■ HR provides an assistant to serve as “on-call” support to answer simple orientation questions for the new hire.

■■ Because the assistant is outside the business unit, there is no stigma associated with asking “basic” questions.

100–Day Organizational Learning Plan

■■ HR provides a templated “First 100 Days” plan that covers all major “exposure” points an individual needs to master the role.

■■ Plan provides step-by-step series of checklists, contacts, and activities to follow.

Point of Hire

External Assessment

© 2001 Corporate Executive Board

Catalyst

Adaptor

Orchestrator

CultivatorRelationshipBuilder

Visionary

GoalDriver

Step #4: Evaluate Rising Leaders’ Scores Against Top Executive Norms

Story Behind the Numbers

Pre-Executives’ Scores Are Summed and Analyzed Against Norms

Spider Graph Comparison*Pre-Executive Scorecard*

* Corporate Leadership Council illustrative.

3.5

Source: GE Medical Systems; Corporate Leadership Council research.

7.0

18b

0.0

Leadership DevelopmentNeeds of Bob Oliver

(in order of priority)

• Relationship Builder

• Visionary

• Cultivator

Bob Oliver’s Scores

Average Scores of Top Executives

Catalyst 7 6.2

Adaptor 6 6.5

Orchestrator 5 5.3

Cultivator 6 6.6

Relationship Builder 5 5.7

Visionary 5 5.6

Goal Driver 7 6.6

Category

IndividualCategory

Score

TopExecutive

NormScores

Name: Bob Oliver

DevelopmentNeeds Assessment*

“Norm” scores arederived from averagescores of current topexecutive responses.

New Hire Manager

Pre HireImmediate Orientation

Early Development

Planning

33



MORE THAN JUST MEET AND GREET

Three Levels of Relationship Building

IPre-Booked

Calendar of Meetings

2Perspective Exchange

Opportunities

3Cross-Business

Networking

CRITICAL ELEMENTS ENCOURAGING NETWORK DEVELOPMENT

Instilling a Sense of Contribution Tapping for New Ideas Building Cohorts

Meeting with the CEO New Hire Perspective Forum Annual New Leader Summit

Gaining Multiple Views of the Organization

Meeting Customers

34





2Accelerating


3Overcoming

New Hire Derailment


Leverage












Development Benefit






35



WRONG PLACE, WRONG TIME, WRONG JOB

WRONG PLACE, WRONG TIME, WRONG JOB

Executive Leverage1

“Untapped Opportunity?”

Asking Too Much?

33%

15%Po

int

of

Op

tim

um L

ever

age

49% Meeting Business Objectives

51% Not Meeting

Business Objectives

1 From “War for Talent,” The McKinsey Quarterly (3 November 1998): 44–57.

Percentage of Leaders Not Meeting Business ObjectivesExecutive Leverage1

36





STRATEGIC HUMAN CAPITAL REVIEW

OVERVIEW

Marriott’s HR department creates a succession management system that provides line managers the tools, skills, and impetus to ensure continuous alignment of talent and organizational capabilities with business priorities.

37



THINKING OUTSIDE OF THE BOX

Expand Scope of the Succession Management

Process to Include Organizational Capability

1

Ensure Accountability for Driving Talent—

Organization Alignment

4

Enhance Talent Assessment Criteria

2

Enable Business Unit Talent—Organization

Alignment

5

Enable Business Unit Evaluation of

Organizational Design and Talent Implications

3

RatingOrganizational Capability Focus Area E F C I

Organization Design/Organizational Structure Design q q q qOrganization Design/Process Design q q q qOrganization Design/Job Design q q q qBusiness/Culture Alignment q q q qPerformance Management System and Measurement Frameworks q q q qChange and Learning Management q q q q

Project Plan

Enablers of Change❏ Purpose and goal explained

❏ New department mission clear❏ Training in place to support

group

Talent Management

Organizational Capability

Business Priorities

38



Have we established the right organizational circumstances to get maximum ROI from our talent?

Areas Reviewed

■■ Organizational Design (Structure, Process, and Job)

■■ Business Culture Alignment■■ Change and Learning Management

■■ Performance Measurement Systems

EVP, BU

THE THIRD LEG OF THE STOOL

Marriott’s Human Capital Review

Annual meetings are held between the president/COO and each business unit EVP to discuss in depth the unit’s talent health, organizational structure, and needs.

Are we attracting, developing, and retaining the best industry talent?

Areas Reviewed

■■ Talent Acquisition■■ Performance Development■■ Total Compensation■■ Work Environment■■ Retention Management

Human Capital Review

■■ Executive and Key Talent Review■■ Leadership Continuity Planning

■■ Organizational Capability Assessment

Key Questions Addressed

SVP HR, BU

President/COO EVP,

HR

SVP, TM & OC

Business Priorities

Talent Management

Organizational Capability

39



Rating

Organizational Capability Focus Area Exceptional Full Contributing Inhibiting

Organization Design/Organizational Structure Design: Leadership structured to provide/execute decision making at right level. Resources organized effectively and efficiently; span of control provides desired results. Virtual teams, task forces utilized to appropriate degree and enable cross-functional work to be successfully performed. Organization effectively responds to external challenges and work requests in a timely manner with appropriate quality/value. All key positions and reporting relationships exist to accomplish work from strategy to execution/evaluation.

Organization Design/Process Design: Right results are achieved at right time. Accountability is consistently clear, and high quality decisions are consistently made on time. Intended outcomes/outputs achieved within desired/required time frame and budget. Common approach is used to perform core, repetitive work. Work flows effectively, the number of hand-offs is as minimal as possible.

