MT ELIZA BUSINESS REVIEW SUMMER / AUTUMN 2005

Requirements for
implementing a succession
management system
David Berke

44

heres not much information around on how to put

effective succession management into practice. Which
makes the following step-by-step guide all the more
valuable...

MT ELIZA BUSINESS REVIEW SUMMER / AUTUMN 2005

AS THE CURRENT generation of executives moves

often with minimal regard for actual readiness. Thus,
closer to retirement many will arrive there in about
both replacement and succession planning may be of
five years interest in succession processes has
help in meeting needs at the very top of an
increased greatly. Doing succession well is important.
organisation, with the latter being of most help. But
An ineffective succession system can result in leaving a
with either, problems can be created at lower levels if
critical position vacant for too long or promoting
there are unanticipated vacancies as people are
someone who is ill-prepared or wrong for the job. Each
promoted or leave.
of these
BEST PRACTICES
eventualities can
MODEL
cause real problems,
To start a succession effort , focus where
Although there is
financial and
some variation
otherwise.
the need and therefore support
among
Succession
is greatest.
recommended
management has
models, most include
gained currency in
the following:
recent years as a
1. active and visible support from the CEO and
strategy for addressing this situation.
executive staff which flows down to line
Research with companies such as Dell, Whirlpool
management
and Johnson & Johnson has led to what could be called
2. linkage of the succession effort with the
a best practice succession management process.1 The
systematic nature of succession management and its
organisations strategy. This provides a context and
focus on capability development make it highly
direction for the plan and associated activities
appealing. Unfortunately, most authors do not explore
3. a focus on development mainly through action
implementation issues. Instead, they commonly say
learning and cross-organisational assignments.
that there is no one, single best approach and that
Development is differentiated, with top talent
each company should design a succession process that
receiving significantly more development than
fits its needs and culture. While good advice, it is
others
inadequate for those tasked with designing and
4. creation of talent pools or a leadership pipeline that
implementing a succession process and/or
may include all management levels and perhaps
recommending one to a companys executive group.
critical non-management positions
The purpose of this paper is to explore some of the
5. regular talent review meetings followed by feedback
primary requirements associated with implementation.
to those in the succession plan/pipeline
First, it is important to define succession
6. open communication with those in the succession
management along with the approaches that have
plan about their status and prospects. This enables
preceded it, and which are still widely used.
those in the plan to share goals, experiences and
other information that might not otherwise be
SUCCESSION MANAGAMENT, SUCCESSION
known by decision-makers
PLANNING AND REPLACEMENT PLANNING
7. streamlined, simple process with minimal
The fundamental purpose of succession management is
paperwork
to ensure that appropriate and ready candidates will
8. accountability for follow-up.
be available when a need arises. The primary focus of
For someone considering design and implementation
succession management is proactive development and
of a succession management system, the above
management of
characteristics lead
talent pipelines or
to some very
The primary focus of succession management is
pools. These support
practical questions
the organisations
proactive development and management of talent regarding:
strategy, and range
roles what those
from critical
who support the
pipelines or pools.
positions at top
succession effort
levels of leadership
should do
and management through to vital, hard-to-replace
systems and processes the internal processes for
technical positions. This ensures a diverse and ready
gathering data and making and implementing
pool of candidates.
decisions
Succession planning has a similar purpose but
resources how time, people and money should be
usually is focused on preparing for succession at the
allocated to ensure that people utilise the systems
top two or three organisational levels. With
effectively and carry out their roles.
replacement planning, the primary focus is
Theoretically, these three elements are subordinate
identification of immediate and long-term successors,
to the goals of the succession system, which, in turn,

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MT ELIZA BUSINESS REVIEW SUMMER / AUTUMN 2005

support the organisations strategy. In practice, each

affects the others. For example, goals will sometimes
change if key leaders are unwilling to participate fully
or if there are insufficient resources. A full succession
management system takes several years to implement.
The following discussion of these three elements is
intended as an aide in thinking through the key steps.

