Sucession Planning Q and A

Mark Caruso is a world renowned expert on the design and introduction of global talent management solutions. His models for succession planning have been benchmarked as best practice by HR Effectiveness, Inc. He has designed and implemented succession planning and performance management processes and software for many of world's most successful companies.

"…take action now to avoid the negative and costly consequences of being unprepared for the exit of key people in the future."

Q: What is "succession planning" to you?

A: Succession planning includes several steps. First, understand your current talent inventory of human resources. How many leaders with what kinds of skills are deployed to fulfill the current strategic intent of the company? Second, and this is in best practice only, evaluate what your leadership talent inventory will look like in the future - including predicting the current jobs that will become open. Third, present a clear picture of the gap between what you have and what you will need.

This gap analysis provides the opportunity to take action now to avoid the many negative and costly consequences of being unprepared for the exit of key people in the future. The CEO and their key team should meet regularly to take action and monitor progress metrics. Succession planning is the key strategic process for the Human Resources function.

Q: What is the Board of Directors role in succession planning?

A: Board governance in this context is clearly focused on the CEO successor. However, as news headlines often remind us, the abrupt departure of other key players can also have dramatic effect on stock price. CFOs, founders not in the chief executive role, CIOs in technology-based firms, top performers in Business Development, Chief Scientists and key innovators in general are also the subject of Board attention.

Board expectations that their CEO will have a formal system for managing change in key leadership roles across the enterprise has become commonplace. The view by the majority is it is an indispensable part of their fiduciary responsibility. Some Boards require detailed succession plan presentations while others are satisfied to receive executive summaries.

Q: What jobs in an organization should be included in the succession plan?

A: The scope of succession plans usually come in one of three varieties - corporate, operations, or functional in their focus. The most common is a corporate plan focusing on the top 1 to 3 levels of the organization below CEO, horizontally across functions. It would include the high impact leadership positions in Finance, Sales, Marketing, Operations, Legal, HR, IT and so on.

In contrast, an operations-focused plan drills vertically downward in the organization chart, in some cases down to first line supervisors. Functional reviews are a bit of a hybrid of the two, usually found in large organizations that review fairly deep in the organization the functional technical talent silos like Finance, Information Technology, and Sales for example."

"My audiences and corporate clients want to know how to actually do it successfully, not academic theorizing."

Q: Should executives be told how they are rated in potential?

A: There is significant disagreement in HR on this question. I have conducted research using my recent seminar audiences and have data from over 400 senior HR executives and company presidents. I first engaged them in a secret ballot before a debate and 50% vote "no" (don't tell them how they are rated on potential) and 50% voted "yes" (do tell them their rating of potential). The audience debates from 26 seminars reliably generated the same 6 to 8 reasons in favor of each position. Following the debates, a second secret ballot was conducted and the combined audiences voted 75% "no" (do not tell them) and 25% voted "yes" (do tell them). The "no" position becomes a clear majority when audiences realized that the "no" position is more conservative in terms of risk. That is, you can decide to "not tell" and then change your mind. But once you tell, there is no going back. Further research uncovers that the 25% who remain loyal to the "yes" position have a focus on one reason only - a strong underlying conviction that it is "the right thing to do" regardless of the consequences.

There is clear agreement that the CEO should make a command decision on this subject - all rated employees are to be told or all rated employees are not to be told how they are rated in potential in order to have the formal policy treat all concerned in a consistent manner.

Q: In the many conference key note speeches, seminars and workshops you have conducted, your presentations on succession planning consistently receive the highest marks from audiences. To what do you attribute this success?

A: Thank you. I think that the strength of my ideas comes from their practical nature. The models and process developed and my advice in general has been proven to work in the real world. My audiences and corporate clients want to know how to actually do it successfully, not academic theorizing. They get that from me. I am enthusiastic and very passionate that organizations can adapt and adopt these models and capture real value. I think that is a positive that comes through as well.

To download the entire Global CEO Magazine article and an accompanying interview with Mark Caruso, click here…