Reasons for a Succession Planning and Management Program

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Why should an organization support a systematic SP&M program? To answer

that question I updated a survey that I sent out in 1993 for the first edition of

this book. (The first survey was mailed to 350 randomly selected members of

the ASTD in October 1993.) The survey for the second edition of this book was

mailed in December 1999 to 742 members of the Society for Human Resources

Management (SHRM). A follow-up mailing was sent in January 2000 to SHRM

members, and a second follow-up mailing went out in February 2000. The

survey for the third edition of this book was sent out in early 2004 to members

of the International Society for Performance Improvement (ISPI), and the results

were compiled in July 2004. Exhibit 1-3 presents demographic information

about the respondents’ industries from the 2004 survey; Exhibit 1-4 charts

the sizes of the respondents’ organizations; Exhibit 1-5 presents information

about the respondents’ job functions; and Exhibit 1-6 summarizes the respondents’

perceptions about the chief reasons their organizations operate systematic

SP&M programs. These reasons are discussed further, in order of their

importance, in the sections that follow. Each reason corresponds to a possible

goal to be achieved by the SP&M program.

Reason 1: Contribute to Implementing the Organization’s Strategic

Business Plans

Succession planning and management should not be conducted in a vacuum;

rather, it should be linked to, and supportive of, organizational strategic plans,

human resource plans, human resource development plans, and other organizational

planning activities. Perhaps for this reason, my survey respondents

Exhibit 1-3. Demographic Information About Respondents to a 2004

Survey on Succession Planning and Management: Industries

Question: In what industry is your organization classified?

Industry Frequency Percentage

Manufacturing 2 9.09%

Transportation/

Communication/

Electric/Gas 1 4.55%

Retail Trade 1 4.55%

Finance/Insurance/Real Estate 5 22.73%

Healthcare 1 4.55%

Government/Armed Forces 6 27.27%

Other 6 27.27%

Total 22 100.00%

Note: Not all respondents chose to answer this question.

Source: William J. Rothwell, Results of a 2004 Survey on Succession Planning and Management Practices. Unpublished survey

results (University Park, Penn.: The Pennsylvania State University, 2004).

Exhibit 1-4. Demographic Information About Respondents to a 2004

Survey on Succession Planning and Management: Size

Question: How many people does your organization employ?

Organization Size Frequency Percentage

0–99 2 9.09%

100–249 2 9.09%

250–499 2 9.09%

500–1999 5 22.73%

2000–4999 5 22.73%

5000 or more 6 27.27%

Total 22 100.00%

Note: Not all respondents chose to answer this question.

Source: William J. Rothwell, Results of a 2004 Survey on Succession Planning and Management Practices. Unpublished survey

results (University Park, Penn.: The Pennsylvania State University, 2004).

indicated that the most important reason to sponsor systematic SP&M is to

‘‘contribute to implementing the organization’s strategic plan.’’

Strategic planning is the process by which organizations choose to survive

and compete. It involves formulating and implementing a long-term plan by

which the organization can take maximum advantage of its present internal

organizational strengths and future external environmental opportunities

Exhibit 1-5. Demographic Information about Respondents to a 2004

Survey on Succession Planning and Management: Job Functions of

Respondents

Question: What is your job function?

Job Function Frequency Percentage

Trainer or Training Manager 10 45.45%

Human Resource Manager 7 31.82%

Other 5 22.73%

Total 22 100.00%

Note: Not all respondents chose to answer this question.

Source: William J. Rothwell, Results of a 2004 Survey on Succession Planning Practices. Unpublished survey results (University Park,

Penn.: The Pennsylvania State University, 2004).

while minimizing the effects of present internal organizational weaknesses and

future external environmental threats.

To implement a strategic plan, organizations require the right people

doing the right things in the right places and at the right times. Without them,

strategic plans cannot be realized. Hence, leadership identification and succession

are critical to the successful implementation of organizational strategy.

Particularly at top management levels, as Thomas Gilmore explains, ‘‘performance

criteria are rarely cut and dried. They often flow from a strategic plan

which the chief executive is responsible for developing and carrying out.’’19 At

least five different approaches may be used to integrate strategic plans and

succession plans20:

1. The Top-Down Approach. Corporate strategy drives SP&M. Leaders

identified through a systematic SP&M process support the successful

implementation of strategy.

2. The Market-Driven Approach. Succession planning and management is

governed by marketplace needs and requirements. As necessary talent

is required to deal with competitive pressures, it is sought out.

3. The Career Planning Approach. Succession planning and management

is tied to strategic plans through individual career planning processes.

In consultation with their organizational superiors and others, individuals

examine their own career goals in light of the organization’s strategy

and make decisions about how they can best contribute to emerging

organizational needs while also improving their own chances for eventual

advancement.

