Is It Time Yet? Is it time to Board the Succession Planning Ship?

Transcription

1 Is It Time Yet? Is it time to Board the Succession Planning Ship? Deborah L. Young Bowden The Bowden Group, Inc. OPRA 2012 Spring Conference Embassy Suites, Dublin, Ohio The Bowden Group, Inc. partners with key business leaders to achieve mission and business objectives by developing customized Human Resource and Organizational Development Solutions. achieving results by focusing on the people side of the business

2 Introduction Planning for both the foreseen and unexpected absences of people who hold key roles in an organization is a task which we often avoid or engage in only in an informal manner. Without concentrated effort on this activity, known as succession planning, a business that has been successful can quickly fail if one or more of its leaders are lost. When succession planning is carefully conducted and the plan periodically reviewed, extended and costly vacancies can be avoided. Succession planning has to be a priority for every business and should be part of its strategic business plan.

3 Objectives At the close of this session, you will be able to: State what Succession Planning/Management is Determine when succession planning becomes a critically urgent issue in your organization Communicate why succession planning matters Identify who should be targeted in the Succession Planning Process Find out how to get started, keep it current, manage risks and build in a return-on-investment Decide if it is time yet, and what you should do next

4 What is Succession Planning? Succession planning is the process of identifying high-potential employees, evaluating and honing their skills and abilities, and preparing them for advancement into positions which are key to the success of business operations and objectives. Succession planning involves: Understanding the organization's long-term goals and objectives. Determining workforce trends and predictions. Identifying high-potential candidates and their respective developmental needs. Managing their development

5 Questions? Comments?

6 Why invest the time, energy and resources in developing an Effective System? What are the natural consequences of your current succession plans/practice? What are the benefits and risks for having/not have succession planning for key positions Current process Succession planning Risks Benefits

7 When does Succession Planning move to be an urgent issue? Use a quick audit to predict current and future staffing requirements In your opinion, how prepared is your organization to deal with a sudden loss of key members of the senior management team? Response You Percent Well prepared Somewhat prepared Not at all prepared Don t know How would you describe the leadership pipeline at your organization? Response You Percent Robust Adequate Inadequate Don t know Study: Looming Crisis for Health Care Leadership 3/1/2011

8 When does Succession Planning move to be an urgent issue? Use a quick audit to predict current and future staffing requirements In your opinion, how prepared is your organization to deal with a sudden loss of key members of the senior management team? Response You Percent Well prepared 7 Somewhat prepared 61 Not at all prepared 30 Don t know 2 How would you describe the leadership pipeline at your organization? Response You Percent Robust 8 Adequate 44 Inadequate 43 Don t know 5 Study: Looming Crisis for Health Care Leadership 3/1/2011

9 The Leadership Crisis in the Developmental Disabilities Field In not-for-profits, 28% of CEOs of nonprofit organizations have been in their positions for ten years or more. Fully two-thirds of current CEOs surveyed anticipate remaining in their positions for five years or fewer. 1 Many leaders of disability organizations are reaching retirement age and there is not a next generation of leaders ready to move into these positions. A study by the University of Delaware that was specific to community developmental disability agencies found that over 50% of the chief executive officers of these service agencies did not have a succession plan for their organization. 2 As one CEO put it, I m ready to think about retirement, and we ve got no one on the bench Change Ahead: The 2004 nonprofit executive leadership and transitions survey. (2004). Baltimore, MD: The Annie E. Casey Foundation. 2. Eidelman, S.M. & Brady, L.T. (2006). Crossroads for leadership in the disabilities field: Preparing the next generation of leaders for the 21st century.newark, DE: University of Delaware. 3. CEO and founder, large nonprofit providing residential and employment supports in four states.

