Ensuring Succession Management Has Business Impact

How can an organization ensure that it has the leadership talent needed in today’s highly competitive business environment? The answer is to implement an efficient and effective succession management process that demonstrates business impact. An efficient succession management process is timely, simple, repeatable, and has low administrative costs. An effective succession management process ensures leadership continuity, minimizes retirement and other turnover disruptions, and retains key talent. An effective succession management process both identifies and develops high-potential leadership talent. 

Business-focused succession management process

For a succession management process to have business impact, it must be designed and implemented with a focus on business results. There are three key steps within a business focused succession management process: identification of succession candidates; development of succession candidate; and measurement and evaluation of the succession management process. 

Identification of succession candidates

There is often a variety of criteria that gets collected and reviewed when identifying who the high-potential leadership candidates are within the succession management process. The criteria can be broken into two categories: criteria based on past and current performance review data, and criteria based on future leadership potential. This is an important distinction because leaders may excel in their current jobs, but may not have the potential to move into higher level positions. Not all high-performance professionals demonstrate high leadership potential. It is important to consider both types of criteria when determining the potential of a leader.  

Past and current performance review data. It is recommended that the most recent performance review rating contain two components. The first is a rating on the leadership competencies—how the job gets done. The second component of the performance review rating is the rating on the performance objectives—what was accomplished as it related to the business objectives of the organization. The overall performance review rating shows the leader’s current ability to do the job, including both “how the job got done” and the “what was accomplished.” Only those leaders who receive the top performance review ratings make it to the next step and are evaluated on their leadership potential.  

Criteria based on future leadership potential. The following criteria are examples of assessment criteria that indicate future leadership potential and can be used to provide the leadership potential ranking. These criteria can be customized based on business needs and show the leader has demonstrated  

• an ability to learn quickly and apply learning to the job in ways that add value
• a self-awareness of own strengths and weaknesses and has actively sought feedback to make meaningful changes in own behavior
• the drive and desire to achieve excel and advance in the company. 

The overall assessment process used to select high-potential leaders should include performance and potential data. The leaders with the highest performance review rating and the strongest leadership potential ranking are considered to be high-potential leaders and succession candidates. 

Development of succession candidates

When implementing a business-focused succession management process it is critical to not only identify the succession candidates but also to develop the succession candidates. Too often a list of succession candidates is created and then the list is put in a book and the book is put on a shelf, with no targeted and accelerated development of the succession candidates. Development of succession candidates is critical to truly have viable succession plan. Otherwise, your succession management process will likely not have the desired business impact. 

Each succession candidate should have an individual development plan focused on targeted, accelerated, and individualized leadership development actions. These development actions are typically based on the development needs identified during the assessment process. The recommended mix of development activities on these development plans is: 

• 55 percent on-the-job experiences (enrichment and lateral rotations; action learning projects)
• 20 percent on mentoring and coaching
• 15 percent on off-the-job experiences (industry associations; community leadership)
• 10 percent on education and training. 

Sample Individual Development Plan

The individual development plans should be reviewed with the succession candidates on a quarterly basis and updated with new activities as required to ensure that the necessary development is taking place. The goal is to ensure that the succession candidate is ready for the next role in the time frame required. 

Measurement and evaluation of the succession management process

This step involves an assessment of the succession candidate’s progress and an overall succession management process evaluation based on predetermined measures of success. There are many business impact measures that may be selected and evaluated to determine success. Below is a brief list of examples based on the Five Levels of Evaluation: 

• Indicators: Number of succession candidates, completion of development plans, and diversity of succession candidates
• Level 1: Reaction of succession candidates, managers, and executives to the succession, and development process
• Level 2: Succession candidate new knowledge and behaviors as a result of completing accelerated development plan activities
• Level 3: Completion of development actions and impact on succession candidate performance
• Level 4: The impact to business metrics such as increased retention, increased internal promotion or backfill rates, decreased expenditures on executive recruiting, and time-to-fill
• Level 5: Metrics that show the benefits and costs and return-on-investment
• Intangible benefits: Measures not converted to monetary values but still very important. 

The measurement and evaluation plan should be created prior to implementing the succession management process. Some of the succession management metrics will be collected immediately; some may need to be measured longer term. The data collected will show if the succession management process is having the desired impact on the business.  

A Succession Management Scorecard is a data collection tool that can be used to communicate the impact of the succession management process at all levels of measurement and evaluation.  

Today’s business environment is undergoing many changes that are having a considerable impact on the quantity and quality of leadership talent. An efficient and effective succession management process can help an organization to remain competitive by creating leadership continuity, minimizing turnover disruptions, and retaining key leadership talent. To ensure that the succession management process will have business impact it must include both the identification and development of succession candidates. The development for the selected succession candidates needs to be targeted, accelerated, and individualized. The succession management process must be measured and evaluated to demonstrate the business impact. 

References

Schmidt, L. (2007). Succession management in corporate universities. In M. Allen (Ed.). The next generation of corporate universities (pp. 351-369). San Francisco, CA: John Wiley & Sons.

Phillips, J. J. & Schmidt, L. (2004). The leadership development scorecard. Burlington, MA: Elsevier Butterworth-Heinemann.  

ASTD Field Editor Holly Burkett, SPHR, CPT, manages a consulting practice in Davis, California, where she helps organizations measure the business value of WLP efforts. A certified ROI professional, she is frequent presenter, workshop leader, and author. Most recently she authored the “Action Planning” chapter in the ASTD Handbook for Measuring and Evaluating Training. She holds a PhD in human capital development; burketth@earthlink.net.

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