Finding Success in Succession

Workforce analytics has taken center stage in the human resources industry as companies employ big data tools to help assess and predict their workforce needs.

To stay ahead of this trend, Talent Management is producing a series of special reports this year, tracking the effect that analytics is having on HR strategies. In this latest installment, we explore the impact of big data on succession planning.

In naming Mary Barra as its next CEO in December, General Motors Co. provided a rare trifecta in today’s world of leadership succession.

First, Barra’s rise to the top of GM made her the first female CEO of a major automaker. Second, with Barra’s tenure at the company in its third decade, she became a rare “lifer” to earn access to the coveted corner office.

And third, Barra was named successor well before the company’s then-sitting CEO, Dan Akerson, was set to retire — an ideal example of preparedness in an era more apt to present seat-of-the-pants CEO succession as the norm.

To succession planning experts, the fact that GM was able to accomplish its top-job succession without a hitch served as a positive reflection of the company’s broader efforts in planning and talent development. In a study of CEO transitions in 2012 by executive search firm Spencer Stuart, 10 of the 37 chief executives hired in the S&P 500 were external, a number management experts say is too high.

“Whenever you have to go outside, you have failed at building a leadership pipeline. End of story,” said Noel Tichy, who worked under Jack Welch at General Electric Co. and is a business author and professor of management at the University of Michigan.

According to Tichy and others, the field of organizational succession planning is in the midst of a transformation. Thanks to recent regulatory pressures, the business benefits of a climate of leadership preparation and greater availability of data, companies are putting more effort into succession planning.

This enhanced spotlight on CEO succession has helped spur a cultural awakening related to organizational talent development. More and more companies are recognizing that thorough succession planning is a competitive differentiator in a business environment that increasingly rewards agility and preparedness.

Compounding this focus, experts say, is the rise of data systems driven by enhancements in computing technology. As companies ramp up their use of HR systems to collect and organize employee data — from detailed profile information and individual competencies to yearly performance scores — succession efforts are able to be more objective and reach deeper levels within the organization.

The development has even propelled some organizations to try to build HR capability on the subject of big data — when the collection of data sets are so large that they may be difficult to process.
But as this special report will show, succession planning isn’t exactly having a big-data moment. Instead, human resources executives liken their use of data to what might be called a “small data” approach — being purposeful about which data sets are considered important, and then balancing those against in-depth qualitative discussion of succession candidates.

“On paper, they might look great. But are they capable of thinking outside of the box and capable of really thinking further, and really be able to take this company to the next level?” said Tom Capizzi, executive vice president of global human resources and chief human resource officer for orthopedic device-maker DJO Global. “You can’t just get that from data.”