Retire at 65? No way. Why we keep going at.... The Washington Post, p. G1. Alcorn, J., & Tomassini, J. (2011, September 4). Within a year of Johnney Pollan's retirement, Dow Chemical asked him to come back. This time as a contractor. With his pension after 31 years of work and his health-care benefits, he and his wife were living comfortably in East Texas. And he could devote more time to his hobby, archaeology. But he answered the call, and his retirement plans have been put on hold - for more than a decade now. Pollan was one of a few hundred people skilled in a proprietary language used to run processes at Dow's plants. Many of them retired at once, and the company was caught in the lurch. "A lot of the expertise was going out the door," said Pollan, 64. "And they found that they really needed it." There's more to come. Of the 4,200 Dow employees in Freeport, Tex., about 40 percent will be eligible for retirement within four years. Nationally, similar trends are emerging. Yet human resources experts, workers and executives from a range of industries say businesses are largely unprepared to accommodate an aging workforce or to cope with its eventual retirement. "They are oblivious," said economist Steven Sass of the Center for Retirement Research at Boston College. Many industries find themselves in a quandary. They often need older workers for their expertise, yet they also might need to accommodate their physical disabilities and their desire for more flexible schedules. And as workers stay on the job longer, they could need training in new technologies or work procedures. In the past decade, the number of seniors in the labor force has grown nearly 60 percent, according to the Bureau of Labor Statistics. By 2018, the number of workers 65 or older is projected to climb to 11 million, from 6.5 million today. Baby boomers are fueling the trend. Healthier and better educated than any previous generation, many plan to continue working, at least part time, well past traditional retirement age. Human resources managers say voluntary retirement nearly stopped after the stock market collapse in 2007. "When do people choose to retire?" asked Karen Smith, a senior researcher at the Urban Institute. "When they are able to replace their income." So employers face a dual challenge. They have to keep older workers productive and then, when those workers do leave, find qualified people to replace them. In 22 industries - among them engineering, agriculture, real estate and health care - more than three in 10 workers are 50 or older, according to a 2007 study from the Sloan Center on Aging & Work at Boston College. "Suddenly, there's this call that the baby boomers are retiring," said Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania's Wharton School. "What did you think they were going to do? Stay until they die? "Companies are not very long-term-oriented," he added. "They don't spend much time worrying about what might be coming down the pipe in the future."Workforce planning In a third-floor hotel conference room in Cambridge, Mass., near biotech labs and the buildings of MIT, several dozen human resources managers recently paid more than $2,000 each to learn more about workforce planning - how to make sure a business has the right people for the job now and in the future. Bob Redlo, who spoke to the group, leads workforce planning and development at Kaiser Permanente, with 8.8 million members the nation's largest managed health-care company. Kaiser's aging workforce is a critical issue, he said. Last year, almost 12,000 Kaiser employees retired - more than 7 percent of the company's workforce. Forty percent of its nurses are older than 50. The average age of its clinical lab scientists is 57; they typically retire at 63. "It's been mitigated a little because of the economy, but I think it's a huge problem for us," Redlo said. Age and experience mean better quality and patient satisfaction, he said. Older workers are also highly trained and can be expensive to replace. Call it the bathtub effect. Among the engineers at Lockheed Martin's missiles and fire-control division, "most were hired into the industry in the '60s and '70s," said Gary McPherson, vice president of human resources for the Lockheed unit. Then new hiring dropped off, which means fewer workers between age 35 and 45. Graph it out on a piece of paper and you see "a bathtub in the middle," between the original generation and a wave of recent college graduates, he said. Forty to 60 percent of McPherson's division will reach retirement age at the same time. Like many companies, Lockheed focuses on the 15 to 20 percent of older workers in what McPherson calls "very critical positions," such as lead missile propulsion engineers. Although the company has developed mentoring programs that pair veterans with younger workers to pass along experience, the chief risk - as at Dow - is that there simply are not enough qualified replacements. In Texas, home to Dow and the Lockheed unit, public schools have de-emphasized vocational education, said John Ray, dean of information and community resources at Brazosport College. "Today, you don't have students with experience in working with their hands," Ray said. Brazosport, a community college near Freeport, has joined with petrochemical companies to train students while hosting courses for new hires at companies such as Dow and BASF. Although Dow has recognized the long-term employment trends the industry confronts - "We're having to look for alternative supplies," said Troy Bearden, Dow's services leader for its Houston area operations - the consequences are sobering. "If you would ever get into a situation when you didn't have the trained and skilled folks available to operate the units," said Bruce Raiff, who oversees "knowledge transfer" programs for Dow's Texas operations, "you'd have to shut the units down." Employers in other industries, coping with the same employment profile, say they face their own challenges. Disability costs can rise with older workers. And workplace adaptations to accommodate decreased mobility might be needed. On the flip side, older workers who do not retire could slow the career ladder for younger workers, while newer technology that is second nature to millennials can put off older workers. Yet older workers are also more highly engaged and absent less often than young workers, according to the Sloan Center. Any of these issues can create intergenerational tension, and managers might have to adapt to an unprecedented range of ages in the workplace.Know-how, passed on Some companies have already taken action, designing programs to allow older workers to move to more flexible jobs, teach part time or retain health benefits via phased retirement. Older nurses at Kaiser, for example, can switch to less physically demanding positions while training the next generation of health-care workers. Nursing schools are not doing the job, said Kaiser's Redlo, adding that his nurses make excellent instructors because they know the hospital system. Many companies have joined with academic institutions to pass knowledge from an older generation to a younger one. Two years ago, Brazosport College opened its Center for Processed Technology, a sleek building with modern classrooms and simulated control rooms. Outside, the building - a glycol and water distillation plant, 10,000 square feet of metal pipes, tanks and switches - resembles the chemical plants lining the highways in nearby Freeport. The center and plant are underwritten in part by local employers such as Dow and BASF. "The equipment is smaller in scale, but it behaves just like the real thing," said Bennett Willis, 69, who worked at Dow for 33 years and has taught at Brazosport for 12. Since 2006, Dow has sent new hires who do not have a degree in processed technology to a 14-week training program at Brazosport, taught by retired Dow employees such as Willis and Pollan. Fifty-three students have completed the program this year. On a recent weekday, a class of new Dow employees learned to control the temperature of a chemical process. Student Cameron Keating, a 40-year-old Army veteran, communicated via walkie-talkie with students and instructors in an imitation control room, where a flipped switch could simulate a catastrophe. As a temperature gauge climbed to unsafe levels, Keating and his classmates had to figure out how to fix it. "You need to increase the output, P-111," Keating said, referring to a liquid control pump. "You mean 112?" asked a voice on the other end. "Oh yeah, 112," Keating responded. "Should be 40 percent." The rate stabilized, the temperature dropped and the faux crisis was averted. Arizona State University and other institutions have created incentives for older, tenured faculty members to retire to open positions for younger faculty and reduce costs. At Sodexo, which provides food service and facility management, employee feedback led to the creation of an employee group on intergenerational workplace issues with regional chapters across the country. "It's not like Gen-Xers and Gen-Yers need to be like their baby boomer boss," said Chris Weiser, who leads the group. "It's not about baby boomers having to learn to text 140 words a minute. It's about understanding that everyone has some style differences. "For the first time in history you have four generations in the workplace," he added. "It's critical that we have these conversations." The benefits of not retiring "Retirement policies are intended to retain and attract," said Sass, of the Center for Retirement Research. But boomers reaching retirement age in droves could transform the relationship between older workers and their employers. "End-of-career employment in the private sector will have to change," Sass said. If the process is underway in health care and engineering, progress elsewhere is slower. Pension rules that reduce benefits for part-time work, the threat of age discrimination lawsuits and union contracts can protect older workers, but they also slow change. Employment also looks different for older workers than for younger ones, experts say. It takes them more than a year, on average, to find work, compared with 36 weeks for those younger than 55, according to the Bureau of Labor Statistics. Older workers are more likely than ever to change jobs after they turn 50, often because of layoffs or buyouts. For many, that means a second career - and lower wages - in a different field. And low-income workers face greater risk as they age, Sass said. The upshot, according to experts, workers and executives, is that the conventional notion of retirement has broken down. "In the absence of employer-defined benefit plans, the structure that eased employees into retirement no longer exists," Sass and Alicia Munnell wrote in their 2008 book, "Working Longer." But Kaiser's Redlo said employers will adapt. "It's good for our business to keep our older workers working," he said. In some cases, it's good for the employees as well. "Sure, you could pay me more money and I could work less hours, but I don't think that's going to happen," said Pollan, the once-retired Dow employee. "I enjoy doing what I do." Saving $3 Billion the HP Way Section: MIRACLE WORKERS Written off as just another ill-conceived megamerger, Hewlett-Packard has exceeded all its goals. Here's why the union has worked — so far — and what must come next. JUST DAYS AFTER ANNOUNCING THE MERGER OF HEWLETT-Packard and Compaq in the fall of 2001, Carly Fiorina flew to Houston for a gut-check summit with her counterpart, Compaq CEO Mike Capellas — and to make perhaps the most important introduction of her career. At Fiorina's side was Webb McKinney, the 33-year HP veteran who was considered the company's organizational mastermind. With Capellas was his young chief financial officer, Jeff Clarke, a numbers whiz whom Capellas admired as a bare-knuckles negotiator. The two men had never met — “I didn't know Jeff from a hole in the wall,” McKinney recently recalled — but they might have suspected that they were about to become inseparable. Fiorina and Capellas had picked them to tackle one of the toughest jobs imaginable: moving the largest technology merger in history from paper and promises into a functioning organism, in the midst of the worst technology slump in two decades. In the process, McKinney and Clarke would lead the redeployment of a combined 145,000 workers in 160 countries. They would be responsible for untangling 163 overlapping product lines — from Intel-based home computers to Unix workstations to handhelds — and firing more than 15,000 employees to meet the $2.5 billion in cost reductions that Fiorina was promising investors. That Webb McKinney and Jeff Clarke (or Weff, as HP workers began to call the pair) hit those cost targets by last December, 18 months ahead of schedule, and are on track to save another $500 million this year is impressive enough. But the savings achievements aren't the reason Tom Ridge, for example, recently sought HP's advice on how to merge dozens of far-flung government agencies into his new Department of Homeland Security. What interests Ridge and business merger planners alike is the formula HP put in place to finish the task. CORPORATE MERGERS HAVE, AT BEST, A spotty history of success, and technology marriages have always been the hardest to get right. One reason is that tech firms are far more dependent on knowhow than, say, a supermarket chain, and defections — a temptation in any merger — can instantly sap a company's value. Thirteen months after 3Com bought Palm Computing in 1997, for example, Palm's executive brain trust, founders Jeff Hawkins and Donna Dubinsky, left to start rival PDA maker Handspring. 