Evolve Your Organization:

Strategic Succession Planning

Brent Pederson, Hay Group Tues, Oct 27, 2015
1.306.359.0181, brent.Pederson@haygroup.com 2:45-3:45 (60 min)

Agenda & Timeframes

Topic Timeframe

1 Why Succession Matters 2:45-2:55 (10)

2 Traditional vs Progressive Approaches 2:55-3:05 (10)

3 The Process: 3 Phases 3:05-3:20 (15)

4 Big Succession Questions & Discussion 3:20-3:35 (15)

5 Assessing & Developing Talent 3:35-3:45 (10)

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Hay Group: Quick Facts & Figures

88 2600 Top 50 #1
Offices in 47 countries Employees worldwide Global Consulting Leadership
Firm Development

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 1. Why Succession Matters

Why Succession Mattersto a Board of Directors

Disney Dissidents Slam Board For Handling of CEO Search

The Hollywood Reporter.com

Charles Schwab CEO Transition Ends With All the Grace of an 18-Car
Pileup
BusinessWeek Online

After Years of Speculation, AIGs Greenberg Announces What Amounts

to a Succession Plan
Forbes.com

Succession Woes Continue to Dog Coca-Cola

BusinessWeek Online
Lessons From McDonalds Tragedy: Always Have a Succession Plan
In 9-11, over 400 corporate vice-presidents lost their lives
Wall Street Journal Online
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Why Succession Mattersto CEOs and Senior Leaders

Over 50% of companies have no replacement plans in place for key

positions other than CEO
Canadian Chief HR Office Survey on CEO Succession
Only one in five CEOs confident that current approaches to talent
management can deliver leaders the business requires
Hay Group/Human Resources Magazine (UK) Survey
41% of business owners want to exit their business in the next 5 years. Are
you ready?
CFIB Report
81% of global companies rate succession as #1 future human capital
challenge
Hay Group/SHRM Survey
90% organizations worldwide have succession management
as top corporate priority
Corporate Leadership Council Report

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 Why Succession Mattersto HR

1. Every year people get 1 year older (simple demographics).

2. Pensions plan returns have been impacted by economic cycles yet
people can/will only put off retirement for so long.
3. Societal & medical advances allow people to live (and work) healthier
for longer.
4. Do we have the right people, at the right time, with the right skills, in
the right locations?
5. Creating opportunities for emerging leaders to retain them.
6. Knowledge transition from current to emerging talent.

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Why Succession MattersTo Shareholders

35% of institutional investors valuation attributable to

non-financial measures

n Management Capability: n Likelihood of Strategy to

Capability of management team Create Value
are leaders appropriately prepared n Strategy Execution
for key positions?
35% n Innovativeness and Ability to
Adapt
n Attracting and Retaining Talent: n Brand
Does company have talent to
deliver against current/ future n Reputation
business plans?

Source: Mavrinac & Siesfeld , Measuring Intangible Investments

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In the past, the supply of potential leaders

exceeded the demandnot today

Then:

Supply of experienced leaders > Demand for experienced leaders

Now:

Supply of experienced leaders < Demand for experienced leaders

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 Succession planning
is critical to the
sustainability of an
organization.

Why Succession Matters: Strategic Drivers

1. Fundamental accountability of senior leadership

2. Regulatory requirement
3. Deliverable to Board of Directors
4. Pending retirements and aging workforce
5. War for talent
6. Focus on building (vs buying) talent
7. Aligned with strategic measures (ex: Engagement, Leadership
Development)
8. Supports effective movement and development of staff
9. Very vulnerable to key person loss

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2. Traditional vs
Progressive Approaches

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 Traditional vs Progressive Approaches

Traditional Succession Plans

Often resemble a hockey draft
High emphasis on face time and who is popular and well known
Lack criteria
9 box grids mapping performance and potential
Emphasize potential (people) but potential for what (job)?
Focus overly on supply via pools of people
Overly complex and die under their own weight
Tends to be a paper activity

Leading Practices
Simple Yet Powerful
Time Efficient
Practical
Sustainable
Balances Supply and Demand
Easily Scaled Out Further
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Succession Planning: Benefits in 7 Areas

Talent Aligned to the Business: The organization has a plan for

Outcomes of improved talent top talent that is responsive to current needs and risks, and also
management anticipates the future needs of the business.

Mission Critical Roles Identified: Mission critical roles are filled by

the best individuals for that role and for the business.

Depth of Talent Pool Defined: Senior leaders understand the

depth of the talent pool and the associated strengths and risks.

Future Leaders Targeted: Potential leaders of the organization are

identified and are ready to step into leadership roles when called
upon.
Risk Clearly Appraised: Senior leaders understand the risks and
benefits associated with a possible hire, move or promotion.

