Okay, okay. You might be in the lucky minority. According to a study by Quantum Workplace, 1% of executives believe that their succession plans are excellent. You might be that rare company that has a fantastic multi-level succession plan, based on substantive, nuanced data, which not only makes your high-potential employees feel invested, but also yields great leadership for your organization.
But it’s statistically unlikely.
You’re probably more like the rest of the world. You would love, love, love to have that kind of succession plan. It comes up in meetings all the time, but when it comes to actually creating it, there’s a sort of paralysis that sets in. Shoulders are shrugged. Helpless looks exchanged. There’s no clear path. No sense where to start. And it all gets pushed off to the next meeting. Or quarter. Or decade.
“The majority (of executives) do not think that their organizations are doing enough to prepare for eventual changes in leadership at the CEO and C-suite levels,” says Stanford Professor David Larcker in the 2014 Report on Senior Executive Succession Planning and Talent Development. “Nor are they confident that they have the right practices in place to be sure of identifying the best leaders for tomorrow. These findings are surprising, really, given the importance that strong leadership has on the long-term performance of organizations. Research shows that companies with sound succession plans tend to do better.”
I got an email from a reader the other day who provided a great view from the trenches on this topic. He is a candidate for a Director of HR position at an IT company, and after an interview where the CEO and COO were grilling him about his ideas for succession planning, he wrote: “Succession planning from my experience (or lack of) is like the HR equivalent of searching for the Holy Grail! I have yet to work for a public or private company that has been able to even dip their toes into this sacred pool.”
According to a 2010 survey by Korn/Ferry, 98 percent of companies believe a CEO succession plan to be important—but only 35 percent actually have one in place. Likewise, DDI’s 2011 Global Leadership Forecast found that only 1 in 3 organizations have high-quality, effective development plans for leadership in general, and in a 2011 AMA Enterprise survey only half of survey respondents said their organizations were somewhat effective in their ability to retain high-potential employees.
Would we all like to have a great succession plan? Yes. Do we all know where to start? Apparently not.
According to the 2014 Report on Senior Executive Succession Planning and Talent Development published by IED and Stanford Business School, here are the Six Key Elements of Successful Succession Planning:
- Strategic Planning – Determine what capabilities, roles, and talent are needed to execute the business strategy today and in the future.
- Talent Assessment – Gauge the Executive team’s bench strength – Do we have who we need (now and in future) and if not, how do we get there?
- Recruiting – Develop a talent pipeline for key roles/jobs.
- Performance Assessment – Let people know they are valued contributors and provide them opportunities for development, exposure to executives, networking across divisions, etc. (get them on the corporate radar screen.)
- Development – Create development plans for individuals (e.g., leadership workshops, classes, on-the-job learning, assignments, special projects, 360s, external classes, etc.)
- Retention and Engagement – Rewards and recognition, work environment, opportunities for development, job autonomy and scope of responsibilities, etc.
This is fantastic advice, but it may not have gotten you any closer to implementation. If you’re like most companies, there are three underlying challenges that are preventing you from putting that plan into practice. They sound like this:
- How do we identify and assess succession candidates and Hi-Pos in the first place?
- What are the components of a development plan that keeps them engaged and onboard?
- How do we track their work performance and growth over time?
Here are five brass-tacks tips we can offer for overcoming those challenges:
- Stop talking in generalities. What is the definition of “high potential” in your organization? Not the Wikipedia definition. YOUR definition. Your culture is unique, and so is your leadership style. If you have not defined what it means to be high-potential—specifically at your company—how can you expect people to execute on that? This paper from Kenan Flagler Business School at UNC includes some nice case studies, and did find some commonalities among the competencies organizations look for in their high-potential candidates. 70% of respondents looked for future performance potential and 69% looked for strategic thinking ability. Other criteria included a drive for results, current and sustained performance, culture fit, and commitment to the organization. Ultimately, though, the definition has to come organically from your own company culture. (DDI World also has a pretty good whitepaper to help with this,)
- Use recognition data to find your Hi-Pos. This is the single best piece of original advice I have in this post. Want to find your best future leaders? Look at who your employees are already recognizing as informal leaders. Performance management cannot always discern high performance from high potential, According to the Corporate Leadership Council, Oonly 29% of high performers are also high-potential employees. If you want to see who the informal leaders in your organization are, look at the recognition work circles. Those people who are in the center of them? Those are the people who have the biggest influence on your company. Chances are, all of your future leaders are there. (For more on identifying HiPos, this paper is a great start.)
- Be more incremental: Many companies focus all of their planning on their chief executives, and go no further. Succession planning cannot be for the CEO alone and focusing all your attention only on getting people to the top spot can be paralyzing. Creating a healthy talent pipeline means developing at all levels. As former Campbell’s Soup leader Doug Conant recently shared in an interview: “To succeed in an enduring way, you must develop well-rounded leaders who can work in a frenetic environment. If you’re not looking forward, watch out. Even the mighty will fall. While the CEO manages succession, the board needs to champion the development of talent. Leaders change, markets change, and it’s hard to find and maintain an enduring proposition without an enduring stream of talent.” Instead of worrying about getting the elite on a direct track to the C-suite, concentrate more of your succession efforts on simply getting a pipeline full of people with leadership potential.
- Use positive feedback as a development tool. There’s a raging debate out there about whether or not you should tell your HiPos that they are being developed for leadership. No matter which side you fall on, it is critical to make these employees feel that you are developing and valuing them. Positive feedback is critical to this process, and it will keep HiPo employees feeling aligned, engaged and relevant. I think this CCL paper has some other terrific insights into what specifically companies are doing for development of HiPos, and how HiPos feel about it. Note the word cloud on page 13. HiPos equate their identification with recognition, so it is important to continue that reciprocal process throughout their development.
- It’s a marathon, not a sprint. Identifying candidates and throwing development their way isn’t enough. You need to assess, track, and continually evaluate their progress. Mentoring is a fantastic method for both development and assessment, because it puts someone on the ground with the candidate who is focused on their progress and well-positioned to judge their progress. Performance evaluations are also important, of course, but again, recognition can be an invaluable tool to give you insight into how those identified future leaders are performing, and how valid that assessment continues to be. There’s some good advice in this Aon Hewitt paper on both initial identification and ongoing assessment of succession candidates.
I hope as you seek to transform your organization’s succession plan into one that… well, doesn’t stink, you can use some of this advice. Let us know how you do, and please share any insights you might have with us, below.