BENCHMARKING OFSUCCESSION PLANNING

PRACTICES

Misha Aima

14 - MBA - 05

GlaxoSmithKline Consumer Health Care

GlaxoSmithKline (GSK) and its subsidiary and associated undertakings, constitute a global healthcare group engaged in the creation, discovery, development, manufacture and marketing of pharmaceutical and consumer health-related products.

GSK operates principally in two industry segments: Pharmaceuticals (prescription pharmaceuticals and vaccines), and Consumer Healthcare (over-the-counter medicines, oral care and nutritional healthcare).

The major markets for the Company’s products are the USA, France, Japan, the United Kingdom, Italy, India, Germany and Spain.

GSK has a portfolio of products, ranging from tablets and health drinks to inhalers and complex capsules, in over 28,000 different pack sizes and presentations.

In India, it is the Number One Pharmaceutical company with a market share of 5.9 per cent. GSK has four manufacturing units in India, located at Thane, Nashik, Mysore and Bangalore and offices in various cities like Gurgaon, Nabha and Hyderabad.

This project aimed at understanding the Succession Planning process established in various companies, across different sectors (FMCG, IT, Service sector) though Benchmarking.

This was done with the help of a questionnaire that was circulated among the HR departments of the participating companies.

The responses to these questionnaires provided insights for our analysis.

Aim of the Project:-

Training Programme:-

Devising the questionnaire.

Data collection from the Benchmarked companies.

Findings and analysis.

Suggestions/ Recommendations.

Project presentation.

Devising the questionnaire.

The process consisted of understanding the Succession

Planning process and its relevance so as to determine the

parameters on which the questionnaire was developed.

Succession Planning:-

A deliberate and systematic effort to : project leadership requirements. identify a pool of high potential candidates. develop leadership competencies in those candidates through

intentional learning experiences, and then select leaders from among the pool of potential leaders. Finally… evaluate success

Identify Leadership Requirements:-Competencies

Create profiles for leadership jobs (e.g., Division Director and Assistant Division Director)

Create profiles for managers (e.g., frontline and middle managers)

Results Objective measures:

E.g., work group results, production, customer satisfaction,

innovations, turnover, competency levels, EE satisfaction Subjective measures:

E.g., rating of total contribution to achieving agency goals, customer satisfaction, process improvement, improved team capacity

Account for complexity and scope of impact

Identifying pool of High Potential:-

Future work potential is based on :

Accumulated skills.

Experience as evidenced by past achievement.

Ability to learn new skills.

Willingness to tackle bigger, more complex or higher quality assignments.

Develop leadership competencies:-Send member of pool through structured development activities .

Targeted to close individual gaps.

Develop for job levels not specific jobs.

Done Through:-Skill Building ClassesCoachingMentoringEducationDevelopmental ExperiencesShort Term AssignmentsAction Learning

How is it done?

10-15%

Training and executive education

10-15%

Relationships and feedback from on the job (bosses, peers, subordinates, mentors, multi-rater assessments

On-the-job experiences, challenging job assignments

55-65%

Off-the-job learning (community involvement, industry associations, etc.

10-15%

Selection of leaders:-Matching people to jobs based on competency profile fit for

the specified positions.

Evaluation:-Collect, analyze, and interpret data on effectiveness of

communications and succession development.

1. One or more well-qualified internal candidates are prepared and ready to assume each key job (i.e., ready list)

2. A record of successful promotions (or lateral placements); few people fail

3. Few superior performers leave the organization because of ‘lack of opportunity’

Why Succession Planning:-

Real or feared shortage of future leaders.

Retaining highly skilled talent.

Growing number of retirement-ready personnel.

Shifting skill requirements.

Making the next employee force a smarter one.

Lack of employee-agency alignment.

Inconsistent execution.

Benchmarking:-

Benchmarking is the process of determining who is the

very best, who sets the standard, and what that standard

is. It is a continuous, systematic process of evaluating and

comparing the capability of one organization with others

normally recognized as industry leaders, for insights for

optimizing the organizations process.

In our project, we have taken a combination of

Functional and Generic benchmarking in which we have

compared practices related to “Succession planning”

across various companies and sectors.

