Making a success of succession
Identifying talented staff with leadership potential is crucial for future success. In the absence of a robust succession-planning process, employers could find themselves in a position similar to that of the Football Association (FA), which had no pool of potential successors to Kevin Keegan following his recent sudden resignation as England team manager.
The FA's position contrasts sharply with the experience of World and European champions France. Since the mid-1990s, the French football federation has had an established succession system to groom potential managers of the national team. The system enabled 1998 World Cup-winning manager Aimé Jacquet to be smoothly replaced when he retired by Roger Lemerre, who subsequently led the country to success at the 2000 European Championships.
Ensuring that individuals with the right skills and competencies are ready to step into key positions requires careful planning. Traditional succession planning, which is often a secretive and mechanistic process, is no longer appropriate in today's fast-changing business environment.
Constant change requires a flexible approach: one that does not identify successors for specific posts, but develops a pool of talented people, each one of which is adaptable and can fill a number of roles.
Potential leaders also require a degree of flexibility. Knowing where your career would be in 10 or 15 years' time might be of comfort to some now that the notion of a job for life has disappeared. But just as rigid systems are not compatible with continually changing roles, neither can they accommodate shifts in individual circumstances and aspirations. Increasingly, people need to make their own career decisions. Women, and gradually more men, must balance career aspirations and family responsibilities.
Aside from the need for greater flexibility in succession arrangements, the traditional approach has been made more difficult by the demise of the conventional corporate hierarchy. There is no longer the same range of development opportunities in delayered organisations. A lateral career move, rather than the customary upwards step, might be all that is available to broaden the experience of potential successors. But this often comes without the same rise in status and responsibility derived from vertical career progression, so generating the same level of commitment to the move might have to be achieved through other means.
A recent publication from the Institute for Employment Studies (IES) attempts to guide employers through the complexity of establishing effective succession planning in the current business environment1. The report, Succession planning demystified, provides a list of 13 practical tips to help organisations develop a system. An earlier EDB feature on succession planning looked at how BP (prior to its merger with Amoco), Glaxo Wellcome and the Halifax Group were developing succession processes against a backdrop of organisational change2. Our review of the IES guidelines explores the issues they raise by looking at how these organisations, and others, are successfully meeting the succession challenge.
Success tips
The first step to implementing a successful succession process is to identify the range of jobs to be covered. The common approach is to identify a few "high fliers" to fill a small number of very senior corporate posts, usually positions in the top two or three management tiers. Some large, decentralised organisations have devolved succession arrangements to each of their business units in order to identify talented individuals to head divisional functions, and to identify those to be fast-tracked for positions at the corporate centre.
Wendy Hirsh, author of the IES report, says that an employer can define the scope of its succession planning when it is clear about:
It is worth remembering that succession planning is concerned with developing longer-term successors in addition to immediate replacements, so the population covered by the process tends to be much bigger than the range of posts covered. Also, the whole process should be manageable. Hirsh explains that: "It is better to conduct a good quality process which has real practical impact on a small population, than to deal half-heartedly with a much larger population."
BP illustrates the range and number of posts covered by succession planning in a large multinational business. The oil and petrochemical company, which had previously focused only on the top 120 executives, extended its succession-planning system in 1996 to cover the top 350 posts - a team collectively known as the "Group Leadership". Between six and 15 people are expected to be ready to fill each one of these 350 Group Leadership roles.
The Halifax Group's succession system covers a much bigger population than BP's. The former building society turned bank operates two competency-based systems: one for its 36,500 staff, the other for the top 250 executive jobs. The systems are implemented through a network of succession-planning committees.
Roles, not jobs
Although some critical and specialist jobs will almost always require individual planning, grouping jobs together enables potential successors to be identified for a collection of posts. Combining jobs in this way provides the sort of flexibility that was referred to earlier as people develop the generic skills and competencies needed for a variety of roles rather than those required for specific posts. Thus, the pool of potential talent from which to choose a successor rises.
One of the aims for succession planning at the Halifax is to ensure the best talent is available where the company most needs it. To achieve this objective, the previous single-function career paths have been replaced with a process that provides individuals with experience of the whole business by moving them around the group and into cross-functional roles. The success of the process rests on people developing a range of general competencies and, where appropriate, the necessary technical and professional skills. The company's executive competency framework draws on four types of skill: intellect, professional and technical skills, managerial processes, and behavioural competencies. Seven key competencies are required, grouped into three categories: strategy formulation, performance delivery and building through people.
Collective reviews
Best practice indicates that succession reviews should occur in each of the main parts of the business and cover the same short list of questions. Such commonality and broad input ensures a degree of fairness. The "blue-eyed boy" syndrome, in which a senior individual promotes his or her favourite employee irrespective of his suitability for the post, is less likely to be an issue where an objective assessment of all possible candidates for a position takes place. Establishing a formal committee to oversee the succession process can also prevent this occurring.
