Fail To Plan And Plan To Fail

Fail to plan and plan to fail The powerhouse behind any company’s success is not its IT infrastructure or a polished corporate strategy. It isn’t even its reputation and a solid shareholder base. None of these things can provide the stability and potential for revenue growth that can be achieved through good people. The importance of having the right people in place permeates throughout the organisation, and is nowhere stronger than in the highest echelons of power. choose a bad one, and you could find that your company is being led downhill fast. Furthermore, with the reputation of a company now often inextricably linked to that of its CEO, the departure of a high profile figurehead can leave an organisation flailing – directionless and lacking identity. In an attempt to ensure that there is an adequate pool of potential successors to fill vacant senior positions, organisations use succession planning strategies. These may cover a range of activities, including developing the potential of existing employees and identifying possible successors from within, as well as targeted recruitment to fill any talent gaps that may exist in the company. We invited a number of experts in this crucial area to provide their insight into the latest thinking in succession planning. A step-by-step guide to effective succession planning. Caroline Dunk, leads consultancy firm cda's work on change management, HR strategy and HR policy & process development. Succession planning has always been something of a ‘Cinderella’ issue – neglected in favor of other priorities. However, setting up an effective succession planning process needn’t be complicated; it’s all about asking the right questions. 1. What is the succession planning process for? You need to be asking whether the process is primarily about managing risk by protecting against loss of key staff or about maximizing the talent pool available to the organisation? How open are you prepared to be with individuals about their place in the succession plan and what are the succession planning timeframes? 2. What are the assessment criteria? It’s important to assess competence and potential against an agreed set of criteria, which reflect the strategic priorities of the organization. Assessing potential has traditionally been a challenge; models like cda’s ‘Leadership Talent Factors’ can provide a useful way to tackle this. 3. Can succession planning be integrated into existing HR processes?

Ideally, assessment decisions will be made or confirmed as part of ongoing career discussions so that data is constantly updated, managers are engaged in the process and any resulting development plans are integrated with other development activity. Roles in the process must be clearly specified, and usually a dedicated succession committee is required to oversee the process and drive cross-business development. 4. How to measure the results? ‘What gets measured gets done’ – so how will succession data be reported? What measures will be used to evaluate the success of the succession planning process? If these requirements are clear at the outset, they will help shape the overall approach. It’s only once these fundamental questions have been answered that thinking on the more detailed aspects of succession planning, such as assessment processes, can start. The corporate strategy How does Destination Hotels & Resorts – the US’s fifth largest independent management company with more than 6500 employees – ensure it has the leaders it needs. VP of HR Robert Mellwig guides us through it. Good leaders make a difference to an organization; great leaders make an exceptional difference. The success of a leader can be simplistically measured in two parts: what results they achieve individually or through their team and how they achieve these results. Many companies have isolated these leadership success factors into specific behaviors. When common behaviors are linked they can be ‘packaged’ as leadership competencies such as motivating and inspiring others, communicating effectively, driving continuous improvement, etc. Strategy and vision At Destination Hotels and Resorts, our overall learning philosophy is centered around creating long-term careers and optimizing our return on human capital. Our goal is to provide internal and external opportunities for our associates to grow and advance in their career and lives. One of our core leadership competencies is ‘championing continuous learning’, which is present in our selection, 360-feedback, performance management and compensation process. The strength within The advantages of having staff rise up from within can be numerous. You will always know more about your employees than someone who is not currently working with the firm. Typically, companies are better able to manage salary planning when internal candidates are considered. We handle succession planning through a third party vendor – SumTotal Systems – with whom we have built an extensive database. This is managed online through an employee and manager ‘self-service’ concept that allows for real-time report and analytics to help run our business. The system captures data on an individual’s background and creates an online resume, and pulls in data from other systems like the 360-feedback process. This

enables us to view comprehensive records about our employee base, both at an individual level and a business level. Reports can also be generated to answer key questions surrounding employee readiness for promotion, who is available and interested in taskforce assignments, etc…. Key metrics for our organization center around readiness for promotion and/or lateral movement. We track this data as: ready now, ready in six months, ready in 12 months, new hire and uncertain, and continue in current role. This allows us to gauge how effectively we are able to build bench strength across functions and business lines. Our metrics and success correlate to our ability to get more people ready for increased responsibility over time. Strategically, it is important to start with an aligned definition of successful succession planning within your organization. What jobs matter the most and which people have the highest impact on the organization? In addition, thinking through the uniqueness of culture can be important. For instance, if you use technology to track who is ‘ready’ for a promotion or lateral move within the company, who will you grant access to in order to use that information? Can they see across business unit lines and what will be the protocol to contact an individual should a career opportunity become available? These questions tend to be answered in part based on the culture, values and norms established in your organization. The ability to forecast talent gaps and ensure you have concrete plans and strategies to provide for optimum business continuity can be one of the most critical value-add activities within a human resources group. Our organizational turnover has improved since adopting this approach, by five percent at the managerial level. Managers are required to log in to the system and update the data twice each year, which reinforces the concept and renews their faith that someone is actually looking at the data. Their manager is also required to update the manager’s profile and communicate back to the associate, which reinforces the use and application of the technology and process. When associates recognize that an employer cares about them, their career and their future and that they have a vehicle to help them manage this effort, their engagement and commitment increase. If they believe there to be employment opportunities within your organization and understand how to achieve their career goals, they will not spend time ‘on your clock’ searching for alternative employment. This translates to increased productivity and ultimately impacts the bottom line, as retention improves and continuity of leadership enables relationship building and business development with customers. The art of succession planning Bernard Cooke, Principal Consultant, OPP Ltd, on identifying derailment factors. In January this year, international oil giant BP finally confirmed a date for Lord Browne’s retirement and that Tony Hayward, head of the company’s exploration and

