The importance of succession management and career planning became obvious to me a few years ago, when I was working as the chief human resources officer for a subsidiary of a very large, Canadian-based, multinational food and beverage company.
The parent company had been rapidly expanding through acquisition, and as part of this expansion strategy it hired new management to run acquired companies.
After several years of implementing this strategy — and spending millions of dollars on executive recruitment, as well as similarly large amounts on severance settlements — the company decided that the “new broom” HR strategy of cleaning house with each takeover needed another look.
Less than half of the executives brought in to run the acquired companies survived more than two years. What’s more, the best performers in the managerial talent pool were people who had been kept on from the acquired firm or had been groomed within the parent company.
Knowing this, the company:
•embarked on an ambitious plan of identifying the talents within the acquired organizations and the parent firm;
•developed “replacement capability” charts for all key positions, as well as career, development and retention plans for high potential managerial and professional employees; and
•created a process for reviewing how well people were matched with vacant positions.
These changes substantially reduced the turmoil and under-performance caused by the previous strategy.
The benefits of career and succession planning have been confirmed in a recently published article in the Academy of Management Journal, “When the Known Devil is Better than an Unknown God.” It concludes that relay succession — at least at the CEO level — results in better firm performance than a “new broom” strategy.
It is no wonder that when Hewitt Associates surveyed 240 top companies in 2002, 73 per cent of respondents said they had a defined succession planning process in place.
However, just 13 per cent of respondents said their organization always used the process when making replacement decisions. In other words, succession and career planning — like a number of other systems HR professionals often purport to have — may be one of those that exist more in name than in practice. If this is the case, then the question is why?
In many cases it is simply because the leaders and managers responsible for the process don’t know how to do good succession and career management. Even when done right, succession and career management can still be undermined by serious organizational issues.
Defining succession and career management is simple enough. Candidates who have been screened are matched with the organization’s position fulfilment requirements.
This simple definition, however, does not take into account the myriad complicating realities present in most organizations.
Office politics get in the way
Organizations are going to have to come to grip with the fact that succession and career management — particularly for senior-level positions and individuals — can be very political.
It would be naive to hope that office politics aren’t in play. Rather, organizations should accept this reality and take steps to minimize political considerations in decision-making. This can be done by using an external, impartial consultant, or through a concerted effort to make the process as transparent and objective as possible.
The organization can establish transparency by having the executive committee involved in selection publicize its commitment to employees. Second, the organization should report on the process in the annual report to employees. Really brave organizations could even make it part of an employee appeal process.
The best laid plans of mice and men
A second reality is that organizations and the environments in which they operate are never static. Too often, well-designed career and succession management processes are not put in place because management is waiting for a stable time to do so. The right time never comes.
Or else, succession management suffers the fate of too many other HR programs, which are viewed as little more than the flavour of the month. They are discarded at the first sign of turbulence or as soon as a new leadership takes over.
This reality is harder to mitigate against. It does lend further credence to the strategy of using an external professional who has a single-minded focus on making the process work irrespective of what might be happening around the organization. That said, if the executive team doesn’t agree that the practice is important, the consultant could easily be fired.
HR’s best hope is to demonstrate the cost savings and effectiveness of succession planning. Only when HR can make that case will succession planning become entrenched.
Managers won’t like the extra work
The last significant reality that works against the effective implementation of succession planning and career management is a lack of resources and skills to successfully carry off implementation.
Succession and career management requires line managers to spend time “managing.” This includes HR-related work like completing replacement capability charts, identifying key competencies for positions and matching candidates with positions.
Furthermore, managers must follow up to make sure candidates are following the training and development plans that have been created for them. This is too often seen as extra work by managers and therefore not considered the priority it needs to be.
Too often these organization design problems lead to a culture of mistrust and skepticism throughout the company when the implementation comes up short of expectations due to poor execution.
I experienced all these realities a few years ago when I was asked to develop a succession and career management process for a well-established East Coast fish processing company.
Due to budget restrictions, the client was only able to contract for the development and design of the program, intending to take care of implementation on its own.
Shortly after completing the design, the company became involved in a major re-organization brought about by changes in its supply of raw materials and in its markets.
In-house HR staff were assigned to deal with the “urgent demands” associated with these changes and were never able to get the succession and career management strategy implemented as planned.
This situation worsened, as the director of HR freely admitted a couple of years later. He did not have the organizational design skills to implement it, nor could he persuade the CEO to provide the funds to bring in a consultant to move it from design to reality.
Although he did not say so, it was clear that while he believed the program was going to add value to the organization, there was not the political will to make it happen. This is something many HR practitioners have experienced with program introduction.
To generate the political will and commitment, HR needs to frame the case in terms of asset management and preventative maintenance — terms non-HR folks know very well. Succession and career management strengthens assets and produces better results for the organization by avoiding costly problems down the road.
I am currently working with a large technology organization on the issue of retention. The calculated cost of a professional leaving the company is pegged at $100,000. Effective succession and career management can help reduce “bad turnover” and the loss of valuable knowledge assets. Additionally, a well-designed and well-implemented succession and career management program can add value to these assets and optimize their allocation.
Every manager understands this because it is the fundamental responsibility of their jobs — building assets and getting better returns. Succession and career management is simply the behavioural science or HR tool that allows the organization to do those two things.
