Succession Planning By Vivek

www.vivekmehrotra.com

Malaysian HR Congress 2007

Succession Planning


What if something happens to the CEO or to a senior executive of my organization?

Who will replace him?

Will the new incumbent have the maturity and the desired competence to execute all responsibilities?

Are people other than him, groomed enough to fill the void that would be created by his absence?


Charlie Bell, President and COO of McDonald, succeeded Jim Cantalupo, CEO hours after the sudden heart attack death

Mr. Zeien, succeeded Chairman and CEO Colman

M. Mockler of Gillette Co.'s when he died of a heart attack in his office

The Wall Street Journal Online


Session Outline Succession Planning - an introduction Succession Planning @ family run business An approach towards Succession Planning Steps to effective Succession Planning Identifying and nurturing Hi-Pos Potential and Performance mix of a Hi-Pos Putting success into Succession Planning How to measure its effectiveness Conclusion


Succession Planning Is not just a process to merely find a deputy or 2IC It is a conscious process to ensure continuity of

Business Operations

Organization’s Policies

Organization’s Culture


Organic Business Growth

Mergers

Acquisition

Promotions, Demotions & Transfers

Business Re-engineering

Succession Planning“Global aging (Over the 1998 - 2008 period), more job openings are expected to result from replacement needs (34.7 million) than from employment growth in the economy (20.3 million)” (Braddock, 1999)


Succession Planning: an age old art

H Recruitment of appropriate candidateetaining the good performers


Getting the right number of people

with the right skills, experiences, &

competencies in the right jobs

at the right time.

Workforce Planning

Nancy B. Kiyonaga, NYS Department of Civil Service


Succession planning ensures that there

are highly qualified members for all

important positions, not just today,

but tomorrow, next year, and

five years from now.

Succession Planning

Kathryn Towe Littleton


What does an organization lose if it does not implement succession planning?

Revenue? Market Share? Company’s Image? Stock Prices or Market Cap?

Human Cap? Workplace will lose high performers

Lack of skilled workforce that understand business well

Right skill mix for the future

Right leaders to accomplish organization’s Vision & Mission


Succession Planning = Commercial Success There is a direct correlation between:

Organization’s ability to develop senior executives & Confidence to meet future growth needs

Organization’s ability to recruit highly able executives & having well-organized program to develop Hi-Pos’

Developmental ‘stretch’ assignments within company & the personal involvement of the CEO Organization’s need to hire outside leaders

& Lack of confidence to meet future growth needs

HUMAN RESOURCE MANAGEMENT, VOL. 13 NO. 1 2005


A process that ensures…

• Right people to lead tomorrow… who live the values,

today

• Organization identify / recruit future leaders

• Employees develop new competencies & skills

• Organization alerts its rising stars to potential leadership opportunities; well in advance

Succession Planning… what is it?


A process that ensures…

• Better talent retention

• Greater employee satisfaction

• Enhanced commitment to work by the employees

• Improved image of organization

Succession Planning… what is it?


Succession Planning… what isn't?

Succession Planning is similar to Workforce Planning

It’s an option with management to develop leadership

Succession Planning & Leadership Development are Two different HR processes Stand-alone activities coordinated by HR department

Line Managers do not have much role in Succession Planning & Leadership Development

Lack of Succession Planning may not pose a similar threat as accounting blunders or missed targets


Succession Planning: the reality

Most globally recognized Indian organizations are not properly equipped with a sound succession plan

Very few Indian companies have been able to effectively implement a succession plan for its important and strategic positions

(A survey by the Associated Chambers of Commerce and Industry of India)


Succession Planning @ Family run businesses More than half of the top 100 companies are family

owned De-merger of business families, with trauma and

acrimony, is fairly common in India.

