Effective Succession Planning: Ensuring Leadership .
EffectiveSuccessionPlanningjjjF O U RT H E D I T I O N
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EffectiveSuccessionPlanningF O U RT H E D I T I O NEnsuring Leadership Continuity andBuilding Talent from WithinWilliam J. RothwellAmerican Management AssociationNew York Atlanta Brussels Chicago Mexico City San FranciscoShanghai Tokyo Toronto Washington, D.C.
Bulk discounts available. For details visit:www.amacombooks.org/go/specialsalesOr contact special sales:Phone: 800-250-5308Email: specialsls@amanet.orgView all the AMACOM titles at:www.amacombooks.orgThis publication is designed to provide accurate andauthoritative information in regard to the subject mattercovered. It is sold with the understanding that thepublisher is not engaged in rendering legal, accounting, orother professional service. If legal advice or other expertassistance is required, the services of a competentprofessional person should be sought.Library of Congress Cataloging-in-Publication DataRothwell, William J.Effective succession planning : ensuring leadership continuity and building talent from within / William J.Rothwell.—4th ed.p. cm.Includes bibliographical references and index.ISBN-13: 978-0-8144-1416-3ISBN-10: 0-8144-1416-81. Leadership. 2. Executive succession—United States. 3. Executive ability. 4. Organizationaleffectiveness. I. Title.HD57.7.R689 2010658.4 092—dc222009032036 2010 William J. Rothwell.All rights reserved.Printed in the United States of America.This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, inany form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the priorwritten permission of AMACOM, a division of American Management Association, 1601 Broadway,New York, NY 10019About AMAAmerican Management Association (www.amanet.org) is a world leader in talent development, advancingthe skills of individuals to drive business success. Our mission is to support the goals of individuals andorganizations through a complete range of products and services, including classroom and virtual seminars,webcasts, webinars, podcasts, conferences, corporate and government solutions, business books and research.AMA’s approach to improving performance combines experiential learning—learning through doing—withopportunities for ongoing professional growth at every step of one’s career journey.Printing number10 9 8 7 6 5 4 3 2 1
To my wife Marcelina, my daughter Candice,my son Froilan, and my grandson Aden.You are the people who matter to me!
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ContentsList of Exhibits — xiiiPreface to the Third Edition — xviiAcknowledgments — xxxiAdvance Organizer for This Book — xxxiiiQuick Start Guide — xxxviiWhat’s on the CD? — xxxixPart IBackground Information AboutSuccession Planning and ManagementChapter 1—1What Is Succession Planning and Management? — 3Six Ministudies: Can You Solve These Succession Problems? — 3Defining Succession Planning and Management — 6Distinguishing SP&M from Replacement Planning, Workforce Planning,Talent Management, and Human Capital Management — 12Making the Business Case for Succession Planning and Management — 14Reasons for a Succession Planning and Management Program — 16Reasons to Launch Succession Planning and Management Depending onGlobal Location — 27The Current Status of Succession Planning: What Research Shows — 27The Most Famous Question in Succession: To Tell or Not To Tell — 29Management Succession Planning, Technical Succession Planning, or SocialNetwork Succession Planning: What Are You Planning For? — 30Best Practices and Approaches — 31American Management Associationwww.amanet.orgvii
ContentsviiiEnsuring Leadership Continuity in Organizations — 36Summary — 41Chapter 2Trends Influencing Succession Planning and Management — 42The Ten Key Trends — 43What Does All This Mean for Succession Planning and Management? — 56Summary — 56Chapter 3Moving to a State-of-the-Art Approach — 58Characteristics of Effective Programs — 58Common Mistakes and Missteps to Avoid — 63The Life Cycle of Succession Planning and Management Programs: FiveGenerations — 75Integrating Whole Systems Transformational Change and AppreciativeInquiry into Succession: What Are These Topics, and What Added ValueDo They Bring? — 78Requirements for a New Approach — 82Key Steps in a New Approach — 83Summary — 86Chapter 4Competency Identification, Values Clarification, and Ethics:Keys to Succession Planning and Management — 87What Are Competencies? — 87How Are Competencies Used in Succession Planning andManagement? — 88Conducting Competency Identification Studies — 89Using Competency Models — 90Newest Developments in Competency Identification, Modeling, andAssessment — 91What’s the Focus: Management or Technical Competencies? — 92Identifying and Using Generic and Culture-Specific CompetencyDevelopment Strategies to Build Bench Strength — 93What Are Values, and What Is Values Clarification? — 94How Are Values Used in Succession Planning and Management? — 96Conducting Values Clarification Studies — 96Using Values Clarification — 97What Are Ethics, and How Are Ethics Used in SP&M? — 98Bringing It All Together: Competencies, Values, and Ethics — 100Summary — 100American Management Associationwww.amanet.org