Leaders Successfully Transitioned: Talented people are

positioned for success and their risk of failure both personal and
organizational is minimized.
Talent ROI Measured: The organization understands the value of
its investment in top talent.

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Succession Planning: Aligning Business, Work, People

Strategy, business model,

Business structure and culture
Context the environment in which
work gets done

Talent
Jobs in context of The capacity of
the business, and people in
implications for
Work Roles People relation to role
role requirements demands

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 Two sides to the succession management equation

Demand
+ Supply

Ability to identify
risks/benefits of
talent moves

Helps answer the question, Potential, for what?

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3. The Process: 3 Phases

Purpose

To support the sustainability of the organization

by proactively identifying leadership talent

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 The Process: 3 Phases

Phase 1: Phase 3:
Phase 2:
Mobilize & Identify Measures &
Talent Review
Key Positions Governance
(8 hours)
(3 hours) (3 hours)

Phase 1 Phase 2 Phase 3

Definition & Purpose Executive Roundtable Confirm Measures

Leading Practices Discussion to Review Discussion: Key
Overview of Phases Talent Succession Questions
Project Plan Discussion: Key Establish Governance
Identify Key Positions Succession & Maintenance
Orientation to Questions Processes
Tracking Tool Role-Based Risk Integration Points
Homework: Propose Assessment Going Forward:
Talent (8 hours) Identify Measures Develop Talent

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Titles Dont Mean Much: Consider 3 CIOs

Advisory Roles Collaborative Roles Operational Roles

Global
Enterprise Behaviours required:
Leadership results oriented
strategic perspective
leading change
Enterprise Behaviours required:
Leadership
partnering
influencing
networking
Strategy Behaviours required:
Formation In a High-Tech
client (internal) focus Business
team contribution/work
Strategic

conceptualizing fit In a
Levels of Work

Strategic
Alignment Manufacturing
Business
Strategic
In a
Operational

Implemen-
tation Research Lab
Tactical
Implemen-
tation

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Avoiding Talent Snaps: Managing Stretch & Risk

Role Profile
Advisory Matrix Delivery
High
Strategic Challenges
Complexity of

Legend
Medium

Black Starting Point

Green Low Risk
Low

Yellow Moderate Risk

Current
Role
Red Significant Risk
Example 1

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 4. Big Succession
Questions & Discussion

Big Succession Questions

1 To tell or not to tell?

Recruitment: Does succession impose on the recruitment

2 process?

3 Diversity: Does diversity impose on the succession plan?

4 Are guarantees offered by the org? Expected from the person?

5 How do we build fences around our top talent?

6 Who do we develop?

7 How do we develop them?

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5. Assessing & Developing

Talent

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 Leadership Development

n Natural extension of the succession planning process

n The ink will barely be dry on your succession plan when you will find
yourself asking, What should we do to develop & retain these
people?
n Benefits of a leadership development strategy
n Retention of top talent
n Development for leaders
n Feedback for leaders on leadership
n Information to supplement the succession process

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Leadership Development Strategies:

5 Common Approaches

1. Shopping Catalog we offer stuff, people can take whatever they want
2. Coaching Focus leaders work with coaches to develop and implement
individual development plans
3. Corporate Approach pick a topic and go hard on that topic that year
(2015=Coaching & Feedback, 2016=Teams, 2017=Leading Change, etc.)
4. Leadership Assessments have leaders complete an assessment tool(s),
attend a workshop to debrief results and develop action plans, re-assess
12-18 months later
5. Formal Leadership Development Program (LDP) take a cross section of
leaders (current, emerging, succession, non-succession), step them through
a structured experience over a 12 month period (2-3 assessment tools, 3-4
core content modules on various topics, a series of coaching sessions,
corporate recognition) most common approach

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On Development

Most organizations choose to develop

their whole management team, while
throwing extra development at names
mentioned in the succession plan.

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 The Science of Leadership

How Leaders Drive Results

Leadership 70% Employee

Competencies
Styles Engagement
30% Results

Balanced
Scorecards /
Dashboards

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Manager Competency Portfolio (MCP) Model

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The 6 Leadership Styles

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 Talent Dashboard Sample A

John Smith

Behavioural Technical
E=mc2

Ability Performance Education Experience Overall
competencie competencie
s s
80100%

6080% 6080% Above

target in
some
4060% At target areas

Below
target

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Talent Dashboard Sample B

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Succession planning
is critical to the
sustainability of an
organization.

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 3 Key Messages

1 Succession Planning: Highly Strategic for HR

2 Keep the Process Simple and Sustainable

3 Leadership Development is the Natural Extension

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Succession Planning: How Can We Help?

1. Implementing A Succession Plan

2. Auditing Your Existing Approach
3. Enhancing Your Existing Approach
4. Leadership Assessments
5. Leadership Development

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Questions

12