Mark Alexander is a principal with the Vancouver-based HR consultancy MacB Group. He may be reached at (778) 772-9300 or at [email protected].
The parent company had been rapidly expanding through acquisition, and as part of this expansion strategy it hired new management to run acquired companies.
After several years of implementing this strategy — and spending millions of dollars on executive recruitment, as well as similarly large amounts on severance settlements — the company decided that the “new broom” HR strategy of cleaning house with each takeover needed another look.
Less than half of the executives brought in to run the acquired companies survived more than two years. What’s more, the best performers in the managerial talent pool were people who had been kept on from the acquired firm or had been groomed within the parent company.
Knowing this, the company:
•embarked on an ambitious plan of identifying the talents within the acquired organizations and the parent firm;
•developed “replacement capability” charts for all key positions, as well as career, development and retention plans for high potential managerial and professional employees; and
•created a process for reviewing how well people were matched with vacant positions.
These changes substantially reduced the turmoil and under-performance caused by the previous strategy.
The benefits of career and succession planning have been confirmed in a recently published article in the Academy of Management Journal, “When the Known Devil is Better than an Unknown God.” It concludes that relay succession — at least at the CEO level — results in better firm performance than a “new broom” strategy.
It is no wonder that when Hewitt Associates surveyed 240 top companies in 2002, 73 per cent of respondents said they had a defined succession planning process in place.
However, just 13 per cent of respondents said their organization always used the process when making replacement decisions. In other words, succession and career planning — like a number of other systems HR professionals often purport to have — may be one of those that exist more in name than in practice. If this is the case, then the question is why?
In many cases it is simply because the leaders and managers responsible for the process don’t know how to do good succession and career management. Even when done right, succession and career management can still be undermined by serious organizational issues.
Defining succession and career management is simple enough. Candidates who have been screened are matched with the organization’s position fulfilment requirements.
This simple definition, however, does not take into account the myriad complicating realities present in most organizations.
Office politics get in the way
Organizations are going to have to come to grip with the fact that succession and career management — particularly for senior-level positions and individuals — can be very political.
It would be naive to hope that office politics aren’t in play. Rather, organizations should accept this reality and take steps to minimize political considerations in decision-making. This can be done by using an external, impartial consultant, or through a concerted effort to make the process as transparent and objective as possible.
The organization can establish transparency by having the executive committee involved in selection publicize its commitment to employees. Second, the organization should report on the process in the annual report to employees. Really brave organizations could even make it part of an employee appeal process.
The best laid plans of mice and men
A second reality is that organizations and the environments in which they operate are never static. Too often, well-designed career and succession management processes are not put in place because management is waiting for a stable time to do so. The right time never comes.
Or else, succession management suffers the fate of too many other HR programs, which are viewed as little more than the flavour of the month. They are discarded at the first sign of turbulence or as soon as a new leadership takes over.
This reality is harder to mitigate against. It does lend further credence to the strategy of using an external professional who has a single-minded focus on making the process work irrespective of what might be happening around the organization. That said, if the executive team doesn’t agree that the practice is important, the consultant could easily be fired.
HR’s best hope is to demonstrate the cost savings and effectiveness of succession planning. Only when HR can make that case will succession planning become entrenched.
Managers won’t like the extra work
The last significant reality that works against the effective implementation of succession planning and career management is a lack of resources and skills to successfully carry off implementation.
Succession and career management requires line managers to spend time “managing.” This includes HR-related work like completing replacement capability charts, identifying key competencies for positions and matching candidates with positions.
Furthermore, managers must follow up to make sure candidates are following the training and development plans that have been created for them. This is too often seen as extra work by managers and therefore not considered the priority it needs to be.
Too often these organization design problems lead to a culture of mistrust and skepticism throughout the company when the implementation comes up short of expectations due to poor execution.
I experienced all these realities a few years ago when I was asked to develop a succession and career management process for a well-established East Coast fish processing company.
Due to budget restrictions, the client was only able to contract for the development and design of the program, intending to take care of implementation on its own.
Shortly after completing the design, the company became involved in a major re-organization brought about by changes in its supply of raw materials and in its markets.
In-house HR staff were assigned to deal with the “urgent demands” associated with these changes and were never able to get the succession and career management strategy implemented as planned.
This situation worsened, as the director of HR freely admitted a couple of years later. He did not have the organizational design skills to implement it, nor could he persuade the CEO to provide the funds to bring in a consultant to move it from design to reality.
Although he did not say so, it was clear that while he believed the program was going to add value to the organization, there was not the political will to make it happen. This is something many HR practitioners have experienced with program introduction.
To generate the political will and commitment, HR needs to frame the case in terms of asset management and preventative maintenance — terms non-HR folks know very well. Succession and career management strengthens assets and produces better results for the organization by avoiding costly problems down the road.
I am currently working with a large technology organization on the issue of retention. The calculated cost of a professional leaving the company is pegged at $100,000. Effective succession and career management can help reduce “bad turnover” and the loss of valuable knowledge assets. Additionally, a well-designed and well-implemented succession and career management program can add value to these assets and optimize their allocation.
Every manager understands this because it is the fundamental responsibility of their jobs — building assets and getting better returns. Succession and career management is simply the behavioural science or HR tool that allows the organization to do those two things.
Mark Alexander is a principal with the Vancouver-based HR consultancy MacB Group. He may be reached at (778) 772-9300 or at [email protected].
