Succession Planning 1

Prepared by: Samuel N Waweru, CFE

For permission to use or adapt this presentation, please contact

S.N. Waweru at [email protected] or +254722241082

Succession Planning

SUCCESSION PLANNING:SUCCESSION PLANNING:Building Your Talent Bench

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Succession: It’s History

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What did the Pope, King Henry the VIII and the Godfather have in common?

The Talent Crisis

What is the Age Bubble?

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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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45% of current presidents will be leaving their posts within the next eight years” (Cook, 2005, p.1)

Others indicate higher rates of attrition predicting 4/5 of incumbent organizations presidents will retire within 10 years” (Amey & VanD’, 2002).

Mr. Joseph, former C.E.O Safaricom says it is critical for companies to prepare for succession planning. “I have been running this company for 10 yrs. it’s doing well and I just thought it is the right time to hand over to somebody else.

However most organizations are ill prepared.

Recent Research Data

Recent Research DataFactors 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.

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─McKinsey, The War for Talent, Right’s People Brand Research Report, DDI Exec. Dev. & Succession Management

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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• Succession planning can be described as the practice of identifying and developing select employees to succeed the existing leadership within an organization (Lopez-Molina, 2008) .

• It can also be defined as a process of identifying a plan for the orderly replacement of key employees (Mathis, 2008)

• A broader definitions today includes development of multiple employees for multiple positions (Byham, Smith, & Paese, 2006).

What is Succession Planning?…Cont…

Meaning - Succession PlanningMeaning - Succession Planning

Refer to the process of planning for filling up the Refer to the process of planning for filling up the vacancies at higher levels when they fall vacant due to vacancies at higher levels when they fall vacant due to retirement, resignation, promotions & transfer of top-retirement, resignation, promotions & transfer of top-level executives. level executives.

The need for succession planning may also arise when the The need for succession planning may also arise when the company is creating more top-level opportunities.company is creating more top-level opportunities.

It may be from within the organization or people may be It may be from within the organization or people may be recruited from outside for filling up the vacancies.recruited from outside for filling up the vacancies.

Replacement vs. Succession

Reactive

Form of Risk Management

Substituting

Narrow Approach

Restricted

Pro-Active

Planned Future Development

Renewing

Organized Alignment

Flexible

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Traditional vs. Future 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

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 will be ready when needed. Little, if any feedback

Hindered by paper process that needs to be updated

Heirs apparent in line for specific positions

Actively involves candidates in development discussion. Regular, developmental feedback

Aided by on-line assessment and regularly updated talent bank; scales to meet the masses

A fluid pool of qualified 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

programs21

Elements - Succession PlanningElements - Succession Planning

Identification of key position :Identification of key position : Identify the Identify the key position likely to be affected by retirement, key position likely to be affected by retirement, resignation, promotion or transferresignation, promotion or transfer

Appraisal of employees potential :Appraisal of employees potential : HR HR manager must appraise the potentialities of the manager must appraise the potentialities of the potential employees from within the org, to potential employees from within the org, to find out best suitable employees, who would find out best suitable employees, who would match the requirement of the vacancy at the match the requirement of the vacancy at the higher level. higher level.

The manager would prepare & short list the The manager would prepare & short list the most potential candidate for succession most potential candidate for succession planning.planning.

Elements - Succession PlanningElements - Succession Planning

Select of the right person :Select of the right person : The HR manager should provide the list of potential employees to the mgmt, which would facilitate the mgmt to make a decision on the selection of the candidate to fill up the vacancy at the higher level. Right person must be selected for succession planning. Length of service with the organization.Length of service with the organization.

Training and Development :Training and Development : Providing T&D to Providing T&D to candidate under guidance of top executive who is candidate under guidance of top executive who is going to retired.going to retired.

Placement :Placement : Candidate would be placed at the Candidate would be placed at the right job as and when post falls vacant.right job as and when post falls vacant.

Factors - Succession PlanningFactors - Succession Planning

Factors considered in Factors considered in planning Succession planning Succession

Planning Planning

Length of Service

Need & Importance - Succession PlanningNeed & Importance - Succession Planning

Helps to fill up vacancies:Helps to fill up vacancies: Succession planning helps to Succession planning helps to fill up the vacancies at right time. As & when the post fill up the vacancies at right time. As & when the post falls vacant, the candidate is made available to occupy falls vacant, the candidate is made available to occupy the same.the same.

