SUCCESSION PLANNING:

Building Your Talent Bench

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 Succession: It’s History
What did the Pope, King Henry the VIII and the
Godfather have in common?

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 The Talent Crisis

• What is the Age Bubble?

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 % change in pop. by age group 2000-2010
60.00%

50.00%

40.00%
Percentage

30.00%

20.00%

10.00%

0.00%

-10.00%

-20.00%
5-9 10- 15- 20- 25- 30- 35- 40- 45- 50- 55- 60- 65- 70- 75-
14 19 24 29 34 39 44 49 54 59 64 69 74 79

Age

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 Recent Research Data
• Factors that impact your need to develop your talent bench
– Corporate officers reported (40%) that company growth was
limited because they didn’t have the right talent.
– Corporate officers reported (75%) that their company is
chronically short of leadership talent.
– Within next 5 years, average company will lose 30% of its
executive staff .
– Failure rates are high (40-50%) when executive talent is hired
from outside.
– Two-thirds of employees have low to moderate confidence in
their companies’ top executives; three-fifths of executives
say the same.

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 Recent Research Data
Factors that impact your need to develop your talent
bench (continued)
– Employees say company leadership is a key contributor to
job satisfaction, commitment and intent to stay; especially
true for top talent.
– Recent surveys state that employees value most the
leadership qualities of honesty and integrity.
– Only 1% of companies rate their succession management
plans as excellent; two-thirds rate them as fair or worse.

─McKinsey, The War for Talent, Right’s People

Brand Research Report, DDI Exec. Dev. &
Succession Management
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 Factors You May Need to Consider
– Increased retirements; company demographics
– Attrition; promotions; transfers
– Market pressures requiring better/different players
– Fit issues; changing skill sets (“the man for all seasons?”)
– M&A’s; accumulative RIF impact in mid management levels
– Weak employment brand; poor retention practices for top
talent
– Increased board pressures, (e.g. Sarbanes-Oxley Act)

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Ask your CEO these top questions
1. Have you lost high potential talent because they didn’t know
they were on the list?
2. If your executive team “got run over by a bus,” would their
replacements be able to step right in and be productive?
3. Is anyone on the “top floors” or in the Boardroom worried about
the status of your “talent bench?”
4. What lost opportunity costs has your organization incurred
because it took a long time to replace a key leader?

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 Key discussion questions …
6. How does someone in your organization get selected to
be a potential successor?
7. Do you have leadership development and talent
management processes in place to grow successors?
8. If your organization has succession criteria, is it past
focused or future oriented?
9. If you have a succession planning process, is it grounded
in your business strategy?
10. Would your selection/promotion practices pass a “drop in”
legal challenge?

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 Common Flaws
• Talent planning and placement efforts are not linked to
business strategy.
• Succession planning and talent assignment by default -
react only when a position becomes open.
• Line mangers ignore the “talent pool,” relying instead on
their own knowledge/comfort with candidates.
• Lack of ownership by the “top floors;” Succession
planning and key assignment of talent is perceived as a
human resources issue.

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 Common Flaws, con’t.
• Entitlement culture rather than criteria-based
promotion process; Halo effect for “chosen ones.”
• Lack of objective discussions; Limited data points to
make good decisions.
• No formal process to keep track of candidates.
• No leadership/career development process to grow
your own talent.

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What is Succession Planning?

A deliberate and systematic effort by an

organization to ensure leadership
continuity in key positions, retain and
develop intellectual and knowledge capital
for the future, and encourage individual
advancement.