Data collection from the Benchmarked companies.

Company Profiles:-

1. GlaxoSmithKline Consumer Health Care

- Pharmaceutical, biological and Health care company .

2. Coca Cola

-The company is a cola giant .

3. PepsiCo / Frito Lay

- The company is in the FMCG sector. 4. Perfetti Van Melle

- The company is a confectionary manufacturer. 5. Ranbaxy

- The company is a pharmaceutical major.

6. VLCC

- Institute of Beauty, Health and Management.7. Canon

- World leader in imaging products and solutions for the digital

home and office.

8. Wipro - IT bigwig.

9. Vardhman Group - Company is a major integrated textile producer in India.

Findings/ Analysis.The findings and analysis has been divided into two section

i.e. the process of succession plan which tries to elaborate

on what are the various technicalities which constitute the

plan .The other area about which we talk is developing

future leaders. This mainly deals with the identification and

the development of key potentials across companies, which

infact is the very essence of any succession plan.

PROCESS:-

The questionnaire consists of question related to the

process which goes into a succession plan. It is divided

across following parameters:

Tools used:The following graph represents the combined results of the questions

related to the kinds of succession planning tools in use

As is clear from the graph the most favored form of a formal succession

plan is the succession planning form as opposed to a leadership path

template, which is least in use.

Which tools are used?

29%

14%10%14%

19%

14%

succession plan forms

leadership developmentplan

leadership pathtempelates

succession planningguidelines

member profile

evaluation form

What are the various policies that are

included in succession plan?This question deals with the fact that how succession planning is a part

of your everyday business practices.

As is depicted in the pie chart majority of the companies have

documentation in their succession plan about the ways and means in

which they will develop leaders.

various practices

24%

29%5%

10%

32%

recruiting & training

compensation

client transition

retirement

developing futureleaders

This graph points towards the depth of your succession plan. Wipro

comes out as the company, which incorporates all the above

mentioned areas in its plan where as GSK only stresses on developing

leaders.

0%

10%

20%

30%

40%50%

60%

70%

80%90%

100%

po

licie

s i

nclu

ded

in

su

ccessio

n p

lan

Gla

xo

Co

ke

Fri

toL

ay

Pe

rfe

tti

Ra

nb

axy

VL

CC

Ca

no

n

Wip

ro

Va

rdh

ma

n

What all does your succession plan consider?

developing futureleaders

retirement

client transition

compensation

recruiting & training

What criteria are used for succession Planning?The following graphs depict what are the various criteria that go into

deciding on what is your succession plan based upon.

As is seen from the figure most of the companies base their succession

plan upon the critical competencies of their key talent.

FACTORS:

38%

22%

34%

6%

CriticalCompetencies

Key Experieces

Results

Potential

The figure shows the combined result of the levels of various criteria

used in the succession plan. Here is in exception of GSK where

potential is an essential consideration in mapping talent.

0%10%20%30%40%50%60%70%80%90%

100%

fact

ors

Gla

xo

Cok

e

Frit

oLay

Per

fetti

Ran

baxy

VLC

C

Can

on

Wip

ro

Vard

hman

what governs your succession plan?

Potential

Results

KeyExperieces

CriticalCompetencies

Time Horizon:As per this question we wanted to find out as to how much into futureare the companies looking for their talent needs. Thus the questionswere targeted towards the time horizons i.e., immediate (0-2 yrs),medium (3-5 yrs) or long range (5-10 yrs) talent requirement of thecompany.GSK 0-2, 3-5 yrsCOKE 0-2, 3-5 yrs FRITO LAY 3-5 yrs PREFETTI NA RANBAXY 3-5 yrs VLCC 3-5 yrs CANON 0-2 yrsWIPRO 2-3, 3-5 yrs VARDHMAN 3-5 yrs

The table shows that most of the companies do not invest their effortsinto long-range talent development. Their main stress is to cater tomedium range talent need.

Pitfalls:The following section tells us about the various hindrances and blocks,

faced by companies, which hold them back from getting to a “sound”

succession plan.

