BY

ALIAS MASOD

CHARTERED FELLOW CIPD, UK.

DIRECTOR / PRESIDENT -ELECT OF IFTDO,

PRESIDENT OF MYLEAD &

CHAIRMAN OF 1MYROI

SUCCESSION PLANNING

9 May 2013

Sharing of Experience

Presentation Outline

What is Succession Planning

Why Use Succession Planning

Links between Succession Planning and Talent Management Programmes

Activities covered by Succession Planning Programmes

Identifying Successors

The Role of HR

Conclusion

What is Succession Planning

Succession planning may be broadly defined as a process for identifying and developing potential future leaders or senior managers, as well as individuals to fill other business-critical positions, either in the short- or the long-term.

In addition to training and development activities, succession planning programmes typically include the provision of practical, tailored work experience that will be relevant for future senior or key roles.

Which posts are covered by Succession Planning?

It is possible for succession planning schemes either to encompass individual senior or key positions or to take a more generic approach targeting a ‘pool’ of positions for which similar skills are required.

Succession planning typically covers the most senior jobs in the organization, together with short-term and longer-term successors for these posts. The latter group are in effect on a fast-track, and may be developed through job moves within various parts of the business.

This focus on the most senior posts, perhaps the top two or three levels of management, means that, even in large organizations, only a few hundred people at any given time would be subject to the succession planning process. The relatively low numbers involved can help make the process more manageable. That said, many large organizations attempt to operate devolved models in divisions, sites or countries where the same or similar processes are applied to a wider population.

Individual Positions

While some jobs will always require specialists, there is a growing focus on identifying and developing groups of jobs to enable potential successors to be identified for a variety of roles.

So jobs might be clustered by role, function and/or level so that the generic skills required for particular roles can be developed. The aim is to develop pools of talented people, each of whom is adaptable and capable of filling a number of roles.

Because succession planning is concerned with developing longer-term successors as well as short-term replacements, each pool will be considerably larger than the range of posts it covers.

Roles, not jobs – the use of pools

Why use Succession Planning?

All organizations need to be able to find people with the right skills to fill key and top leadership and management jobs. Traditionally, large blue-chip companies ran highly-structured, mechanistic, confidential and top-down succession schemes aimed at identifying internal successors for key posts and planning their career paths to provide the necessary range of experience.

But with growing uncertainty, increasing speed of change in the business environment and flatter structures, succession planning of this sort has declined. A further problem with traditional succession planning was that it failed to take account of non-managerial roles – a brilliant scientist, for example, who might be crucial to the future of the organization and who wanted to stay in a research role.

In a climate of enduring skills shortages and lack of confidence in the leadership potential within the existing workforce, interest in succession planning has revived. For example, the latest Global leadership forecast, run by the CIPD in association with talent management specialists DDI, suggests that relatively few leaders rate other leaders in their organizations as good or excellent.

Succession planning can also assist with the retention of talented individuals, as they are aware of internal opportunities available to them in seeking to progress their careers.

Why use Succession Planning?

It is difficult to gauge with precision the extent to which succession planning currently operates among Malaysia organizations: one recent survey indicates that over half of employers have some form of succession planning in place, albeit these are more likely to take the form of informal rather than formal arrangements1.

Modern succession planning, however, looks quite different from the old version, with a broader vision, greater openness and diversity and closer links to wider talent management practices.

Why use Succession Planning?

Links between Succession Planning and talent management programmes

Talent management covers a wide range of activities designed to recruit, retain and develop highly-talented individuals – with a focus on attracting external talent as well as nurturing internal talent.

All organizations need a certain amount of new recruits directly at senior levels to bring in new ideas and approaches, and fill newly-created or unanticipated roles

Many, however, seem to rely either too much on outsiders or too much on insiders, suggesting that it is difficult to find the right balance.

“Insiders” versus “Outsiders”

It is also sometimes argued that outsiders should not be brought in at board level but somewhere below it, so that people with outside experience can become accustomed to the corporate culture and undergo development before making the next step up.

Others, though, argue that if an objective business case can be made for bringing in outsiders at board level, this should be done where appropriate, and in particular that a failing business needs to recruit from outside - and to be seen to be doing so - to satisfy investors.

“Insiders” versus “Outsiders”

While many employers aim to attract certain highly-talented individuals from outside the organization for key or senior positions, this aim is likely to be balanced by a desire to promote widely from the home-grown talent pool.

This will be particularly relevant where there is a high degree of organization-specific knowledge, for example in the case of IT professionals in business-critical roles.

Moreover, some commentators believe that leaders developed from within tend to be more successful than those brought in from outside.

Succession planning is therefore central to the internal element of talent management programmes.

CIPD report The talent perspective: what does it feel like to be talent-managed? assessed the experiences of participants in talent management programmes, encompassing the development of potential future leaders as well as existing senior figures.

