When business leaders use the phrase “succession planning,” their thoughts probably don’t fly immediately to their organizations’ learning functions. But they likely should, because effective succession planning really isn’t just about planning. It’s about the successful union of planning and development.
There are multiple definitions for succession planning. Canada’s HR Council for the Nonprofit Sector takes a simple approach: Succession planning identifies and develops individuals with a high potential to take on leadership positions. HR expert Susan M. Heathfield expands succession planning beyond the executive level, challenging organizations to intentionally recruit talent to be developed for “each key role within the company.” Business thought leader Marshall Goldsmith, who takes up the cause of augmenting planning with development, cautions organizations against regarding succession programming complete merely because a plan has been hatched and documented. “Measure outcomes, not process,” he said, opining that a name change “from succession planning to succession development” might be in order.
What’s the Problem?
The Institute for Corporate Productivity (i4cp) and the American Society for Training & Development (ASTD) teamed up for a major research study in 2010, “Improving Succession Plans: Harnessing the Power of Learning and Development,” to examine the roles organizational learning functions play in the succession planning process.
As is the case with every organizational function in this economy-traumatized business environment, it is important to understand the relevance of succession planning. That is, identifying the business-critical issues that succession planning addresses and how its effective execution supports organizational performance, now and in the future.
Companies need trained and capable leaders to fulfill their missions and succeed over the long term. They also need qualified talent available to fill mission-critical positions. These two objectives emphasize the future orientation that characterizes succession planning. But the effort isn’t only about the leadership and talent needed to ensure organizational continuity.
The i4cp/ASTD study analyzed responses from 1,247 participants, representing organizations across a wide range of industries, company sizes and structures. When asked about their companies’ reasons for adopting a formal succession planning process, nearly 90 percent of respondents cited identification and preparation of future leaders, while about three-quarters said they did so to ensure business continuity. At the same time, more than half said their organizations pursued succession planning in order to offer advancement opportunities and to support retention efforts.
Among the concerns companies look to succession planning to address are projected shortages of talent, replacement of pending retirees, preparation for company growth initiatives and support for change. Together, those reasons clearly state that succession planning isn’t only about preparing tomorrow’s leaders. Rather, it’s a much more organizational-pervasive undertaking.
Planning for successors — not just in the C-suite, but in all positions crucial to an organization’s ability to execute strategy — provides vital support for overall performance. Ensuring that key positions are filled with qualified individuals who have been properly trained and prepared to effectively handle the duties of those jobs provides a strong foundation for organizational productivity. Successful succession planning also makes it possible to maintain continuity in management. In turn, a solid and dependable structure within leadership and other essential positions adds to an organization’s effort to utilize its financial and human resources effectively. Such stability contributes to employee engagement, retention, recruitment and many other functions. Absent an effective succession planning program, an organization stands to lose a great deal.
That kind of potential loss isn’t just theoretical. Participants in the i4cp/ASTD study acknowledged that they have a long way to go to master succession planning. Only 14 percent of respondents characterized their succession planning efforts as being effective to a high or very high extent. Just 17 percent said their planning efforts extended far enough into their organizations to ensure that key positions had successors in their pipelines.
More than half of the study participants said their companies didn’t have a formal succession planning process, though about half of those did say they plan informally. When it comes to succession planning, the challenges for today’s companies are all too apparent. Opportunities are plentiful for learning leaders to take an active role in improving succession planning programs.
The Elements of Succession Planning
The tactics companies use to execute succession planning range from the slapdash — “hit and miss as needed” — to the constructive — “key performers are identified and given stretch assignments” — according to participant feedback in the i4cp/ASTD research. Certain components emerged from the study that paint a picture of the ways higher-performing organizations structure their programs.
Responsibility for succession planning most often resides with a firm’s entire executive team, and many business leaders see this as a best practice. “Leaders [and] managers have succession planning objectives as part of their annual performance objectives, which drive bonuses,” said a representative from one firm. Another said that “senior leadership understands that they own the process and are actively involved in coaching and developing high-potential leaders.” Both approaches illustrate how the company brass can be encouraged to take a hands-on role in succession efforts.
In about 1 in 4 organizations, responsibility for succession planning falls to the HR department. While HR involvement makes sense because of the function’s know-how in talent-related issues and programming, many sources opine it is senior leaders’ active participation that is a key underpinning for optimal succession outcomes. Perhaps it is that mindset that drives the selection of candidates for the succession pipeline. Nearly 3 out of 4 companies in the i4cp/ASTD study confirm that their favored method is nomination or selection by senior leaders. Some companies acknowledge that they automatically associate designation as a high-potential employee with the succession pipeline, while others say they rely on nominations made by workers’ managers.
