Shh! Succession Planning Underway

What’s the most secretive talent management process? Succession planning is the most guarded of all HR policies and procedures, according to a 2012 survey of nearly 300 senior managers and executives by AMA Enterprise — a division of American Management Association, a leadership, management and talent development organization.

Nearly half of respondents (46 percent) said their organizations were “not at all” transparent when it came to succession planning; 43 percent said their companies were “somewhat” transparent; and 11 percent said their companies were “very transparent” when it came to succession planning.

The same survey showed a lack of transparency in high potential selection criteria, with 82 percent stating their organizations were “not at all” or “somewhat” transparent, and 85 percent said their companies remained “somewhat” or “not at all” transparent when it came to admission into leadership programs.

Those numbers suggest there is a lot of secrecy around this crucial process, and organizations might be missing out on some of the benefits associated with transparency.

Is Honesty the Best Policy?
Marc Collins, vice president of human resources for North America for Bekaert Corp., a global steel wire transformation and coatings company, said succession planning should be as transparent as possible and that leaders are doing employees a disservice if they aren’t honest about where they stand in the organization.

“We need to try as much as possible to help them achieve their goals and objectives as they go forward,” Collins said. “Sometimes there might be too big a gap in terms of where they aspire to be and their skill development, and they have to make the decision … of whether or not it makes sense to continue on at that organization.”

If honesty is the best policy, David Brookmire, president of Corporate Performance Strategies, a consulting firm, said one reason companies aren’t transparent is out of fear it will de-motivate those who aren’t identified as high potentials; these folks often comprise the majority of a workforce.

For instance, there might be a seasoned pro at an organization who isn’t promotable to a vice president level, but the organization cannot afford to lose the individual. “They may not have the strategic ability, the intellectual capacity to move up one or two levels, but you really need them to run your business,” Brookmire said.

However, companies may not need to be too concerned about how it will look if leaders identify and groom a select few over others. Stephen Miles, founder and CEO of The Miles Group, a talent strategy development company, said what’s really important is taking any action in a thoughtful manner. “At the end of the day, you can’t bet on everybody,” he said. “We get all worried about people’s feelings and ‘that’s not fair,’ but you need to develop people in order to be viable. In order to do that, you need to make bets.”

At restaurant chain The Cheesecake Factory Inc., there was a debate about whether it could potentially de-motivate those who were not chosen for the company’s emerging leader program.

Ultimately, Dina Barmasse-Gray, the company’s senior vice president of human resources, said the company chose to identify them. “Frankly, it’s more important for us to retain and engage early on with our high-potential leaders in the field and make sure they know that we see a future for them with us, so we made that very intentional choice.”

Bekaert Corp. advocates having dialogues with employees, but these discussions are always seasoned with tact. No one says straight out that someone is not on the succession plan. “That’s the kiss of death,” Collins said. “But we do tell them if you aspire to take on higher levels of responsibility, this is what it’s going to take in order for you to get there.”

This type of candid dialogue can help turn around potential derailers by detailing areas of weakness individuals need to address to move forward. In this context it’s important for talent managers to get over fear of having direct conversations, being conflict averse or not wanting to share bad news with people. “To me it’s being open and honest. If that’s one of your corporate values, you need to be able to practice that in succession planning as well,” Collins said.

Having this type of open culture where there’s two-way communication can be a boon to both employers and high potentials. Openness promotes better dialogue between the high-potential person and the company, and it alleviates individuals’ uncertainty.

For instance, a company may inform an employee that he’s been identified as a high potential, but explain that this is contingent upon his ability to relocate to where the business needs him, Brookmire said. This opens up a conversation about the direction the employee is headed and what it takes to get there.

Being informed of high potential status also can benefit employees because they’re more likely to get the most out of learning and development programs; they have a better idea of where they stand and why the learning is important, which could be inspiring.

Barmasse-Gray said having individuals selected for The Cheesecake Factory’s emerging leader program be able to see themselves as future leaders, and know the company intends to develop them, has had significant retention value.

“We’ve heard from many people that just the recognition of being part of the program was one of the highlights of their career to date because it was confirmation that they were on the right track, that their hard work was being seen by people above them [with whom] they may not have regular interactions,” she said.

Don’t Know What Employees Want? Ask
At Bekaert Corp., which has approximately 26,000 employees worldwide, the approach to succession planning is twofold.

