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If you ask 100 people about succession planning
, you are likely to get 100 different responses about what it actually is and how their organization is handling it.
Source : Halogen Software
10 Key Steps to Effective HR Succession Planning
Effective Succession Planning is also known as:
Sucession Planning Tool,
Effective succession management,
Business Succession Plans,
Producing Effective Succession Planning,
Effectual Succession Planning,
succession planning model,
Creating a business succession plan,
Succession Planning Tool.
There are two forces
at work today that are driving organizations to consider some form of succession
planning as a component of an overall talent management strategy. Namely, these
forces are: the aging of the workforce; and a shortfall in the skills
possessed by those available for recruitment. Both are projected to become
But what is succession planning and how will it address these
human resource issues? What are the best practices being applied by
successful companies today? How does succession planning differ from
replacement planning? When do leaders know that their organization needs a
succession planning and management program? What are talent pools, and how
are they used? What ten key steps are tied to effective succession planning?
What common mistakes are made in establishing succession planning, and how
can they be avoided? This white paper answers these questions. By doing so, it
provides a starting point to help decision-makers and HR practitioners alike
contemplate the ins and outs of a practical succession planning program.
What Is Succession Planning, and Why Is It Needed?
sometimes called succession management to emphasize the active and continuous
nature of the effort, is a process for preparing people to meet an
organization's needs for talent over time. As I defined it in my book
Effective succession planning (2005, p. 10), succession planning "is perhaps
best understood as any effort designed to ensure the continued effective
performance of an organization, division, department, or work group by making
provision for the development, replacement, and strategic application of key
people over time." Geared to developing the internal bench strength of an
organization, succession planning is usually part of a larger talent
management program that is intended to attract the best through recruitment,
keep the best through effective retention practices, and develop the best people
through well-targeted talent development efforts.
Why is succession planning
needed? There are many answers to that question. One of the most important is
the aging workforce. Demographers have long been aware that the U.S. workforce
is aging, a result of population change. According to labor economist Douglas
Braddock, "over the 1998-2008 period, more job openings are expected to
result from replacement needs (34.7 million) than from employment growth in
the economy (20.3 million)" [Occupational employment projections to 2008 (1999,
What are the practical consequences of this massive shift in the
average age of the workforce? Consider:
- One in five of all senior
executives in the Fortune 500 is eligible for retirement now.
- About 50% of
the entire U.S. government workforce is eligible to retire now.
- 55% of
today's registered nurses can be expected to retire between 2011 and 2020
Equally threatening is the current difficulty in finding qualified hires. A
January 2006 study by Manpower [Talent Shortage Survey (p.2)], finds that 44%
of employers are experiencing difficulty today finding employees with the
right skills ' in particular, there are shortages filling the following roles:
- Sales Representatives
- Administrative Assistants & PA's
Succession Planning Differ from Replacement Planning?
Ask a CEO to define
succession planning. There is a good chance that, if you do that, you will find
that the average CEO confuses replacement planning and succession planning.
But they are not the same.
Replacement planning assumes that the organization
chart will remain unchanged over time. It usually identifies "backups" for
top-level positions, as they are identified on the organization chart, and stops
there. A typical "replacement chart" will list about 3 people as "backups" for
each top-level position and will usually indicate how ready each person is to
assume the role of the current job incumbent. (See Exhibit 1)
planning, in contrast, focuses on developing people rather than merely naming
them as replacements. Its goal is to build deep bench strength throughout the
organization so that, whenever a vacancy occurs, the organization has many
qualified candidates internally that may be considered for advancement.
most cases, organizational leaders recognize that it is wiser to focus beyond
replacement planning to succession planning to build the long-term
sustainability and viability of the organization.
When Do You Know That
Your Organization Needs a Succession Planning and Management Program?
Several common symptoms, if they appear in an organization, may indicate the
need for a more systematic approach to succession planning. Among them:
- The organization has conducted a retention risk analysis, a process of
estimating the projected departure dates for each individual in the workforce
or work group, for reasons of retirement or otherwise.
- The organization
has no way to respond quickly to sudden, surprise losses of key talent. If a key
person is suddenly lost due to death, disability or resignation, it may take a
long time to find a suitable replacement.
- The time it takes to fill
positions'what is called the time-to-fill metric--is unknown or is perceived
by managers to be too long.
- Managers at one or many levels complain that
they have trouble finding people ready for promotion or else have trouble
finding people who are willing to accept promotions as vacancies occur.
- Workers complain that promotion decisions are made unfairly or capriciously.
- Women, minorities, and other groups protected by law are not adequately
represented at various levels and in various functions throughout the
- Critical turnover'that is, the percentage of high potential
workers leaving'is higher than the number of fully successful (average)
What Are Talent Pools, and How Are They Used?
pool is a group of people being prepared for more challenging responsibilities.