Once a candidate is chosen for a succession program, the learning function becomes central to achieve success. Learning’s expertise is ideally suited to help provide structure to the succession planning process, along with the tools needed to facilitate candidate development. Organizational learning and development director and study participant Lesa Becker of Idaho’s Saint Alphonsus Regional Medical Center said that her role ranges from talent-review participation to design and delivery of learning and development plans.
Other study participants echoed Becker. More than 55 percent said their learning function defines content for leadership development programs to a high or very high extent. Almost half of companies look to learning for actual delivery of training, while others seek the function’s involvement in integrating succession planning with other talent management programs and with managing succession efforts.
Researchers from i4cp and ASTD said any involvement by organizational learning functions correlates to succession planning success, but recommended that chief learning officers work with other talent leaders as well as with the organization’s top executives to ensure the integration of succession planning with other talent management programs and to align development with organizational business strategies.
Indeed, learning leaders may welcome the interaction with other talent leaders in order to ensure that succession programs function effectively, since multiple obstacles can impede optimal outcomes. The most often cited barrier to succession planning success that emerged from the i4cp/ASTD study was a lack of sufficiently robust development plans for candidates. Certainly involving the learning function and its capabilities in planning and delivering content can help organizations avoid this common pitfall.
Like many talent programs, succession planning can suffer from a lack of metrics to track results. About 1 in 4 study participants admitted problems in this area. Other obstacles in the way of good succession planning outcomes include budget woes, program communication issues, lack of program reach beyond management levels, and problems tracking and sharing data about succession candidates.
Learning professionals can prove instrumental in addressing these and other barriers to succession planning by applying a disciplined approach to the overall development process. As they do with other organizational learning programs, learning professionals could begin with rigorous planning to help define the succession process; that includes the formulation of custom development programs for each candidate. Learning also can add its voice to other talent leaders to encourage senior management’s investment in and support for succession planning.
When senior leaders do become involved in candidate development, learning professionals may be called upon to help them prepare for roles as mentors and coaches. A close alliance between leaders and the learning function can help to ensure that candidate development activities actually address the needs identified for each candidate and are relevant to specific business challenges the organization faces, while also providing oversight to maintain consistency and quality in the development process.
Put the Success in Succession Planning
Two ideas emerged as core findings in the i4cp/ASTD study: the need to make development a more critical part of the succession planning process and the need to integrate succession planning with other talent management programs.
Few organizations can speak to the value of integrating succession planning and talent management as knowledgeably as McDonald’s Corp. In fact, the fast food organization built its integrated talent management programming on a foundation of leadership development and succession planning. David Small, vice president of McDonald’sï¿½ leadership institute and global talent management, described the company’s early interest in developing leadership talent as a means to accomplish succession planning for its top management. Beginning with a focus on a more robust performance management system, Small said the company added a competency model to ensure that “competencies are aligned with our development strategy.”
McDonald’s early succession planning efforts proved vital to company continuity when the firm lost two CEOs within a year’s time in 2004. With a process already under way, McDonald’s was able to name successors to both men within hours of their deaths. Small said the unfortunate situation gave the company’s succession and talent programs “the firepower we needed to move forward with efforts that might not have moved as quickly otherwise.” Given that history, current McDonald’s CEO Jim Skinner’s prioritizing leadership development and talent management speaks to the company’s ability to learn from, and continue to strengthen, its succession planning experiences.
Companies can take to heart the lessons McDonald’s learned and devote greater focus to preparing viable leadership pipelines. The i4cp/ASTD study yielded a number of recommendations to fuel such efforts. Some strategies likely to contribute to succession planning success include:
• Securing senior leaders’ championship for succession programs, including leaders’ active participation in development activities.
• Extending succession planning efforts deeper into the organization to address critical roles and those for which talent may be hard to find.
• Determining appropriate metrics to gauge program effectiveness and applying them in a disciplined and consistent manner.
• Honing the candidate selection process to include employees who embody high potential for leadership and to solicit nominations from company managers.
Finally, organizations are likely to enhance their outcomes by making learning leaders an active part of succession efforts. This is especially relevant when it comes to shaping and delivering development programs that provide succession candidates with meaningful and relevant content designed to prepare them for the unique challenges that future leadership in their particular organizations will bring.
Carol Morrison is a senior research analyst for the Institute for Corporate Productivity. She can be reached at firstname.lastname@example.org.
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