First there is an annual talent development review process, during which senior leaders sit down to examine management talent, front-line supervisors through senior executives. Based on data from the performance management system and from reviewing an individual’s potential for growth against specific criteria, each individual receives an overall rating to categorize high potentials, potentials and sustained contributors. Then senior leaders evaluate where each of these individuals might fit best within the organization.

The second part of the process is to conduct comprehensive stay interviews with all potentials and high potentials. Collins said these individuals aren’t expressly told of their status as such; they are told they have value to the organization, their strong contributions have been noted and leaders see a bright future for them.

These conversations open up the doors of communication, Collins said, because once an individual’s aspirations are on the table, it’s easier to step back, determine areas where development is needed and to identify a clear path for the individual to move forward in the organization. “People feel like: ‘Hey, I am valuable to the organization; I do have a career path here, and I do have an opportunity to grow and develop.” That can play a significant role in high potential retention.

These conversations also allow individuals to express disinterest in moving up, but interest in a lateral move. For example, Collins said sometimes stay interviews reveal that an employee working in operations has a background and experience in finance and would like to explore how to get back on a finance track.

Other employees may be content where they are. A commercial manager who excels at sales may ask to be left alone rather than move into a sales manager position. “It’s very helpful to learn that instead of going in and promoting this individual, they feel obligated to move, they don’t want it and they’re not successful over time,” Collins said.

A Bird’s Eye View of the Right Succession Plan
There are some universal best practices that can be applied when formulating a succession planning strategy. The No. 1 step talent leaders should take is to step back and define a company’s future needs.

Miles said companies often mistakenly do succession planning in the rearview mirror. They might say, ‘We had a great CEO, and we need another one of those,’ or ‘We had a terrible CEO and we definitely don’t want one of those.’ But instead of dusting off an antiquated CEO profile, companies should take a more forward-looking approach by asking questions such as: Where do we as a company want to be in 2016? What do we want someone in the CEO role to be able to do?

“Then you can look back inside your company and say: OK, we’re heading here, or this new product is coming out, or we just bought this new company and the scale and complexity has changed — here are the two or three internal candidates, and here are the moves that need to be made in order for them to increase their viability,” Miles said.

Another best practice is for a company’s senior decision-makers — including the head of HR — to meet at least twice a year to do strategic reviewing and planning. Brookmire said this would include a review of talent, high potentials, progress toward plans, potential openings coming up and where they can slot different people.

Building in accountability for talent development also can help companies prepare high potentials better for new roles, Brookmire said. That may mean rewarding leaders via compensation or promotion opportunities if they’re stellar at developing high potentials through coaching and other techniques.

Providing high potentials with stretch assignments is also beneficial. For example, leading a cross-function or cross-enterprise initiative would expose them to the business and prepare them for future roles within an organization.

Regardless of a company’s stance on the succession planning transparency/secrecy spectrum, to ensure a company continues to move forward, have a plan to prepare those next in line, whether that preparation happens behind a corporate curtain or in front of it.

Reader Reaction
We asked our Twitter and LinkedIn followers whether succession planning should be transparent or kept under wraps. Most say being open is the way to go:

Via Twitter:

@jonkochik: Under wraps. High potential is a state, not a trait.

@MortenKamp: Succession planning should be transparent, otherwise it’s too difficult to develop the potential successor.

@ManjuChidanand: Sometimes it’s good to be under wraps since you may be choosing one over many others who are equally competent.

@kryslee21: Transparent! It informs and empowers people
to take ownership of their own development and career growth.

@gabylondon123: Transparency is best. Talent management and career progression should not be a mystery for employees.

@nindzaja: It depends on the maturity of the company. I believe in transparency.

@AmandaRmerri: Transparent so that everyone is clear about the expectations.

@gavino9: It must be trans-parent — it aids talent retention if people know where they can possibly get to.

Via LinkedIn:

Jason Kipps: Make your suc-cession planning process transparent when it is supported by an objective, quantifiable evaluation and assessment process.

Carl Nielson: I believe succession planning is an upper management process and not for public debate, so I consider it to be a confidential exercise.

Brenda Younger: Anything short of transparency has the potential to undermine employee trust,
a critical factor to successful leadership in any organization.

What do you think? Join the discussion here, follow us @TalentMgtMag or join our Talent Management LinkedIn group.