Sucession Planning Q and A
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"
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?
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
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
"My audiences and corporate
clients want to know how to actually do it successfully, not
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
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
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