ContentsixPart IILaying the Foundation for a SuccessionPlanning and Management Program — 103Chapter 5Making the Case for Major Change — 105Assessing Current Problems and Practices — 105Demonstrating the Need — 114Determining Organizational Requirements — 118Linking SP&M Activities to Organizational and Human Resource Strategy —119Benchmarking Best Practices and Common Business Practices in OtherOrganizations — 123Obtaining and Building Management Commitment — 128The Key Role of the CEO in the Succession Effort — 131The Key Daily Role of Managers in the Succession Effort — 133Sustaining Support for the Succession Effort — 133Summary — 135Chapter 6Starting a Systematic Program — 136Strategic Choices in Where and How to Start — 136Conducting a Risk Analysis and Building a Commitment to Change — 137Clarifying Program Roles — 139Formulating a Mission Statement — 142Writing Policy and Procedures — 149Identifying Target Groups — 151Clarifying the Roles of the CEO, Senior Managers, and Others — 155Setting Program Priorities — 157Addressing the Legal Framework — 158Establishing Strategies for Rolling Out the Program — 167Summary — 168Chapter 7Refining the Program — 169Preparing a Program Action Plan — 169Communicating the Action Plan — 170Conducting Succession Planning and Management Meetings — 173Training on Succession Planning and Management — 177Counseling Managers About Succession Planning Problems inTheir Areas — 185Summary — 188American Management Associationwww.amanet.org
ContentsxPart IIIAssessing the Present and the FutureChapter 8— 189Assessing Present Work Requirements and Individual JobPerformance — 191Identifying Key Positions — 192Three Approaches to Determining Work Requirements in KeyPositions — 196Using Full-Circle, Multirater Assessments — 201Appraising Performance and Applying Performance Management — 204Creating Talent Pools: Techniques and Approaches — 207Thinking Beyond Talent Pools — 212Summary — 214Chapter 9Assessing Future Work Requirements and IndividualPotential — 215Identifying Key Positions and Talent Requirements for the Future — 215Three Approaches to Determining Future Work Requirements in KeyPositions — 218Assessing Individual Potential: The Traditional Approach — 224The Growing Use of Assessment Centers and Portfolios — 233The Latest Issues in Potential Assessment — 236Summary — 237Part IVClosing the Developmental Gap:Operating and Evaluating an SP&MProgram — 239Chapter 10Developing Internal Successors — 241Testing Bench Strength — 242Formulating Internal Promotion Policy — 246Preparing Individual Development Plans — 249Evaluating Individual Development Plans — 257Developing Successors Internally — 257The Role of Leadership Development Programs — 265The Role of Coaching — 265American Management Associationwww.amanet.org
ContentsxiThe Role of Executive Coaching — 267The Role of Mentoring — 268The Role of Action Learning — 270The Role of Acceleration Pools — 270Summary — 271Chapter 11Assessing Alternatives to Internal Development — 272The Need to Manage for ‘‘Getting the Work Done’’ Rather than ‘‘ManagingSuccession’’ — 272Innovative Approaches to Tapping the Retiree Base — 281Deciding What to Do — 284Summary — 286Chapter 12Integrating Recruitment with Succession Planning — 287What Is Recruitment, and What Is Selection? — 287When Should Recruitment Be Used to Source Talent? — 288Internal Versus External Recruitment: Integrating Job Posting with SuccessionPlanning — 289Recruiting Talented People from Outside — 290Innovative Recruitment Approaches to Attract High Potentials — 293Summary — 296Chapter 13Integrating Retention with Succession Planning — 298What Is Retention, and Why Is It Important? — 298Who Should Be Retained? — 299What Common Misconceptions Exist in Managing Retention Issues? — 303Using a Systematic Approach to Increase the Retention of TalentedPeople — 305Summary — 306Chapter 14Using Technology to Support Succession Planning andManagement Programs — 309Defining Online and High-Tech Methods — 309Where to Apply Technology Methods — 315How to Evaluate and Use Technology Applications — 315What Specialized Competencies Do SP&M Coordinators Need to Use TheseApplications? — 327Summary — 328American Management Associationwww.amanet.org
