Succession Planning & Management: Understanding the Whole Picture

Cope & Associates, Inc. Proprietary Information

SUCCESSION PLANNING & MANAGEMENT

Understanding the Whole Picture

Presenters note version for:

Paula Cope, President & CEO

Cope & Associates, Inc.Burlington, VT

www.ConsultCope.com

Cope & Associates Proprietary Information 2

WHAT IS SUCCESSION PLANNING?

“Succession planning is perpetuating the enterprise by filling the pipeline with high-performing people to assure that every leadership level has an abundance of these performers to draw from, both now and in the future.”

Ram Charan, Stephen Drotter, James Noel,

The Leadership Pipeline


OLD WAYS OF THINKING ABOUT SP&M

Primary purpose was to identify replacements• Formal, often reactive system

• Ownership was at senior levels

• Not seen as a development tool

• Static “slate,” “list” or “plan”

• Limited to executive levels

• Characterized by secrecy

• Few options for search

Having a strong talent pool alone is not enough


NEW WAYS OF THINKING ABOUT SP&M

Now seen as a mechanism for identifying and cultivating leadership talent• Flexible, proactive system that meets an organization’s

current and future needs

• Ownership at many levels including the employee & widely distributed across organization

• Dynamic development tool

• Greater potential for recruitment & retention

• Identifies opportunities, not just positions, feeds cultivation

• Expands options for talent search from internal to include external

• Increases the role of technology & communications


TRENDS EFFECTING SP&M

Global competition Technology –level playing field Retirement of the Boomer Generation with a

concurrent decline in the US workforce starting in 2010• By the year 2020, 40% of the US workforce will be

eligible for retirement

Workforce shortages• Service Sector

• Health Care

• Education


WORKFORCE CRISIS

As of this year ,2010, 76MM baby-boomers can retire. Only 46MM Generation X-ers are available to take their place.

Change in US Workforce Age Groups

0

2

4

6

8

10

12

1990 - 951995 - 002000 - 052005 - 102010 - 152015 - 202020 - 252025 - 302030 - 352035 - 40

Millions Increase in20 to 64 AgeGroupIncrease inOver 65 AgeGroup


DRASTIC CHANGES IN RETIREMENT

0%

5%

10%

15%

20%

25%

30%

35%

2003 2008

In the past five years, the expected retirement start dates have decreased by nearly 50% indicating that employees are planning to work

longer.

Source: Insurance Information Institute


FAST FACTS Only 50% of public and private boards have

succession plans in place Only 23% said they had a plan in progress and

expect to complete it soon There are more than 4 million owners of

established businesses who are at least 50 years old


FAST FACTS

The average American company spends only 1-2 days annually developing or revisiting its strategic plan vs. the typical American wedding which takes an average of 9 months to plan and lasts about 5 hours

On 9/11/01, among the thousands who perished were 172 corporate vice presidents, lost on a single day in the same geographic location


FAST FACTS

According to a 2005 survey of 364 CEOs of privately held, fast growing companies, about 65% plan to move on within 10 years or less and have not yet chosen a replacement

83% of 1400 current CFOs recently surveyed said they have not identified their successor chosen a replacement

CFO’s who do advocate succession planning tend to have experienced it elsewhere


WHERE TOO MANY COMPANIES

ARE TODAY

Help Wanted

A warm body to fill a non-descript position in a nice company with little interest in advancement. Some possibility of moving up if someone dies or leaves. Decent co-workers, untrained supervisors, set hours, regular pay, occasional feedback. No additional training necessary and little provided after hire. Apply through traditional means.


WHERE WE NEED TO BE

Help Wanted

Dynamic organization seeks talented, innovative team member for a variety of positions. Ongoing development and training, continuous feedback, coaching & mentoring, and abundant opportunities for advancement. Pay and benefits exceed your expectations. Opportunities to dialogue with leadership team abound. Come in today and find the perfect fit for you or partner with us to create a structured, personalized plan to help you get where you want to be!