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Replacement vs. Succession
• Reactive • Pro-Active
• Form of Risk • Planned Future
Management Development
• Substituting • Renewing
• Narrow Approach • Organized Alignment
• Restricted • Flexible

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 Traditional vs.
• Driven by an annual
bureaucratic HR procedure
• Entitlement focus – good
old boy payback system -
decided in secret
• “The list” and identified
development actions, but no
accountability for
development
Future
• Driven by current and future
business needs
• Successors determined by
an open process with
multiple inputs and factors
• Development plans,
development discussions
and coaching with both
candidate, sponsors and
others held accountable for
progress and monitoring
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 Traditional vs. Future
• Assumes targeted people • Actively involves candidates
in development discussion.
will be ready when needed. Regular, developmental
Little, if any feedback feedback
• Hindered by paper process • Aided by on-line assessment
that needs to be updated and regularly updated talent
bank; scales to meet the
masses
• Heirs apparent in line for • A fluid pool of qualified
specific positions leaders to be tapped as
needed for the next level

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 Reasons for Succession Planning

Here are a couple –

-- ( can you think of others … ?)
• Help individuals realize their career plans
within the organization
• Tap the potential for intellectual capitol in
the organization

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 Reasons for a Succession Planning
Program
• Provide increased opportunities for “high potential”
workers
• Identify “replacement needs” as a means of targeting
necessary training, and employee development
• Increase the talent pool of promotable employees
• Contribute to implementing the organization’s
strategic business plans

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 Reasons, con’t.
• Help individuals realize their career plans within
the organization
• Tap the potential for intellectual capitol in the
organization
• Encourage the advancement of diverse groups
• Improve employee’s ability to respond to
changing environmental demands
• Improve employee morale
• Cope with effects of voluntary separation
programs

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 Assessment Questionnaire

• Complete the following Assessment

Questionnaire to determine how well your
organization is presently conducting
Succession Planning.
• Share the assessment with your
organization, use it as a starting point to
determine the need for your approach.

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 Critical Considerations for a
Successful Succession Process
Let’s discuss…..
Examples:
• Common values on the why’s and how’s are
communicated.
• True commitment to only the best people getting
nominated.
• Focused on future strategy and emerging
business needs.

Others?
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 Critical Considerations for a
Successful Succession Process
1. Common values on the why’s and how’s are
communicated.
2. True commitment to only the best people getting
nominated.
3. Focused on future strategy and emerging business needs.
4. Accurate research information on retirement and attrition.
5. Good communication between line and HR on promotions
and transfers.
6. Senior level commitment, involvement and ownership;
alignment with key stakeholders.
7. Horizontal and vertical communication at appropriate
levels

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 Critical Considerations, con’t.
8. Key criteria understood; competency identification and
validation; “Leadership Profiles” for targeted positions.
9. 360, multi-rater and other objective assessments and
methods.
10. Feedback rich process; development culture.
11. Fluid in design; pools high potentials for possible next jobs.
12. Established committees to oversee the review and placement
process.
13. Rigorous talent review team process includes individual,
manager and/or sponsor, objective sources and organization.
14. Promotions evaluated against the succession candidate pool.

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 Critical Considerations, con’t.
15. Aligned/linked with other practices of talent development and
performance management throughout the organization.
16. Relevant development opportunities and assignments.
17. Executive coaching for key players or those in accelerated roles.
18. Accessible e-based talent bank to manage candidate data,
assignment and relocation needs, and identify ready candidates.
19. Built with checks and balances; diversity and legal considerations.
20. Defined outcomes and ongoing review process to measure
effectiveness.

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Sample: Succession Planning Process

• Phase I: Review Business Issues

• What is your organization’s mission and vision? What
are your organizational values?
• What competencies are necessary in your employees to
support current and future mission, vision and values?

Why link succession with strategy?

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 Overview of Process and Tools

Executive
Manager Decision-Making Profiles & Dev. plans focus
Org.Strategic and Self Matrix Organization on both strengths
Initiatives, Mission Evaluations Chart And dev.areas
Vision & Values

Determine Gap
Identify Assess
between
Determine Key Leadership Organizational Monitor & Track
Actual Performance
Competencies Candidates & Risks Employee’s
& Behaviors vs.
For Leadership Assess Against and Develop Performance
Required
Competencies Strategies
Competencies

Process Process Implementation Process

Design Management

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 Functional and Leadership Competencies
FUNCTIONAL LEADERSHIP

Integration and Balance Cross Boundary Perspective

The ability to pull together diverse views and conflicting information into a Maintains balance between enterprise-wide, global thinking and a focus on
comprehensive direction for the business. Balances today’s business the functional areas within Fairbanks. It includes connecting with initiatives in
requirements with tomorrow’s vision for where the business is heading. other areas and proactively sharing relevant resources with others.