Organization Design/Job Design:Senior positions designed with clear roles/responsibilities. Jobs are appropriate to senior talent sufficient autonomy; necessary interdependence without overlap). Positions are appropriately sized to be realistic. Jobs are designed to include career development/progression/ broadening. Job design promotes retention. Measurement criteria exists and utilized to judge performance results.

Business/Culture Alignment:Strategy, leadership impact, decision making style, communications are aligned to foster/sustain the overall Marriott International culture and unique subculture/climate necessary to a specific unit to achieve business goals and work priorities. Senior leadership behavior congruent with desired values/culture. Results are appropriately balanced with how results are accomplished. Distinct approaches/environment exists to achieve/sustain a competitive advantage. Ability to respond to adverse situations quickly/effectively while maintaining values.

Performance Management System and Measurement Frameworks:Interactive and systematic ways are used to assess impact the leadership team has on core objectives, and key operating results achieved by the organization, groups and teams. Evaluation criteria includes “return on investment” (benefit gained against invested resources, etc.); “leading” and “lagging” indicators are in use. Goals (what is to be achieved) and boundaries (what is to be avoided) are clearly delineated.

Change and Learning Management:Ability of leadership to effectively, quickly and easily introduce and manage [major] change; necessary changes implemented and adopted by associates as intended. Change is sustained. Infrastructure for learning and knowledge transfer in place; benefits from learning and experience are institutionalized and internalized throughout organization. Consistent rewards/recognition for re-using/enhancing as opposed to creating new.

A DETAILED LOOK AT THE ORGANIZATION

Organizational Capability Review (OCR) Tool

Targeted questions help focus managers’ attention on key organizational design and talent utilization questions.

Additional questions encourage managers to think broadly about the overall talent environment.

Rating Criteria

Exceptional—Strong facilitator of goals; source of competitive advantage

Full—Strong performance but enhancement possible

Contributing—Adequate performance but enhancement necessary

Inhibiting—Performance below expectations; major realignment needed

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OCR Standard and Investigating Questions Areas of Talent Misalignment Identified Opportunities

Jobs are designed to include career development/progression/broadening

■■ Are there multiple feeder positions for each job?■■ Is there any job that is so customized that a single successor is not possible?

Role change and customization has led to gaps in the development

ladder

Identify and validate career pipelines for this and

related positions

Job design promotes retention■■ Are there positions which have historically high turnover?■■ Does analysis of the job turnover point to an organizational rather than individual cause?

Growth in role complexity has resulted in some “impossible” jobs

Identify and restructure problematic roles

Leadership structured to provide/execute decision making at the right level

■■ Are individual executives frustrated with their levels of autonomy?

■■ Are high-risk decisions being made with appropriate oversight?

Static role definitions leave approval authority too centralized

Redistribute executive responsibilities to provide appropriate authority and

development “stretch”

Jobs are appropriate to senior talent■■ Are the skills of executives being fully leveraged in their current positions?

■■ Are some executives holding responsibilities that others could do better in or develop more from?

Jobs are not sufficiently customized to fully leverage

individual skill sets

Consider areas where job responsibilities could be shifted to fully leverage

available talent

UNCOVERING OPPORTUNITIES FOR IMPROVEMENT

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1 Proactively Assess Talent and Organizational Capability

Business unit head and SVP of HR discuss talent and organizational implications of new business priorities or strategy shift.

2 Identify Key Performance Levers

LTDI and OCR used to surface opportunities for improvement.

3 Recommend and Select Intervention Option

Business unit leaders work with OC specialist to develop and select options for intervention.

4 Design, Develop, and Implement Change

OC specialist partners with business unit head and senior HR generalist to carry out change.

5 Evaluate Results

The team assesses the implementation and establishes metrics to ensure sustained realization of benefits.

HR Center of Expertise for Talent Management and Organizational Capability, Organizational Capability Department

■■ Staff with expertise in organizational design, change management, and performance management systems.

■■ Led by a VP of Organizational Capability who reports to the SVP of Talent Management and Organizational Capability.

■■ Consult with business units to increase organizational effectiveness.

Recent Organizational Capability Engagements■■ Merging departments (e.g., currently integrating a large corporate division and a lodging division into a single organization)

■■ Building cross-organizational business processes (e.g., end-to-end work flow of the hotel development process)

■■ Creating new departments■■ Re-allocating job accountabilities

TURNING THE SHIP (ON A DIME)

Hypothetical Example of an Organizational Capability (OC) Engagement

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Succession Risks

Imperatives for All Organizations

MANAGING SUCCESSION RISKS: A FOUR-PART ACTION PLAN

Portfolio RiskTransition RiskReadiness RiskVacancy Risk

Imperative #4:

Maximize Strategic Talent Leverage

Imperative #3:

Overcome New Hire Derailment

Imperative #2:

Accelerate Full Business Exposure

Imperative #1:

Safeguard Critical Business Capabilities

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Succession PlanningReactive Process Management of Individual Departure Events


Vacancy Risk Readiness Risk Transition Risk Portfolio Risk


2Accelerating


3Overcoming

New Hire Derailment

4Maximizing Strategic

Talent Leverage











Balancing Short-Term Business Risk with Long-

Term Development Benefit




Strategic Executive Talent ManagementProactive Strategic Management of Talent Portfolio in Support of Business Goals

CLC HUMAN RESOURCES™CORPORATE LEADERSHIP COUNCIL

