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02.09

Companies That Practice Succession Management Reap Rewards

By Gary Perman

Succession management has been bandied about as a topic of interest in companies and technology departments for several years. Recently, succession management has enjoyed increased interest, as the need for skilled talent becomes more critical.

Succession management can be defined as making provisions for the replacement of key people. Good succession management planning requires a clear understanding of an organization’s values, mission, and strategic plans. Ultimately, a good plan will ensure continuing leadership by cultivating talent from within the organization through planned development activities.

Companies that ignore the need for succession management planning risk potentially devastating losses to growth and financial profits when any of the following events occur:

• Executives or managers depart from a company because of retirement, termination or death

• Key performers leave for another company

• Promotions within a company leave a vacancy without a trained successor to fill the vacated position

Considering the hype, and given the importance of being prepared for unexpected staff changes, it might be fair to assume that most companies practice succession management. However, you might be surprised to discover the lack of succession planning at many companies. According to the National Association of Corporate Directors, 45 percent of companies with sales over $500 million still do not have a clear succession plan. For companies with revenue under $500, that percentage is even smaller; and at start-ups and small companies, succession planning is nearly non-existent.

Companies that are unprepared for key staff departures can experience tremendous financial losses. Delays in finding a replacement are common. And skilled labor shortages can further lengthen the amount of time that is required to find a suitable replacement. During extended vacancies, projects are delayed, revenues go unrealized, accounts are lost, innovation is lost, overtime costs rise and employee morale can suffer. If companies want to be effective at filling unplanned vacancies, they must plan for vacancies, and commit the time and resources required to develop a detailed and progressive succession management plan that will ensure that the company will continue to retain the skills required for corporate sustainability.

The realities of a continued talent crunch, and an ever widening gap between the number of jobless and the number of skilled technical talent, are driving more and more companies to making succession management a priority. Bill Bliss, an executive leadership development consultant to several publicly held companies, says that “there is no logical reason not to practice succession planning. A key area of accountability for any corporate board should be to mandate a viable succession plan for at least the CEO, if not the key leadership team. If they don't demand that a plan is in place, the stockholders should fire the board.”

Bliss adds that in many privately held companies, he has seen numerous reasons for not having a succession management plan, including the fact that the CEO doesn't want to give up the reigns. “These CEOs don't appreciate that their life could end any minute, or they could suffer a permanent disability as a result of a freak accident, or a host of other reasons. This really points to selfishness on their part, as they are not planning for the livelihood of so many other people who depend on the company they are leading — family, employees, customers, and other stakeholders.” Second, the CEO and even his team are often too focused on short term issues and not focused on longer-term issues — again this can be for selfish reasons. A third reason, Bill says, is that the “CEO has the succession plan in his head — yet no one else knows about it. This is not a great strategy, as the likely successor does not know the position they are in, nor is the CEO putting that person on an adequate development plan to get them fully ready.”

While the costs of avoiding succession management are significant, the rewards for companies that do practice succession management are even greater. Succession management can be incorporated into any size company from the smallest start — up to large corporate giants.

Norbert Kubilus, former COO of National Data Corporation and now CIO at Tatum Partners in San Diego says, “I've been a firm believer in IT succession planning for more than 30 years. My rise in National Data Corporation was a direct result of succession planning. As a CIO/CTO/COO, I've developed formal succession plans for my team. Some CIOs may feel threatened by the concept of CIO succession planning ... but developing one or more strong candidates demonstrates that the incumbent CIO is concerned about the continuity of IT leadership, and about protecting the company's technology investment."

Succession management also preserves knowledge, including intellectual property, within a company. Manuel Mellos, Director of IT at Woolworths states, “with a lot of intellectual property inside people's heads these days, it is important to preserve those heads via a good succession plan. Succession planning may assist in extracting that intellectual property out of those heads, as well.”

Best practices in succession management

Savvy companies tend to share several common traits that make their succession management plans successful. First, their succession plans are easy to use. Successful plans are non-bureaucratic, uncomplicated processes — with a unified approach to ensure consistency and maintain objectivity across all departments, in all organizational levels, and at all locations throughout the company.

The best plans are developmentally oriented, rather than simply replacement oriented. Developmentally oriented means that the plan becomes a proactive vehicle for managers and executives to reflect on the progress of their talent and the opportunities they require for genuine development. Highly effective plans actively involve the very top players in the organization. Senior executives view effective succession management as a critical strategic tool for attracting and retaining talent.