Management of Budget and Metrics Drive for Results

Emphasizes profitability, financial viability and performance potential to The ability to continuously raise performance standards and drive
ensure business performance. Develops financial measurement outstanding organizational performance. It includes achieving superior
frameworks, and identifies key metrics to drive business performance. performance not only for one’s own area, but also for FCC performance as a
whole.

Market Knowledge Adaptability

Understands business and regulatory environment, major industry players, Adaptability relates to taking action to improve current approaches or
and the business dynamics. Has in-depth knowledge of the full range of FCC solutions. Facilitates a creative or innovative approach to working.
business products and key competitors in the market place. Responds with agility to changing goals, processes or environments.

Cutting-Edge Technology and Business Methods Organizational Alignment

Understands and takes action to maintain, develop, and apply specialized The ability to rapidly align people, processes and organization structure with
knowledge of technology and business methods relevant to one’s role. strategic direction. This includes the active identification and removal of
Takes the initiative to keep abreast of key technological changes and trends. barriers that block change and impede desired behavior.

Business Strategy and Planning Communication and Influence

Formulates appropriate business strategies and supporting plans that drive The ability to effectively communicate and influence others inside and outside
the success of the business areas and support Fairbanks’ overall business the organization to build commitment to Fairbanks objectives.
plans.

Developing and Motivating Self and Others

Efforts to apply and grow one’s expertise/knowledge (and to help others do
so) within and across specialized technical/functional areas.

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 POSITION HISTORY
2002-Present, Fairbanks Capital Corp., Controller
Sample, Sally 1998-2002, Independent Consultant
Controller 1990-1998, Household International Inc.
•V.P. Specialty Finance
•CFO
Date of Hire: 1/7/2002 •Deputy Controller
Talent Code: Solid Citizen Performer
Potential Positions: Chief Financial EDUCATION
Officer Northwestern University, Kellogg School of Mgmt., M.S.
Purdue University, B.S.

STRENGTHS
• Strategy and Planning

Competency A
• Budget Management
• Good Judgment
• Good communication/interpersonal skills

Functional
• Driven to improvement and success

DEVELOPMENT AREAS
• Development of treasury/technical skills
• Working effectively across departmental lines to accomplish goals
• Build knowledge of FCC and servicing operations

Integration and Balance

• Training and development of staff
Exceeds
Key Standard

At Standard

Needs Development

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Results: Talent Summary by Competency
Functional competencies Leadership competencies

Drive for Results

Cross-Boundary
Management of

Communication
Organizationa

Self & Others

and Planning

and Influence
and Balance

Developing
Adaptability
Technology

Perspective
& Business
Integration
Knowledge

Alignment
Strategy

Methods
Market
Budget

This graphical representation indicates how the high potential group scored on each competency. It is compiled so that the competencies are listed from left
to right in the order in which there is the greatest need for development according to our data collection. It is most useful for looking at the talent needs of
the group (rows do not represent an individual's scores in this grid).