Individuals to be placed in talent pools may be surfaced by various means. One
approach is to ask managers to assess and nominate people. Another approach
is to apply objective assessment methods'such as multi-rater full-circle
assessments to identify individuals who are likely to be worthwhile to
develop for future responsibility.
Talent pools dramatize the difference
between replacement planning and succession planning. In replacement
planning, individuals are usually identified as "backups" for specific
But replacement planning encourages promotions only in "silos" of
specialization. In contrast, succession planning encourages managers at all
levels to regard talent in any part of the organization as a possible
successor for positions immediately above them. Hence, talent pools may be
identified underneath each "level" on the organization chart but are not tied
to specific positions at the next higher levels. (See Exhibit 2)
cases, talent pools are filled from the bottom up. High potential candidates
being prepared for possible promotion are placed in talent pools. Of course,
no promises are made to people who enter pools that they will actually
receive promotions. Instead, the organization commits to help individuals
prepare themselves to qualify for higher levels of responsibilities. But it is
up to individuals to continue to perform well in their current jobs while
also preparing themselves to meet the new challenges at higher levels of
responsibility. Successfully implemented, when a vacancy occurs, the
organization will have a pool of internal candidates ready to meet the
What Ten Key Steps Are Tied to Effective Succession Planning?
Think of implementing systematic succession planning as making a long-term
organizational change. Succession planning requires more of a commitment to a
longer-term, strategic view of how to meet talent needs than short-term, and
sometimes panic-driven, efforts to fill vacancies as they occur. It can be
established and operated using ten key steps that have been field-tested in many
organizations, industries, and economic sectors. (See Exhibit 3.)
A first step for any systematic succession effort is to clarify the senior
leaders' expectations and preferences for a succession program. After Sarbanes-Oxley,
corporate Boards have become more active in succession planning. A fundamental
mistake, and a formula for disaster, is to dump the responsibility for the
succession effort on the Human Resources department.
While the Human Resources function or other parts of the organization must
participate, the leadership responsibility for succession planning rests with
the CEO. If he or she does not favor systematic succession planning, it cannot
A second step is to establish competency models by talent pool considering
the positions that will be fed by that pool. A competency model is a narrative
description of the knowledge, skills, attitudes, and other abilities that lead
to exemplary performance. Competency models provide blueprints of the talent to
build at present and in the future. In short, a competency model describes "what
should be" for such hierarchical levels as executives, managers, supervisors,
salespersons, technical professionals, or other groups. Alternatively,
competency models may be created for specific departments. A recent innovation
in some corporations has been to articulate the organization's ethics, values
and code of conduct and then rate individuals against that as well as against
competencies. Ethics, values and codes of conduct provide a basis by which to
assess individuals against a dimension that goes beyond what it takes to get
good results on the job
A third step is to conduct individualized multi-rater, full-circle assessment.
(This is sometimes called 360-degree assessment.) The idea is to assess
individuals against the competencies required for success in an organization.
The results of a multi-rater, full-circle assessment usually indicate gaps
between what competencies an individual currently possesses and what he or she
should possess to be successful.
A fourth step is to establish (or reengineer) an organizational performance
management system. One fact of life is that individuals are seldom eligible for
promotion, advancement, or other developmental opportunities if they are not
performing successfully in their current jobs. Individuals must thus be measured,
as objectively as possible, against the performance expectations for their
current level of responsibility.
A fifth step is to assess individual potential for success at higher levels
of responsibility. Unlike past or present-oriented performance management,
potential assessment focuses on the future. Some means must exist to examine the
talent available for future possibilities--and advancement. Regular potential
assessment provides the means to do just that.
A sixth step is to establish a means of regular, ongoing individual
development planning. Once it is clear what present and future gaps exist for
individuals as a result of performance assessment and potential assessment, some
means should be established to help them prepare for the future by narrowing
those gaps. To that end, individual workers--and their immediate supervisors--devise
a plan to help individuals develop themselves and thereby prepare for possible
A seventh step is to implement individual development
plans (IDPs). There are various ways by which to do that. One way is to
establish in-house leadership and management development programs. A second way
is to develop competency menus, in print or online, that provide specific
developmental suggestions for individuals. Examples of developmental suggestions
might include books to read, classroom courses to attend, online courses in
which to participate, on-the-job assignments to seek out, and action learning
projects that bring together groups of people to solve practical business
problems while simultaneously permitting the means by which to build competence
in new areas.
An eighth step is to establish a talent inventory. Increasingly, decision-makers
must be able to find the organization's talent on short notice. To that end,
they must have information about the pools of talent that the organization is
developing and has readily on tap so that teams can be marshaled on short notice
to fight fires, seize opportunities, outdraw competitors, and fill vacancies.
As part of this step, it may also be useful to create depth and development
charts to show how many people fall into different categories. Different HR
strategies may be needed to manage individuals in different talent grids. An
example of a talent grid appears in Exhibit 4.