discussions, assuring there is accountability for

development assignments that come from the talent
reviews, and for subsequent progress reports that roll
up from lower management levels. Additional related
activities include:
leading policy direction discussions with senior staff
linking current and future business
needs/challenges with internal capability to meet
ROLES
those challenges
CEO and Line Management
discussing potential and actual talent gaps and
All the current research on succession and talent
determining next steps
management indicates that the CEO must set and lead
reviewing critical jobs
the agenda for an organisations succession system, or,
discussing high potentials then reviewing and
more broadly, the talent management agenda. There
providing input to their development plans
are at least two reasons:
engaging in talent review discussions and providing
The board of directors will be interested in
performance-related input as appropriate
succession and associated processes, at least at the
coaching and developing others
senior levels of the
While
organisation
activities dealing
Only the CEO can represent the entire
Disney and Citibank
with policy and
are two recent
strategy are
organisations talent management needs and hold probably most
examples
Only the CEO can
appropriate for
management accountable for implementation.
represent the talent
executive levels,
management needs
managers at all
of the entire organisation and hold subordinate
levels should be expected to engage in most of the
levels of management accountable for
others, scaling the specifics to their organisational
implementation.
level. In some cases, managers will be unfamiliar with
Human Resources (HR) cannot do this effectively
what to do and/or how to do it. They may require
because it is a support function; it does not have
coaching or other developmental activities, delivery of
sufficient authority. Members of the senior leadership
which may be facilitated by HR or other parts of the
team often are inappropriate because their interests
organisation.
can be parochial, resulting in behaviour such as hiding
Throughout, the CEO must set the standards and
talent or blocking cross-business/cross-functional
enforce them through words and actions. If the CEOs
assignments.
message and actions are inconsistent and if, for
CEOs of best practice companies report that they
example, he or she protects colleagues who are underspend up to 30 per cent of their time on talent
performing, this will be a signal that others can do the
management-related issues (Jack Welch at GE being a
same. As a result, an effective succession management
well-known example).
system can
They understand that
quickly become
CEOs of best practice companies like Jack Welch one where the
this is part of their job
and that they, along
focus is on
at GE spend up to 30 per cent of their time on
with all the
administrative
organisations
details instead of
talent management.
managers, are
readiness.
ultimately accountable
Human Resources
for strengthening the organisations talent pool.
Human Resources primary role is to establish and
The CEO should work with the senior team to
support effective succession management processes
determine operating principles related to areas such
that lead to desired results. Processes should be
as: diversity; differentiation of talent; cross functional
simple, direct and aimed at building bench strength.
movement of people for development; at what level to
That is what gives decision-makers the best choices
treat high potentials as a corporate resource instead of
when a vacancy occurs.
a functional resource; whether to adopt a make or buy
To do this, HR must apply its expertise in
orientation (ie, whether to develop internally or
assessment, development and selection, and combine
recruit from the outside); and the role of line
that with expert organisational and industry
management in the development of people.
knowledge. HR should have solid data about key
Along with the senior team, the CEO should be
organisational leaders and it should also provide expert
actively involved in key activities such as talent review

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MT ELIZA BUSINESS REVIEW SUMMER / AUTUMN 2005

support to assist line management in assessing people.