Cope Clock Model:YOUR ORGANIZATION

Leadership Alignment

Enterprise Risk Management

Communications

Stakeholder Engagement

Systems/Infrastructure

Organizational Structures

Leadership

Human Capital

Performance Management

Business Processes

Strategies&Tactics

Mission& Vision

Values &Operating Principles

Goals &Objectives

Processes

People

Strategy

©C ope & Associa te s , Inc . 2007

A Systems Approach to Success ion Planning and Management


CORE ELEMENTS OF AN EFFECTIVE SP&M PLAN

Any plan must coordinate with an organization’s strategic plan

The best plans are

developed by a representative

group of employees Successful plans are systemic in nature & take

advantage of opportunities across the organization Solid plans align strategies, people, & processes All plans need to have champions, accountability,

evaluation methods, & follow-up built in


THE ROLE OF BOARD & STAFF IN SP&M

Role of the Board: Devise strategies & policies that provide the

roadmap for implementing the organization’s vision, mission, goals, & objectives

Role of the Staff: Develop tactics to stay on the course Success comes when you act tactically while

keeping the big picture in mind


SAMPLE BOARD POLICY ON SP&M

We, the Board of Organization Z, recognize the importance of succession planning as a way of attracting, developing, and retaining leaders within our organization. Furthermore, we recognize that this proactive process is good for our employees, our organization, and our stakeholders.

The goal of succession planning is to ensure the perpetuation of our organization by having the right people available for the right jobs at the right time and that employees know the career paths available to them and are given every opportunity to develop the skills they need to advance.


BENEFITS TO SP&M

Increases the chances of having a competent & available workforce

Ensures there are strategies in place to transfer knowledge Minimizes disruptions when people join or leave the

organization Provides an opportunity to supplement recruitment &

retention efforts Decreases the financial impact of bad hires Promoting from within decreases the need & expense of

using headhunters to replace key contributors with fees that can range from 20-40% of the placed employee’s annual salary


STEPS IN DEVELOPING AN SP&M PLAN

1. Develop a policy on succession planning

2. Charter a representative, self-nominated Steering Committee with the power and authority to oversee the process over an extended period of time

3. Have the Steering Committee learn about SP&M

4. Set goals and determine milestones

5. Develop a communications plan• The more transparent, the better


SAMPLE CHARTERGoal: To create a perpetuation plan for the XYZ Organization as it

relates to employee talent and potential.

Primary Time: May 2010- December 2013

Responsibilities of the Steering Committee: Maintain confidentiality of all activities pertaining to SP&M and related

discussions Make decisions within the context of a meeting Analyze information using critical thinking skills Communicate accurately, honestly, and effectively with stakeholders Support publicly the decisions of the SP&M Steering Committee Participate in and support leadership development discussions Act as a resource for the organization, both bringing information to the SC and

delivering information to staff Assist HR Director to develop communication messages about SP&M to staff

Staff Support: Ongoing administrative support for the SP&M Steering Committee will be provided by Employee A. The Director of HR, will hold the main responsibility for overall communication about SP&M activities & outcomes.



6. Complete a period of data collection including:• Review the organization’s strategic plan

• Review current trends in your industry

• Complete an organization assessment including updating the SWOT

• Complete a workforce analysis

• Review current job descriptions, job competencies, staffing, & the organizational chart

7. Find opportunities everywhere to make improvements in the organization before determining key positions to address



8. Identify key positions to be addressed in the plan

9. Review current job responsibilities and position descriptions

10.Review competencies for each position• If none exist, develop them

11.Select the competencies required for each position



12.Using a sorting tool, the Steering Committee with the help of HR, will sort employees to see who meets the competency requirements of the positions

13.They will also review “multi-rater feedback”

14.Gaps will be identified in available talent, necessary skills, or positions needed to be future organizational goals


SAMPLE SORTING TOOL

Declared

Retired

Too New

In Position

Mis-Placed/

Wrong Seat

Minimally Versatile

Well Placed Hard-To-Replace Pro

Expandable(B) w/in Business Area

(V) Across Business Areas

Clearly Versatile

Proactive

Active

Reactive

Blocked

Versatility

Adapted from Charles Bishop, Making Change happen One Person at a Time.