production business, will succeed him as chief executive. The choice of a successor for one of the UK’s most high profile businessmen has been played out under a spotlight. It is a valuable reminder – should senior management teams need one – of the importance of a long-term and clearly communicated strategy for succession planning. The rise of shareholder activism has placed a sharp focus on the importance of having effective leaders at the helm of the world’s leading, public companies. Also, the challenges of competing in a globalized economy have placed talent management firmly at the top of the business agenda. Many organizations have responded effectively in their approach to people management, but many have yet to step up and take the holisitic view that succession planning requires. Above all, a business should be considering its future leadership in the context of its overall organizational strategy. What are the key goals and objectives of the business over the next five or so years? Aligned with this, what skills and qualities will leaders need to drive success? The development of a senior leadership team must be underpinned by a long-term ‘talent management’ strategy that focuses on finding and keeping future leaders of the right quantity and quality, at all levels. This highlights an important consideration – that effective succession planning must look beyond the development of a single figurehead to assembling and maintaining an effective senior management group. Business performance does not depend on one charismatic, highly talented leader – that individual must be supported by a team of individuals with skills that complement each other, as well as those of their chief executive. A clear understanding of individuals’ strengths and their potential is the starting point, a process that can be supported through effective analysis and psychometric tools. From intellectual or cognitive ability through to drive and, critically, for senior managers, interpersonal skills, it is important to have an insight into the capability of top people to perform against the company’s business plan and deliver its objectives. Beyond this, team chemistry is key; individuals who will work together need to be assessed as to whether they can operate as a high-performing team, and a psychological approach to this is particularly effective. It’s also essential to gain insight into individuals’ likely ‘derailment factors’, those characteristics that may surface under stress to cause even the most talented employee to veer off course if they are not recognized and addressed. Such factors include, for example, difficulty in changing or adapting to change, problems letting go, or, crucially, difficulty in building and leading a team. While it is important to have an understanding of and address these potential weaknesses, effective succession planning should focus as much on developing and playing to the strengths of each individual in the senior management team. Relevant individuals must also have a high degree of self-awareness to ensure clarity about their own areas of strength and possible pitfalls, as well as their impact on those around them. Ticking these boxes will underpin a high performance group that works as a successful senior team.

The challenge, of course, is to ensure up-and-coming talent is identified at the earliest stage of an employee’s time with an organization. In this way, potential may be groomed and long-term loyalty encouraged through effective investment in, and support of, skills development throughout the company. A focus on the next CEO alone is guaranteed to leave you short of choices! Don’t lose face Jonathan Jordan, Chief Executive of Burson-Marsteller UK, on the impact of C-level departures. Q. Just how important is the image and reputation of C-level staff on the success of a company? A. Research confirms what every executive knows to be true – that CEO and corporate reputation are inextricably linked and have a proven impact on the success of a business. Burson-Marsteller has been conducting CEO and corporate reputation research since 1997, when research amongst C-level executives worldwide found that the average estimated contribution of the CEO to a company’s reputation stood at 40 percent. In 2003, this figure jumped to 50 percent. The tremendous importance attached to CEO reputation reaches far and wide, and its value has been proven in countries across continents. Even among consumers – a segment often considered less informed about business matters – the CEO effect was found to be strong. In both the US and the UK, BursonMarsteller’s research on the general public found that a CEO’s reputation accounted for 48 percent of a company’s reputation. CEO reputation continues to matter the world over. Q. Has this always been the case, and if not what’s changed? A. More attention and pressure is being placed on CEOs than ever before. CEO departures and corporate behavior make headline news worldwide. With the spotlight on CEOs shining brighter each quarter, CEOs need to better understand the inextricable link between their reputations and company reputations. Companies are clearly recognising that their stakeholders were becoming more numerous and diverse. With the rise of the internet came a deeper interest in corporate affairs. A company’s constituencies were expanding beyond traditional groups such as the financial community, the media and government regulators to encompass organizations such as NGOs and pressure groups. Technology empowered new stakeholders to voice their opinions, exert influence and demand access to top management. News could be instantaneously communicated around the world through the proliferation of TV stations and new media and every nook and cranny of a company’s affairs were laid wide open to critique and scrutiny. Q. Do you think companies realize this enough and take sufficient steps to safeguard or plan for that reputation?

A. In light of these changes to the external business environment, there is greater dependence by the CEO on his/her communications’ team. However, some companies are better than others in planning and safeguarding their reputations. Leaders that are in touch with their organizations and that actively engage with stakeholders are in a much better position. Q. So what can organizations do about it? How can they assess what impact their reputation is having on the company as a whole? A. It comes down to research. One Forbes 500 CEO offered this advice to new CEOs: The first priority is to get in touch with the company’s reality. Undertaking research to measure how key stakeholders (ie. employees, customers, prospects, vendors, suppliers, partners and local community groups) perceive the company and its strengths and weaknesses is critical. Well-designed research, independently performed and statistically based is essential. There are also now multiple rankings and listings that measure how well companies are perceived and admired, such as Fortune’s Most Admired Companies. This provides an independent picture of the competitive landscape. Q. How can they plan better for the future and ensure they have the kind of leaders that will instigate success? A. This is where effective succession planning is essential. CEO turnover is on the increase, with the average tenure of chief executives just five to seven years. However, despite shorter terms, they must leave the company stronger not weaker and in a better position to be run by a successor. Chief Executives can personify a company’s vision and voice, yet companies endure beyond their leaders. Successful leaders plan for an heir apparent with the strength, values and experience to handle the next stage of the company’s evolution. •

HR consultancy DDI – responses (Laura Buller)

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VP HR Boeing