10 When does Succession Planning move to be an urgent issue (considerations)? Issue What are the key/critical positions necessary for the organization? How prepared is your organization to deal with a sudden loss of key persons? Implication In addition to sudden loss, what openings do you anticipate in the next 2-5 years? How fast are people in the pipeline ready? Is there a pipeline? How engaged and satisfied are high-potential employees? How committed are leaders to devoting time to help prepare others? How many executive positions have you filled from inside? What percentage of individuals have high performance rating? How many people exhibit both high potential and high performance attributes? Baby boomers are not leaving Competition for the workers Need for worker flexibility

11 Why invest the time, energy and resources in developing an Effective System? What would happen if you were required for health reasons to take a one year leave of absence effective immediately? From a business stand point what is really going to happen? From a client s perspective what is really going to happen? From a client s family s perspective what will be the impact? Who is ultimately accountable?

12 Questions? Comments?

13 What are the Key Elements of an Effective System? They are systematic and proactive To quickly anticipate and fill openings and gaps avoiding extended and costly vacancies and assure the stability of business operations. To align people strategy with business strategy. To identify employees with high management potential plan their careers and development and provide meaningful developmental opportunities for the organization at the same time. To be inclusive, rather than looking at one or two candidates for a key role, best practice organizations develop pools of talent

14 What are the Key Elements of an Effective System? They are part of the Company/System Culture by using an ongoing planning process, often as part of staffing review, performance evaluations and overall expectations. keeping the process simple, opening up the process and making it as transparent as possible. owning their succession management, hr should support the process, but management must own it, it is integral to business success. having employees own their own development create an environment of professionalism, and to recognize their current role as a chosen career path, rather than a I do not know what else to do. lead by example to attract others to the profession.

15 What are the Key Elements of an Effective System? Best practices in management and leadership development tend to business and strategy driven strong training and development design based on competencies individual development plans emphasize on-the-job development create progressive assignments carefully designed assignments build in relationships and crucial connections provide for organizational learning can pay for themselves through a return on investment

16 Who should be involved in the process? 1. Identify key stakeholders both inside and outside of the organization Individual Manager Executives Board of Directors Organization 2. Select a person to take responsibility for the overall process. 3. Enlist the help of others: professional associations, third party advisors: accountants, attorney, bankers, insurance agents, etc.

17 Steps Involved In Succession Planning 1. Establish present and future leadership roles 2. Identifying legal and diversity issues to consider. 3. Selecting key employees. 4. Evaluating the strengths, weaknesses and readiness for succession in key employees. 5. Planning for the individual development of and ways to retain key employees. 6. Identifying emergency positions without successors. 7. Planning for positions that cannot be filled internally.

18 Steps Involved in Succession Planning 1. Establish Present and Future Leadership Roles Ask questions to assess what tomorrow s business and roles may look like: How will the state of the business today affect the business operations of the next 1-5 years? What operations are critical to the future of the business? Will they be discontinued or downsized, or will they grow or remain constant? Will reengineering, process improvement or technology impact the business in the future? What job functions, if any, will be consolidated? Will the projected workload volume increase or decrease? Will staffing levels change? If so, how? What skills and abilities will be needed to match these changes?

19 Steps Involved in Succession Planning 2. Identify legal and diversity issues When positioning employees for succession, avoid likeme approaches. Many top performing companies rely on diverse workforces and leadership. Organizations tend to take comfort in advancing those employees to key positions who closely resemble incumbents in ways such as age, education, leadership style, industry experience, career trajectory and of course, race and gender*. Assessment tools can be used to reduce biased selection practices. Discrimination laws require inclusion of all qualified employees regardless of race or gender.

20 Steps Involved in Succession Planning 3. Select Key Employees The incumbents in key positions identify employees available for succession into their positions. Profiles of candidates are developed: A history of performance reviews and accomplishments, including years of relevant experience, education and credentials are compiled for profiles. Cross-departmental leadership/key decision makers must be involved in the plan throughout the process to represent their selections and discuss concerns with one another. Identifiable gaps need to be temporarily or permanently closed in the event of an emergency replacement of a candidate in another department.