Recognition :Recognition : The employees who are trained to take a The employees who are trained to take a position at higher level feels that there services are position at higher level feels that there services are recognized and rewarded by the organization.recognized and rewarded by the organization.

Motivation & Job Satisfaction :Motivation & Job Satisfaction : Succession planning Succession planning motivates the employees towards the work and also motivates the employees towards the work and also increased job satisfaction. It helps to fulfill their higher increased job satisfaction. It helps to fulfill their higher level needs i.e. “HIGH ESTEEM” needs.level needs i.e. “HIGH ESTEEM” needs.

Replacement Planning - Succession PlanningReplacement Planning - Succession Planning

Replacement Planning is a process of replacingReplacement Planning is a process of replacing candidate or employee with another employee orcandidate or employee with another employee or candidate . candidate . The replacement can be done at the request of the The replacement can be done at the request of the

employee, when a person finds it difficult to perform employee, when a person finds it difficult to perform effectively in a particular position and or in a effectively in a particular position and or in a particular place then he may request for transfer. particular place then he may request for transfer.

The company can also replace the employee with The company can also replace the employee with another suitable employee.another suitable employee.

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?28

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

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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

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Assess Organizational

Risks and Develop

Strategies

Managerand Self

Evaluations Org.Strategic

Initiatives, MissionVision & Values

Determine Gap between

Actual Performance & Behaviors vs.

Required Competencies

Decision-MakingMatrix

Monitor & Track Employee’s Performance

Executive Profiles &

Organization Chart

Dev. plans focuson both strengths

And dev.areas

Determine CompetenciesFor Leadership

IdentifyKey LeadershipCandidates &

Assess Against Competencies

ProcessDesign

Process Implementation ProcessManagement

Functional and Leadership Competencies

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FUNCTIONAL LEADERSHIP

Integration and BalanceThe ability to pull together diverse views and conflicting information into a comprehensive direction for the business. Balances today’s business requirements with tomorrow’s vision for where the business is heading.

Cross Boundary PerspectiveMaintains balance between enterprise-wide, global thinking and a focus on the functional areas within Fairbanks. It includes connecting with initiatives in other areas and proactively sharing relevant resources with others.

Management of Budget and MetricsEmphasizes profitability, financial viability and performance potential to ensure business performance. Develops financial measurement frameworks, and identifies key metrics to drive business performance.

Drive for ResultsThe ability to continuously raise performance standards and drive outstanding organizational performance. It includes achieving superior performance not only for one’s own area, but also for FCC performance as a whole.

Market KnowledgeUnderstands business and regulatory environment, major industry players, and the business dynamics. Has in-depth knowledge of the full range of FCC business products and key competitors in the market place.

AdaptabilityAdaptability relates to taking action to improve current approaches or solutions. Facilitates a creative or innovative approach to working. Responds with agility to changing goals, processes or environments.

Cutting-Edge Technology and Business MethodsUnderstands and takes action to maintain, develop, and apply specialized knowledge of technology and business methods relevant to one’s role. Takes the initiative to keep abreast of key technological changes and trends.

Organizational AlignmentThe ability to rapidly align people, processes and organization structure with strategic direction. This includes the active identification and removal of barriers that block change and impede desired behavior.

Business Strategy and PlanningFormulates appropriate business strategies and supporting plans that drive the success of the business areas and support Fairbanks’ overall business plans.

Communication and InfluenceThe ability to effectively communicate and influence others inside and outside the organization to build commitment to Fairbanks objectives.

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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Sample, SallyController

Date of Hire: 1/7/2002Talent Code: Solid Citizen PerformerPotential Positions: Chief Financial Officer

POSITION HISTORY2002-Present, Fairbanks Capital Corp., Controller1998-2002, Independent Consultant1990-1998, Household International Inc.•V.P. Specialty Finance•CFO•Deputy Controller

EDUCATIONNorthwestern University, Kellogg School of Mgmt., M.S.Purdue University, B.S.