Nurturning Internal Talent

A survey report conducted by CIPD found that talent management and succession planning becomes more not less important in an economic downturn, when it is more important than ever to know how to develop people to meet short and long-term business critical issues.

Impact of Economic Climate

Activities covered by Succession Planning programmes

A wide range of activities may be included in succession planning programmes, both formal and informal training and development processes together, critically, with a focus on the attainment of relevant work experience.

Traditionally, people would tend to gain experience by upward moves, with accompanying increases in status and salary. Nowadays that may not be invariably possible because organizations are less hierarchical, with fewer management layers.

Moreover, fewer opportunities for vertical moves exist during difficult economic times. A sideways move into a different job, perhaps without any additional compensation, may be an alternative way of gaining additional experience.

Similarly, some organizations are taking advantage of secondmentopportunities as a way of providing wider development opportunities to potential leaders.

Broadening experience by lateral moves (Planned Job Rotation Programs)

IDENTIFYING SUCCESSORSInformal v Formal Approaches

Participants in succession planning programmesmay be selected either by informal methods, such as conversations with managers, or by more formal techniques, such as the performance review process and/or the assessment of competencies.

Many organizations have developed frameworks for technical and generic competencies, which relate to a broad range of desired skills and behaviours.

The assessment process attached to generic frameworks (especially for management competencies) can provide a useful starting point for evaluating an individual’s potential for a senior role.

Thus succession plans may need to be integrated with existing competency frameworks. However, there should not be an over-reliance on competencies because they may be too limiting and mechanistic to assess skills such as leadership. Moreover, they relate to the past and present rather than to the future, which is where organizational leaders need to look.

Best Practice: Australian Model of Frontline Management initiative (FMI)

Competencies

It is now widely accepted that employees need to understand the succession process, the methods used to judge potential successors and the kinds of jobs that are considered suitable for each individual.

Hence the previously confidential nature of the succession planning process has been reduced, and advertising of senior internal jobs is more common.

With openness should go fairness; objective assessments of all available candidates need to be seen to be made, and succession development committees (under a variety of names) exist in many large companies to review key talent and succession plans and to examine how to improve the process.

Openness, fairness and diversity

With the business case for diversity now widely recognised, employers are also increasingly aware of the need to ensure that diverse talents are properly developed and that diversity considerations are built into talent and succession processes.

The modern version of succession planning takes account of the growing recognition that people, men as well as women, increasingly need to make their own career decisions and to balance career and family responsibilities.

Openness, fairness and diversity

The adoption of flexible working practices can enhance the effectiveness of succession planning programmes by increasing the available talent pool.

Best Practice: Through Leadership Development Programs, in Banking sector and Telecommunication

Openness, fairness and diversity

Succession planning sits inside a very much wider set of resourcing and development processes called ‘succession management’, encompassing management resourcing strategy, aggregate analysis of demand/supply (human resource planning and auditing), skills analysis, the job filling process, and management development (including graduate and high-flyer programmes).

The HR function has a key role to play with each of these processes.

While succession planning needs to be owned by line managers, and should be actively led by the chief executive (who has a key role in ensuring that it is given the importance it deserves by other senior managers), HR has a critical role in supporting and facilitating the process.

The Role of HR

The function must compile all the necessary information on potential candidates via the design and management of assessment processes and information support, including the development and maintenance of any relevant databases. HR departments are of course also heavily involved in giving career advice and information to individuals, and assessing and advising on their development needs.

The Role of HR

Those responsible for succession planning need to be highly knowledgeable about how the business is likely to evolve and how such change might affect the numbers involved in succession planning and the skills they must possess.

This necessitates a close relationship at a senior level between top managers responsible for shaping the future of the business (including the chief executive) and the HR function, which acts as a facilitator.

It is imperative for employers to avoid talent tunnel vision, where the focus is purely on current skills needs, and to ensure they develop a good understanding of future business needs for leaders and managers.

Linking Succession Planning with Business Planning

There is no one model for succession planning, as its contours are likely to be quite different in small and large organizations - although it can be equally vital in both -and there are no hard-and-fast rules. But what is indisputable is that all organizations need leaders and managers with a range of experience.

Management training and development activities alone cannot provide the hands-on experience that is crucial in making future leaders.

Although it is a complex and time-consuming process that, carried out properly, may absorb substantial time and expenditure, succession planning is an important way to manage the delivery of that experience, complemented by management training and development activities, and align it with business needs.

Organizations need to ensure that they continually review and develop their succession plans to meet current and future skills, capability and behavioral needs and to ensure that succession planning is closely aligned with evolving business priorities.

Reference: CIPD, UK

CONCLUSION

Succession Planning: A ModelAttachment