A performance management system. At base,
(This may mean using external experts.) HR also
this consists of setting expectations and providing
should have the appropriate information technology
timely feedback on performance in relation to those
for storing and utilising the data it gathers. HR should
expectations. Often this becomes the basis for coaching
establish and control processes for internal searches
and other developmental activities. The organisations
and candidate slating; it should push to establish
reward system sometimes is linked to this feedback
standards for how key vacancies are treated and how
loop. In theory, a performance appraisal should be an
talent is assessed.
effective means of formalising performance
HR does not
management. In
make selection
practice, it rarely is.
decisions, but that
Nevertheless, many
HR can advocate a long-term view and high
does not mean that
organisations use
standards. What it should not do is become
HR cannot advocate
performance
a long-term view
appraisals for this
a political broker.
and high standards.
purpose.
What HR should not
Any of the best
do is become a
practices that
political broker. If that happens, HRs ability to carry
involve the following should depend, in part, on a
out its responsibilities in this and others areas can be
performance management system (though, too often,
compromised.
they do not):
HR should resist the temptation to create elaborate
a development assignment
administrative procedures. These do little to build
collection of data regarding how well the individual
organisation support for succession. They also focus
performed and how well he or she developed
attention and effort in the wrong place should be
identified knowledge and skills
readiness. Having a list of likely replacements is not
feedback to the individual on their performance
the same as having actual ready replacements.
decisions at a higher organisational level about next
steps
SYSTEMS AND PROCESSES
A development system. Development sometimes
One or more organisational systems and processes
involves workshops and other more formal events.
support each of the best practices. All of them,
Most often, however, development occurs on the job
including those detailed below, are interdependent and
through coaching and various developmental
require people who know how to utilise them.
assignments, such as participation on action learning
(Although there is not space to address the topic in
teams or job rotation. Those identified as having the
this paper, the
greatest potential
ability to implement
are more likely to
many of these
attend off-site
A performance management system consists of
systems and
workshops and
processes depends
similar activities.
setting expectations and providing performance
on a supportive
A developmental
feedback in relation to those expectations.
organisational
assignment is most
culture as well as
effective when the
the other factors
person being
described below.)
developed understands what is to be learned and why;
Those systems and processes include: a competency
in other words, there should be an explicit link to
model, a performance management system, a
performance management and appropriate
development system, a talent review process, an HR
competencies. Action learning works best when
information system, and an executive level policy and
learning goals are clear and when the action-learning
review process.
team is addressing a project that is meaningful to the
A competency model. This describes primary
organisation and/or senior management. To support
knowledge, skills and abilities needed to meet
such assignments effectively, most managers will
leadership and operational goals. These often are
require personal development to build their own skills
highly detailed in terms of desired behavior and
in performance management and coaching. An
outcomes in each competency area and, sometimes, by
organisational culture that expects and supports
organisational level. Once established, competencies
application of performance management and coaching
can be used for various purposes, including: the
skills also is helpful.
performance management system for expectation
To effectively allocate assignments, it is important
setting; the talent review process; and development
to know which ones provide what kind of development,
and, therefore, selection.
at least in general terms. Some companies use

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MT ELIZA BUSINESS REVIEW SUMMER / AUTUMN 2005

particular jobs for development because they know the

Often data on those in the succession plan is
experience gained in the assignment is critical for
arranged in a matrix (see figure 1). Some companies
future growth. This information is best developed over
use formulas to fill in the boxes; some are more
time by talking with people about the challenges faced
informal. In the end, assessing potential is at least as
in a particular assignment, rather than by just using
much art as science. It is best to use performance-overjob descriptions and theorising. Often, HR gathers this
time as the measure. To do this, it is important to
information.
know what criteria are being applied and to have
A talent review
people who are
process. This builds
skilled enough to
on the performance
use those criteria.
It is important to know if the right people are
management
The foundation for
being developed at the right pace for the right jobs. this lies in the
system, the
organisations
competency model
competency model
and skilled use of
and information about development opportunities and
performance management.
assignments. These meetings serve to regularly
An HR information system. At the highest
measure the progress of those in the system. It is
organisation levels, where overall planning occurs, the
important to know whether the right people are being
outcome of the talent review process is combined with
developed at the right pace for the right jobs. It also is
workforce planning data from the HR information
important to know if there are enough people in the
system and broader organisational and strategic
system to avoid stretching the pool too thin. Usually,
planning. Here, it is important to compare current
high potentials are reviewed once a year. If there are
trends with projected future needs and to examine
large numbers of people in the plan, multiple meetings
areas such as turnover, age of the employee population
may be needed.
by level, key retention risk areas, potential blockages
At higher organisational levels, broader issues
of positions identified as developmental assignments,
related to overall bench strength and potential
and bench strength.
talent gaps also may be discussed, as future
An executive level policy and review process.
development assignments are determined. Usually,
This is chaired by the CEO and typically includes the
high potentials above a certain organisation level are
executive staff and HR. It deals with succession
considered a
management policies
corporate resource
such as
The resource question is partly about priorities
or corporate
differentiation,
property. Typically,
diversity and crossand orientation to succession and talent
the CEO and
functional
his/her executive
development
management.
staff will at least
assignments. The
have input into
review group also
final decisions about cross-functional/organisational
ensures that succession management outcomes link to
development assignments for this group. These
organisational strategies and challenges. If the
decisions should be made in the context of the
organisation is moving in a direction that may require
significant business challenges the organisation is
additional or new knowledge and skills, activities
expected to face in two to five years.
related to filling the leadership pipeline and
development should reflect that.
Figure 1
Potential-performance matrix

Medium
potential

High
potential

High
performance

48

Medium
performance

Low
performance

RESOURCES

The resources question is often the first one asked.