STRENGTHS• Strategy and Planning• Budget Management• Good Judgment• Good communication/interpersonal skills• 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• Training and development of staff

Competency Assessment Functional Leadership

Integration and Balance Cross-Boundary Perspective

Management of Budget Drive For Results

Market Knowledge Adaptability

Technology and Business Methods

Organization Alignment

Strategy and Planning Communication and

Influence

Develops Self and Others

Exceeds Standard

At Standard

Needs Development

Key

Results: Talent Summary by Competency

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Technology

& B

usiness M

ethods

Strategy

and Planning

Com

munication

and Influence

Drive for R

esults

Developing

Self &

Others

Organizationa A

lignment

Cross-B

oundary P

erspective

Adaptability

Integration and B

alance

Market

Know

ledge

Managem

ent of B

udget

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

Functional competencies Leadership competencies

Decision Making Matrix

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SOLID CITIZEN PERFORMER(High Performance/Low Potential)Gets all important things doneIs a pro in his/her positionIs seen as a leader in his/her areaHas reached potentialAction Required:Continue developing in current position; is in the right job

STRONG PERFORMER(High Performance/Med Potential)Gets all important things doneMay act at level of capability of one level above current positionActs as leader and role modelExhibits many strengths or competencies beyond current roleSome leadership development issuesAction Required:Look for opportunity to display leadership in current job

STAR PERFORMER(High Performance/High Potential)Gets all important things doneActs at a level of capability of at least one level above current positionAcknowledged as a skilled leader and role modelExhibits many strengths or competencies beyond current roleHas wide spread influence beyond current roleAction Required:Stretch assignments to prepare for larger role

QUESTIONABLE PERFORMER(Medium Performance/Low Potential)Gets most important things doneIs very proficient in his/her current positionIs not seen as a leader in his/her area Action Required:Work on improving performance in current job; may be candidate for lateral move

SOLID CITIZEN PERFORMER(Medium Performance/Medium Potential)Gets most important things doneShows signs of leadership and role modelingExhibits many FCC executive competenciesMay be new in positionAction Required:Leave in current job; continue developing skills and improving performance

STRONG PERFORMER(Medium Performance/High Potential)Gets most important things doneAcknowledged as a leader and role modelExemplifies FCC executive competenciesActs at level of capability of next level in the organizationAction Required: Focus on performance short term and development opportunities long term

LOW PERFORMER(Low Performance/Low Potential)Isn’t getting most important things doneDifficulty performing to standards in his/her current positionAction Required:Consider reassignment to more appropriate position; including lower level or exit option

QUESTIONABLE PERFORMER(Low Performance/Medium Potential)Isn’t getting most important things doneCapable of making higher contributionMay be in wrong job or occupied with non-work distractionAction Required:Focus on improving performance

SOLID CITIZEN PERFORMER(Low Performance/High Potential)Isn’t getting most important things doneHas been acknowledged as a team player and role modelHas exemplified FCC executive competenciesMay be in wrong job or occupied with non-work distractionAction Required:Address root cause performance issue; worthy of investment in development

Potential

Per

form

ance

Decision Making MatrixSOLID CITIZEN PERFORMER(High Performance/Low Potential)

JF

STRONG PERFORMER(High Performance/Med Potential)

BWEB

STAR PERFORMER(High Performance/High Potential)

BR TOEK

QUESTIONABLE PERFORMER(Medium Performance/Low Potential)

DS

SOLID CITIZEN PERFORMER(Medium Performance/Medium Potential)

EH LGTW KSDSo

STRONG PERFORMER(Medium Performance/High Potential)

TKAG

LOW PERFORMER(Low Performance/Low Potential)

QUESTIONABLE PERFORMER(Low Performance/Medium Potential)

SOLID CITIZEN PERFORMER(Low Performance/High Potential)

38Potential

Per

form

ance

Results: Talent Summary by Individual

Participants

Integration and B

alance

Manage-m

ent of B

udget

Market

Know

ledge

Technology

andB

usiness M

ethods

Strategy and

Planning

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          

         39

Cross

Boundary

Perspective

Drive for

Results

Adaptability

Organization A

lignment

Com

muni

actionand

Influence

Develops

Self and

Others

Functional Competencies Leadership Competencies

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

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 Planning. meetings

Training on Succession Planning.

Counsel managers to deal with Succession Planning. 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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Samuel N. Waweru, CFE, is the Lead Consultant with Q-Line Kenya LImited in charge of Training and Consultancy.

He is a member of the Association of Certified Fraud Examiners (ACFE)

Mr. Waweru is a frequent speaker at professional auditing and information technology seminars.

He is a champion of clean sustainable environment

He can be reached at +254-722-241082 or [email protected]

ABOUT THE PRESENTER

The end

Thank you