Leading Effectively e-Newsletter - May 2009

Now, Rethink Succession Planning

Surviving the economic downturn and thriving in a post-recession world will require strong and well-developed pools of talent. But too many companies are hobbled by outdated succession plans and rigid people-management systems.

"In strong economic times, it is easier to ignore deficiencies in the succession-management process. Companies can absorb their weaknesses," says CCL senior faculty member Roland Smith, co-author of a new report on succession management. "In the current economic downturn, the need to identify and develop top talent for critical roles is much more important."

The report, High-Impact Succession Management: Best Practices, Models and Case Studies in Organizational Talent Mobility, was produced by CCL and research and advisory firm Bersin & Associates. It offers a comprehensive view of succession management and explores how companies are approaching it at all levels of the organization. Among the study's findings:

• More than half the survey respondents said their companies implement succession-management processes at only the most senior executive levels.
• Only 12 percent of respondents said their companies' succession-management programs are integrated with talent-management programs, such as performance management and employee development.
• Fewer than 40 percent of respondents said their companies include mid-level managers and skilled professionals in succession-planning initiatives; just 11 percent included first-line supervisors.

"Now is the time for companies to take a very close look at their talent and review the effectiveness and impact of their human capital systems," Smith explains. "Companies must rethink how they structure, source, manage and develop talent. In addition, companies have to be selective during layoffs, retaining those with the skills to move the company forward."

Smith and co-authors Michael Campbell, a CCL research associate, and Bersin's Kim Lamoureux, identify several succession-management best practices, including:

• Broaden the view of talent. Best-practice organizations address succession management consistently across all key positions at all levels.
• Ensure executive commitment and engagement. The roles leaders play at all levels are important for driving successful succession-management practices — but the most critical differentiator between the "best" and the "rest" is the level of commitment and engagement displayed by top executives and next-level senior executives.
• Include technical, professional and management roles. Succession management is too narrowly focused on the development of managerial leaders versus highly skilled technical roles. Depth of talent, not just top leadership talent, is extremely important for competitive advantage.
• Implement a strong talent-review process. Best-practice succession-management companies integrate three key attributes into their talent-review process: process integrity, appropriate line-of-business and HR participation in talent-review meetings and a business-alignment strategy. Without business strategy alignment, the talent-review process will continue to be seen as an HR exercise, rather than as a key business driver for achieving results.

"Good succession management is clearly correlated to business success," says Smith, noting that best-practice organizations are three times more effective at achieving key business measures.

"Stakeholders are starting to ask companies hard questions about their succession practices — and whether leaders are prepared to get through the current crisis and capitalize on future opportunities," Smith adds. "Do they have the right skills, knowledge and experiences? Can they motivate employees? Our research shows that many companies don't know the answers to these questions."

For more information or to purchase the full report, visit: www.bersin.com/hism.