Succession Management vs. Succession Planning

An expert looks at the CHRO's three critical roles in generating multiple options for key leadership positions. Succession management is a robust process that needs to accommodate unexpected business challenges down the road.

Friday, April 1, 2011
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Succession planning -- a mainly "one-deep" exercise to ensure you are preparing for the expected (or sometimes, unexpected) departure of a CEO or other top executive -- is important. However, it is no longer sufficient to manage talent risk and drive your business forward.

When I work with clients, I often start with a discussion of a broader view of succession -- something we in our firm call succession management.

Succession management is a robust process that goes several layers deep. It aims to generate multiple options for key positions. That's important, because conditions change and the candidate you've planned for may not be the one you really need.

If, for example, your company makes a major acquisition or the market for your products and services fundamentally shifts, you may suddenly need a different kind of leader than the one you have already lined up for the job.

Traditional succession planning cannot "flex in real time" to respond to rapid (and often, unforeseen) changes in an organization's strategy and environment. However, with succession management, you have a robust pipeline with multiple options for key positions; in essence, you increase the likelihood that you will be prepared for known and unknown leadership and business challenges down the road.

A very public example of this was General Electric. It was widely known that there were three strong candidates ready to replace CEO Jack Welch (rather than one "tick-the-box" choice). However, what really makes companies like GE unique is that they generate multiple options at many levels in the organization.

Increasingly, boards of directors are looking at this quite closely. In the past, boards might have said to the CEO, "You've got your successor figured out? Fine. We're covered." Now, board members are saying, "What does our leadership pipeline look like? And are we prepared to lead multiple futures in unknown environments?"

They are starting to see succession management as part of their fiduciary responsibility to govern the enterprise.

The CHRO's Role

Generating multiple options for CEO succession requires an integrated system of activities, such as coordination between those in the company responsible talent planning, executive recruiting, leader development, performance management and mobility. Given this level of effort and complexity, what is the role of the chief human resource officer (and the organization) in CEO succession?

I suggest that there are three roles:

Role No. 1: Strategic influencer. I deliberately did not say "strategist" because it is the job of the CEO and the executive team -- governed by the board -- to "own" succession management.

I have seen studies suggesting that CEOs should be spending 25 percent to 40 percent of their time thinking about talent, including succession. However, in this context, the CHRO can play a critical strategic role to influence the CEO, the executive team and the board to think about succession management in the right way.

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This might involve laying out leading practices, including a framework and solid business case that succession management is critical to the company.

Role No. 2: Flawless integrator. Succession management requires a robust and repeatable talent-review process -- one that works to build an organizational culture and memory around talent in the succession pipeline. Setting up and running such a process requires elegantly simple design and flawless execution.

In addition to talent review, companies must orchestrate "feeder" processes, such as developmental career moves, leadership programs, coaching, peer networks and performance management. And all of these need to be designed to deliberately develop executives as they come up through the pipeline.

It's up to the CHRO and the HR organization to integrate all these aspects.

Role No. 3: Trusted confidant. Even with an integrated set of processes in place for succession management, you still need to foster a culture of honest dialogue about talent. Otherwise your processes may yield suboptimal (or even risky) results.

In this context, the CHRO can serve as a "trusted confidant" when sensitive conversations need to be had. She or he must "know" the talent really well on multiple levels, as well as sometimes conduct additional due diligence on the fly (i.e., when an unexpected executive departure occurs).

If the CHRO has already built trust among the executive network, he or she can help get the dialogue to an honest place no matter what the circumstances.

Neil Neveras is U.S. practice leader and global co-leader for Leadership Services at Deloitte Consulting LLP.

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