Effective succession planning
ARTICLE | Professor Victor Callan for TAFE NSW ICVET
Failing to plan
There is an old adage, “Failing to plan is planning to fail”. Like any other organisation that wants to thrive and compete, a training organisation must have plans in place so that the right people are in the right place at the right time to achieve successful organisational outcomes. The purpose of this short review is to provide an explanation of succession planning, to discuss its relationship to building capabilities that ensure the continued ability of an organisation to compete and to grow, and to provide some practical tips.
Being proactive or reactive
There are significant demographic changes facing Australian training organisations. Numerous reports, for example, have detailed the ageing of the Vocational Education and Training (VET) workforce in Australia, the increased use of part-time and casual staff, and the challenges of attracting and retaining younger generations to replace retiring staff 1.
The new reality is that a deep bench of talent is the most important asset if organisations want to operate successfully into the future. Those training organisations that will move from being good to great over the next decade will be those that have put in place effective succession planning. Those that choose not to plan will most likely continue to adopt very reactive approaches that rely overwhelmingly on outside hiring. They are most at risk of failing to replace talented staff in a period of increasingly large skills shortages.
As numerous reports show, the more innovative of our VET organisations are already very much2 :
- Engaged in planning around the types of people and the capabilities that will be required to meet the needs of the increasingly diverse training market
- Challenging traditional views about who can be the leaders
- Identifying and resolving blockages that are preventing staff from more diverse backgrounds from aspiring to higher positions of responsibility
- Incorporating into their approach to talent management, the more specific challenge of effective succession planning around key roles and responsibilities
- Employing a wide range of developmental opportunities to support their talent through on-the-job experiences, challenging assignments, 360 degree assessments, and opportunities to be involved in new forms of partnering with industry.
Succession planning
The practice of succession planning has been around for hundreds of years. Its roots exist in the dilemmas of managing transitions of power in royal families and in business dynasties. In organisations succession planning is about building pools of candidates who possess critical capabilities that are required to meet the short and longer term objectives of the organisation. Effective succession planning is a form of future proofing. It assists the enterprise to adopt and sustain specific strategic positions into the future that will allow the achievement of its vision, goals and specific objectives. Succession planning involves a projection of future needs in terms of the capabilities that staff will need to have to fill key positions that support the business.
In the past, most of this planning centred upon key management and leadership roles. Today succession planning is focused not only upon filling the most senior positions, but also upon developing leaders, managers and team leaders at all levels. This new positioning of succession planning reflects the move away from leadership development being a discrete activity to leadership development being more about building a culture of leaders throughout the organisation.
Evidence about the impact of succession planning
The majority of reviews about the impact of effective succession planning are anecdotal reports or the experiences of very large corporations. There is not a lot of evidence-based research. However, in a recent review into the practice and art of succession planning, Andrew Garman and Jeremy Glawe brought together over 150 research papers to address a number of key questions3 . On the question should succession planning be done, they found that the most compelling evidence was at the executive level when the CEO “gets hit by the proverbial bus”. In these cases, organisations fared much better if they could immediately name an internal successor.
This same review also revealed that organisations with a reputation for excellence in their management of talent and succession planning gave higher returns to their shareholders than their industries’ average.
That is, major stakeholders today (i.e. governments, customers, industry partners) expect businesses and organisations to have a plan in place that covers the replacement of its senior leaders.
Some practical tips in planning for succession
A priority of the senior leaders. Senior leaders must be actively committed to and involved in the process of succession management. They need to convey that succession management is a key organisational priority and one that requires collaboration across the organisation. With this high level of commitment in place, lower level managers can challenge built-in rigidities and biases that might turn talent away. In addition, senior leaders need to accept responsibility for creating a succession culture or a culture of leadership. In these environments, the thinking and planning around succession planning and talent management is not just the purview of the CEO. The task of succession planning becomes a partnership between the senior executive group, senior and middle managers and supervisors in identifying, nurturing and retaining this talent.
Fundamental to effective succession planning is a healthy and robust performance management system that manages the expectations of all employees who aspire to higher positions. It needs to be used well to judge, identify and to build the capabilities of top performers.
Succession planning as a strategic activity. It is important to link succession planning to the organisation’s long-term strategic plans. Strategic planning identifies the capabilities required by the organisation and its staff to achieve its objectives. Strategic plans should inform future needs around staffing, and in turn identify required capabilities, career progression, promotion processes, and the strategies being used on and off-the-job to grow talent.
Capability pathways. The VET sector has been developing Management and Leadership Capability Frameworks that define the capabilities required for now and into the future. A number of VET publications provide examples of such capability frameworks that can support the activities around succession planning 4. These frameworks do provide “capability pathways” that can help staff to know what knowledge, skills and experiences are needed if they are to move into more senior and challenging roles in VET. These capability frameworks, as well as the feedback provided through performance reviews, provide important opportunities for honest conversations with staff about their future within the organisation and the training sector.
Succession planning requires a major re-think about who could be future leaders at all levels of the training organisation.