Reliance Industries – Mukesh & Anil Ambani Bajaj Auto – Rahul & Shishir Bajaj Escorts – Rajan & Anil Nanda Jumbo Group – Bhavika, Kiran & Komal Chhabria

Sahad P.V. - Family Values


Succession Planning @ Family run businesses

Family run business groups, which dealt with Succession issues successfully

Murugappa Group Dabur India Thapars GMR Group

Sahad P.V. - Family Values


Succession Planning @

GMR group’s Succession Plan Clearly articulated set of rules to deal with

Management succession Ownership succession Control and power sharing

Sucheta Dalal, CHEQUES AND BALANCES


Family Constitution Family Business Board Laid down policies on

Consensus in decision making Media policy Code of conduct Process of inducting family members into the business Providing benefits to those who do not want to enter the

business



G M Rao to step down at the age of 70

Three next generation successors to decide next chairman Dead lock trustee Induction of family members is on merit and are paid on par

with other professionals employed

The economic benefits of shareholding will be separate


Sucheta Dalal, CHEQUES AND BALANCES


Succession Planning @ Family run businesses Ownership Vs. Management

Family owns the controlling shares, but inducts professional managers to run their business.

Retail giant Rob Walton - Chairman Lee Scott - CEO

"Successful business families are those who runbusinesses as capitalists and families as socialists."N. Srinivasan


Succession Planning @ India's largest pharmaceutical company

1952, Bhai Mohan Singh founded Ranbaxy 1967, Dr Parvinder Singh, Bhai Mohan Singh's son, a

doctorate in pharmacy from the University of Michigan joined the company

1982, he became the company's Managing Director

1993, D.S. Brar joined as Business Development Manager, became the President (Pharmaceuticals) and a whole time Director

ICFAI - Center for Management Research


1997, Brar revealed his retirement plans to retire in 2002.

2003, Dr Brian Tempest (President, Pharmaceutical Division, Ranbaxy) took the reigns of Ranbaxy from Brar as CEO and MD

2006, Malvinder Singh has taken over as CEO & MD

Succession Planning @ India's largest pharmaceutical company


Succession Planning @ Corporates

Long Term Succession PlanningWho is completing his term this year?Who have the skills to replace this position?Who has necessary skills & ready for a larger or a different role?

Short Term Succession PlanningWho needs immediate replacements?Whose professional career demands relocation?Who would like to choose other volunteer options?


Department (A)Key Position (1)Key Position (2)

Department (B)Key Position (1)Key Position (2)

Department (C)Key Position (1)Key Position (2)

Current / Future Competencies and expected vacancies

Assessment & Evaluation to identify Hi-Pos

Profiling of Prospective Leaders

Individual development plans/Job rotation/Simulation workshops

Independent Assignment

Assessment of individual’s competency and skill gaps

Bottom - up Succession Planning


Understand organization's long term goals & objectives

Determine Critical Positions

Assess individual’s competency and identify skill gaps

Identify current and future competencies for positions

Identify expected vacancies

Evaluate potential candidates as successor for key positions

Determine the individual’s current performance & future potential

Design individual’s development plans

Review individual development plans to ensure needs are addressed


Steps of Succession Planning

Follow-up

• Assist with leadership transition and development

• Develop & implement coaching and mentoring programs • Develop an evaluation plan for succession management

• Monitor progress of succession candidates


Succession Planning @ (Talent Review and Planning) • Review of Business Strategy• Identification of Critical Roles• Stock of Talent Inventory • Identification of Potential Successor• Assess individual’s competency and identify skill gaps• Individual Development Plan in terms of

• Job Rotation• Training• Coaching• Performance Counseling

• Follow-up on individual development plans to ensure that all developmental needs are addressed

Express computer online


Succession Planning @ (Talent Review and Planning)

Lifecycle leadership development programs

• New Leaders Program

• Wipro Leaders Program

• Business Leaders Program

• Strategic Leaders Program


Current performance is not the sole predictor of future success

Future potential is a sign of prospective results

Performance V/s. Potential


Performance

Performance is an assessment of Hi-Po’s

• Past Business results• Past Performance review results

Identifies mainly the areas of low performance/weakness • Build a poor image of the employee• Minimal level of performance from Hi-Pos’ leading to

• Wasted resources• Low morale• Unsatisfactory performance• Higher degrees of employee turnover

PotentialV/s.