Succession committees are common in many large companies. In BP, four business development committees agree the job and people plans for potential successors that are drafted by HR development specialists. A group-level cross-business development committee manages the high-potential programme and also formulates the strategic direction of the succession plans, and ensures their delivery. At Glaxo Wellcome's US operation, an executive development committee meets three times a year to review key talent and succession plans and look at how to improve the process.
Looking to the future
Where possible, succession plans should be integrated with existing frameworks for technical and generic competencies. This obviates the need to "reinvent the wheel" by developing a completely new framework geared specifically towards finding potential successors. Companies are increasingly implementing competency frameworks with the aim of improving individual performance. The assessment process attached to generic frameworks, especially where it reviews specified management competencies, can provide a good starting point to evaluate and identify someone's potential for a senior role. This is the case at the betting company Ladbrokes. The company's HR controller Graham Baker explains that: "Assessment of competence and performance is helping us to spot people who are ready for more responsibility and promotion"3.
A key challenge for succession management is the need to anticipate business change and how this might affect both the numbers and skills covered by the process. For example, plans to outsource the HR or information technology functions - two options currently attracting much attention - will wholly change the role of the senior HR or IT professionals who are retained and the skills they require to fulfil their new role.
Although this might be only one option being explored, and might not happen, those responsible for succession will have to plan for such an outcome. Hence, the succession-planning process needs to be adaptable. The competency-based approach adopted by the Halifax Group is designed to be flexible: it is forward-looking, reflecting the direction in which the business is developing rather than how it existed at the time the system was established.
Rather than compiling a list of names to replace the holders of key posts, succession planning at Glaxo Wellcome is more concerned with identifying talent and providing them with appropriate experience. A major reason for this is the nature of the pharmaceuticals business itself, which is complex and rapidly changing, so organisational structures are evolving and creating new opportunities. Another pharmaceuticals business, Eli Lilly, also recognises that today's more dynamic marketplace means that the skills and experience profile of future leaders is less predictable4.
Pinpointing suitable development opportunities can be difficult. Job vacancies should always be examined to see if any provide potential successors with the appropriate experience. A simple database containing information on post-holders and successors, which is regularly updated, is vital and can be scanned to see whether a vacancy would represent a valuable step in the development of an individual in the talent pool. BP feeds all succession information, including agreed job and people plans, into its IT system. This enables the company to model different permutations depending on the strategic needs of the business.
An open system
It is important to ensure that people understand the succession process, in particular the methods used to judge potential successors and the kinds of jobs that are considered suitable for each individual.
Eli Lilly operates a transparent succession-planning system of this type. In the past, managers completed a résumé (a form of CV) detailing an individual's potential without his or her input or approval, and only senior managers at each site took part in succession discussions. Now, individuals complete their own résumé, which includes career aspirations and mobility preferences; and input from managers at all levels of the business is channelled into the succession process. In addition, potential successors are informed of the outcome of succession decisions, including what level the company expects them to reach, and within what timescale.
The role of personnel or HR specialists is crucial to the success of succession planning, and a credible HR professional should coordinate the process. Hirsh describes the HR function's role in succession planning as that of "facilitator". This would mean that HR ensures that those with responsibility for succession do what is required of them, including making sure meetings happen and that the discussion process covers all avenues. HR is also responsible for compiling all the necessary information on potential candidates. A further important role performed by HR is that of counsellor: the confidant of senior executives on succession issues, and the guide who helps individuals plan the right career paths.
The succession-planning tips highlighted by Hirsh are not hard-and-fast rules, neither are they appropriate for all organisations. Large companies will benefit from a close examination of the guidelines and, while smaller enterprises will find them useful, they will probably need to adapt them to suit their own circumstances. But whatever the size of organisation, a modern succession-planning process is vital for future success.
References
1 "Succession planning demystified", Wendy Hirsh, Institute for Employment Studies, October 2000, available from BBCS, tel: 01482 224626, price £19.95, www.employment-studies.co.uk
2 "Planning succession in a climate of organisational change", Employee Development Bulletin 96, pp.6-12, December 1997, available from Lorraine Herne, tel: 020 7354 6761, e-mail: lorraine.herne@butterworths.com, price £12 plus VAT.
3 "Separating competence from performance: Ladbrokes Limited", Competency & Emotional Intelligence, Autumn 2000, p.8, available from Subscriptions, IRS, tel: 020 7354 6742/3, e-mail: sue.jackson@butterworths.com, price £55.
4 "The IPD guide on career management in organisations", Institute of Personnel and Development, 1998, available from Plymbridge Distributors, tel: 01752 202301, price £5.50 (£4.95 to CIPD members), www.cipd.co.uk