Another successful method for candidate development involves planned job rotations within a department, says Norbert Kubilus. For example, senior directors rotating through computer operations, application development, telecommunications and planning functions — as well as opportunities to gain experience in other departments, such as finance and administration, or in specific business units. Also, mentoring candidates in areas such as customer service, vendor management, contract negotiation, business consulting and project management can help round out their skills.

Says Kubilus, “Having a ready successor may also allow a CIO in a larger or growing enterprise to move into another executive role — without having to leave the company or leave the IT organization with weak leadership.”

Best practice succession plans can help to highlight gaps in talent, and identify important key positions that are critical to the overall success of the organization. Succession planning does the job of monitoring the succession process, enabling the company to ensure that the right people are moving into the right jobs at the right time, and that gaps are being spotted early on.

Successful plans are built around continual reinvention. Best practice companies continually refine and adjust their plans as they receive feedback, monitor developments in technology, and learn from other leading organizations. Where old plans were characterized by confidentiality and secrecy, today’s plans actually encourage involvement by individuals who are participants as well as candidates for future openings. Under older systems, few participants knew where they actually stood in terms of their potential for career opportunities ahead.

Tim McHugh, CTO at TriMet, a Tri-County public transportation service based in Portland, Oregon, says, “We focus on developing the existing IT staff so they have a broader understanding of the business, which is a big part of our succession management.” When the IT department has vacancies, McHugh says that by developing their staff, existing IT people easily step into a new position and then, in turn, he can hire behind them. “We try to hire people in at the less experienced positions and develop them. It provides for professional growth and builds more stable and durable institutional knowledge.” Tim adds that he attributes this internal development and succession management as a key ingredient to their low turnover.

When a succession management move is initiated because of a retirement at TriMet, one of the company’s key strategies is to use the retirement as an opportunity to transition to newer technology. “It is often the case that someone nearing retirement is working with a technology nearing obsolescence,” says McHugh. Having senior and developing staff work together to phase out older technologies provides an added benefit to the succession management transition, and can be “a rewarding project late in someone’s career.” The transference of business knowledge from the experienced to the inexperienced tends to be more important than the technology transfer itself.

Retirement is not TriMet’s highest risk, although it is the easiest to plan for. As McHugh emphasizes, “The potential for key critical staff in support of our mission critical areas walking out the door unexpectedly is what we want to be mindful of. We want to make sure we are properly staffed and are not short-handed on experience in these areas.”

Key factors in an efficient succession management plan:

1. Identify Succession Candidates Within Your Company
   Performance management and 360-degree feedback are linked throughout the succession management process, and are the main tools used by best practice organizations to place employees into development plans. Using assessment tools such as assessment centers, tests, interviews and a performance-appraisal process will assist you in making accurate leadership placement and development decisions. By using some of these tools, you can clearly define the specific behaviors, skills and values that leaders need in order to succeed now and in the future in your organization.
    

2. Provide Management Education and Mentoring
   To advance the core mission of any organization, information managers must have an increasingly complex understanding of the information over which they preside. Additionally, they must have:

• the ability to create and manage information

• a practical understanding of laws governing the use of information

• an understanding of the social and policy questions that involve the lawful handling and use of information

• the ability to work with an organization’s IT department to design and implement systems to house and retrieve information

• the ability to work with commercial vendors to design information products that serve an organization’s specific needs

One way to develop a succession candidate is to provide formal training to help the candidates learn more about what it takes to be a CIO/IT leader and how to prepare for the position. Options include seminars and courses offered by the American Management Association, the intensive nine-month Regional Leadership Forum, sponsored by the Society for Information Management, or one of the CIO "boot camps" sponsored by Gartner. A person can also take advantage of specialty programs at an ever-growing number of universities throughout the country.

Columbia University in New York offers a program for IT managers with an interest in succession planning. Art Langer, Sr. Director and faculty member in the Executive Master of Science in Technology Management program, oversees a continuing education and mentoring program at Columbia. Langer is an IT professional and human development specialist with a successful track record of distinguished accomplishments. His cutting-edge program focuses on current IT managers who want to segue into a more senior role in IT. His program works with existing IT managers and directors and builds an educational experience to help them become successful as a corporate executive.

Many individuals performing IT functions today find that while their responsibilities are substantial, they do not have the systematic, formal training and up-to-date technological skills they need to grow in their career and advance to the next position within their companies.