Review opinions about who can lead. Effective succession planning really requires VET organisations to throw away the book about the type of people that they see as potential leaders. More training organisations need to review, challenge and update their definitions of leadership and to develop succession and workforce plans that attract, recruit, select, train and advance those individuals with the skills most aligned with current realities. This re-thinking especially needs to recognise the utility of greater diversity in the VET leadership pipeline.
Effective succession planning can provide better pathways for more people to lead at younger ages than they do at present, for more women to be in key leadership positions, and for more individuals with non-VET experiences to join the sector in key positions of responsibility. Assumptions need to be challenged around the commonly-held view that outsiders to VET cannot perform as well as insiders due to what are seen as almost insurmountable challenges in learning about the complexities of VET.
Be able to make a case for the need to succession plan. If you are managing staff that you think have the talent to lead in the future, and want to get access to a budget to develop them, mount a business case to more senior managers. For example, to gain entry into new training markets, VET organisations need to promote into leadership roles those employees who are more similar to existing or targeted clients. Also influential is what might be called the integration, learning and innovation case. That is, a training organisation that has more diversity in its leadership group (e.g. around the gender, generational, cultural and industry backgrounds of its leaders) should demonstrate more creativity and innovation around its purpose, strategic direction, core business, and potential opportunities for growth.
Seek transparency. There is evidence from best practice, as well as from research, that the succession process needs to be as transparent as possible5 . In particular, this requires good communications, clear policy and numerous opportunities for the succession planning process to be reviewed to assist its continued development. If an organisation is not open to regular review, for example, succession planning can come to be seen as a highly political process. One symptom is when the views of individual managers around the capabilities of their staff are frequently at odds with advice from other sources. This is where the organisation needs to clearly define and communicate the standards of performance. In addition, through job rotations, special assignments and leadership and management development programs talented staff can be judged by a wider group of senior staff, as well as by their peers, around their potential to lead.
There are related concerns around the use of terms such as high potentials, leaders of the future, acceleration pools, and the Top 100. Most recommendations around getting the right selection process in place cite the need to develop formal criteria, to use multiple methods for selection, and to provide managers with the training and skills to identify those who might become part of the talent management and succession planning programs.
Watch out for too much process. Another risk that needs to be managed is that the succession planning processes can become an administrative nightmare. Succession planning in larger organisations can take on many dinosaur-like qualities, moving too slowly to identify, support and to build the pool of successors. Effective succession planning has to move along at pace to ensure that the right people are in the right place at the right time.
Conclusion
In summary, succession planning has broadened its focus. It is more than just about replacing the CEO. As a strategic endeavour, succession planning is an integral part of talent management in today’s organisations. For the reader interested in more in-depth treatments, the following texts explore succession planning processes, systems, and specific cases. These include:
- Byham, W.C., Smith, A.B., & Paese, M.J. (2002). Grow your own leaders: How to identify, develop and retain leadership talent. New York: Prentice-Hall.
- Charan, R. (2008) Leaders at all levels: Deepening your talent pool to solve the succession crisis. San Francisco: Jossey-Bass.
- McCall, M.W. (1998). High flyers: Developing the next generation of leaders. Boston: Harvard Business School Press.
To gain a more Australian public sector examination of the merits of succession planning, as well as case studies of good practice, look at:
- http://www.apsc.gov.au/# which is the site of Australian Public Service Commission. The site provides access to special publications relevant to succession planning, public sector cases, and access to various capability frameworks around its Integrated Leadership System.
- http://www.apsc.gov.au/publications03/managingsuccession.pdf . This paper titled ‘Managing succession” reports on research undertaken by the Australian Public Service Commission, and provides many insights into best practice in succession planning.
- http://www.apsc.gov.au/publications08/leadingproductivepeople.pdf, has the publication titled “Leading productive people: A manager’s seven steps to success.” This report has been developed to help new managers build their people management skills. It identifies the essential steps and best approaches that managers can take to build the productivity and effectiveness of their people.
- http://www.apsc.gov.au/publications01/indigenousrecruitment.pdf provides the booklet titled “Recruitment of Indigenous Australians in the Australian public service”. It covers the legal framework that applies to the recruitment and development of Indigenous Australians, as well as providing ideas regarding strategies that organisations might adopt and develop.
Reference
1 Dickie, M., Eccles, C., FitzGerald, I., McDonald, R., Cully, M., Blythe, A., Stanwick, J. & Brooks, L. (2004) Enhancing the capability of VET professionals project: Final report. Brisbane: NCVER.
2 Callan, V.J. (2004) Building innovative VET organisations. Adelaide: NCVER; Mitchell, J., Clayton, B., Hedberg, J. & Paine, N. (2003) Emerging futures: Innovation in teaching and learning in VET. A report on current practice. Melbourne: ANTA.
3 Garman, A. & Glawe, J. (2004) Succession planning. Consulting Psychology Journal: Practice and Research, 56, 2, pp. 119-128.