3Com spun Palm out a year later, but after a blockbuster IPO, the company began a long decline. Keeping pace with new products during a merger also plagues tech firms, where product cycles pass in months, not years. After acquiring supercomputer maker Cray for $767 million in 1996, SGI struggled to introduce high-end servers based on Cray's vaunted technology. It watched as rival Sun Microsystems passed it by with faster machines — using Cray designs it had bought from SGI a year earlier. Banging out new products at a speedy clip, though, is a cinch compared with what plagues mergers most of all — the inability to make fast decisions. Few knew that better than Clarke, who had a ringside seat during Compaq's $9.6 billion acquisition of Digital Equipment in 1998. By the time the deal closed later that year, merger executives had failed to trim redundant product lines, and customers were left guessing about the fate of Digital products, such as its high-end Alpha servers. Amid the confusion, Dell took just 15 months to slip past Compaq as the leader in domestic PC sales. “We screwed up,” Compaq founder Ben Rosen said. “We learned you have to make a lot of correct decisions quickly.” Step 1: The Decision Factory That's exactly what McKinney had in mind when he sketched out the structure of HP's integration team, one designed to have the right alchemy with (and constant access to) top management. Days after the Houston meeting, he and Clarke began recruiting managers in equal numbers — Clarke rounded up Compaq talent, and McKinney lined up their HP matches. In just six months, the integration group, called the “clean team,” would grow much faster than any startup. Within weeks of the merger's announcement, the team had 500 members; by March 2002, more than 900. Even after the merger closed in April 2002, it kept growing, peaking at more than 1,000 fulltime employees. By establishing such a huge body of managers and reassuring them that their jobs would be safe even if the merger failed, Clarke and McKinney were able to coax them to share in confidence everything they knew. It also kept most of them motivated to stay — another critical benchmark. Step 2: “Adopt-and-Go” Just as important was creating an assembly line for decision-making. In most mergers the power to say who goes and who stays is weighted in favor of the acquirer. HP weighted it equally. The strategy, called adopt-and-go, was to get cross-company pairs of managers to meet daily to determine whose products had the most market share, the better brand, and so on. Then, at weekly presentations with McKinney and Clarke, managers had to offer up one for elimination. In four months, this game of managerial Survivor yielded a road map for product lines and helped close redundant warehouses and factories, ultimately saving $500 million in procurement costs. In the end, many Compaq products beat out HP's (see chart, above). But when it came to choosing a brand, HP was the clear winner. On business machines, HP will soon phase out the Compaq name. Adopt-and-go went beyond generating a product lineup. It helped HP get through the most painful part of integration planning: generating 18,000 pink slips. The process led to hard feelings in certain quarters. One of them was HP's sales team, which surrendered key positions to Compaq's aggressive and wellregarded sales managers. “The perception was that Compaq people got all the big jobs,” says Mike Cox, executive vice president for sales and delivery at IT services firm Logical, who left HP in early 2001. But those decisions, Clarke contends, went by the book. Compaq veterans earned the top spots in U.S. sales by delivering better performance. In June 2002, Clarke complained to Fiorina that management job cuts (not among her direct reports, but in the layers below) were falling short. Managers who hadn't been named to posts were still collecting checks. Fiorina insisted that Clarke get the process back on track, and within two weeks, hundreds of managers — including many HP career veterans — were gone. Step 3: Feed the Fast Track From the start, McKinney set up the clean team to ensure that the process wouldn't slow product launches. Once adopt-and-go had run its course, new-product managers got the resources they needed to keep moving. Last November, HP launched its Tablet PC and began selling the $1,399 Media Center PC before either Dell or Sony could respond. The company has also kept feeding its profit engine — the printer business — with dozens of new product launches, keeping the pressure on Canon, Lexmark, and the latest and most dangerous newcomer, Dell. “When you start doing [merger planning], you run the risk of taking your eyes off the business,” says Mark Sirower, a corporate merger consultant. “That kills a lot of deals.” Step 4: Enforce Cost Deadlines If McKinney was seen as CEO of the integration team, Clarke served as his tough-minded CFO. “If there were issues that the teams couldn't resolve,” McKinney explains, “Jeff and I would jump in.” If those two couldn't resolve the impasse, they'd pass it to a committee chaired by Fiorina. One such issue was the pace of the cost cuts. In March 2002, Clarke reported to Capellas that he had fallen short on efforts to reduce expenses. Walter Hewlett and other merger opponents seized on this and quickly made Clarke's comments the centerpiece of their legal effort to derail the merger. But when Clarke was dragged into court that April, he wouldn't give in; he testified that his clean-team managers were simply “sandbagging” the integration effort, trying to make themselves look good by giving him numbers they knew they could beat. He could wring the savings out of them, Clarke argued. If managers could hit his cost targets, he knew he'd set them too low. “It's a cat-and-mouse game,” he says. “I would say, ‘Good, now why not go and get me some more?’” Clarke's testimony helped Fiorina win the case — and his bargaining skills with clean-team managers helped HP deliver the cuts as promised. The cuts, in fact, have helped HP turn two ailing PC businesses into a single, healthy one. At the time the merger was announced, HP and Compaq's PC businesses were losing a combined $372 million a quarter; the merged PC business is now profitable. While HP currently sells both Compaq and HP computers — allowing the company to grab more shelf space at retailers like Best Buy — the guts of the machines are identical, and manufacturing costs have been trimmed by 17 percent. (An accounting change also helped, though HP says its PC business would be profitable even without it.) That's not to suggest there's any verdict as yet on the merger as a whole. Last November, Capellas resigned to become CEO of WorldCom, and in March, HP reported revenues of $17.9 billion, $600 million less than expected for its fiscal first quarter. Only HP's printing business grew last year; without it, HP would have reported a loss. The real issue, of course, is how HP will perform once tech grows again. To ensure that it will, Fiorina has asked Clarke to tackle HP's next Mission Impossible: trimming another $1 billion out of the business of warehousing and shipping everything HP makes — printers, PCs, cameras, servers — and the myriad parts that go into these products. It's a challenge that Clarke relishes, and one that HP's suppliers have good reason to fear. “Jeff is like a bulldog on a bone,” says Mike Winkler, who ran HP's supply chain before Clarke took over last December. “If he takes it, there's no way he's letting go.” SINGLE ELIMINATION “Adopt-and-go” meant that managers had to play Survivor with overlapping products. In most cases, surprisingly, Compaq goods prevailed. Where the Savings Come From Because HP and Compaq's margins are so slim, cost cuts can trigger big percentage gains in profitability. Thanks largely to Clarke and McKinney's efforts, HP is on track to achieve $3 billion a year in postmerger savings — more than doubling HP's expected FY 2004 operating income, assuming the same revenues. WHAT WORKS A fast-moving process for making hard choices kept the HP-Compaq merger on track — and in the black. HP and Compaq (FY 2004), had they not merged Combined total revenues $72.5 billion Costs Cost of sales Operating expenses $53.9 billion $11.9 billion Research and development $4.1 billion Operating income $2.6 billion Projected cost reductions Cost of sales Operating expenses $0.9 billion $1.6 billion Research and development $0.5 billion Total merger savings $3.0 billion Post-merger HP-Compaq (FY 2004) Revenues $72.5 billion Costs Cost of sales Operating expenses $53.0 billion $10.3 billion Research and development $3.6 billion Operating income $5.6 billion SOURCES: Merrill Lynch; company statements; Business 2.0 estimates PHOTO (COLOR): Compaq iPaq PHOTO (COLOR): Campaq Evo PHOTO (COLOR): Compaq Itanium-based server PHOTO (COLOR): HP Jornada PHOTO (COLOR): HP Omnibook PHOTO (COLOR): HP Itanium-based server PHOTO (COLOR): Compaq ProLiant PHOTO (COLOR): HP NetServer PHOTO (COLOR): THE ENFORCER Compaq CFO Jeff Clarke pushed managers to beat cost-savings goals. PHOTO (COLOR): THE PROCESS GEEK HP exec Webb McKinney mapped out the decision-making strategy. ~~~~~~~~ By Brian Caulfield Effective Succession Planning jjj F O U RT H E D I T I O N This page intentionally left blank Effective Succession Planning F O U RT H E D I T I O N Ensuring Leadership Continuity and Building Talent from Within William J. Rothwell American Management Association New York • Atlanta • Brussels • Chicago • Mexico City • San Francisco Shanghai • Tokyo • Toronto • Washington, D.C. Bulk discounts available. For details visit: www.amacombooks.org/go/specialsales Or contact special sales: Phone: 800-250-5308 Email: specialsls@amanet.org View all the AMACOM titles at: www.amacombooks.org This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Library of Congress Cataloging-in-Publication Data Rothwell, William J. Effective succession planning : ensuring leadership continuity and building talent from within / William J. Rothwell.—4th ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-8144-1416-3 ISBN-10: 0-8144-1416-8 1. Leadership. 2. Executive succession—United States. 3. Executive ability. 4. Organizational effectiveness. I. Title. HD57.7.R689 2010 658.4⬘092—dc22 2009032036
