Why bother with succession planning?

Hills described how the planning process has evolved over time. In "the old days," she said, the CEO simply looked around for someone smart (but not too smart), and accomplished (but not too much), charming (but no more charming than the CEO himself), and malleable. He then groomed his successor personally. These days, she admits ruefully, succession systems can be so elaborate that they're daunting.

At the same time, the process is harder to do than it used to be because: (1) globalization has increased the diversity of workplaces and employees, and business complexity has skyrocketed; (2) much middle management has been eliminated, so that grooming time is reduced and the gap between one job and the next above it is much larger than it was; and (3) employees are much more likely to hop from one employer to another, so HR doesn't know who it will have tomorrow. But Hills feels those factors make a solid succession plan more necessary than ever before. The essentials of a good process, she says, are engaging and developing your targeted high performers. Recruiting and selection are also important, but not as high a priority.

Where do we start?

Hills suggests that the first step for an organization is to identify its core strategy, which may not be the same across the whole company. Do you tend to buy or build? Look not just at whether people tend to be promoted from within (building) or hired from outside (buying). Also review the firm's modes of adding new systems or functions. Are they bought from outside or built inside? Then assess the advantages of each: Hiring from outside can bring in new technologies not available inside, as well as new ideas and ways of doing things. Companies that always promote and develop existing employees can become very insular. But the down side is that acquiring new talent can be extremely expensive.

By going internal, you save money, enhance employee engagement and morale, and gain ample time to get to know promotion candidates quite well. Another good preparation step is to evaluate the organization's approach to two goals: Is it primarily results-oriented, mostly focused on organizational culture, or is there a good balance between the two? Finally, Hills recommends five strategies for effective succession planning.

(1) Measure for the three Cs of fitness. Continually measure potential future leaders on the basis of their competence, connection, and culture. How strong are their business and planning skills? How well do they connect with other people? And how closely, and with how much passion, do they model the organization's chosen culture? Hills suggests that competence and connection are both crucial, though at times at odds. Some leaders are so sure of the rightness of their own ideas and vision that they stifle contributions from others, which eventually weakens the organization. But being too open to others' ideas leads to the perception that the leader is wishy-washy.

(2) Implement tools for development. Magic in the mix is a set of tools for developing those chosen as future leaders. There are three--job experience, coaching, and formal learning. Job experience is not what's on the employee's résumé when he or she was hired, but the job rotations, projects, and special assignments that the individual is given once in the company. Coaching should be done by as many different managers as possible, and top management participation in coaching key candidates is crucial. Formal learning involves identifying personal attributes that the company wants in its leaders--usually soft skills--and bringing high potentials together periodically to learn them. Candidates also use these sessions to network with one another.

(3) Involve talent in the planning. Hills tells the story of a client company that carefully planned to diversify its top management by maneuvering to promote a particular woman to a big job. The opportunity finally came, they presented the promotion to the candidate--who promptly turned it down. The moral of the story is that once selected, candidates should be interviewed periodically about what they would choose as their next job, what they feel they learned most from the past job, and other wishes.

(4) Cast a wider net--in a bigger ocean. Developing a small coterie of candidates to eventually fill a handful of key jobs can be shortsighted. Dig deeper, select more potential leaders, and don't pigeon-hole them. See how each develops and how the business changes, keeping each in mind for any one of several possible slots.

(5) Focus on the future. The talent you need today isn't the same as you'll need in 5 years, so develop both flexibility and vision. Imagine coming business developments--"look around the corner," as Hills says--and then seek the talent that may be needed for the changes.