4. The Futuring Approach. Succession planning and management becomes

a vehicle for anticipating talent needs stemming from corporate

strategy. It is viewed as a way to scan external environmental conditions

Exhibit 1-6. Reasons for Succession Planning and Management Programs

Question: There are many reasons decision-makers may wish to establish a Succession

Planning program in an organization. For each reason listed in the left column

below, please circle a response code in the right column indicating how important

you believe that reason to be for your organization. Use the following scale: 1 _

Not at all important; 2 _ Not Important; 3 _ Somewhat Important; 4 _ Important;

5 _ Very Important.

Importance in Your Organization

Reasons for Sponsoring Succession Planning (Mean Response)

Contribute to implementing the organization’s

strategic business plans. 4.56

Identify replacement needs as a means of targeting

necessary training, employee education,

and employee development. 4.44

Increase the talent pool of employees. 4.33

Provide increased opportunities for highpotential

workers. 4.22

Tap the potential for intellectual capital in the

organization. 4.11

Help individuals realize their career plans within

the organization. 3.89

Encourage the advancement of diverse groups

—such as minorities or women—in future jobs

within the organization. 3.67

Improve employee morale. 3.33

Improve employees’ ability to respond to

changing environmental demands. 3.22

Cope with the effects of voluntary separation

programs—such as early retirement offers and

employee buyouts. 2.78

Cope with effects of downsizing. 2.44

Decide what workers can be terminated without

damage to the organization. 2.22

Reduce headcount to essential workers only. 2.00

Source: William J. Rothwell, Results of a 2004 Survey on Succession Planning and Management Practices. Unpublished survey

results (University Park, Penn.: The Pennsylvania State University, 2004).

and match the organization’s internal talent to the demands created by

those conditions.

5. The Rifle Approach. Succession planning and management is focused

on solving specific, identifiable problems confronting the organization,

such as higher-than-expected turnover in some organizational levels or

job categories. (One trend is to single out and track the turnover of

high potentials in the organization, which is called critical turnover.)

Consider what role SP&M should play in supporting the strategic plans of

your organization. In doing that, realize that ‘‘there is no one universal approach

that works well across all companies; rather, effective companies match

their succession strategies to their business strategies.’’21

Related to strategic planning is human resource planning (HRP), which

is ‘‘the process of analyzing an organization’s human resource needs under

changing conditions and developing the activities necessary to satisfy these

needs.’’22 HRP is comprehensive in scope, examining an organization’s workforce

and work requirements. One result of HRP should be a long-term plan

to guide an organization’s personnel policies, programs, and procedures.23

Few authorities dispute the growing importance of HRP. As Manzini and

Gridley note, ‘‘The need for people with increasingly specialized skills, higher

managerial competencies, and commitment to new levels of excellence, with

professional qualifications in disciplines that did not exist a few decades

ago—at costs commensurate with their contribution to organizational objectives—

is and will continue to be the overriding ‘business’ concern of the organization.’’

24 Succession planning and management is integrally related to HRP,

though SP&M is usually focused more on leadership needs and leadership

skills. Many techniques and approaches that have evolved for use in HRP may

also be applied to SP&M.

Succession planning and management should focus on identifying and developing

critically important leadership talent. Moreover, SP&M may rely on

means other than planned learning or promotion from within to meet talent

requirements. For instance, critical succession needs may be met by external

recruitment, internal transfer, or other means.

Reason 2: Identify ‘‘Replacement Needs’’ as a Means of Targeting

Necessary Training, Employee Education, and Employee Development

The second reason cited by survey respondents for organizations to sponsor

systematic SP&M is to ‘‘identify ‘replacement needs’ as a means of targeting

necessary training, employee education, and employee development.’’ In

other words, SP&M becomes a driving force to identify justifiable employee

training, education, and development needs. Training helps employees meet

their current job responsibilities; employee education prepares them to ad-

vance to future responsibilities; and employee development can be a tool for

individual enlightenment or organizational learning.

Reason 3: Increase the Talent Pool of Promotable Employees

Respondents in organizations sponsoring systematic SP&M cited the third

most important reason as to ‘‘increase the talent pool of promotable employees.’’

Succession planning and management formalizes the process of preparing

people to fill key positions in the future. Of course, the term talent pool

may mean a group of individuals—rather than one identifiable successor—

from which possible successors for key positions may be selected.

Reason 4: Provide Increased Opportunities for ‘‘High Potential’’

Workers

My survey respondents indicated that the fourth important reason to sponsor

systematic SP&M is to ‘‘provide increased opportunities for ‘high potential’

workers.’ ’’ Although definitions of high potentials (HiPos) may differ, they

are usually regarded as those employees who have the potential for future

advancement. Hence, a very important reason for SP&M is to identify appropriate

ways to accelerate HiPo development and improve the retention of talented

people with potential.25 A few important retention strategies are

summarized in Exhibit 1-7.