ContentsxiiChapter 15Evaluating Succession Planning and ManagementPrograms — 329What Is Evaluation? — 329What Metrics Should Be Used to Evaluate SP&M Programs? — 330What Should Be Evaluated? — 331How Should Evaluation Be Conducted? — 334How Can SP&M Be Evaluated with the Balanced Scorecard and HRDashboards? — 339Summary — 347Chapter 16The Future of Succession Planning and Management — 348The Fifteen Predictions — 349Summary — 370Appendix I: Frequently Asked Questions (FAQs) About Succession Planningand Management — 371Appendix II: Case Studies on Succession Planning and Management — 377Notes — 409Index — 429About the Author — 447A copy of the files on the CD-ROM can be found atwww.amacombooks.org/go/EffectSuccessPlngAmerican Management Associationwww.amanet.org
List of ExhibitsP-1.Age Distribution of the U.S. Population, Selected Years, 1965–2025 —xxiP-2.P-3.1-1.1-2.U.S. Population by Age, 1965–2025 —xxiiOrganization of the Book —xxviiHow General Electric Planned the Succession —7The Big Mac Succession —101-3.Demographic Information about Respondents to a 2009 Survey on SuccessionPlanning and Management: Industries —17Demographic Information about Respondents to a 2009 Survey on SuccessionPlanning and Management: Size —17Demographic Information about Respondents to a 2009 Survey on SuccessionPlanning and Management: Job Functions of Respondents —18Reasons for Succession Planning and Management Programs —19Strategies for Reducing Turnover and Increasing Retention -4.3-5.3-6.4–1.5-1.5-2.Workforce Reductions Among Survey Respondents —26Summary of Best Practices on Succession Planning and Management from SeveralResearch Studies —32Assessment Questionnaire: How Well Is Your Organization Managing theConsequences of Trends Influencing Succession Planning and Management? —44Sarbanes-Oxley Act of 2002 —50Characteristics of Effective Succession Planning and Management Programs —64Assessment Questionnaire for Effective Succession Planning and Management —68Chief Difficulties with Succession Planning and Management Programs —71Simple Exercise to Dramatize the Need for Succession Planning andManagement —76Dow Chemical Company’s Formula for Succession —79The Seven-Pointed Star Model for Systematic Succession Planning andManagement —83Interview Guide to Collect Corporate-Culture-Specific Competency DevelopmentStrategies —95Demographic Information About Respondents to 2009 Survey on Succession Planningand Management: Job Functions of Respondents —107Importance of Succession Planning and Management —108American Management Associationwww.amanet.orgxiii
List of Exhibitsxiv5-3.Making Decisions About Successors in Organizations Without Systematic SuccessionPlanning and Management —1095-4. Questionnaire for Assessing the Status of Succession Planning and Management in anOrganization —1125-5. Worksheet for Demonstrating the Need for Succession Planning andManagement —1165-6. Interview Guide for Determining the Requirements for a Succession Planning andManagement Program —1205-7. Interview Guide for Benchmarking Succession Planning and ManagementPractices —1255-8. Opinions of Top Managers About Succession Planning and Management —1295-9. Opinions of Human Resource Professionals About Succession Planning andManagement —1305-10. Actions to Build Management Commitment to Succession Planning andManagement —1315–11. Rating Your CEO for His or Her Role in Succession Planning and Management —1346-1. Model for Conceptualizing Role Theory —1396-2. Management Roles in Succession Planning and Management: Grid —1416-3.6-4.Worksheet to Formulate a Mission Statement for Succession Planning andManagement —145Sample Succession Planning and Management Policy —1506-5.6-6.Targeted Groups for Succession Planning and Management —152Activity for Identifying Initial Targets for Succession Planning and ManagementActivities —1536-7.Activity for Establishing Program Priorities in Succession Planning andManagement —1596-8.7-1.U.S. Labor Laws —161Worksheet for Preparing an Action Plan to Establish the Succession Planning andManagement Program —1717-2.Sample Outlines for In-House Training on Succession Planning andManagement —1798-1.Worksheet for Writing a Key Position Description —1988-2.Worksheet for Considering Key Issues in Full-Circle, Multirater Assessments —2038-3.Relationship Between Performance Management and Performance Appraisal —2068-4.Approaches to Conducting Employee Performance Appraisal —2088-5.Worksheet for Developing an Employee Performance Appraisal Linked to a PositionDescription —2119-1.Worksheet for Environmental Scanning —2179-2.Activity on Organizational Analysis —2199-3.Activity for Preparing Realistic Scenarios to Identify Future Key Positions —2209-4.Activity for Preparing Future-Oriented Key Position Descriptions —221American Management Associationwww.amanet.org
