SUCCESSION PLANNING

HRM

SUCCESSION PLANNING
A careful and considered plan of action ensures that the least possible disruption to the persons responsibilities and therefore the organizations effectiveness. Examples include such a person who is

suddenly and unexpectedly unable or unwilling to continue their role within the organization; accepting an approach from another organization or external opportunity which will terminate or lessen their value to the current organization; indicating the conclusion of a contract or time-limited project; or moving to another position and different set of responsibilities within the organization.

A succession plan clearly sets out the factors to be taken into account and the process to be followed in relation to retaining or replacing the person.

HRM

SEVEN-POINTED STAR MODEL FOR SYSTEMATIC SUCCESSION PLANNING

Make the Commitment

Assess Present Work/People Requirements Appraise Individual Performance Assess Future Work/People Requirements Assess Future Individual Potential Close the Developmental Gap Evaluate the Succession Planning Program
HRM

SUCCESSION PLANNING
To effectively do succession planning in your organization,
I. II. III.

IV.

V. VI.

You must identify the organizations long term goals. You must hire superior staff. You need to identify and understand the developmental needs of your employees. You must ensure that all key employees understand their career paths and the roles they are being developed to fill. You need to focus resources on key employee retention. You need to be aware of employment trends in your area to know the roles you will have a difficult time filling externally

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SUCCESS STORIES

GENERAL ELECTRICS (GE)

McDonald's

MOTOROLA
PROCTER & GAMBLE (P&G)

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GENERAL ELECTRICS

Succession planning is an ongoing, rigorous and challenging process at GE.

At GE, succession planning was not confined to only the top management, but was applied across all tiers of management.
The managers of GE's various businesses were encouraged to identify potential candidates and fulfill their development needs, and transform them into efficient leaders ready to take up top jobs at the company.

As part of CEO succession planning, GE shifted its key candidates from one business to another to enable them to gain experience across all its businesses.
HRM

GENERAL ELECTRICS

The company used mainly annual performance reviews for identifying potential candidates, until the early 1980s.
However, after Welch took over as the CEO, the succession planning process at GE became a more systematic process, with the use of various analytical tools and the involvement of the top management in leadership development and succession planning. Since early 1980s, the annual Human Resource Reviews (popularly called Session C) had been at the heart of succession planning at GE. The succession planning by Welch for his post had started way back in 1994, when Welch, with help of Bill Conaty and Chuck Okosky, both vicepresidents, HR and Executive Development, created a list of essential qualities, skill and characteristics an "ideal CEO" should possess.

HRM

GENERAL ELECTRICS

The list mainly included elements such as integrity and values, vision, leadership, experience, edge, stature, fairness, energy, balance, insatiable appetite for enhancing knowledge, courageous advocacy, and most importantly, stomach to play for high stakes and being comfortable operating under a microscope. The three candidates for the top spot at GE were Immelt, W. James McNerney, CEO of GE Aircraft Engines, and Robert L.Nardelli, President and CEO of GE Power Systems. Welch wrote in his autobiography, that choosing between the final trio "was the most difficult and agonizing [decision] I ever had to make.All the three exceeded every expectation we set for them.

According to Welch, it was his nose and his gut, which prompted him to select Immelt.

HRM

McDonalds
McDonalds was tested in CEO succession planning in 2004. The then CEO, Jim Cantalupo, died unexpectedly in April 2004. The Board was to able to replace him in an orderly manner six hours later. A few weeks later, the replacement CEO, Charlie Bell, was diagnosed with cancer, and the board again was able to make an orderly replacement. Four days into his tenure as CEO, Jim Skinner, called a meeting of top executives and outline the strategic direction. He said, "I had three goals:

long-term sustainable growth talent management and leadership development and promoting balanced, active lifestyles, which meant trying to be part of the solution to those things that were problems not only for McDonald's image but for society as a whole
HRM

McDonalds

Even though the Board of Directors took only hours to name a successor, McDonalds has been grooming the potential CEO for years. When the time comes for the new guy to lead, he is ready. A brief look into Skinners career in McDonalds shows that to be the case. Skinner has been with McDonald's since joining the company in 1971 as a restaurant manager trainee and is a former head of its European business. In July 2004, as part of a management shake-up designed to support Bell, he was given oversight of McDonald's operations in Asia, the Middle East, Africa and Latin America. The fact that just four days into his tenure as CEO, he is able to come up with strategic direction, shows that Skinner is really prepared for the job.
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McDonalds

