In quick succession
Traditional succession planning may no longer be appropriate for today's fast-changing business environment, but a more modern approach that nurtures high-potential talent for a variety of roles certainly is. Includes case studies of UK Greetings and Britvic Soft Drinks.
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Learning points
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Far from being outmoded and inappropriate in the current climate, nurturing and developing tomorrow's potential leaders to take the business forward has never been more crucial.
Proof of the vital need for succession planning within a tight labour market is provided by the Chartered Institute of Personnel and Development's (CIPD) 2005 annual recruitment and retention survey1.
It found that the category of vacancy causing "the biggest recruitment headache" for employers was management and professional vacancies. According to the CIPD, the survey results show how important is investment in succession planning and leadership by UK firms.
The latest annual survey from interim manager provider Praxia2 also illustrates the adverse impact of not taking succession management seriously. It shows that the public sector is rapidly increasing its use of interim managers. One-third of public service employers use interim managers to plug recruitment shortages. With the daily rate of an interim manager of up to £1,500 and an average assignment of eight months, the sector could benefit considerably in financial terms by undertaking more effective succession planning.
In its guide Succession planning demystified, the Institute for Employment Studies (IES)3 defines modern succession planning as: "A process by which one or more successors are identified for key posts (or groups of similar key posts), and career moves and/or development activities are planned for these successors. Successors may be fairly ready to do the job (short-term successors) or be seen as having longer-term potential (long-term successors)."
Succession planning is still about identifying future potential leaders to fill key positions. But as the above definition implies, it is much more likely to have wider relevance within organisations and focus on people rather than specific jobs per se.
It is primarily the application of the process that has changed to suit today's business model. Just as resourcing is now focused on "talent management" and flexibility around both organisational strategy and skills, the emphasis for succession planning is on adaptability. This indicates the much more sophisticated approach that is now needed in today's workplaces.
The IES publication provides guidance on how to develop effective succession planning in an uncertain business environment. Its main adaptations to changing needs are summarised as:
strong emphasis on using succession planning as a process for proactively developing "talent", and therefore on organising work experiences that provide effective development opportunities;
planning for "pools" of jobs where possible, not just for individual posts;
a more devolved model, with only very senior roles and small "high-potential" populations being planned at the corporate centre;
acceptance of the need for a more diverse senior management group, based on functional strength as well as general management skills; consideration of future skill needs as well as current skills;
more objective information on the performance, skills and potential of individuals, ie a meritocratic philosophy;
more involvement of the individual and a gradual shift towards a more open approach; less emphasis "on the plan" and more on the dialogue and the valuable database which is built through the success process and which can be used in a variety of ways; and
line ownership, often led by the chief executive, with active facilitation and support from HR.
Talent pool
Just as the aim of workforce planning is to have "the right people with the right skills in the right place at the right time", the goal for succession planning is to have the right leaders ready to step into business-critical positions at the right time. These people could be five or 10 years away from being ready to assume a senior role. But the way in which promising employees are actively managed and developed during this period is pivotal to whether or not they remain with the organisation.
By its very nature, succession planning is a forward-looking process. A key challenge is to anticipate what skills will be needed in the future. This cannot be done effectively without close reference to the business strategy. For example, a consideration of proposed increases or decreases in company growth, output and revenue is needed.
The process therefore lies downstream from both business and HR strategy. The next stage is a "gap analysis" to consider the availability of skills and potential within the organisation and to balance this internal talent pool with the need to increase the diversity of the senior management team and encourage new people to join.
The emphasis is no longer on grooming a selected few for designated positions of power, but on developing a cross-functional range of talented individuals who have the potential to perform outside their current skills set.
Although today's succession planning needs to be flexible to changing business requirements, it still needs to be integrated within a wider succession management model and associated resourcing practices. These include recruitment, workforce planning, learning, career development and performance management.
While vertical integration should ensure that the process is linked to the business strategy, horizontal fit with these wider HR activities will provide the support to implement the succession plan. For example, if a key vacancy arises it may present a potential development opportunity.
Succession plans also need to be enshrined within the performance development plans of particular individuals to ensure that people are gaining the necessary skills and learning to progress. Similarly, performance appraisals should be used to highlight any need for development opportunities or training requirements.
Equality of opportunity should be the byword of any organisation's resourcing approach. The older, more elitist form of succession planning should be replaced by a process that is both meritocratic and transparent. While it is acceptable to encourage individuals to apply for more challenging roles in line with the succession plan, the final appointment decision should be based on fair and objective selection criteria.
Opening up the recruitment process ensures not only that the organisation recruits the best possible candidate for the post but prevents a mechanistic approach to succession management. There may well be employees who have not been identified as potential successors but who nonetheless have the potential to make progress in the organisation.
Next in line
Succession planners need to have a clear vision of what the organisation's top talent requirements will be in three to five years' time. The next step is to identify potential successors for the plan. As well as involving line managers closely in the process, who should be able to nominate people from their team, there are other approaches, such as development centres and psychometric tests. The trick is to distinguish between current levels of performance and future potential.
