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
Jan 16, 2015
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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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!
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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
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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
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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
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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.
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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
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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
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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.
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STEPS IN DEVELOPING AN SP&M PLAN
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
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STEPS IN DEVELOPING AN SP&M PLAN
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
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STEPS IN DEVELOPING AN SP&M PLAN
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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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Contact Us for More Information
Paula Cope
Cope & Associates, Inc.
381 Martindale Road
Shelburne, VT 05482
www.ConsultCope.com
T: 802-951-4200
Cope & Associates Proprietary Information 36
RESOURCESAtwood, Christee Gabour. Succession Planning Basics. Alexandria: ASTD Press, 2007.
Bishop, Charles H. Jr. Making Change Happen One Person at a Time. Boston: AMACOM, 2001.
Bower, Joseph L. The CEO Within. Boston: Harvard Business School Press, 2007
Brown, John. How to Run Your Business So You Can Leave It In Style. Golden: Business Enterprise Press, 2004.
Brown, John and Kevin Short. Cash Out Move On. Golden: Business Enterprise Press, 2008.
Carey, Dennis and Dayton Ogden. CEO Succession. New York: Oxford University Press, 2000.
Charan, Ram. Leaders at All Levels. San Francisco: Jossey-Bass, 2008.
Charan, Ram; Stephen Drotter, and James Noel. The Leadership Pipeline. San Francisco: Jossey Bass, 2001.
Collins, James. Good to Great. New York: Harper Collins, 2001.
Collins, James and Jerry Poiras. Built to Last. New York: Harper Collins, 1994.
Fulmer, Robert M. & Conger, Jay. A. Growing Your Company’s Leaders. New York: AMACOM, 2004.
Rothwell, William J. Effective Succession Planning. New York: AMACOM, 2001.
Sobol, Mark; Harkins, Phil; and Conley, Terence ed. Linkage Inc.’s Best Practices for Succession Planning. San Francisco: Pfeiffer, 2007.
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JOURNAL ARTICLESAyres, G. R. & Jones, M. J., “Face the Fear,” Trusts & Estates: Special Report Transferring Business
Interests (2007, February): 50 – 57.
Atwood, Christie Gabour, “Succession Planning Basics,” Training & Development (November 2007): 55-58.
Bolt, Jim, “How Strong is Your Bench? Trends in Executive Development,” Fastcompany.com (2005) [Electronic Version], Retrieved Nov. 16, 2007.
Cavanaugh, Bonnie Brewer, “The Long Run, “ Best’s Review, (2008, December); 38-40.
Dychtwald, K., Erickson, T. J., & Morison, R., “Workforce Crisis: How to beat the shortage of skill and talent,” Harvard Business School Press (2006)
Forbes staff writer, “Why Succession Planning Matters,” Forbes.com, (2008, January).
Gale Cengage Learning, “Succession Planning is vital to avoid the expense of hiring and paying off CEOs., William Reed Ltd.,(2008, October).
Hira, Nadira A., “You Raised Them, Now You Manage Them,” Fortune Magazine, (2007, May): 38 - 46.
Kiger, Patrick J., “The Coming Knowledge Drain,” Workforce Management (November 2005): 52-54.
L’Allier, Ph.D., J. J., & Kolosh, K.), “Preparing for Baby Boomer Retirement,” Chief Learning Officer (2005) [Electronic Version] Retrieved from www.clomedia.com on August 24, 2007.
Million Dollar Round Table Staff, “Service Guaranteed,” “The Right Fit,” “Preparing the Next Generation,” “Family Matters,” Round the Table (published by The Million Dollar Round Table, www.mdrt.org) (Nov/Dec 2007): 24-31.