21 Steps Involved in Succession Planning 3. Select Key Employees Selection is based on available candidates. There will be some available candidates who are ready while there will be some who will not meet the demands of critical positions and in some cases there will be no identifiable candidate for succession at all. A common method used to chart the available candidates and their readiness level to succeed is a 9- box grid. The 9-box grid helps management to visualize the available successors along with the strengths/weaknesses in the plan. The next slides depict an example of a 9-box grid and a sample readiness chart.

22 Sample 9-Box Grid Potential Satisfactorily Placed High Professional High Potential Remain at current level of organization, in current or similar role; has likely achieved highest career level. Able to do the work of bigger jobs at the same management level in the next 1 to 2 years. Able to do the work at the next management level in 3 to 5 years or sooner. Box 4 Box 2 Box 1 Outstanding/ Excellent Highly valued, seasoned professional in current role; remain at current level. Does extremely well at current job with potential to do more, give stretch assignments to help prepare leader for next management level. Consistently performs well in a variety of assignments, prime targets for recruitment by other companies. Box 7 Box 5 Box 3 Effective Probably solid performers in current roles. Could progress higher in specialty and become a box 4. These individuals should be considered for a bigger job at the same level if they can deliver better results. Current role may still provide opportunity for growth/ development; focus should be on helping them improve performance. Box 9 Box 8 Box 6 Needs Improvement Consider reassignment, reclassification or exit. Tight performance management is crucial, consider helping leader manage time more effectively. Maybe job mismatch, new hire with lots of potential, or new assignment. May require coaching to improve performance.

23 Sample Readiness Level Chart Position Vulnerability Succession Candidate Names Key Position Title Incumbent Name Open in < 1 Yr Open in 1 3 Yrs Open in 3 + Yrs Ready in < 1 Yr Ready in 1 3 Yrs Ready in 3 + Yrs

24 Questions? Comments?

25 Steps Involved in Succession Planning 4. Evaluating Strengths, Weaknesses and Readiness of Key Employees Once candidates have been identified for succession and skills required for current and future succession have been identified, assessment tools may be used to determine skill deficiencies that may presently exist. There are a number of approaches which may include: 360 surveys (can include feedback from peers, direct reports, line management and other relevant sources--such as clients, customers, vendors and/or suppliers). Leadership evaluations by independent third party consultant. Existing performance review information and feedback from management.

26 Steps Involved in Succession Planning 5. Planning Individual Development of Key Employees Once strengths and weaknesses have been identified, Individual Development Plans for development of strengths and reduction of weaknesses should be created. Common Individual Development Plans include leadership programs and skill specific educational programs, such as finance for nonfinancial mangers, but may also include an internal mentoring program. Samples of documents used in steps 4 and 5 follow.

27 Sample Development Plan NAME: TITLE: Overall Performance Summary: (Indicate recent performance including major accomplishments or performance issues.) Key Strengths: (List 2-3. Indicate key technical or professional competencies, skills or knowledge the person has.) Development Needs: (List 2 or 3. Indicate key experiences, skills or knowledge the person lacks in order to move to the next level.) Development Actions: 1. On The Job: (What new responsibilities do you plan to assign to help this person develop this year?)

28 Sample Development Plan (cont) 2. Special Assignment: (What task force, projects or special assignments will be given this year to aid development?) 3. Training: (What specific training or seminars are recommended this year for his/her development?) Potential For Promotion: (Indicate this persons readiness to be promoted to the next organizational level.) Ready now for the next level. Ready in the next 24 months. Ready in 2 to 3 years. Recommended Next Position: (List the next assignment that would most benefit the individual in his/her development.)