Competencies can have an important role to play in succession planning, but some experts caution against an over-reliance on them. Poorly constructed competency frameworks are typically based on desired behaviours and skills required in the here and now and are not future-focused. The emphasis may also be top-heavy on generic and personal skills, rather than on the specialist and functional.
Translating the potential that people have to take on more senior roles into reality is the long and hard part. This is where the horizontal integration of other people management activities really comes into play. Regular employee input and feedback is needed via processes such as performance reviews, 360-degree assessments and career development discussions.
There should be a dedicated learning and development budget to support succession planning. Development goals should be incorporated into leadership and management development programmes, and consideration given to other opportunities for growth, such as secondments and job moves. Managers should be provided with incentives to manage their employees' development in the same way as they are expected to meet operational targets. Mentoring and coaching also have a crucial role to play.
The path to success
A modern succession plan needs to match business requirements with employees' aspirations and circumstances. It has been referred to as a system of "multiple dialogues", requiring involvement and buy-in from a range of stakeholders within the organisation, crucially, the chief executive, senior managers, line managers and HR.
In addition, involving those people earmarked by the succession plan provides the opportunity to gain their commitment to their own career progression. Succession planning can therefore act as a powerful motivational and retention tool, with many surveys highlighting the importance of career progression as a factor influencing employees' decision to remain with an employer for the long term.
The flipside of more openness in the plan is managing expectations - an employee should never be led to believe that progression is a certainty. Communication is also important because people's circumstances and aspirations are subject to change over time. This dialogue can be facilitated by performance management and is a crucial part of line managers' role in the process. While transparency in the process should always be encouraged, there is the risk that employees who discover that they have not been singled out for succession could feel upset and demotivated. There is no easy solution to this conundrum. However, motivational tools can be used to help individuals handle their disappointment.
This is a key area of the process that requires the skills and support of HR - succession planning relies heavily on the function's expertise in a variety of different ways.
Although succession planning's success rests on the commitment of all the key players in the organisation, it is HR that is positioned to act as the main conduit for data exchange and to ensure consistency of decision-making. It is also HR that should have the future strategic direction of the organisation firmly within its sights, and be able to apply a high level of interpersonal skills to support line managers, employees and senior executives in working towards that end.
1Annual recruitment, retention and turnover survey, June 2005, Chartered Institute of Personnel and Development, www.cipd.co.uk.
2Interim management: market overview 2004, Praxia, www.interimmanagement.com.
3Succession planning demystified, Wendy Hirsch, Institute for Employment Studies, 2000, www.employment-studies.co.uk.
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UK Greetings is a wholly owned subsidiary of American Greetings and is one of the UK's leading direct-to-retail publishers and manufacturers of greetings cards. It employs around 3,300 people in the UK. In recent years, the business has experienced considerable growth and expansion, both organically and by acquisition. As a result, the demands placed on the senior management group have increased, as has the contribution needed from this group to continue the further development of the company. "It was critical that we had the skills and experience at a senior level to deliver the strategy and further develop the business," explains Brian Capps, director of group HR. "This was the main impetus for our succession planning programme." The top 20 The succession plan covers the 20 senior managers who report to the company's five executive directors. Its broad aims are to: audit the talent pool of this group to establish resourcing and development strategies; improve recruitment for key positions by raising awareness of the available talent and enabling faster decisions;
actively develop long-term successors by ensuring career progression through skills and experience; and
foster corporate culture through the establishment of a group of people in a position to promote development activities throughout the organisation.
The plan is concerned with the broad development of this group - thereby creating a senior talent pool - rather than identifying a specific successor for a specific role. The process identifies those senior managers who require development in their current role, those who have the potential to expand their current role and those who have the potential to be developed into a more senior role. The process The first stage of the succession planning programme involved analysing data about each participant including their CV, training and development record, job record and previous performance appraisal documents. Participants attended a two-day career development workshop where they undertook a series of observed tasks as well as psychometric and ability tests. Executive directors worked alongside external consultants as observers to ensure the impartiality of observer analysis and feedback. Following the workshop, an analysis was completed for each participant, which included their development potential and development needs. After an initial, detailed discussion between the HR director and the participant's line director, the findings and development plan were discussed with the individual. The development plans include recommendations that are tailored to the individual and may comprise coaching, secondments, project management and participation in programmes from some of the recognised business schools in the UK. Further, all participants attended a further teamworking workshop, which received very positive feedback. It has also provided the basis for more supportive relationships and a much stronger dialogue among the participants. Ensuring success According to Brian Capps, UK Greetings' succession planning process has been effective, primarily because the members of its senior management group now have individual development plans and the business has an audit of this talent pool. In addition, there now exists an impetus from a senior level to cascade development throughout the organisation. Before embarking on the programme, he undertook in-depth research into the concepts of succession planning to determine what was likely to be the most suitable model for UK Greetings. His advice to other organisations considering a similar approach is to: have clear objectives and plans - what you are doing, why you are doing it and how you will achieve it;
from the start, ensure commitment to the process at all levels in terms of providing time, resources and objectives;
involve line managers, as far as possible - they are responsible for the development of their employees, while the role of HR is to support and facilitate this; and
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