- Exceeds Standards - At Standard - Needs Development

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 Decision Making Matrix
SOLID CITIZEN PERFORMER
(High Performance/Low Potential)
•Gets all important things done
•Is a pro in his/her position
•Is seen as a leader in his/her area
•Has reached potential
Action Required:
Continue developing in current position; is in the
right job
QUESTIONABLE PERFORMER
Performance
(Medium Performance/Low Potential)
•Gets most important things done
•Is very proficient in his/her current position
•Is not seen as a leader in his/her area
Action Required:
Work on improving performance in current job;
may be candidate for lateral move
LOW PERFORMER
(Low Performance/Low Potential)
•Isn’t getting most important things done
•Difficulty performing to standards in his/her
current position
Action Required:
Consider reassignment to more appropriate
position; including lower level or exit option
STRONG PERFORMER
(High Performance/Med Potential)
•Gets all important things done
•May act at level of capability of one level above
current position
•Acts as leader and role model
•Exhibits many strengths or competencies beyond
current role
•Some leadership development issues
Action Required:
Look for opportunity to display leadership in
current job
SOLID CITIZEN PERFORMER
(Medium Performance/Medium Potential)
•Gets most important things done
•Shows signs of leadership and role modeling
•Exhibits many FCC executive competencies
•May be new in position
Action Required:
Leave in current job; continue developing skills
and improving performance
QUESTIONABLE PERFORMER
(Low Performance/Medium Potential)
•Isn’t getting most important things done
•Capable of making higher contribution
•May be in wrong job or occupied with non-work
distraction
Action Required:
Focus on improving performance
Potential
STAR PERFORMER
(High Performance/High Potential)
•Gets all important things done
•Acts at a level of capability of at least one level
above current position
•Acknowledged as a skilled leader and role model
•Exhibits many strengths or competencies beyond
current role
•Has wide spread influence beyond current role
Action Required:
Stretch assignments to prepare for larger role
STRONG PERFORMER
(Medium Performance/High Potential)
•Gets most important things done
•Acknowledged as a leader and role model
•Exemplifies FCC executive competencies
•Acts at level of capability of next level in the
organization
Action Required:
Focus on performance short term and development
opportunities long term
SOLID CITIZEN PERFORMER
(Low Performance/High Potential)
•Isn’t getting most important things done
•Has been acknowledged as a team player and role
model
•Has exemplified FCC executive competencies
•May be in wrong job or occupied with non-work
distraction
Action Required:
Address root cause performance issue; worthy of
investment in development
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 Decision Making Matrix
SOLID CITIZEN PERFORMER STRONG PERFORMER STAR PERFORMER
(High Performance/Low Potential) (High Performance/Med Potential) (High Performance/High Potential)

JF BW BR
EB TO
EK

QUESTIONABLE PERFORMER SOLID CITIZEN PERFORMER STRONG PERFORMER

(Medium Performance/Low Potential) (Medium Performance/Medium Potential) (Medium Performance/High Potential)
Performance

DS EH TK
LG AG
TW
KS
DSo

LOW PERFORMER QUESTIONABLE PERFORMER SOLID CITIZEN PERFORMER

(Low Performance/Low Potential) (Low Performance/Medium Potential) (Low Performance/High Potential)

Potential

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 Results: Talent Summary by Individual
Functional Competencies Leadership Competencies
Participants

and Balance

of Budget

Knowledge

Technology

Strategy

Drive for

Adaptability

Organization

Develops
Communi
Planning
Manage-

Perspective

Influence
Integration

Results

Self and
Business

Alignment
Boundary
Market

Methods

action

Others
ment

and

and
Cross
and
Participant 1

Participant 2

Participant 3

Participant 4

Participant 5

Participant 6

Participant 7

Participant 8

Participant 9

Participant 10

Participant 11

Participant 12

Participant 13

This graphical representation is a comparison of each individual’s performance by competency (each row on the vertical axis represents an individual's score).
- Exceeds Standards - At Standard - Needs Development

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 Lessons Learned
• It is an ongoing process where the players
will change continuously
• In smaller less stable organizations, the
organizational direction may also change
• Competencies need to be constantly
monitored to ensure they are measuring
what you want to measure

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 Refining the Program
• Prepare a program action plan
• Communicate the action plan
• Conduct Succession Plng. meetings
• Training on Succession Plng.
• Counsel managers to deal with Succession
Plng. issues affecting them and work areas

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 Goal: Build a Development Culture
“The strategic objectives of the company
lead to assessment of talent to determine
future staffing needs and bench strength,
which in turn determine development
needs and actions.”
─ “Promoting A Development Culture,” Right Management
Consultants, Peggy Simonsen

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