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AMA’s approach to improving performance combines experiential learning—learning through doing—with opportunities for ongoing professional growth at every step of one’s career journey. Printing number 10 9 8 7 6 5 4 3 2 1 To my wife Marcelina, my daughter Candice, my son Froilan, and my grandson Aden. You are the people who matter to me! This page intentionally left blank Contents List of Exhibits — xiii Preface to the Third Edition — xvii Acknowledgments — xxxi Advance Organizer for This Book — xxxiii Quick Start Guide — xxxvii What’s on the CD? — xxxix Part I Background Information About Succession Planning and Management Chapter 1 —1 What Is Succession Planning and Management? — 3 Six Ministudies: Can You Solve These Succession Problems? — 3 Defining Succession Planning and Management — 6 Distinguishing SP&M from Replacement Planning, Workforce Planning, Talent Management, and Human Capital Management — 12 Making the Business Case for Succession Planning and Management — 14 Reasons for a Succession Planning and Management Program — 16 Reasons to Launch Succession Planning and Management Depending on Global Location — 27 The Current Status of Succession Planning: What Research Shows — 27 The Most Famous Question in Succession: To Tell or Not To Tell — 29 Management Succession Planning, Technical Succession Planning, or Social Network Succession Planning: What Are You Planning For? — 30 Best Practices and Approaches — 31 American Management Association www.amanet.org vii Contents viii Ensuring Leadership Continuity in Organizations — 36 Summary — 41 Chapter 2 Trends Influencing Succession Planning and Management — 42 The Ten Key Trends — 43 What Does All This Mean for Succession Planning and Management? — 56 Summary — 56 Chapter 3 Moving to a State-of-the-Art Approach — 58 Characteristics of Effective Programs — 58 Common Mistakes and Missteps to Avoid — 63 The Life Cycle of Succession Planning and Management Programs: Five Generations — 75 Integrating Whole Systems Transformational Change and Appreciative Inquiry into Succession: What Are These Topics, and What Added Value Do They Bring? — 78 Requirements for a New Approach — 82 Key Steps in a New Approach — 83 Summary — 86 Chapter 4 Competency Identification, Values Clarification, and Ethics: Keys to Succession Planning and Management — 87 What Are Competencies? — 87 How Are Competencies Used in Succession Planning and Management? — 88 Conducting Competency Identification Studies — 89 Using Competency Models — 90 Newest Developments in Competency Identification, Modeling, and Assessment — 91 What’s the Focus: Management or Technical Competencies? — 92 Identifying and Using Generic and Culture-Specific Competency Development Strategies to Build Bench Strength — 93 What Are Values, and What Is Values Clarification? — 94 How Are Values Used in Succession Planning and Management? — 96 Conducting Values Clarification Studies — 96 Using Values Clarification — 97 What Are Ethics, and How Are Ethics Used in SP&M? — 98 Bringing It All Together: Competencies, Values, and Ethics — 100 Summary — 100 American Management Association www.amanet.org Contents ix Part II Laying the Foundation for a Succession Planning and Management Program — 103 Chapter 5 Making the Case for Major Change — 105 Assessing Current Problems and Practices — 105 Demonstrating the Need — 114 Determining Organizational Requirements — 118 Linking SP&M Activities to Organizational and Human Resource Strategy — 119 Benchmarking Best Practices and Common Business Practices in Other Organizations — 123 Obtaining and Building Management Commitment — 128 The Key Role of the CEO in the Succession Effort — 131 The Key Daily Role of Managers in the Succession Effort — 133 Sustaining Support for the Succession Effort — 133 Summary — 135 Chapter 6 Starting a Systematic Program — 136 Strategic Choices in Where and How to Start — 136 Conducting a Risk Analysis and Building a Commitment to Change — 137 Clarifying Program Roles — 139 Formulating a Mission Statement — 142 Writing Policy and Procedures — 149 Identifying Target Groups — 151 Clarifying the Roles of the CEO, Senior Managers, and Others — 155 Setting Program Priorities — 157 Addressing the Legal Framework — 158 Establishing Strategies for Rolling Out the Program — 167 Summary — 168 Chapter 7 Refining the Program — 169 Preparing a Program Action Plan — 169 Communicating the Action Plan — 170 Conducting Succession Planning and Management Meetings — 173 Training on Succession Planning and Management — 177 Counseling Managers About Succession Planning Problems in Their Areas — 185 Summary — 188 American Management Association www.amanet.org Contents x Part III Assessing the Present and the Future Chapter 8 — 189 Assessing Present Work Requirements and Individual Job Performance — 191 Identifying Key Positions — 192 Three Approaches to Determining Work Requirements in Key Positions — 196 Using Full-Circle, Multirater Assessments — 201 Appraising Performance and Applying Performance Management — 204 Creating Talent Pools: Techniques and Approaches — 207 Thinking Beyond Talent Pools — 212 Summary — 214 Chapter 9 Assessing Future Work Requirements and Individual Potential — 215 Identifying Key Positions and Talent Requirements for the Future — 215 Three Approaches to Determining Future Work Requirements in Key Positions — 218 Assessing Individual Potential: The Traditional Approach — 224 The Growing Use of Assessment Centers and Portfolios — 233 The Latest Issues in Potential Assessment — 236 Summary — 237 Part IV Closing the Developmental Gap: Operating and Evaluating an SP&M Program — 239 Chapter 10 Developing Internal Successors — 241 Testing Bench Strength — 242 Formulating Internal Promotion Policy — 246 Preparing Individual Development Plans — 249 Evaluating Individual Development Plans — 257 Developing Successors Internally — 257 The Role of Leadership Development Programs — 265 The Role of Coaching — 265 American Management Association www.amanet.org Contents xi The Role of Executive Coaching — 267 The Role of Mentoring — 268 The Role of Action Learning — 270 The Role of Acceleration Pools — 270 Summary — 271 Chapter 11 Assessing Alternatives to Internal Development — 272 The Need to Manage for ‘‘Getting the Work Done’’ Rather than ‘‘Managing Succession’’ — 272 Innovative Approaches to Tapping the Retiree Base — 281 Deciding What to Do — 284 Summary — 286 Chapter 12 Integrating Recruitment with Succession Planning — 287 What Is Recruitment, and What Is Selection? — 287 When Should Recruitment Be Used to Source Talent? — 288 Internal Versus External Recruitment: Integrating Job Posting with Succession Planning — 289 Recruiting Talented People from Outside — 290 Innovative Recruitment Approaches to Attract High Potentials — 293 Summary — 296 Chapter 13 Integrating Retention with Succession Planning — 298 What Is Retention, and Why Is It Important? — 298 Who Should Be Retained? — 299 What Common Misconceptions Exist in Managing Retention Issues? — 303 Using a Systematic Approach to Increase the Retention of Talented People — 305 Summary — 306 Chapter 14 Using Technology to Support Succession Planning and Management Programs — 309 Defining Online and High-Tech Methods — 309 Where to Apply Technology Methods — 315 How to Evaluate and Use Technology Applications — 315 What Specialized Competencies Do SP&M Coordinators Need to Use These Applications? — 327 Summary — 328 American Management Association www.amanet.org Contents xii Chapter 15 Evaluating Succession Planning and Management Programs — 329 What Is Evaluation? — 329 What Metrics Should Be Used to Evaluate SP&M Programs? — 330 What Should Be Evaluated? — 331 How Should Evaluation Be Conducted? — 334 How Can SP&M Be Evaluated with the Balanced Scorecard and HR Dashboards? — 339 Summary — 347 Chapter 16 The Future of Succession Planning and Management — 348 The Fifteen Predictions — 349 Summary — 370 Appendix I: Frequently Asked Questions (FAQs) About Succession Planning and Management — 371 Appendix II: Case Studies on Succession Planning and Management — 377 Notes — 409 Index — 429 About the Author — 447 A copy of the files on the CD-ROM can be found at www.amacombooks.org/go/EffectSuccessPlng American Management Association www.amanet.org List of Exhibits P-1. Age Distribution of the U.S. Population, Selected Years, 1965–2025 —xxi P-2. P-3. 1-1. 1-2. U.S. Population by Age, 1965–2025 —xxii Organization of the Book —xxvii How General Electric Planned the Succession —7 The Big Mac Succession —10 1-3. Demographic Information about Respondents to a 2009 Survey on Succession Planning and Management: Industries —17 Demographic Information about Respondents to a 2009 Survey on Succession Planning and Management: Size —17 Demographic Information about Respondents to a 2009 Survey on Succession Planning and Management: Job Functions of Respondents —18 Reasons for Succession Planning and Management Programs —19 Strategies for Reducing Turnover and Increasing Retention —23 1-4. 1-5. 1-6. 1-7. 1-8. 1-9. 2-1. 2-2. 3-1. 3-2. 3-3. 3-4. 3-5. 3-6. 4–1. 5-1. 5-2. Workforce Reductions Among Survey Respondents —26 Summary of Best Practices on Succession Planning and Management from Several Research Studies —32 Assessment Questionnaire: How Well Is Your Organization Managing the Consequences of Trends Influencing Succession Planning and Management? —44 Sarbanes-Oxley Act of 2002 —50 Characteristics of Effective Succession Planning and Management Programs —64 Assessment Questionnaire for Effective Succession Planning and Management —68 Chief Difficulties with Succession Planning and Management Programs —71 Simple Exercise to Dramatize the Need for Succession Planning and Management —76 Dow Chemical Company’s Formula for Succession —79 The Seven-Pointed Star Model for Systematic Succession Planning and Management —83 Interview Guide to Collect Corporate-Culture-Specific Competency Development Strategies —95 Demographic Information About Respondents to 2009 Survey on Succession Planning and Management: Job Functions of Respondents —107 Importance of Succession Planning and Management —108 American Management Association www.amanet.org xiii List of Exhibits xiv 5-3. Making Decisions About Successors in Organizations Without Systematic Succession Planning and Management —109 5-4. Questionnaire for Assessing the Status of Succession Planning and Management in an Organization —112 5-5. Worksheet for Demonstrating the Need for Succession Planning and Management —116 5-6. Interview Guide for Determining the Requirements for a Succession Planning and Management Program —120 5-7. Interview Guide for Benchmarking Succession Planning and Management Practices —125 5-8. Opinions of Top Managers About Succession Planning and Management —129 5-9. Opinions of Human Resource Professionals About Succession Planning and Management —130 5-10. Actions to Build Management Commitment to Succession Planning and Management —131 5–11. Rating Your CEO for His or Her Role in Succession Planning and Management —134 6-1. Model for Conceptualizing Role Theory —139 6-2. Management Roles in Succession Planning and Management: Grid —141 6-3. 6-4. Worksheet to Formulate a Mission Statement for Succession Planning and Management —145 Sample Succession Planning and Management Policy —150 6-5. 6-6. Targeted Groups for Succession Planning and Management —152 Activity for Identifying Initial Targets for Succession Planning and Management Activities —153 6-7. Activity for Establishing Program Priorities in Succession Planning and Management —159 6-8. 