29 Measure your return on your investment Set the expectations Well designed development plans with objectives, preand post meetings with managers, applied learning and an evaluation loop to deliver results Action Plans can provide enough return on investment to fund the training and succession plan programs Liquid Propane Business Adding a Rail Leg Adding a Rail Scale Adding a Drive Through Business Adding a Convenience Store Employee Productivity Study

30 Sample Development Plan Summary Name Title High Level Plan

31 Steps Involved in Succession Planning 6. Identifying Emergency Positions Without Successors Emergency positions are those where no successor is available or no successor with developmental potential exists and without that person the entire business is at risk. Emergency positions, key licenses held that are critical because the organization has already determined the key roles and future organizational needs. When a succession plan has a vacancy, the organizational operations may be at risk in the event of a departure. In the case where no developmental potential exists in an employee, organizations need to ask themselves whether this employee has the ability to bring value to the organization. In some cases an exit plan may be appropriate.

32 Steps Involved in Succession Planning 7. Planning for Positions that Cannot be Filled Internally Where no successor exists, the organization will need to consider external recruitment strategies and develop a recruitment plan and in the interim consider cross-departmental succession opportunities. This situation can be beneficial in that it presents the opportunity for the organization to bring fresh and diverse talent into the organization.

33 Steps Involved in Succession Planning 7. Planning for Positions that Cannot be Filled Internally The external recruitment considerations may include asking for assistance on a temporary full or part time basis (with non-compete and confidentiality agreements), potential candidates might include: Recent retirees, Individuals in like roles/responsibilities that can become shared employees on a temporary or full-time basis. Former employees with the right skill sets In the ag business several organizations formed to fill roles as General Managers, Risk Management & Safety, and Grain Operations; assuring high quality, credentialed and licensed professionals, staff and resources to large and small organizations. Include your trusted advisors: banker, insurance agent, attorney, accountant, financial planner, industry/trade association executive. Ask for their confidential experiences, observations and opinions.

34 Keeping the Plan Current How will the plan be kept current? Develop a recurring timeframe, semiannually or annually. Determine effectiveness of existing plan. Determine whether the current plan still meets the organizational objectives. Determine whether the candidates have changed and make necessary adjustments in the plan. Assess and develop new candidates as with initial plan.

35 Communicating the Plan to Employees Determine the method of communication Take this opportunity to inform employees about the benefits of developing a succession plan and how it affects them. Employees recognize that the organization s management looks toward the future with optimism and invests in employee development and growth.

36 Challenges and Barriers in the Process What are some of challenges and barriers to getting a plan in place? What are some challenges and barriers once the plan is actually in place?

37 Summary Succession planning is the process of identifying highpotential employees, evaluating and honing their skills and abilities, and preparing them for advancement into positions which are key to the success of business operations and objectives. Having a well-developed and current succession plan in place is important for assuring continuity of services for clients and business operations and for managing the risk associated with vacancies in key positions, providing developmental opportunities, and helping develop a diverse workforce.

38 Summary (cont d) There are important steps/considerations involved in succession planning: identifying key leadership roles, legal and diversity issues, evaluating the potential employees, and selecting and developing employees to fill these key roles when needed. Once a workable succession plan is developed, it is critical to keep it current and to communicate it to all stakeholders including employees.

39 Summary (cont d) The Bottom line is strong leadership today does not guarantee strong leadership in the future. Leading organizations do not leave succession management to chance. It s one reason they do not just survive they thrive.

40 Decide what you should do next As a result of being at this session, Is it time for you to embark on the Succession Planning Journey? What should you DO next?

41 For More Information Young-Bowden, Deborah, The Bowden Group, PO Box 36, Ostrander, OH National Commission on Nursing Workforce for Long-Term Care found at Curriculum for Homecare Advances in Management and Practice (CHAMP) sponsored by the Visiting Nurse Associations of America 2011 SHRM Poll: Succession Planning, June 6, 2011, Society for Human Resource Professionals. Succession Planning Training for Supervisors, 2008, Society for Human Resource Professionals. Building Your Bench Strength (Part 1 & 2) How the best organizations select and develop tomorrow s leaders, by Guido M. J. dekoning. The Gallup Organization, March Licking County, Chanda Busse, Director of Service Coordination, Louise Decker, Director of Human Resources, National Leadership Consortium on Developmental Disabilities, Newark, DE, Graphics, under agreement with The Grove Consultants International

42 Evaluation Please be sure to complete and leave the evaluation sheet you received with your handouts Thank you for your attention and interest!