Reason 5: Tap the Potential for Intellectual Capital in the Organization

Intellectual capital refers to the value of the human talents in an organization.

Tapping the potential for intellectual capital was cited as the fifth most important

reason for an SP&M program in an organization. SP&M is thus important

in making and realizing investments in intellectual capital in the organization.

Reason 6: Help Individuals Realize Their Career Plans Within the

Organization

Organizations make a substantial investment in the training of their employees.

Employee performance may improve with experience as individuals advance

along a learning curve in which they master organization-specific and

job-specific knowledge. When individuals leave an organization, their loss can

be measured.26 If they remain with one employer to realize their career plans,

then the employer benefits from their experiences. In this sense, then, SP&M

can serve as a tool by which individuals can be prepared for realizing their

career plans within the organization. That reason was cited by my survey respondents

as the sixth most important for organizations to sponsor systematic

SP&M.

Exhibit 1-7. Strategies for Reducing Turnover and Increasing Retention

Possible Causes of Turnover Possible Strategies for

People leave the organization Increasing Retention

because they:

Are dissatisfied with their _ Assess the extent of this problem by

future prospects in the organi- using attitude surveys (paper-based or

zation or believe they have online), by using exit interviews with

better prospects for the future departing workers, and by running

in another organization. selected focus groups to gather information.

_ Give people hope by establishing and

communicating about a succession

planning and management program.

_ Establish or improve job posting programs,

job rotations, and other efforts to

give people more exposure and visibility

within the organization.

_ Improve communication about the future

of the organization and what that

might mean for individuals in it.

Dislike their supervisors and/ _ Assess the extent of this problem by

or their supervisors’ approach using attitude surveys (paper-based or

to supervision. online) and by using exit interviews with

departing workers.

_ Improve supervisory training, with special

emphasis on addressing sources of

dissatisfaction that influence turnover.

_ Establish or improve job posting programs,

job rotations, and other efforts to

give people more exposure and visibility

within the organization.

Dislike the kind of work that _ Assess the extent of this problem by

they do or the kind of assign- using attitude surveys (paper-based or

ments that they have been online), by using exit interviews with

given. departing workers, and by running

selected focus groups to gather information.

_ Establish or improve job posting programs,

job rotations, and other efforts to

give people more exposure and visibility

within the organization.

Dislike their wage or salary _ Assess the extent of this problem by

level, believe it is not competi- using attitude surveys (paper-based or

tive, or believe they are not online), by using exit interviews with

compensated in a way com- departing workers, and by running

mensurate with their contribu- selected focus groups to gather infortions.

mation.

_ Conduct regular wage and salary surveys

outside the organization.

_ Clarify the organization’s philosophy of

rewards (‘‘Do we want to pay only at

competitive levels? If so, why?’’).

_ Make use of innovative reward and

compensation practices that go beyond

mere considerations of wages to include

alternative reward and alternative

recognition programs and ‘‘cafeteria

rewards’’ tailored to individual needs.

Are stressed out or burned out _ Assess the extent of this problem by

from too much work or too using attitude surveys (paper-based or

little personal rest and recre- online), by using exit interviews with

ational time. departing workers, and by running

selected focus groups to gather information.

_ Take steps to add a component on

work-life balance in descriptions of

high-potentials and high performance

and communicate that change to the organization.

_ Add to the social life of the organization

by stepping up social activities and reexamining

to whom and how work is

allocated.

Reason 7: Encourage the Advancement of Diverse Groups

The workforce in the United States is only becoming more diverse, reflecting

the nation’s increasingly diverse population. Unfortunately, not all workers

have historically been treated equally or equitably. Discrimination, while prohibited

by federal and state laws, still occurs. Indeed, the realization of that

prompted Supreme Court Justice Thurgood Marshall to explain that, as a black

in America in 1991, he did not feel free.27 While reactions to that view may

vary, there is increasing recognition of a need to promote multiculturalism,

which involves increasing the consciousness and appreciation of differences

associated with the heritage, characteristics, and values of many different

groups, as well as respecting the uniqueness of each individual. In this approach,

diversity has a broad meaning that encompasses sex and ethnic

groups along with groups based on such attributes as nationality, professional

discipline, or cognitive style.28

Perhaps as an indication of increasing recognition that organizations have

a responsibility to pursue diversity at all levels, respondents to my survey indicated

that ‘‘encouraging the advancement of diverse groups’’ was the seventh

most important reason for organizations to sponsor systematic SP&M. Many

organizations build in to their SP&M programs special ways to accelerate the

development of protected labor classes and diverse groups.