PITFALLS :

18%

10%

9%

16%17%

20%

10%

Management unwilling tocommit to long term planning

Lack of formal written plan

Plan is too rigid inflexible orcomplex

Perception of costs involved

Breakdown in support for theprogram

Too long a wait for realmovement

Selection of unqualified orunmotivated people

The graph below is a depiction of the level of pitfalls to an effective

succession plan in the companies. GSK here is a clear winner with no

such pitfalls.

0

5

10

15

20

25

pit

falls

Gla

xo

Co

ke

Fri

to L

ay

Pe

rfe

tti

Ra

nb

axy

VL

CC

Ca

no

n

Wip

ro

Va

rdh

ma

n

How effective is your succession plan?

DEVELOPING LEADERS:-

The next set of questions deals with the insights into how

are “leaders” actually identified, nurtured and developed by

adopting a succession plan.

What are the types of development considerations in your succession planning process?

In this segment we wanted to have an insight into which of the following

considerations are used by companies in the developmental phase of their

succession plan; Role – based (Programs focus on key positions that are difficult to

fill or critical.) Individual – based (Programs focus on particular people with

potential for advancement.) Pool – based (Programs focus on a number of high -potential

members who could move into any of several different leadership positions within the organization.)

An interpretation of the question shows that companies like GSK and

Canon have individual development plans whereas Coke has a more

stratified development program and lays stress on all the above

considerations .

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

deve

lopm

ent c

onsi

dera

tion

Gla

xo

Cok

e

Frito

Lay

Per

fetti

Ran

baxy

VLC

C

Can

on

Wip

ro

Var

dhm

an

Pool Based

IndividualBased

Role Based

What is the “competency mix” for evaluating key talent?

key competencies for talent evaluation :-

28

26

27

28

37

35

31

28

24

30

26

29

33

35

35

5

0 5 10 15 20 25 30 35 40

Self Confidence

Global Awareness

Service Orientation

Adaptability

Achievement Orientation

Self Initiative

Conceptual Thinking

Communication

Impact and Influence

Change Catajyst

Building Bonds/Relationships

Developing others

Technical Competency

Vision

Business Acumen

Potential

ratings

How are key potentials identified and which areas do they target?

companies How do companies identify Key potentials?

Positions targeted

GSK Mentoring & coaching and appraisal system

key positions in marketing , R n D , Finance and sales

COKE Career discussions key positions

FRITO LAY No formal structure except appraisals

critical positions esp. in

R n D

PREFETTI Resulted oriented

“star performers”

key positions in sales and marketing

RANBAXY Individual development plans critical positions

VLCC appraisals key positions

CANON Performance management system

consumer imaging (CII) and sales (OSS)

WIPRO 360 degree appraisal top 75 positions

VARDHMAN appraisals key positions

Recommendations.Spread responsibility and ownership for succession planning process design, execution and refinement.

Select a set of key leadership criteria and provide an outstanding development process, aligned with corporate culture, to help leaders meet requirements for advancement. international experience

cross-functional experience

completion of leadership courses

Screen effectively to identify high potentials and to concentrate development resources on future leaders. 360-degree performance reviews

Performance-Potential grids

situation modeling.

No Competency Model Fit

1 Action Oriented 7.5% 3.0%

2 Influence Ability 5.0% 2.0%

3 Composure 2.0% 1.0%

4 Conflict Management

5.5% 5.0%

5 Interpersonal Savvy

3.0% 5.0%

6 Listening 6.5% 6.0%

7 Negotiating 1.0% 2.0%

8 Organizational Agility

3.0% 4.0%

9 Perseverance 7.0% 5.0%

10 Presentation Skills 8.0% 0.0%

… Others 3.0% 2.0%

TOTAL 100.0% 61.0%

Priority Gaps

Developmental Planning

Role Model Strengths

John Doe

Division Director

Competency Comparison

Measure the results of succession planning process for individuals and the corporation to ensure alignment with goals.

Assigning employee development planning responsibility to a corporate executive (usually in the HR department)

Linking development at the individual level

Integrating development reviews into the performance review process

Creating a matrix to chart development and performance.