7-1. U.S. Labor Laws —161 Worksheet for Preparing an Action Plan to Establish the Succession Planning and Management Program —171 7-2. Sample Outlines for In-House Training on Succession Planning and Management —179 8-1. Worksheet for Writing a Key Position Description —198 8-2. Worksheet for Considering Key Issues in Full-Circle, Multirater Assessments —203 8-3. Relationship Between Performance Management and Performance Appraisal —206 8-4. Approaches to Conducting Employee Performance Appraisal —208 8-5. Worksheet for Developing an Employee Performance Appraisal Linked to a Position Description —211 9-1. Worksheet for Environmental Scanning —217 9-2. Activity on Organizational Analysis —219 9-3. Activity for Preparing Realistic Scenarios to Identify Future Key Positions —220 9-4. Activity for Preparing Future-Oriented Key Position Descriptions —221 American Management Association www.amanet.org List of Exhibits xv 9-5. Steps in Conducting Future-Oriented Rapid Results Assessment —223 9-6. How to Classify Individuals by Performance and Potential —226 9-7. Worksheet for Making Global Assessments —228 9-8. Worksheet to Identify Success Factors —229 9-9. Individual Potential Assessment Form —230 10-1. Sample Replacement Chart Format: Typical Succession Planning and Management Inventory for the Organization —243 10-2. Succession Planning and Management Inventory by Position —244 10-3. Talent Shows: What Happens? —247 10-4. Simplified Model of Steps in Preparing Individual Development Plans —251 10-5. Worksheet for Preparing Learning Objectives Based on Individual Development Needs —253 10-6. Worksheet for Identifying the Resources Necessary to Support Developmental Experiences —255 10-7. Sample Individual Development Plan —258 10-8. Methods of Grooming Individuals for Advancement —260 10-9. Key Strategies for Internal Development —261 11-1. Deciding When Replacing a Key Job Incumbent Is Unnecessary: Flowchart —274 11-2. Worksheet for Identifying Alternatives to the Traditional Approach to Succession Planning and Management —282 11–3. Tool for Contemplating Ten Ways to Tap the Retiree Base —285 12-1. Worksheet to Assess How Often and How Well an Organization Uses Traditional External Recruiting Sources —291 13-1. Worksheet to Calculate the Cost of Turnover —300 13-2. Worksheet to Compare Your Organization on Best Practices in Employee Retention —307 14-1. Continua of Online and High-Tech Approaches —310 14-2. Starting Point for a Rating Sheet to Assess Vendors for Succession Planning and Management Software —312 14-3. Hierarchy of Online and High-Tech Applications for Succession Planning and Management —316 14-4. Worksheet for Brainstorming When and How to Use Online and High-Tech Methods —319 15-1. Hierarchy of Succession Planning and Management Evaluation —332 15-2. Guidelines for Evaluating the Succession Planning and Management Program —335 15-3. Worksheet for Evaluating the Succession Planning and Management Program —337 15-4. Sample Incident Report for Succession Planning and Management —338 15-5. Steps for Completing a Program Evaluation of a Succession Planning and Management Program —340 American Management Association www.amanet.org List of Exhibits xvi 15-6. Checksheet for Conducting a Program Evaluation for the Succession Planning and Management Program —342 16-1. Worksheet to Structure Your Thinking About Predictions for Succession Planning and Management in the Future —350 16-2. Worksheet to Structure Your Thinking About Alternative Approaches to Meeting Succession Needs —355 16-3. Age Distribution of the U.S. Population in 2025 —358 16-4. Age Distribution of the Chinese Population in 2025 —359 16-5. 16-6. 16-7. 16-8. Age Distribution of the Population in the United Kingdom in 2025 —359 Age Distribution of the French Population in 2025 —360 Important Characteristics of Career Planning and Management Programs —364 Assessment Sheet for Integrating Career Planning and Management Programs with Succession Planning and Management Programs —366 American Management Association www.amanet.org Preface to the Fourth Edition The world moves faster than ever. Since the third edition of this book, many changes have occurred to shape succession planning and management as well as the related field of talent management. Just consider the changes: In the World ' The Recession of 2007 and Beyond: As this edition goes to press, unemployment in the United States has exceeded 9 percent, and the United Nations projects that the global unemployment rate could climb higher than 6.1 percent. As a result, some business leaders question whether the time and money devoted to succession planning and talent management are worth it when layoffs are increasing. ' The Lingering Aftereffects and Legacy of 9/11: When the World Trade Center collapsed, 172 corporate vice presidents lost their lives. That tragic event reinforced the message, earlier foreshadowed by the tragic loss of life in Oklahoma City, Oklahoma, that life is fragile and that talent at all levels is increasingly at risk in a world where disaster can strike unexpectedly. In a move that would have been unthinkable ten years ago, some organizations are examining their bench strength in locations other than their headquarters in New York City, Washington, or other cities that might be prone to attack if terrorists should wipe out a whole city through the use of a dirty nuclear weapon or other chemical or biological agent. Could the organization pick up the pieces and continue functioning without headquarters? That awful, but necessary, question is on the minds of some corporate and government leaders today. (In fact, one client of mine has set a goal of making a European capital the alternative corporate headquarters, with a view toward having headquarters completely reestablished in Europe within 24 hours of the total loss of the New York City headquarters, if disaster should strike.) ' The Aftereffects of Many Corporate Scandals: Ethics, morality, and values have never been more prominent than they are today. The Bernard Madoff scandal American Management Association www.amanet.org xvii xviii Preface to the Fourth Edition followed on the heels of earlier scandals affecting numerous Wall Street firms and, years before that, Enron, Global Crossing, and WorldCom. Many business leaders have recognized that ethics, morality, and values do matter. Corporate boards have gotten more involved in succession planning and management owing in part to the requirements of the Sarbanes-Oxley Act and to the recognition that many senior corporate leaders are at or beyond the traditional retirement age. And corporate leaders, thinking about succession, realize that future leaders must model the behaviors they want others to exhibit and must avoid practices that give even the mere appearance of impropriety. And yet some CEOs receive large performance bonuses even when they lead their firms into bankruptcy.1 ' Growing Recognition of the Aging Workforce: Everyone is still talking about the demographic changes sweeping the working world in the United States and in the other G8 nations. Some organizations have already felt the effects of talent loss resulting from retirements of experienced workers. ' Growing Awareness That Succession Issues Amount to More Than Finding Replacements: When experienced people leave organizations, they take with them not only the capacity to do the work but also the accumulated wisdom they have acquired. That happens at all levels and in all functional areas. Succession involves more than merely planning for replacements at the top. It also involves thinking through what to do when the most experienced people at all levels depart—and take valuable institutional memory with them. ' Increasing Globalization of Talent: Workers in the West are heading to the Far East, where more opportunities exist even in the midst of financial crises. Talent is becoming more willing to travel where pay and benefits, as well as tax rates, are more favorable. ' Growing Interest in Tapping Retirees: Though experts may argue over whether a talent shortage has emerged or will emerge, business leaders are increasingly turning to their more experienced workers or seeking to find them. Changes in Succession Planning ' Wide Acceptance of Talent Management and Talent Development: As is true in so many areas of management, these terms may well still be in search of meanings. They have more than one meaning. But, in many cases, talent management refers to the efforts taken to attract, develop, and retain best-in-class employees—dubbed high performers (or HiPers), high professionals (HiPros), and high potentials (or HiPos) by some. Talent development may refer to efforts to groom HiPers or HiPos for the future and/or to tap them for transfer American Management Association www.amanet.org Preface to the Fourth Edition xix the specialized knowledge of HiPros. Think of it as selective attention paid to the top performing 10 percent of employees—that’s one way it is thought of. ' The Emergence of ‘‘Workforce Planning’’: Though some people think that succession planning is limited to the top of the organization chart—which I do not accept, by the way—others regard comprehensive planning for the future staffing needs of the organization as workforce planning. It is also a popular term for succession planning in government, rivaling the term human capital management in that venue. ' Growing Awareness of Succession Planning: Decision makers have become aware of the need for succession planning as they scurry to find replacements, even in the midst of a global business slowdown, for a pending tidal wave of retirements in the wake of years of downsizing, rightsizing, and smart sizing. ' The Recognition That Succession Planning Is Only One of Many Solutions: When managers hear that they are losing a valuable—and experienced—worker, their first inclination is to clutch their hearts and say, ‘‘Oh, my heavens, I have only two ways to deal with the problem—promote from inside or hire from outside. The work is too specialized to hire from outside, and the organization has such weak bench strength that it is not possible to promote from within. So we better get busy and build a succession program.’’ Of course, that is much too limited a view. The goal is to get the work done and not necessarily to replace people, and there are many ways to get the work done. ' Growing Awareness of Technical Succession Planning as a Means of Addressing the Knowledge Transfer Problem: Though succession planning is typically associated with preparing people to make vertical moves on the organization chart, it is also as applicable to engineers, lawyers, research scientists, MIS professionals, and other professional or technical workers who possess specialized knowledge. When they leave the organization, they may take critically important and proprietary institutional memory and knowledge with them. Hence, growing awareness exists for the need to do technical succession planning, which focuses on the horizontal level of the organization chart and involves broadening and deepening professional knowledge and preserving it for the organization’s continued use in the future. ' Continuing Problems with HR Systems and the Need for HR Transformation: HR systems are still not up to snuff. As I consult in this field, I see too little staffing in HR departments, poorly skilled HR workers with low credibility, ineffective competency modeling efforts, insufficient HR technology to support robust applications like succession, and many other problems with the HR function itself. This observation includes timid HR people who are unwilling to stand up to the CEO or their operating peers, exert people leadership, American Management Association www.amanet.org xx Preface to the Fourth Edition and insist on accountability systems to make sure that managers do their jobs to groom talent while they struggle to get today’s work out the door. ' Widening Interest in Tactical Succession Planning: Many HR practitioners recognize that they are often blamed for failing to find, keep, and develop talented people. Yet, until now, too little attention has been devoted to the daily responsibilities of managers and workers in talent management. While HR has a role to lead the organization to strategic talent management, managers and workers have a daily role in tactical talent management. The world continues to face the crisis of leadership described in the preface to the first edition of this book. Indeed, ‘‘a chronic crisis of governance—that is, the pervasive incapacity of organizations to cope with the expectations of their constituents—is now an overwhelming factor worldwide.’’ That statement is as true today as it was when this book was published in 1994. Evidence can still be found in various settings: Many citizens have lost faith in their elected officials to address problems at the national, regional, and local levels; the religious continue to lose faith in high-profile church leaders who have been involved in sensationalized scandals; and consumers have lost faith that business leaders will act responsibly and ethically.2 Add to those problems some others: People do not trust the mass media, like newspapers or television stations, now owned by enormous corporations, to tell them the truth; they may not assume that reporters have even bothered to check the facts; and patients have lost faith that doctors, many of whom are pressured to hold down costs, to ‘‘do no harm.’’3 A crisis of governance is also widespread inside organizations. Employees wonder what kind of employment they can maintain when a new employment contract has changed the relationship between workers and their organizations. Employee loyalty is a relic of the past,4 the victim of the downsizing craze so popular in the 1990s that persists in some organizations to the present day. Employee engagement is a problem everywhere when 19 percent of all employees in the United States are actively working against the goals of their employers. Changing demographics makes the identification of successors key to the future of many organizations when the legacy of the cutbacks in the middle-management ranks, the traditional training ground for senior executive positions, has begun to be felt. If that is hard to believe, consider that many of the best-known companies in the United States could lose a high percentage of their senior executives to retirement at any time.5 Demographics tell the story: The U.S. population is aging, and that could mean many retirements soon. (See Exhibits P-1 and P-2.) Amid the pressures of pending retirements in senior executive ranks and the increasing value of intellectual capital and knowledge management, it is more necessary than ever for organizations to plan for leadership continuity and employee development at all levels. But that is easier said than done. Systematic succession planning American Management Association www.amanet.org Preface to the Fourth Edition xxi Exhibit P-1. Age Distribution of the U.S. Population, Selected Years, 1965–2025 Population (thousands) 25,000 5 201 20,000 19 95 15,000 1965 10,000 5,000 9 80 + –7 4 –7 75 9 70 –6 4 65 –6 9 –5 60 55 16 –1 9 20 –2 4 25 –2 9 30 –3 4 35 –3 9 40 –4 4 45 –4 9 50 –5 4 0 Age Source: Stacy Poulos and Demetra S. Nightengale, ‘‘The Aging Baby Boom: Implications for Employment and Training Programs.’’ Presented at http://www.urban.org/aging/abb/agingbaby.html. This report was prepared by the U.S. Department of Labor under Contract No. F-5532-5-00-80-30. is not consistent with longstanding tradition, which favors quick fixes to necessarily long-term, culture-changing succession planning and management (SP&M) issues. Nor is it consistent with the continuing, current trends in which too few people are thrown at too much work. Shallow internal talent pools are exacerbated by the use of outsourcing and contingent workers from which to choose future leaders. In previous decades, labor in the United States was plentiful and taken for granted. Managers had the leisure to groom and test employees for advancement over long time spans and to overstaff as insurance against surprise losses in key positions. That was as true for management as it was for nonmanagement employees. Most jobs did not require extensive prequalification. Seniority (sometimes called job tenure), as measured by time with an organization or in an industry, was sufficient to ensure advancement. Succession planning and management activities properly focused on leaders at the peak of tall organizational hierarchies because organizations were controlled from the top down and were thus heavily dependent on the knowledge, skills, and attitudes of top management. But times have changed. Few organizations have the luxury to overstaff in the face of fierce global competition from low-cost labor abroad and economic restructurAmerican Management Association www.amanet.org Preface to the Fourth Edition xxii Exhibit P-2. U.S. Population by Age, 1965–2025 100000 16–24 yr olds 25–34 yr olds 35–44 yr olds 45–54 yr olds 55 & older 90000 80000 70000 60000 50000 40000 30000 20000 10000 1965 1975 1985 1995 2005 2015 2025 Year Source: Stacy Poulos and Demetra S. Nightengale, ‘‘The Aging Baby Boom: Implications for Employment and Training Programs.’’ Presented at http://www.urban.org/aging/abb/agingbaby.html. This report was prepared by the U.S. Department of Labor under Contract No. F-5532-5-00-80-30. ing efforts. That is particularly true in high-technology companies where several months’ experience may be the equivalent of a year’s work in a more stable industry. At the same time, products, markets, and management activities have grown more complex. Many jobs now require extensive prequalification, both inside and outside organizations. A track record of demonstrated and successful work performance—not just time in position—and leadership competency have become key considerations as fewer employees compete for diminishing advancement opportunities. As employee empowerment has broadened the ranks of decision makers, leadership influence can be exerted at all hierarchical levels rather than limited to those few granted authority by virtue of their lofty titles and managerial positions. For these reasons, organizational leaders must take proactive steps to plan for future talent needs at all levels and implement programs designed to ensure that the American Management Association www.amanet.org Preface to the Fourth Edition xxiii right people are available for the right jobs in the right places and at the right times to get the right results. Much is at stake in this process: ‘‘The continuity of the organization over time requires a succession of persons to fill key positions.’’6 There are important social implications as well. As management guru Peter Drucker explained in words as true today as when they were written:7 The question of tomorrow’s management is, above all, a concern of our society. Let me put it bluntly—we have reached a point where we simply will not be able to tolerate as a country, as a society, as a government, the danger that any one of our major companies will decline or collapse because it has not made adequate provisions for management succession. [emphasis added] Research adds weight to the argument favoring SP&M. First, it has been shown that firms in which the CEO has a specific successor in mind are more profitable than those in which no specific successor has been identified. A possible reason is that selecting a successor ‘‘could be viewed as a favorable general signal about the presence and development of high-quality top management.’’8 In other words, superiorperforming CEOs make SP&M and leadership continuity top priorities. Succession planning and management has even been credited with driving a plant turnaround by linking the organization’s continuous improvement philosophy to individual development.9 But ensuring leadership continuity can be a daunting undertaking. The rules, procedures, and techniques used in the past appear to be growing increasingly outmoded and inappropriate. It is time to revisit, rethink, and even reengineer SP&M. That is especially true because, in the words of one observer of the contemporary management scene, ‘‘below many a corporation’s top two or three positions, succession planning [for talent] is often an informal, haphazard exercise where longevity, luck, and being in the proverbial right place at the right time determines lines of succession.’’10 A haphazard approach to SP&M bodes ill for organizations in which leadership talent is diffused—and correspondingly important—at all hierarchical levels while the need also exists to scramble organizational talent quickly to seize business opportunities or deal with crises. Succession Planning in Tough Economic Times One difference between this edition and the previous one is the tough economic climate faced by organizations globally. Consider: ' In 2008, the U.S. economy shed 2.6 million jobs, the most since 1945. ' As this book goes to press, the United States has reached a jobless high of 7.2 percent, the most in 16 years. American Management Association www.amanet.org xxiv Preface to the Fourth Edition ' Fewer than one in three workers qualifies for unemployment insurance benefits when they are laid off because, for one reason or another, they are not eligible. ' From the start of the recession in December 2007 through December 2008, the total number of mass layoff events (seasonally adjusted) was 23,485, and the number of initial claims (seasonally adjusted) was 2,394,434.11 ' For all of 2008, on a not seasonally adjusted basis, the total numbers of mass layoff events reached 21,137, and initial unemployment claims reached 2,130,220, their highest annual levels since 2001 and 2002, respectively. Among the 21 major industry sectors, six registered series highs for both mass layoff events and initial claims for all of 2008: construction; transportation and warehousing; finance and insurance; real estate and rental and leasing; management of companies and enterprises; and accommodation and food services.12 In light of these conditions, some senior managers question whether it is worthwhile to devote time and money to succession planning issues. They reason that, with so many people out of work or working below their skill level, it should be easy to find well-qualified replacements for the dwindling number of people who can afford to retire at a time that retirement funds have tanked along with the stock market. But that logic is not necessarily true. The people thrown out of work do not necessarily match up nicely and precisely to the people who need to be replaced due to retirements or job growth. For instance, the biggest job growth is in health care. How many workers laid off from manufacturing or construction can become nurses? The point is that succession planning is needed in good times as well as in bad. Employers must plan for their future, and planning for people is part of that. Relying solely on the external labor market for talent can be a suboptimal strategy, ignoring the value of company-culture-specific experience and wisdom. The Purpose of This Book Succession planning and management and leadership development figure prominently on the agenda of many top managers. Yet, despite senior management interest, the task often falls to human resource management (HRM) and workplace learning and performance (WLP) professionals to spearhead and coordinate efforts to establish and operate strategically oriented succession programs and to avert succession crises. In that way, they fill an important, proactive role demanded of them by top managers, and they ensure that SP&M issues are not lost in the shuffle of fighting daily fires. But SP&M is rarely, if ever, taught in most undergraduate or graduate college American Management Association www.amanet.org Preface to the Fourth Edition xxv degree programs—even in those specifically tailored to preparing HRM and WLP professionals. For this reason, HRM and WLP professionals often need assistance when they coordinate, establish, operate, or evaluate SP&M programs. This book is intended to provide that help. It offers practical, how-to advice on SP&M. The book’s scope is deliberately broad. It encompasses more than management succession planning, which is the most frequently discussed topic by writers and consultants in the field. Stated succinctly, the purpose of this book is to reassess SP&M and offer a practical approach to ensuring leadership continuity in key positions and for key people by building leadership talent from within. Succession planning and management should support strategic planning and strategic thinking. It should provide an essential starting point for management and employee development programs. Without it, organizations will have difficulty maintaining leadership continuity or identifying appropriate leaders when a change in business strategy is necessary. Though many large blue-chip corporations operate best-practice SP&M programs, small and medium-sized businesses also need them. In fact, inadequate succession plans are a common cause of small business failure as founding entrepreneurs fade from the scene, leaving no one to continue their legacy,13 and as tax laws exert an impact on the legacy of those founders as they pass away. Additionally, nonprofit enterprises and government agencies need to give thought to planning for future talent. Whatever an organization’s size or your job responsibilities, then, this book should provide useful information on establishing, managing, operating, and evaluating SP&M programs. Sources of Information As I began writing this book I decided to explore state-of-the-art succession planning and management practices. I consulted several major sources of information: 1. A Tailor-Made Survey: In January 2009 I surveyed over 1,200 HRM professionals about SP&M practices in their organizations. Selected survey results, which were compiled in February 2009, are published in this book for the first time. This survey was an update of earlier surveys conducted for the first edition (1994), second edition (2000), and third edition (2005). Though the response rate to the survey was disappointing, the results provided interesting information. 