43 Questions? Comments?

44 OPRA 2011 Fall Conference Succession Planning, Is It Time Yet? Session Evaluation 1. What major insights did you gain from this session? 2. What was most beneficial? 3. What would you like to see changed or improved? 4. What will you DO as a result of attending this session? 5. Comments Optional Name Best Way to Contact Me

45 OPRA 2011 Fall Conference Succession Planning, Is It Time Yet? Worksheet 1. WHY are you attending this session? 2. Does your organization have a formal succession plan? In your opinion, how prepared is your organization to deal with a sudden loss of key members of the senior management team? Response You Percent Well prepared Somewhat prepared Not at all prepared Don t know 3. DECIDE: Is it time for you to embark on the Succession Planning Journey? 4. FIRST STEPS: What do you believe need to be your first steps? How would you describe the leadership pipeline at your organization? Response You Percent Robust Adequate Inadequate Don t know 5. WHEN will you get started? 6. WHAT are the BARRIERS to getting a plan in place? 7. HOW CAN WE HELP?

46 Succession Planning, Is It Time Yet? How I embarked on my voyage into the world of succession planning. It was I had just been promoted to lead employment and development for Countymark Inc, a Fortune 500, $2.3 Billion Agricultural Cooperative serving 5,000 employees, 146 Local Co-op Businesses and 145,000 family farm operations in Michigan, Ohio and Indiana. All tolled the system operated over 700 local, national and international elevators, port, terminal and r & d facilities. Cash was tight, the Corporation was operating on precariously slim margins, and no extra staff. Today the business is controlled by Land O Lakes, ADM, Cenex, Countrymark Petroleum and Growmark. I was lunching at the local bowling ally in Celina, Ohio with Charlie Heigel, the General Manager of Mercer Landmark. Bowling pins crashed in the background of this dimly lit cigarette filled dining room. Charlie was a crusty old, cigarette smoking, poker playing, whisky drinking, 55 plus year old, seen it all type of guy. He had the most profitable track records in the industry. His grand-father helped my grand-father get into the grain elevator business in the 1930 s. This was the late 80 s. I was a female, an anomaly in the feed and grain industry. Because of our family relationships, unbeknownst to me, Charlie was showing me the ropes, helping me to know the TRUE lay of the land. With his raspy voice, in his all-knowing manner He threw THIS out there: Deb. I was thinking. (Pause) There are 146 CEO s in this System. More than half of us will retire in the next 5 years. Most of the 700 branch and facility managers will also be retiring. These last 10 years it has been all we can do to survive. There is no bench strength. The gap in experience is outrageous, they are either my age or in their 20 s. We ve just cut the hell out of staffing and training too, for that matter. Did anyone else know he was planning on retiring? Most thought he would die on the job. He made it sound like no one else had even noticed these facts. I was processing what I had just heard. (Pause) So what did this mean? What were the implications of his facts? For CMK, it meant that this Fortune 500, $2.3B Closed Cooperative Business and in fact the entire Countrymark Cooperative System that provided supplies, services and marketing to 145,000 farmers was in jeopardy. With this discovery and the subsequent confirmation of this information Our corporate leadership and HR efforts took on an entirely different tack. As an organization we were going to have to batten down the hatches if we were to weather this, lack of succession planning leadership readiness storm. I did mention we had no cash, no working capital and were for the most part UNDERSTAFFED. The Ship had set sail, the Succession Planning Voyage had begun.