(Used with permission from Country Financial)

Solid contributor;

Possible future leader

Develop potential for larger role

Change Response


BUILDING BENCH STRENGTH

Hiring right the first time• Onboarding-improving orientation so that new hires

become more productive sooner

Building a Talent Pool• These go beyond list-making for single jobs

• These are people who are being prepared for leadership at different levels in an organization, but not necessarily for specific positions

Creating Individual Development Plans Mentoring & Coaching Training & Development


BUILDING BENCH STRENGTH

Developmental Opportunities• Apprenticeships & internships

• Job rotations

• Study groups

• On-line learning

• Interim assignments

• Community assignments

• Exit interviews

• On-the-job training

• Peer coaching

• Self-study

• Webinars

• Stretch assignments


KEY POINTS OF THE PIPELINE PROCESS

Focus on performance Keep the pipeline continuously filled Pipeline elements must be clearly understood

• Talent and potential

• Development of people

• Positions

• Competencies

Balance long and short-term needs


GETTING STARTED Small Organization - about 25 people (1.5-2 years)

• Organization Assessment (OA) first

• Leadership identification & development plans

• Senior team is de facto Steering Committee led by owner/CEO/ED

Medium Organization - about 100 people (2-3 years)• Staffed by 1 HR manager with a steering committee of 5-7 people

• Used consultants & trainers to supplement staffing & provide development

Large Organization - over 1000 people (3 years)• Staffed by HR and Corporate Training & Development Depts.

• Self-nominated steering committee

• In-house training department oversees course curriculum

• Developmental plans for all employees & appraisals

• Job rotations, stretch assignments, x-training opportunities, coaching, mentoring abound


PITFALLS

Lack of support from the top Lack of effective communications to all

stakeholders Perpetuation of myths about SP&M Not managing the risks Inadequate representation in the process or

inadequate participation Lack of or minimal documentation of the plan and

its components


PITFALLS

No funding for training & development Lack of accountability & follow through to get the

plan off the paper Focusing only on the top rung of leadership Not revising the plan often Assuming that success at one level in an

organization plus training & development guarantees success at higher positions


CUES THAT BOARD MEMBERS ARE SUPPORTING SP&M

They fund it They discuss it They participate in it at the appropriate times They speak the language Strategic planning sessions include SP&M as a

key topic


BEST PRACTICES

The best SP&M systems have two main purposes:• Serve the organization by providing a continuous

supply of appropriate talent

• Serve the employee by helping them reach their potential

• Provide a continuous stream of opportunities for growth

• Give them a reason to stay engaged over a long period of time

• Provide ongoing feedback


BEST PRACTICES

Simple, easy to use and maintain Developmentally focused Clearly identified champions Pay as much attention to the gaps as to the main

events Create and strengthen system-wide linkages Use metrics carefully and deliberately to monitor

and modify the system ARE STRATEGIC


THE BEST SP&M SYSTEMS

Select successors who are the • right people

• with the right skills

• at the right time

• for the right reasons

for leadership & other key positions

“Succession is one of the key responsibilities of leadership.”

Max Dupree, Leadership is an Art


CONCLUSION

SP&M is important in perpetuating worthy organizations It has value beyond finding replacements Succession planning is a “process” & as such, it is

ongoing A board generally needs at least 18-24 months to

develop a process to manage the planned retirement of a current company leader

Discussion & exploration come first, assuming no crisis exists

There is no single correct process SP&M is not a sprint. It’s a marathon.


Contact Us for More Information

Paula Cope

Cope & Associates, Inc.

381 Martindale Road

Shelburne, VT 05482

www.ConsultCope.com

E: [email protected]

T: 802-951-4200


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Documents

Succession Planning & Management: Understanding the Whole Picture