McDonald's has assigned responsibility for succession planning design to a key group staffed with specialists. The specialists include industrial-organizational psychologists, whose role is to serve as experts in the design process. McDonald's goals are to obtain and retain a quality workforce. The company identified "People" as one of its three global corporate strategies and outlined a new business strategy called McDonald's People Promise. As part of this promise, McDonald's reorganized its HR department into three areas:

The HR Design Center, a unique group of subject matter experts in charge of developing, testing and implementing HR systems and tools. The HR Service Center, which focuses on administrative, transactional, and franchisee consulting needs HR Business Partners, which provides strategic HR consulting to line and staff organizations
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McDonalds

The HR Design Center is largely responsible for designing and developing the systems that drive succession planning and employee development. The center is divided into four practice areas:
Measurement and Organizational Effectiveness - Projects include creation and development of the annual Employee Commitment Survey, design of the Human Resources Scorecard and standardizing HR data. The Design Center also partners with other departments to identify best practices that positively affect turnover, productivity, customer satisfaction, sales and profitability. Leadership Assessment and Development - Projects include executive succession planning and 360-degree feedback and coaching. Specialists in this area assess senior leadership and help set development plans for company leaders. Competency-Based People Systems and Culture - Specialists address selection, performance development, assessment and planning. They also identify development needs, design curricula, build staff models, define job competencies and create performance appraisal documents. Recruitment and Retention - Specialists help in designing interviews and selection processes.
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Motorola, Inc

An electronic and wireless communications company based in Illinois, United States of America. In the late 1980s due to changing demographics in its workforce, Motorola began to redesign its established succession planning process to make the development of women and minorities a priority. Through succession planning Motorola has significantly improved the outcomes for women in its organisation. 1989 Motorola had two female vice presidents. In 1991, succession planning process was started, known as the Organisation and Management Development Review (OMDR) being amended to include diversity objectives. 1997, six years after the modification of Motorolas succession planning to accelerate the advancement of women and minorities within the organisation, Motorola had forty female vice presidents, including seven women of colour.
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Motorola, Inc

Setting of goals and commitment

Within ten years the number of women and minorities at all levels of management should be representative of the number of women and minorities in the available talent pool. Every year at least three women and minorities would be among the twenty to forty people appointed vice-president.

The program

Motorolas OMDR guarantees that women and minorities are identified as high potential managers and move along through the organisation. each division to submit lists of candidates in four categories: white men, women, minorities and technical staff. Career development plans are prepared for each high potential and their progress through the company is then tracked.

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Motorola, Inc
A replacement chart is prepared that identifies key positions and three people who could fill each one was developed. Line one is the immediate successor. Line two is the person who should success the incumbent if the company had three to five years to prepare. Line three is the most qualified woman or minority candidate at that time, in addition to any women or minority person already on line one or two.

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Procter & Gamble

When Procter & Gamble global business units president Susan Arnold announced in March that she was leaving P&G, the question resurfaced: Who else could possibly replace A.G. Lafley, the company's long time CEO? Since Lafley took the helm at P&G in 2000, he has increased sales 110%, to $84 billion, and nearly tripled profits, to $12 billion. He followed rigorous leadership program called Build From Within. It microscopically tracks the performance of every manager, making sure that he is ready for the next slot. Each of the top 50 jobs already has three replacement candidates lined up We promote from the inside, because that's our primary source of talent
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HRM

Example If a talented young brand assistant wants to become, say, a COO, P&G tries to give him as broad experience as possible. The company might make him the assistant manager of Cascade detergent. Later he'll run laundry products in Canada, before eventually overseeing all of Northeast Asia. If you train people to work in different countries and businesses, you develop a deep bench. The company maintains a comprehensive database of its 138,000 employees. Every employee is tracked carefully through monthly and annual talent reviews. In these sessions Proctoids (freshers) discuss their business goals, their ideal next job, and what they've done to train others. When a position opens, head of HR draw up a list of employees who are ready to move immediately to another country, say, an Eastern European country, complete with their performance reviews. The beauty of the system is that they can fill a spot in an hour.
HRM

Procter & Gamble

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