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Linking Leadership Development and Succession Planning to Business Performance

Talent development is a business imperative for companies that intend to win it all in the future. Attracting talent depends on a complex interweaving of winning factors, including employer brand, and creating the next generation of leaders requires senior leaders to be fully engaged in this on-the-job development.

Thursday, February 1, 2007
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Successful companies thrive in the shade. For organizations that understand the link between leadership development, succession planning and business performance, the shadow of the leader means there's no shadow of a doubt regarding the success of the organization.

That success is heightened by individuals who are immediately able to step in and execute business strategies and objectives -- in other words, leaders who are ready now. By identifying, developing and advancing critical leadership talent with a systemic, C-level-down approach, winning organizations create value and drive results. The commitment of resources and the discipline required to build this cadre carries a true return on investment, as many of America's most dynamic companies have discovered.

Winning companies such as Whirlpool, Raytheon, IBM and Sunoco have rejected the belief system that limits value creation to economics, replacing it with fresh strategies that incorporate a pool of ready-now talent nurtured through a disciplined program for executive development and succession planning. They have calculated the return on this investment by measuring the impact of ready-now talent on business performance, reduced turnover and associated costs.

In addition, these organizations know there is a tremendous competitive advantage in rapidly responding to a market opportunity or quickly filling a critical position with an internal, ready-now executive, versus going hand-to-hand in the global talent marketplace. Indeed, offering opportunities to become a ready-now leader is one way companies win the battle for talent.

Exelon's commitment to relentless development and advancing key talent from within ensures we have the leadership bench required to position us for future growth.

Organizations with a reputation for nurturing and advancing leaders create a powerful differentiator. In fact, talent development is a business imperative for companies that intend to win it all in the future. However, attracting the talent to develop depends on a complex interweaving of winning factors, including employer brand.

Winning Factors

Recruiters, key new hires and business-performance studies all cite an employer's commitment to executive development and advancement as a significant attraction for fresh talent and a powerful retainer for talent already in-house. This becomes part of an employer's brand identity and is a major driver behind the develop-from-within strategy. So are increased success rates and the reduced costs associated with turnover and executive recruitment.

Working with an outstanding leader is also a major draw. Top-tier talent look to the example the leader sets and are eager to build on his or her legacy. The lynchpin of this process is relentless development, beginning with identification of the skills and behaviors required to execute strategy and be successful in critical roles across all business units.

C-level executives and senior leaders must be fully engaged in this on-the-job development of high potentials and next-generation leaders. They must provide performance assessment that is objective, fresh and actionable, and set accountability for executives and managers involved in the process.

Part of that accountability is reflected in an organization's succession planning. Dynamic succession planning literally translates into success for the future. It is not a matter of choosing leaders based on loyalty or the skills, capabilities and behaviors that have worked in the past. In fact, part of the challenge for current leadership is to overcome the urge to fill positions based on similarities and, instead, to groom replacements with enduring skills for winning.

These include driving for accountability and achieving results, thinking strategically and learning with agility, dealing effectively with ambiguity, championing change, promoting diversity and leading with courage. The true leader desires a successor whose shadow is larger than his or her own and creates an environment where such an individual can grow.

Winning organizations continually renew their top-down commitment to ensuring there is diversity, in its many dimensions, represented at all levels. At Exelon, we regularly track our efforts to ensure that the diversity of our workforce includes a diversity of talented women and people of color, being ever mindful of our customers and the local communities we serve.

This organization provides top talent with exposure opportunities, encourages them to be noticed, to over-deliver on results, get on the radar quickly as supporters of key initiatives, and to have a positive high-energy approach to work and life. To support the effort, winning companies provide visibility, education, role models, coaches and mentors. They also encourage the board of directors to be actively engaged in the process.

An emerging best practice aligns the board's role in guiding strategic direction with ensuring deep bench strength. Boards are often an untapped resource in this regard, but inviting their robust participation has benefited some of the nation's most dynamic companies, including Starbucks, Tyson, Mellon Financial and S.C Johnson.

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Taken together, board engagement, exposure, enduring skills for winning, relentless development and brand identity support the creation of new leaders and effective succession planning. At Exelon, this disciplined, committed process is called Fast Forward.

Fast Forward

Targeted to first-line supervisors, managers, high potentials and executives, Fast Forward involves specific differentiators designed to support Exelon in its search for the best future leaders. These include the use of psychologists to conduct the formal assessments required for all key management positions augmented by a forthright, multi-rater feedback process. The focus is on key leadership behaviors as well as business results.

The Fast Forward initiative ensures Exelon has, at any time, the required supply of ready-now leaders who will take us into the future.

There is also a consistent, continual use of quarterly business-unit reviews to guide development and succession plans and provide an updated snapshot of the leadership bench. This allows for immediate, timely feedback and coaching, and identification of credible ready-now successors for all senior-level positions.

To assure Exelon's key talent is best positioned to assume critical roles, Exelon applies a planned-moves matrix. The matrix addresses the next one to two moves per critical position and tracks the percentage of planned moves completed by high potentials. It is updated quarterly.

In addition, a matrix talent-assessment tool calibrates each business unit's talent bench. This allows Exelon to comparatively review talent and focus on development, as well as the effective assessment and differentiation of the current bench in conjunction with succession chart reviews.

Finally, the Exelon Leadership Institute -- a best-in-class executive-development program conducted in partnership with leading business schools -- builds advanced business fundamentals, focuses on action learning, provides access to internal and external experts, and affords visibility and opportunities for meaningful interaction with Exelon senior executives and corporate directors. It also offers personalized feedback and coaching.

Ultimately, an organization's present and future merge in leadership development, succession planning and business performance. Winning companies commit to doing this work at every level. Organization-wide, they have accountabilities for developing and advancing leadership talent, for fostering the beliefs, objectives and practices needed to succeed in the new global marketplace, and for providing seamless succession initiatives. They marry a C-level-down systematic, disciplined approach to creating a pool of ready-now leaders who cast shadows that are long indeed.

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