A ninth step is to establish accountability for the systematic succession
planning effort. Individuals--and their bosses--must be held accountable, for
cultivating their talents over time and closing developmental gaps. Otherwise,
individual development plans will not be realized. Often, financial incentives
for talent development can help. For instance, individuals can be given bonuses
if they achieve their developmental objectives, and supervisors can be given
bonuses if their workers achieve their developmental objectives. Alternatively,
periodic meetings may be held in which individuals must report on how well they
are implementing their individual development plans, and senior executives may
report to the CEO or the Board on how well their employees have been progressing
toward realizing their individual development plans.
A tenth and final step is to evaluate the results of the systematic
succession planning effort. Often, the time-to-fill metric is a key measure of
success. How long does it take to fill positions with qualified applicants?
While not directly a financial measure, the time to fill does translate into
financial terms. Productivity is lost, and so are opportunities, when vacancies
exist in today's right sized corporate settings.
What Common Mistakes Are Made in Establishing Succession Planning, and How
Can They Be Avoided?
Many mistakes are commonly made in establishing succession planning programs.
They are worth enumerating. It is also worthwhile to describe some ways to avoid
these common mistakes.
Assuming that Success at One Level Will Guarantee Success at Higher Levels.
An individual's success at one level is no guarantee of success at higher levels
of responsibility. The reason is simple: the competencies required for success
at each level are different. Hence, it is important to separate thinking about
how well someone does his or her current job and how well he or she might do a
job at a higher responsibility level.
Assuming that Bosses Are Always the Best Judges of Who Is Promotable. A
second mistake is to assume that, for purposes of succession planning, bosses
are always the best judges of who is promotable. That is not always true. Bosses
are self-interested players in the succession game. They have a stake in what
happens to people. Indeed, some bosses do not want to see their best people
promoted for fear of an inability to replace them. Some bosses grade people by
their own standards'with the result that some individuals who are quite unlike
the boss are not considered for promotion. While the support of a boss is useful
in developing individuals, more objective assessments, such as multi-rater
assessment are excellent in aiding the manager's assessment.
Assuming that Promotions Are Rewards. Some employees have an entitlement
mentality in which they feel that long service with an organization should
always be rewarded with promotions. But business decisions must be based on who
will do the best job, not who is "owed" a promotion because of greatest
seniority. Workers must continually be reminded that doing jobs at each level
requires different competencies, and the best way for them to compete is to
prepare for future challenges rather than expect promotions for past performance
at a different level of responsibility.
Trying to Do Too Much Too Fast. The strong results-orientation of many
organizations today emphasizes quick results. Senior leaders expect to see all
the components of a comprehensive succession system in place immediately. That
is not always realistic. It is advisable to think of implementing systematic
succession in a phased way'either from the top down or else starting in specific
divisions or locations with greatest need.
Giving No Thought to What to Call It. A fifth mistake is to devote no time to
considering what to call the succession program. As any marketer knows, product
names do matter. It is not necessary to call a spade a spade. Many organizations
choose alternative names--such as "leadership development program," "human
capital management program," or even "talent program."
Assuming that Everyone Wants a Promotion. A sixth mistake is to assume that
everyone wants a promotion. That is not always true today. In many downsized
organizations, workers have seen what pressures their bosses have to deal with.
Some say "leave me out of that." Hence, it is unwise to assume that everyone
wants a promotion'or even to assume that money will convince everyone. It will
not. Check first. Find out what people want to do. For that reason, many
organizations launch both a top-down succession planning program and a bottom-up
career planning program to galvanize development efforts both among managers and
The world faces a quiet crisis of succession. As the global workforce ages
and the skills gap increases, increasing attention will be paid to establishing
and maintaining effective succession planning programs. CEOs, managers, human
resource practitioners and even individuals have important roles to play in that
effort. There is a practical approach to the work that must be done if
organizations are to establish and sustain systematic efforts to ensure that the
right people will be in the right places and at the right times to do the right
things so as to achieve the right results.
William J. Rothwell, Ph.D., SPHR (see www.rothwell-associates.com) is
Professor of Workplace Learning and Performance in the Workforce Education and
Development program on the University Park campus of The Pennsylvania State
University. He is also an active consultant specializing in succession planning
and management and issues related to it. Among his best-known publications are
Effective succession planning, 3rd edition (Amacom, 2005), Career planning and
succession management (Greenwood, 2005), The strategic development of talent
(HRD Press, 2003), The competency toolkit (HRD Press, 2000), building in-house
leadership and management development programs (Quorum, 1999), and The action
learning guidebook (Wiley/Jossey-Bass Pfeiffer, 1999).
Halogen Software offers a practical and affordable automated succession
planning tool that fully supports the advanced practices presented by Dr
Rothwell and other experts in this area. Halogen eSuccession makes it easy for
organizations to focus on developing people rather than merely replacing them.
It helps organizations establish a larger number of promotable employees, who
are more likely to stay with the company and who's skills are better aligned
with their strategic plans. Visit http://www.halogensoftware.com/ for more
By William J. Rothwell, Ph.D., SPHR