To effectively retain and engage talent, be sure to have an authentic, transparent succession plan.
By Lily Kelly-Radford
Although many things about the employment contract have changed, employee commitment is still typically rewarded with development opportunities that will later lead to career mobility. For the most ambitious, the greatest reward is still an opportunity to compete for positions at the top. And finally, succession management is still the mechanism most organizations use to vet the candidates capable of claiming the top prize.
Promoting from within is a practice that can attract strong talent because it provides a clear prescription for development. To advance to a higher position, individuals know they are required to master certain skills, demonstrate personal growth and deliver the results necessary for an executive position. Succession also assures continuity of organizational culture and the strategic focus of the business.
Unfortunately, while succession plans are found in about 70 percent of all organizations, the degree to which such plans are followed in any organization is more tenuous, according to a 2014 study by Human Capital Media Advisory Group, the research arm of Talent Management.
Employees view succession management as a trustworthy process only if it results in a true meritocracy. To achieve this, the talent identification and development process has to be transparent. For high potentials, executives need to embrace, endorse and consistently act upon the succession plan. And it is incumbent upon talent managers to assure that it happens. Without authenticity, succession management fails as a mechanism to keep employees engaged over time.
What Causes Succession to be Inauthentic?
Given the pervasiveness of succession planning, how do organizations find themselves with such a dysfunctional succession process? Typically, it occurs in three ways:
- It’s on a napkin. Top executives have drawn up their plan and have a picture in their minds of the next senior executive. This can be well intentioned — “We need a proven financial expert with acquisition experience who is looking for their crowning achievement.” Or it can simply be a case of “I want someone who looks and acts like me.” Concerned about legacy, rarely are CEOs best positioned to identify their successors.
- Trouble in paradise. The succession plan is real with every intention of being followed, but a top executive — one who is to be succeeded — makes a major error in judgment resulting in a significant loss for the company. Here, the perception among leadership becomes, “Our top, highly vetted and experienced person really messed up! How can we trust other senior leaders who were also formed in that mold?” All bets are off for the fallen executive’s identified successor. Regardless of circumstances, the organization starts to look for someone different.
- The devil’s in the details. Again, there’s a plan in place, and high potentials are being groomed for top positions, but in this case one of the candidates falters. It could be the revelation of a personal problem, inappropriate behavior or a failure to deliver results. Regardless, the fallen candidate poisons the process. If a replacement is needed soon, it’s likely to be from outside the organization.
The least authentic succession scenario is the first, in which C-level leadership overrides the process in favor of others who were pre-ordained. Candidates who have been applying themselves to company-designed development plans can suddenly find themselves passed over.
When the successor is “on a napkin,” everyone in the organization is being duped. And it doesn’t take long for the rank-and-file employees to realize the ruse. This makes learning and leadership development initiatives much less effective, lowers morale and instills a culture of dishonesty. While the disruption caused by succession “on a napkin” can’t be easily fixed, the other two scenarios have some hope.
Succession Management That Fits
Sometimes, organizations have a culture that expects a heroic leader model, even if it is unconscious. These are hard challenges for internal candidates because they cannot be “a prophet in their own land.” Often these are academic institutions or organizations that are highly critical and perfectionistic about their expected leader. It’s sometimes inferred that bringing in the “shiny new penny” — a new executive without any internal baggage — will provide a fresh perspective to the organization and lead the changes necessary. Many organizations combine external with internal successors very successfully.
A publicly held corporation that demands constant innovation might value the disruption caused by a hired change agent. On the private side, a family owned organization might need a break from the bloodline to be fresh and competitive while a start-up might need to build new capability. The promise of an outside hire is that they bring none of the stale habits of the organization, and they bring in new capabilities.
For public giants like IBM, effectively managed internal succession can help an organization navigate turbulent times.
In 2011, Ginni Rometty was named the new CEO of IBM. Josh Bersin, principal and founder of Bersin by Deloitte blogged about the appointment:
“A significant transition in the composition of the business itself as well as an opportunity to celebrate the company’s first female CEO. This transition shows an example of world-class succession management. It was predictable (IBM CEO’s leave their jobs at the age of 60) and shows the results of years of development planning. Ms. Rometty is an IBM veteran, worked her way up to managing the integration of PricewaterhouseCoopers, and most recently ran sales and marketing. Investors, customers, and IBM employees will see this as a well-planned, safe transition.”
More than four years have passed since Rometty took the helm, and it’s been anything but smooth sailing, but the board continues to support her leadership as she works to transform the business. Authentic succession planning is a critical process to helping the organization prepare for the future. Is your organization ready to invest?
Requirements for an Authentic Plan
A cultural commitment: One of the most effective ways to connect employees to the organization and its success is to build a strong organizational culture that supports long-term career development. Research tells us that career development and opportunities for advancement are primary drivers of talent recruitment, as well as engagement and retention. Cultural commitment is reinforced through the stories told about the “way things are done here” and evidenced by a track record of in-house promotions.
A defined and transparent career management process: “We’ve come to appreciate that succession planning is not a stand-alone event that occurs once a year,” said Margaret Schweer, chief operating officer and managing principal of Tammy Erickson Associates. “Decisions about succession are intimately connected to a larger, ongoing people practice called the ‘career conversation process.’ ”
Schweer said that today’s career conversation process is actually a series of ongoing conversations designed to transparently connect employee capabilities and ambitions with organizational needs. And no matter the level — individual contributor, manager or senior executive — employees need answers to the same six questions, developed by Right Management:
- Who am I, and how do I fit?
- What is expected of me?
- What and how should I develop?
- How am I doing?
- How will my talents and contributions be recognized?
- What’s next for me?
“The answers to these questions culminate in a shared understanding that feeds succession decisions,” Schweer said.
Clear linkage and accountability: Line management and human resources share the responsibility for assuring the basis of a meritocracy by developing personnel to their next levels. Open dialogue about employee development needs, performance and potential is a vital part of the succession process.
Ownership at the top: “One of the clearest ways that I have seen succession management crash and burn — and often the underlying factor in multiple scenarios — is when it has been relegated to HR in such a way that it does not have executive buy-in,” said Dana McDonald, director of Goodwill University at Goodwill Industries of the Southern Piedmont, in Charlotte, North Carolina. “That leads to an inauthentic process that often underlies each of these scenarios.”
She advised that while talent management should manage the process, the top executives have to author it and own it for succession to be authentic.
Dialogue about employee performance and potential is vital on the management side of the process. Calibration sessions result in feedback to candidates as to their advancement or needs for development. This is where senior leadership is most accountable for an authentic succession management process.
“The annual calibration session is really the key to the process working and senior leaders being brought into the process,” McDonald said. “It brings all of the managers into the room at the same time with a list of candidates. And for each candidate, the direct manager presents that candidate and their assessment of where they fall in a nine-box grid, based upon assessments, performance data and qualitative observations.”
Overall, when creating a succession plan, organizations that value a sense of stability and continuity should consider a transparent process for top positions as vital to their brand. It has to be endorsed and owned at the top, including boards. Talent managers also play an important role in making succession authentic and effective in a way that imbues the company with trust, achievement and meritocracy.
Lily Kelly-Radford is a psychologist and partner in The Executive Development Group, LLC, a leadership development firm in Greensboro, NC.