Columbia’s program trains managers how to meet the real-world demands of solving complex problems of organizing information. The program offers evening courses to accommodate the schedules of working professionals. It is a true Masters program with all the requirements and curriculum to earning a Masters. A unique aspect of this program is that each student has an executive level management mentor who meets with the student for one year.

Columbia University has a list of mentors consisting of successful COO’s, CEO,’s VP’s and CIO’s from prestigious companies, including:

Mark Bernard, CIO, Horizon Blue Cross Blue Shield

Sandra Alayo, VP of IT, Safe Horizon, Inc.

Cath Callagee, VP IS Ops, UPS

Paul Amorello, SR VP of IT at Pepperidge Farm, Inc.

Dana Deasy, CIO British Petroleum

Michael Iacona, CIO of TMP Worldwide

Maggie Miller, VP, and CIO of Warner Music Group, among other highly recognized names and companies.

“We’ve graduated 150 students, so far, with zero attrition,” Langer concludes.

Other Universities are beginning to follow in Columbia’s footsteps, including UCONN, George Washington University, and Rutgers.

3. Provide Internal Education and Mentoring
   When a supervisor mentors direct reports who appear to have the skills, experience and desire to advance in title and responsibility within the company it can produce qualified succession candidates. Loren Jackson, IT Manager at Nike told me, “Part of my job is to identify a person on my team who can step into my shoes and manage the IT department when I advance to the Director of IT position.”
   
   The growing demand for talent will continue to put more pressure on IT departments to employ succession management strategies. “Succession management is not that critical in low-end positions, but mid-level and senior-level positions are a must.“ If no one is available to take your job, you are certainly not going anywhere,” adds Langer. Succession management practices have certain advantages, such as bringing forth molded, well trained, and acculturated players with unparallel organizational knowledge.
   
   Some might argue that no sector is exempt from change — especially the IT world — and that what you learn this year may become obsolete next year, let alone five years from now. Companies can strive to keep up with the meteoric changes in the marketplace by incorporating new players who will help them to keep abreast of new market developments. Such an approach might work to some degree, but wouldn’t it be much more cost efficient to retain your existing talent and offer continuing education on growing market developments and skills? For its investment in homegrown candidates, your company retains invaluable corporate knowledge, and gets a highly trained person who already is assimilated into the company’s culture, and ready to hit the ground running. By preparing in-house candidates for promotion, your company builds employee loyalty — and the company receives a tax write-off for offering the continuing education. A Win-Win proposition for both company and employee.
    

4. If You Don’t Have The Talent, Now Is The Time to Get It
   The best time for executives to initiate a succession management program is before a critical employee leaves the company.
   
   Establish an ongoing relationship with a headhunter. Headhunters build relationships with industry talent, they know how to identify talent, and can cut your search time in half. In the event a person leaves your company and you do not have someone ready to step into the vacancy, a quick call to a headhunter can save you a tremendous amount of energy and time (weeks and months). A headhunter in your field will be tuned into the market place. They know your competition and can identify qualified talent in a matter of days.

While the succession management process differs from one organization to another, there are certain characteristics of an effective program that are universal:

1. Succession management smoothes transitions. Having someone to step into an important vacancy is a critical measure of the effectiveness of succession management. However, helping that person transition in a positive manner with all the necessary skills and knowledge is as important, and often more challenging, to execute.
    

2. The ‘right’ developmental assignments. A successful process includes job assignments that properly prepare candidates for their new positions, as compared to a sink-or-swim approach.
    

3. Meaningful appraisals and feedback. Objective assessments are essential for management to specify what’s required for a successful promotion.
    

4. Appropriate selection criteria. A successful succession management plan depends on the development of competencies for each job, giving everyone involved a clear picture of the skills, values, behavior and attitudes required to succeed.
    

5. A range of good choices. A working succession plan results in having more than one good person available for a key job. Real success requires choices between two or more qualified people.

The rewards of practicing succession management in a company can far outweigh the short term benefits of not having a succession management plan.

By initiating a succession management plan, you will discover rewards, including:

• Transference of business, cultural and production knowledge from the experienced to the inexperienced

• Retaining intellectual property

• Replacements hit the ground running, in the event that a leader or employee leaves the company

• Lower turnover rate

• Less production down time

• Less down time to train a replacement

• Less costs in replacement: identifying and recruiting new talent

Gary Perman is a certified recruiting professional and owns PermanTech, which specializes in recruiting technology executives, managers and engineers. He hosts an employment-technology blog [http://technicalheadhunter.com].

Comments may be submitted to todaysengineer@ieee.org.

Opinions expressed are the author's.