2. Phone Surveys and Informal Benchmarking: I spoke by phone and in person with vendors of specialized succession planning software and discussed SP&M with workplace learning and performance professionals in major corporations. American Management Association www.amanet.org xxvi Preface to the Fourth Edition 3. Other Surveys: I researched other surveys that have been conducted on SP&M in recent years and, giving proper credit when due, I summarize key findings of those surveys at appropriate points in the book. 4. Web Searches: I examined what resources could be found on the World Wide Web relating to important topics in this book. I have included the Web links for the readers’ benefit. 5. A Literature Search: I conducted an exhaustive literature review on SP&M— with special emphasis on what has been written on the subject since the 2005 edition of this book. I also looked for case study descriptions of what real organizations have been doing. 6. Firsthand In-House Work Experience: Before entering the academic world, I was responsible for a comprehensive management development (MD) program in a major corporation. As part of that role I coordinated management SP&M. My experiences are reflected in this book. 7. Extensive External Consulting and Public Speaking: Since entering the academic world, I have also done consulting and public speaking on the topic of SP&M all over the world. I spoke about succession planning and talent management all over Asia, including an address to 64 CEOs of the largest corporations in Singapore; conducted seminars on succession in Asia and in Europe; keynoted several conferences on succession and spoke on the topic at many conferences; and provided guidance for a major research study of best practices on the topic in large corporations. Most recently, I have focused attention on best practices in government succession at all levels—local, state, federal, and international. The aim of these sources is to ensure that this book will provide a comprehensive and up-to-date treatment of typical and best-in-class SP&M practices in organizations of various sizes and types operating in different industries and economic sectors. The Scheme of This Book The fourth edition of Effective Succession Planning: Ensuring Leadership Continuity and Building Talent from Within is written for those wishing to establish, revitalize, or review an SP&M program within their organizations. It is geared to meet the needs of HRM and WLP executives, managers, and professionals. It also contains useful information for chief executive officers, chief operating officers, general managers, university faculty members who do consulting, management development specialists who are looking for a detailed treatment of the subject as a foundation for their own efforts, SP&M program coordinators, and others bearing major responsibilities for developing management, professional, technical, sales, or other employees. American Management Association www.amanet.org Preface to the Fourth Edition xxvii The book is organized in four parts. (See Exhibit P-3.) Part I sets the stage. Chapter 1 opens with dramatic vignettes illustrating typical—and a few rivetingly atypical— problems in SP&M. The chapter also defines succession planning and management. It also distinguishes it from replacement planning, workforce planning, talent management, and human capital management. Then the chapter goes on to emphasize its importance, explain why organizations sponsor such programs, and describe different approaches to succession planning and management. Chapter 2 describes key trends influencing succession planning and management: (1) the need for speed; (2) a seller’s market for skills; (3) reduced loyalty among employers and workers; (4) the importance of intellectual capital and knowledge management; (5) the key importance of values and competencies; (6) the increasing amount of software available to support succession; (7) the growing activism of the board of directors; (8) the growing awareness of similarities and differences in succession issues globally; (9) the heightened awareness of similarities and differences of Exhibit P-3: The Organization of the Book Part I Background Information About Succession Planning and Management Part IV Closing the “Developmental Gap”: Operating and Evaluating a Succession Planning and Management Program Part II Laying the Foundation for a Succession Planning and Management Program Part III Assessing the Present and the Future American Management Association www.amanet.org xxviii Preface to the Fourth Edition succession programs in special venues: government, nonprofit, education, small business, and family business; and (10) managing the special issue of CEO succession. The chapter clarifies what these trends mean for SP&M efforts. Chapter 3 summarizes the characteristics of effective SP&M programs, describes the life cycle of SP&M programs, identifies and solves common problems with various approaches to SP&M, describes the requirements and key steps in a sixth-generation approach to SP&M, and explains how new approaches to organizational change may be adapted for use with SP&M. Chapter 4 defines competencies, explains how they are used in SP&M, summarizes how to conduct competency studies for SP&M and use the results, explains how organizational leaders can ‘‘build’’ competencies using development strategies, defines values, explains how values and values clarification can influence SP&M efforts, defines ethics, and shows how ethical issues should influence SP&M efforts. Part II consists of Chapters 5 through 7. It lays the foundation for an effective SP&M program. Chapter 5 describes how to make the case for change, often a necessary first step before any change effort can be successful. The chapter reviews such important steps in this process as assessing current SP&M practices, demonstrating business need, determining program requirements, linking SP&M to strategic planning and human resource planning, benchmarking SP&M practices in other organizations, and securing management commitment. It emphasizes the critical importance of the CEO’s role in SP&M in businesses. Finally, it treats the role of in-house politics on SP&M. Building on the previous chapter, Chapter 6 explains how to clarify roles in an SP&M program; formulate the program’s mission, policy, and procedure statements; identify target groups; set program priorities; and establish accountabilities. It also addresses the legal framework in SP&M and provides advice about strategies for rolling out an SP&M program. Chapter 7 rounds out Part II. It offers advice on preparing a program action plan, communicating the action plan, conducting SP&M meetings, designing and delivering training to support SP&M, and counseling managers about SP&M problems uniquely affecting them and their areas of responsibility. Part III comprises Chapters 8 and 9. It focuses on assessing present work requirements in key positions, on present individual performance, on future work requirements, and on future individual potential. Crucial to an effective SP&M program, these activities are the basis for subsequent individual development planning. Chapter 8 examines the present situation, addressing the following questions: ' How are key positions and/or key people identified? ' What three approaches can be used to determining work requirements in key positions? American Management Association www.amanet.org Preface to the Fourth Edition xxix ' How can full-circle, multirater assessment be used in SP&M? ' How is performance appraised? ' What techniques and approaches can be used in creating talent pools? Chapter 9 examines the future. Related to Chapter 8, it focuses on these questions: ' What key positions are likely to emerge in the future? ' What will be the work requirements in those positions? ' What is individual potential assessment, and how can it be carried out? Part IV consists of Chapters 10 through 16. Chapters in this part focus on closing the developmental gap by operating and evaluating an SP&M program. Chapter 10 offers advice for testing the organization’s overall bench strength, explains why an internal promotion and job-posting policy is important, defines the term individual development plan (IDP), describes how to prepare and use an IDP to guide individual development, and reviews important methods to support internal development. Chapter 11 moves beyond the traditional approach to SP&M. It offers alternatives to internal development as the means of meeting replacement needs. The basic idea of the chapter is that underlying a replacement need is a work need that must be satisfied. There are, of course, other ways to meet work needs than by replacing a key position incumbent. The chapter provides a decision model to distinguish between situations when replacing a key position incumbent is or is not warranted. Chapter 12 is a new chapter in this edition. It relates hiring practices to succession planning, emphasizing the importance of taking a fresh perspective to the recruiting and selection challenge. There are, after all, only two ways to get talent. One way is to develop it internally, which is the traditional focus of succession planning. But the other way is to recruit it. For that reason, recruitment and selection are added to issues treated in the book. Chapter 13, also a new chapter, examines the importance of retaining top talent. If an organization devotes time, money, and effort to developing talent, then it is important to retain it. The chapter thus focuses on retention. Chapter 14 examines how to apply online and high-tech approaches to SP&M programs. The chapter addresses four major questions: (1) How are online and hightech methods defined? (2) In what areas of SP&M can online and high-tech methods be applied? (3) How are online and high-tech applications used? (4) What specialized competencies are required by succession planning coordinators to use these applications? Chapter 15 is about evaluation, and it examines possible answers to three simple questions: (1) What is evaluation? (2) What should be evaluated in SP&M? (3) How should an SP&M program be evaluated? American Management Association www.amanet.org Preface to the Fourth Edition xxx Chapter 16 concludes the book. It offers numerous predictions about SP&M. To mention a few: I end the book by predicting that SP&M will (1) prompt efforts by decision makers to find flexible strategies to address future organizational talent needs; (2) lead to integrated retention policies and procedures that are intended to identify high-potential talent earlier, retain that talent, and preserve older high-potential workers; (3) have a global impact; (4) be influenced increasingly by real-time technological innovations; (5) become an issue in government agencies, academic institutions, and nonprofit enterprises in a way never before seen; (6) lead to increasing organizational openness about possible successors; (7) increasingly be integrated with career development issues; and (8) be heavily influenced in the future by concerns about work-family balance and spirituality. The book ends with two appendices. Appendix I addresses frequently asked questions about succession planning and management. Appendix II provides a range of case studies about SP&M that describes how it is applied in various settings. One last thing. You may be asking yourself, ‘‘How is the fourth edition of this classic book different from the second edition?’’ I made many changes to this book. Allow me to list just a few: ' A Quick Start Guide, like those that come with computers, has been added to the opening of the book. ' The survey research cited in this book is new, conducted in year 2009. ' The results of a different survey on potential/promotability practices, conducted in 2008, are also included. ' The literature cited in the book has been expanded and updated. ' A new section on ethics has been added. ' The section on competency identification, modeling, and assessment has been updated. ' The chapter on technology applications has been updated with references to the ever changing world of software available to support succession and talent management. All these changes reflect the many developments that have occurred in the SP&M field within the last few years and since the last edition was published. William J. Rothwell University Park, Pennsylvania May 2009 American Management Association www.amanet.org Acknowledgments Writing a book is like taking a long journey. The researching, drafting, and repeated revisions require more time, effort, patience, and self-discipline than most authors care to admit or have the dedication to pursue. Yet no book is written in isolation. Completing such a journey requires any author to seek help from many people, who provide advice and direction along the way. This is my opportunity to thank those who have helped me. I would therefore like to extend my sincere appreciation to my graduate research assistant Lin Gao for helping me to track down and secure the necessary copyright permissions and to my graduate students Jinyong Kim and Hong Min Kim for their help in putting my survey on Survey Monkey. I would also like to thank Christina Parisi and other staff members at Amacom, who offered numerous useful ideas on the project while demonstrating enormous patience with me and my busy schedule in consulting and presenting around the world. American Management Association www.amanet.org xxxi This page intentionally left blank Advance Organizer for This Book Complete the following assessment before you read this book. Use it to help you assess the need for an effective succession planning and management (SP&M) program in your organization. You may also use it to refer directly to topics in the book that are of special importance to you now. Directions: Read each of the following items. Circle Y (yes), N/A (not applicable), or N (no) in the left column next to each item. Spend about 15 minutes on this. Think of succession planning and management in your organization as you believe it is and not as you think it should be. When you finish, score and interpret the results using the instructions appearing at the end of this Advance Organizer. Then be prepared to share your responses with others in your organization as a starting point for planning. If you would like to learn more about one of the items, refer to the number in the right column to find the chapter in this book in which the subject is discussed. Circle your response in the left-hand column for each response. Has your organization: Chapter Y N/A N 1. Clearly defined the need for succession planning and management (SP&M)? 1 Y N/A N 2. Distinguished succession planning and management from replacement, workforce planning, talent management, and human capital management? 1 Y N/A N 3. Made the case by showing the importance of succession planning and management? 1 Y N/A N 4. Clarified the organizational reasons (goals) for the SP&M effort? 1 Y N/A N 5. Investigated best practices and approaches to SP&M? 1 Y N/A N 6. Considered what trends may influence SP&M? 2 Y N/A N 7. Clarified how trends, as they unfold, may influence SP&M in your organization? 2 Y N/A N 8. Investigated the characteristics of effective SP&M programs? 3 American Management Association www.amanet.org xxxiii Advance Organizer for This Book xxxiv Y N/A N Y N/A N 9. 10. Y N/A N 11. Y N/A N 12. Y N/A N 13. Y N/A N 14. Y N/A N 15. Y N/A N 16. Y N/A N 17. Y N/A N 18. Y N/A N 19. Y N/A N 20. Y N/A N 21. Y N/A N 22. Y N/A N 23. Y N/A N 24. Y N/A N 25. Y N/A N 26. Thought about how to roll out a SP&M program? Set out to identify, and try to avoid, common problems with SP&M? Considered integrating whole-systems transformational change into the SP&M program? Considered integrating appreciative inquiry strengthbased thinking into the SP&M program? Planned for what might be required to establish a state-of-the-art approach to the SP&M program? 3 3 3 3 Identified competencies as they might be used in your organization? Considered how competency models might be used as a foundation for your SP&M program? 4 Explored new developments in competency identification, modeling, and assessment for the SP&M program? Identified competency development strategies to build bench strength? Specifically considered how values might impact the SP&M program? Considered how ethics might be used in your SP&M program? Determined organizational requirements for the SP&M program? Linked succession planning and management activities to organizational and human resource strategy? Benchmarked best practices and common business practices in SP&M practices in other organizations? Obtained and built management commitment to systematic succession planning and management? Clarified the key role to be played by the CEO in the succession effort? Conducted a risk analysis of what groups or individuals might pose the greatest potential for loss to the organization? Formulated a mission statement for the succession effort? 4 American Management Association www.amanet.org 4 4 4 4 5 5 5 5 5 6 6 Advance Organizer for This Book xxxv Y N/A N 27. Written policy and procedures to guide the succession effort? 6 Y N/A N 28. Identified target groups for the succession effort? 6 Y N/A N 29. Set program priorities? 6 Y N/A N 30. Addressed the legal framework affecting the SP&M program? 6 Y N/A N 31. Established strategies for rolling out the program? 6 Y N/A N 32. Prepared a program action plan? 7 Y N/A N 33. Communicated the action plan? 7 Y N/A N 34. Conducted SP&M meetings? 7 Y N/A N 35. Trained on succession planning and management? 7 Y N/A N 36. Counseled managers about succession planning problems in their areas? 7 Y N/A N 37. Identified key positions and/or key people? 8 Y N/A N 38. Appraised performance and applied performance management? 8 Y N/A N 39. Considered creating talent pools? 8 Y N/A N 40. Thought of possibilities beyond talent pools? 8 Y N/A N 41. Identified key positions for the future? 9 Y N/A N 42. Assessed individual potential for promotability on some systematic basis? 9 Y N/A N 43. Considered using assessment centers? 9 Y N/A N 44. Considered using work portfolios to assess individual potential? Y N/A N 45. Tested bench strength? 10 Y N/A N 46. Formulated internal promotion policy? 10 Y N/A N 47. Prepared individual development plans? 10 Y N/A N 48. Developed successors internally? 10 Y N/A N 49. Considered using leadership development programs in succession planning? 10 Y N/A N 50. Considered using executive coaching in succession planning? 10 Y N/A N 51. Considered using mentoring in succession planning? 10 Y N/A N 52. Considered using action learning in succession planning? 10 American Management Association www.amanet.org Advance Organizer for This Book xxxvi Y N/A N 53. Explored alternative ways to get the work done beyond succession? 11 Y N/A N 54. Explored innovative approaches to tapping the retiree base? 11 Y N/A N 55. Integrated internal and external recruiting strategies with development and retention strategies? 12 Y N/A N 56. Considered innovative approaches to attract more high potentials? 12 Y N/A N 57. Established a systematic approach to retention? 13 Y N/A N 58. Tracked turnover by the quality of workers who leave? 13 Y N/A N 59. Investigated how online and high-tech methods may be applied? 14 Y N/A N 60. Decided what should be evaluated in the program? 15 Y N/A N 61. Decided how the program can be evaluated? 15 Y N/A N 62. Considered how changing external competitive conditions may affect the succession planning and management program? 16 Total  Scoring and Interpreting the Advance Organizer Give your organization one point for each yes and zero for each no or N/A. Total the number of Ys and place the sum in the line next to the word Total. Then interpret your score as follows: 55 or more Your organization is apparently using effective succession planning and management practices. 45 to 54 Improvements could be made to your SP&M practices. On the whole, however, the organization is proceeding on the right track. 30 to 44 Succession planning and management practices in your organization do not appear to be as effective as they should be. Significant improvements should be made. 29 or less Succession planning and management practices are ineffective in your organization. They are probably a source of costly mistakes, productivity losses, and unnecessary employee turnover. Take immediate corrective action. American Management Association www.amanet.org Quick Start Guide Readers of past editions of this book have occasionally asked me for some upfront guidance on deciding right away how to get started in launching a succession planning and management program. That is the reason for this Quick Start Guide. Though subsequent chapters treat many topics in depth and the Advance Organizer is meant to give you ideas about the possible shortcomings of your own organization’s SP&M practices compared to best practice, this Quick Start Guide is meant to give you suggestions on how to get started fast on a succession planning program. Step 1: Talk to top managers in your organization to find out whether they perceive a need for succession planning and management and/or talent management in your organization. If they do, then jump to step 3. If they do not, continue on to step 2. Step 2: Build a convincing case for SP&M based on business needs. Think about how to answer this question: ‘‘What information could persuade senior decision-makers in your organization to undertake a SP&M program?’’ There are several ways to do this. One is to analyze the workforce data of your organization. Ask payroll to run a report to project the estimated retirement eligibility date of the entire organization. Then ask for separate reports by job code, department, and location. Group the data in three-year intervals. Look for places where the estimated retirement eligibility of a group is the highest. Consider that location, level, or department as a starting point for a possible succession or talent management pilot program. Another way is to analyze the growth of your organization’s staff based on sales or revenue figures. Compare the changing revenues and workloads of your organization to the staffing levels across departments. See if you can find a mathematical relationship between sales levels, workload levels, and staffing numbers by department. Then consider what sales forecasts indicate for your organization and how that matches up with the staffing levels. Create charts and graphs to illustrate what you found. Also consider turnover by area as a factor. Use these charts and graphs to build a compelling case to do more about planning for people. Step 3: Consider the options. One place to start in a SP&M program is top-down, working from the senior team downward. Novices tend to think of this first, but it is risky. The reason: Top managers are a small group and are easy to work with but a rollout of such a program requires considerable logistical support in HR technology and handholding as it reaches lower-level, geographically scattered ranks—like middle managers. American Management Association www.amanet.org xxxvii Quick Start Guide xxxviii A second place to start is with a simple replacement program in which the CEO, working through HR, asks each manager to provide a list of three backups for all management positions in the company. The advantage of that approach is that it gets managers thinking and builds momentum for more sophisticated programs. The disadvantage is that managers tend to think all the work in SP&M is done when they have completed replacement charts. In reality, much work will remain to prepare more people to be ready to step into higher-level positions. A third place to start is in a hotspot, a department or location having both a manager who supports the idea and a need to replace people due to a larger-thanaverage number of expected retirements, business growth, or both. The advantage of this approach is that it permits a pilot test that can create a quick-win and a snowball strategy to leverage attention in other parts of the organization. The disadvantage is that special attention is given to employees of one department, which may touch off concerns by workers and managers in other departments. A fourth place to start is to ignore the issue of management succession entirely at first and focus initially instead on knowledge transfer. That approach can be especially appealing to organizations in which much of the work depends on special expertise— such as an engineering consulting firm or an engineering department, a hospital, or the research division of any firm. If this approach is used, then the focus will not be on preparing people for promotion but rather on encouraging information sharing and knowledge transfer through mentoring, community of practice sites, and other practical approaches. There are other places to start, of course, but the real question is why decision makers see or feel a need for a succession program. Then mount a program that will clearly meet that need. Step 4: Get roles, goals, and accountabilities clear. Clarify, and get agreement on, the specific responsibilities of key groups—such as the CEO, top managers, the HR department, operating managers, and individuals—in the SP&M or talent management program. Who does what? Then clarify and get agreement on the specific and measurable objectives to be met by the program. Those objectives, in turn, should address key complaints or business problems. Finally, get the accountabilities clear. How are people at each level on the organization chart held accountable for carrying out their roles and meeting goals? Will success be rewarded financially? Will lack of action be punished in some way? Step 5: Address the key journalistic questions. On whom will the program focus? What will the program consist of? When will it start, and how will it be phased in? Where will the focus of attention be—on the whole organization or only parts of it? Why is the organization undertaking the program, and how will success be measured? How will the program be coordinated? Follow these initial steps and you are on your way to launching an SP&M and/or talent management program. Read the book for more details on all these issues. American Management Association www.amanet.org What’s on the CD? Selected Worksheets and Resources from the Book Exhibit 2-1. Exhibit 3-2. Exhibit 3-3. Exhibit 5-4. Exhibit 5-5. Exhibit 5-6. Exhibit 5-7. Exhibit 6-3. Exhibit 6-4. Exhibit 6-6. Exhibit 6-7. Exhibit 6-8. Exhibit 7-1. Exhibit 8-1. Exhibit 8-2. An Assessment Questionnaire: How Well Is Your Organization Managing the Consequences of Trends Influencing Succession Planning and Management? Assessment Questionnaire for Effective Succession Planning and Management A Simple Exercise to Dramatize the Need for Succession Planning and Management A Questionnaire for Assessing the Status of Succession Planning and Management in an Organization A Worksheet for Demonstrating the Need for Succession Planning and Management An Interview Guide for Determining the Requirements for a Succession Planning and Management Program An Interview Guide for Benchmarking Succession Planning and Management Practices A Worksheet to Formulate a Mission Statement for Succession Planning and Management A Sample Succession Planning and Management Policy An Activity for Identifying Initial Targets for Succession Planning and Management Activities An Activity for Establishing Program Priorities in Succession Planning and Management Handout: U.S. Labor Laws A Worksheet for Preparing an Action Plan to Establish the Succession Planning and Management Program A Worksheet for Writing a Key Position Description A Worksheet for Considering Key Issues in Full-Circle, Multirater Assessments American Management Association www.amanet.org xxxix What’s on the CD? xl Exhibit 8-5. A Worksheet for Developing an Employee Performance Appraisal Linked to a Position Description Exhibit 9-1. A Worksheet for Environmental Scanning Exhibit 9-2. An Activity on Organizational Analysis Exhibit 9-3. An Activity for Preparing Realistic Scenarios to Identify Future Key Positions Exhibit 9-4. An Activity for Preparing Future-Oriented Key Position Descriptions Exhibit 9-5. Steps in Conducting Future-Oriented ‘‘Rapid Results Assessment’’ Exhibit 9-6. How to Classify Individuals by Performance and Potential Exhibit 9-7. A Worksheet for Making Global Assessments Exhibit 9-8. A Worksheet to Identify Success Factors Exhibit 9-9. An Individual Potential Assessment Form Exhibit 10-1. A Sample Replacement Chart Format: Typical Succession Planning and Management Inventory for the Organization Exhibit 10-2. Succession Planning and Management Inventory by Position Exhibit 10-4. A Worksheet for Preparing Learning Objectives Based on Individual Development Needs Exhibit 10-5. A Worksheet for Identifying the Resources Necessary to Support Developmental Experiences Exhibit 10-7. A Sample Individual Development Plan Exhibit 10-8. Methods of Grooming Individuals for Advancement Exhibit 10-9. Key Strategies for Internal Development Exhibit 11-1. Deciding When Replacing a Key Job Incumbent Is Unnecessary: A Flowchart Exhibit 11-2. A Worksheet for Identifying Alternatives to the Traditional Approach to Succession Planning and Management Exhibit 12-4. A Worksheet for Brainstorming When and How to Use Online and High-Tech Methods Exhibit 13-3. A Worksheet for Identifying Appropriate Ways to Evaluate Succession Planning and Management in an Organization Exhibit 13-4. A Sample ‘‘Incident Report’’ for Succession Planning and Management Exhibit 13-5. Steps for Completing a Program Evaluation of a Succession Planning and Management Program Exhibit 13-6. A Checksheet for Conducting a Program Evaluation for the Succession Planning and Management Program American Management Association www.amanet.org What’s on the CD? xli Exhibit 14-1. A Worksheet to Structure Your Thinking about Predictions for Succession Planning and Management in the Future Exhibit 14-2. A Worksheet to Structure Your Thinking about Alternative Approaches to Meeting Succession Needs Exhibit 14-7. Important Characteristics of Career Planning and Management Programs Exhibit 14-8. An Assessment Sheet for Integrating Career Planning and Management Programs with Succession Planning and Management Programs Also: ' Effective Succession Planning: A Fully Customizable Leader Guide for the Manager’s Role in Succession Planning ' Effective Succession Planning: A Fully Customizable Participant Guide for the Manager’s Role in Succession Planning ' PowerPoint Slides to Accompany the Manager’s Role in Succession Planning ' Assessment Instrument for Use with the Manager’s Role in Succession Planning ' Executive Assessment Instrument for Use with the Manager’s Role in Succession Planning ' PowerPoint Slides to Accompany Executive Briefing on Succession Planning ' Frequently Asked Questions About Succession Planning (from the Book) for Use with the Executive Briefing on Succession Planning ' Effective Succession Planning: A Fully Customizable Leader Guide for Mentoring from A to Z ' Effective Succession Planning: A Fully Customizable Participant Guide for Mentoring from A to Z ' PowerPoint Slides to Accompany Mentoring from A to Z American Management Association www.amanet.org This page intentionally left blank jjj PA R T I Background Information About Succession Planning and Management Part I Background Information About Succession Planning and Management Part IV Part II Closing the “Developmental Gap”: Laying the Foundation for a Operating and Evaluating a Succession Succession Planning and Planning and Management Program Management Program • Defines SP&M • Distinguishes SP&M from replacement planning • Describes the importance of SP&M • Lists reasons for an SP&M program • Reviews approaches to SP&M • Reviews key trends influencing SP&M and explains their implications • Lists key characteristics of effective SP&M programs • Describes the life cycle of SP&M programs Part III Assessing the Present and the Future • Explains how to identify and solve problems with various approaches to SP&M • Lists the requirements and key steps for a fifth-generation approach to SP&M • Defines competencies and explains how they are used in SP&M • Describes how to conduct and use competency identification studies for SP&M American Management Association www.amanet.org This page intentionally left blank jjj C H A P T E R 1 What Is Succession Planning and Management? Six Ministudies: Can You Solve These Succession Problems? How is your organization handling succession planning and management (SP&M)? Read the following vignettes and, on a separate sheet, describe how your organization would solve the problem presented in each. If you can offer an effective solution to all the problems in the vignettes, then your organization may already have an effective SP&M program in place; if not, your organization may have an urgent need to devote more attention to succession issues. Vignette 1 An airplane crashes in the desert, killing all on board. Among the passengers are several top managers of Acme Engineering, a successful consulting firm. When the vice president of human resources at Acme is summoned to the phone to receive the news, she gasps, turns pale, looks blankly at her secretary, and breathlessly voices the first question that enters her mind: ‘‘Now who’s in charge?’’ Vignette 2 On the way to a business meeting in Bogota, Colombia, the CEO of Normal Fixtures (a maker of ceramic bathroom fixtures) is seized and held for ransom by freedom fighters. They demand U.S. $1 million within 72 hours, or they will kill him. Members of the corporate board are beside themselves with concern. American Management Association www.amanet.org 3 4 Background Information About Succession Planning and Management Vignette 3 Georgina Myers, supervisor of a key assembly line, has just called in sick after two years of perfect attendance. She personally handles all purchasing and production scheduling in the small plant, as well as overseeing the assembly line. The production manager, Mary Rawlings, does not know how the plant will function in the absence of this key employee, who carries in her head essential and proprietary knowledge of production operations. She is sure that production will be lost today because Georgina has no trained backup. Vignette 4 Marietta Diaz was not promoted to supervisor. She is convinced that she is a victim of rac...
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