Much of the preceding is a general discussion about
how time, people and money should be allocated in
implementing an effective succession system. In this
section, we will examine some ways to approach this
issue.
There is no doubt that the systems and processes
described above require commitment of resources. The
best practices companies are very large and successful;
presumably they have the necessary resources.
However, other companies of equal size and, one
assumes, approximately equal resources have not
implemented such systems. Thus, it seems reasonable

MT ELIZA BUSINESS REVIEW SUMMER / AUTUMN 2005

to suggest that the resource question is partly about

learn their new role and the skills required to be
available time, people and money, and partly about
successful.
priorities and orientation to succession and talent
SUMMARY AND RECOMMENDATIONS
management. There is no easy answer to the question
We have reviewed the roles, systems and processes,
of orientation and priority-setting. Research from the
and resources needed to implement a full succession
Corporate Leadership Council (2003), and others
management
shows that
system. For many
investment in
Compare the cost of development with the cost
companies this is
effective
more a long-term
development leads
of turnover or bringing in a new manager
goal than a real,
to better company
near-term
performance.
from outside.
possibility. It is best
That said, let us
to focus where the
briefly discuss the
need and therefore support is the greatest. Often, a
two most visible uses of resources.
succession effort will begin or become energised
Development. One of the primary reasons for
because of a need in a critical area, such as preparing
internal development is upward movement of the
to replace many of an organisations top executives
companys employees. It is good for morale. It often is
within five years.
more effective for the organisation when a person who
Executives and their subordinate managers must
understands a company and its processes is promoted.
learn that succession management requires a shift in
Consequently, a useful perspective related to cost is to
how they understand and enact their roles. There is a
compare the cost of development with the cost of
significantly greater emphasis on performance
turnover, or the cost of bringing in a new, mid-senior
management, coaching, and the talent review process.
level manager from outside the company. The cost of
Human Resources must also adapt and provide expert
workshops and other similar activities is fairly easy to
coaching, facilitation on key policy issues, appropriate
quantify. The cost of developmental assignments is
advocacy, and simple workable systems that will
more difficult. The various benefits, including some
support effective succession management.
work-related output of the project or assignment, must
Often a succession effort will begin at the top three
be balanced against some measure of opportunity cost,
organisation levels. This a good place to begin and to
and somewhat reduced performance, as learning
learn about how to
occurs. Development
implement a
assignments should
Succession management focuses on development
succession system.
not be viewed as
it is only the
free or almost free
of a pipeline that provides ready candidates at all But
beginning, if the aim
just because the
is succession
participant is doing
management levels.
management, which
company-related
focuses on
work.
development of a pipeline that provides ready
Executive/management time. The executive/
candidates at all management levels and, in some
management time issue is about time, of course. But,
organisations, critical non-management positions.
as mentioned above, it is more a question of priorities
Most organisations already have some version of
and adapting to the change in role. At the top of the
many of the systems and processes described above.
organisation, this means taking on a less technical
These organisations can and should build on what they
and more strategic role. The CEO must take the lead.
have, using a unifying structure such as the succession
For all levels of management, this also is likely to
management model described above. Approached
mean having to learn and apply performance
incrementally and with this structure in mind, many
management and coaching skills. HR can help
companies can develop an effective succession system,
managers save time by establishing processes and
and an executive and management team that
resources for development assignments and actionunderstands its role in managing succession and the
learning projects. HR also should have a significant
companys talent.
role in assisting executives/managers to adapt and
ENDNOTES
1. Such as: M Leibman, RA Bruer and BR Maki, 1996,
Succession management: The next generation of succession
planning, Human Resource Planning, vol 19, issue 3.
See also:
Corporate Leadership Council, 2003, Hallmarks of
Leadership Success, Washington DC.

JA Conger and RM Fulmer, 2003, Developing your

leadership pipeline, Harvard Business Review, December.

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