protect your human capital assets

A Critical component to Improve Performance

The demand for effective managers continues to grow, the retirement of baby boomers is producing a sharp decline in the ranks of available talent. In addition, the executives of the future are expected to be more sophisticated in order to develop and lead new global and technological initiatives. For these reasons, careful planning for the eventual replacement of managers at all levels in organizations has gained strategic importance.

This is true for small firms as well as large ones. It's not just succession to the top - It's getting the right person in place for every job. Some of tomorrow's key jobs may not even exist now. If a firm plans to double in size in five years, they will need more talented managers.

The larger issue is leadership development, tracking, and developmental opportunities. The real key in succession management is to create a match between the organization's future needs and the aspirations of individuals. The only way to keep talented people is to provide them with growth opportunities that keep them stretching and finding more promising opportunities they might find elsewhere. The average college graduate will change jobs five times in his or her career. Within the next decade, this norm will probably increase to seven job changes. Recruiting and retaining leaders becomes an economic and strategic challenge.

Succession management serves as an interface between the human resource function and the strategic direction of an organization. In this role, it is a vital resource in anticipating the future needs of the organization and helps find, assess, develop, and monitor the human capital required by the organization's strategy. While serving as trusted adviser and confidant of the CEO, the succession management function may also reflect the concerns and needs of line executives throughout the business units.

Talent Assessment

Talent assessment is a semi-transparent process in best-practice organizations. Most managers receive feedback and information about their developmental needs and suggested activities for further growth. Individuals who have been designated as high potential are seldom told of this designation to avoid raising expectations. At Lilly, an eight-page talent identification questionnaire is used to evaluate the assumed potential of 15,000 associates on performance, potential derailment factors, and learning agility. Similarly, Dell uses scaling calls to determine an individual's level of talent.

Best-practice partners use a core set of competencies or behaviors to establish a standard of comparison for assessment. Most organizations use a subset of leadership competencies that are aligned with the core set. All use these competencies as a basis for performance management and four out five use these for identification of high- potential employees. Furthermore, best-practice partners used fewer competencies than study sponsors, feeling that simplicity and focus were stronger advantages than comprehensive efforts. Dow has moved from having different competencies for each global business to a common set of seven used throughout the corporation. Dell focuses on "global corporate talent," which consists of individuals who have the capability to "run significant portions of a .... Business...on a global basis." They also track "functional high potentials."

Technology Used to Integrate Data

Developmental Activities

Subject Firms Measure Performance

All best-practice partners use some variety of a nine-box matrix for classifying the performance of their managers. In most instances, this matrix (originally popularized by General Electric) assesses individuals on the basis of performance, corporate values, and perceived potential. An individual who is performing well may not be judged as highly as someone who has not gotten comparable results but has persevered in a real stretch assignment. A popular competency was "learning agility." This refers to the ability and willingness to learn new material and adapt to new situations.

BEST-PRACTICE INSIGHTS

Deploying a Succession Management Process

Best-practice organizations make succession planning an integral corporate process by exhibiting a link between succession planning and overall business strategy. This link gives succession planning the opportunity to affect the corporation's long-term goals and objectives.

Human resources is typically responsible for the tools and processes associated with successful succession planning. Business or line units are generally responsible for the "deliverables" -i.e., they use the system to manage their own staffing needs. Together, these two groups produce a comprehensive process.

Technology plays an essential role in the succession planning process. Ideally, technology serves to facilitate the process (make it shorter, simpler, or more flexible) rather than becoming the focus of the process or inhibiting it in any way.

Identifying the Talent Pool

Best-practice organizations use a cyclical, continuous identification process to focus on future leaders.

Best-practice organizations use a core set of leadership and succession management competencies.

Engaging Future Leaders

Best-practice organizations emphasize the importance of specific, individualized development plans for each employee.

Individual development plans identify which developmental activities are needed, and the "best practice" firms typically have a mechanism in place to make it simple for the employee to conduct the developmental activities. Typically, divisional human resource leaders will monitor employee follow-up in developmental activities.

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