Potential is an assessment of Hi-Po’s

Willingness to perform

Open-mindedness

Personal Accountability

Willingness to learn from successes & failures



“Future work potential is based on accumulated skills

and experience as evidenced by past achievement,

ability to learn new skills and willingness to tackle

bigger, more complex or higher quality assignments.”

Charan, Drotter & Noel, The Leadership Pipeline, Jossey-Bass, SF, 2001



Performance V/s. PotentialCriteria for deciding Performance V/s. Potential mix

• Industry

• Job Profile

• Tenure

• Learning Curve

BPO, Science & Technology, IT, Media

R&D, Sales, Finance, Manufacturing

Entry Level, Middle Level, Sr. Managers

Management Trainees, Newly Promoted Managers,New Job profile


How to assess pool of Hi-Pos:

Negative feedback Change in behavior based on the feedback or … Learning from mistakes/successes in past Hunt for new information for self development or to

improve workgroup Learning & Demonstration of new skills Development of Team mates


[email protected]


Performance V/s. Potential H

L H

Per

form

ance

Potential

Competent / Capable

Needs Improvement

Plan exit

Long Term employee

New employee

Misfit in the position

High Performer in current roleAble to get things doneRecognize the technical expertiseOrganize the transfer of knowledge

Performance role modelLack ability to manageDetermine career aspirations Assist in developing leadership skills

Misses performance expectations Unorganized workingIdentify if unhappy in current roleCreate development plan

Performance below expectationsRigidity in behavior Recruitment error Consider exit options

Average Performer in current roleDemonstrate desire to achieveProvide training & coaching inputsRecognize potential; offer support

Despite competence, performing lowAwareness about perf. deficit missingCounseling to understand culture Help him in setting priorities

Offer challenging stretch assignments

Offer opportunities to develop others

Jackson leadership


Putting Success into Succession Planning

Management succession is a process and not an event

• Strong commitment of senior managers

• Process is to be owned by the line management

• Simple and tailored to unique organizational needs

• Flexible and linked with strategic business plans

• Evolved from a thorough human resources review process

• Based upon objective assessment of candidates


Role of CEO & Senior Executives in Succession Planning

Culture of coaching and mentorship

Focus on the company's competitive advantage and sustainable growth

To withdraw from the key roles for short or even medium-term periods

To take corrective steps in case of gaps arising due to their withdrawal


Role of CEO & Senior executives in Succession Planning

CEO is a dispensable resource

" Take a bucket and fill it with water,

Put your hand in it right up to the wrist,

Pull it out and the hole that's remaining

Is a measure of how you will be missed"

"Indispensable Man"

Bryan Hattingh


How to measure the effectiveness of the Succession Planning

The number of senior positions filled internally

The overall retention figure

The leadership talent created and provided to

the industry


Succession Planning - Check list

Within x months, assessment for all key departments and positions will be completed

Within x months, developmental plan for all Hi-Pos will be completed

By year 20xx, increase in job rotation of Hi-Pos’ by x%

By year 20xx, increase in Hi-Pos’ leaders by x%

Over x years, increase in Hi-Pos’ retention by x%

www.exceptionalleadership.com


Conclusion Succession Planning is as critical as creating a business

strategy Succession Planning is as important as running the

business profitably While identifying successors appropriate weightage needs

to be given to both performance and potential For an effective implementation of Succession Planning

involvement of CEO and line managers is a must Measuring the effectiveness of a succession planning

program is as critical as its implementation

Washout visual – Courtesy TOI


Thank You

Visual – Courtesy TOI

Succession Planning By Vivek

Business

Transcript of Succession Planning By Vivek