List of Exhibitsxv9-5.Steps in Conducting Future-Oriented Rapid Results Assessment —2239-6.How to Classify Individuals by Performance and Potential —2269-7.Worksheet for Making Global Assessments —2289-8.Worksheet to Identify Success Factors —2299-9.Individual Potential Assessment Form —23010-1. Sample Replacement Chart Format: Typical Succession Planning and ManagementInventory for the Organization —24310-2. Succession Planning and Management Inventory by Position —24410-3. Talent Shows: What Happens? —24710-4. Simplified Model of Steps in Preparing Individual Development Plans —25110-5. Worksheet for Preparing Learning Objectives Based on Individual DevelopmentNeeds —25310-6. Worksheet for Identifying the Resources Necessary to Support DevelopmentalExperiences —25510-7. Sample Individual Development Plan —25810-8. Methods of Grooming Individuals for Advancement —26010-9. Key Strategies for Internal Development —26111-1. Deciding When Replacing a Key Job Incumbent Is Unnecessary:Flowchart —27411-2. Worksheet for Identifying Alternatives to the Traditional Approach to SuccessionPlanning and Management —28211–3. Tool for Contemplating Ten Ways to Tap the Retiree Base —28512-1. Worksheet to Assess How Often and How Well an Organization Uses TraditionalExternal Recruiting Sources —29113-1. Worksheet to Calculate the Cost of Turnover —30013-2. Worksheet to Compare Your Organization on Best Practices in EmployeeRetention —30714-1. Continua of Online and High-Tech Approaches —31014-2. Starting Point for a Rating Sheet to Assess Vendors for Succession Planning andManagement Software —31214-3. Hierarchy of Online and High-Tech Applications for Succession Planning andManagement —31614-4. Worksheet for Brainstorming When and How to Use Online and High-TechMethods —31915-1. Hierarchy of Succession Planning and Management Evaluation —33215-2. Guidelines for Evaluating the Succession Planning and Management Program —33515-3. Worksheet for Evaluating the Succession Planning and Management Program —33715-4. Sample Incident Report for Succession Planning and Management —33815-5. Steps for Completing a Program Evaluation of a Succession Planning and ManagementProgram —340American Management Associationwww.amanet.org
List of Exhibitsxvi15-6. Checksheet for Conducting a Program Evaluation for the Succession Planning andManagement Program —34216-1. Worksheet to Structure Your Thinking About Predictions for Succession Planning andManagement in the Future —35016-2. Worksheet to Structure Your Thinking About Alternative Approaches to MeetingSuccession Needs —35516-3. Age Distribution of the U.S. Population in 2025 —35816-4. Age Distribution of the Chinese Population in 2025 —35916-5.16-6.16-7.16-8.Age Distribution of the Population in the United Kingdom in 2025 —359Age Distribution of the French Population in 2025 —360Important Characteristics of Career Planning and Management Programs —364Assessment Sheet for Integrating Career Planning and Management Programs withSuccession Planning and Management Programs —366American Management Associationwww.amanet.org
Preface to the Fourth EditionThe world moves faster than ever. Since the third edition of this book, many changeshave occurred to shape succession planning and management as well as the relatedfield of talent management. Just consider the changes:In the World' The Recession of 2007 and Beyond: As this edition goes to press, unemploymentin the United States has exceeded 9 percent, and the United Nations projectsthat the global unemployment rate could climb higher than 6.1 percent. As aresult, some business leaders question whether the time and money devotedto succession planning and talent management are worth it when layoffs areincreasing.' The Lingering Aftereffects and Legacy of 9/11: When the World Trade Centercollapsed, 172 corporate vice presidents lost their lives. That tragic event reinforced the message, earlier foreshadowed by the tragic loss of life in OklahomaCity, Oklahoma, that life is fragile and that talent at all levels is increasingly atrisk in a world where disaster can strike unexpectedly. In a move that wouldhave been unthinkable ten years ago, some organizations are examining theirbench strength in locations other than their headquarters in New York City,Washington, or other cities that might be prone to attack if terrorists shouldwipe out a whole city through the use of a dirty nuclear weapon or otherchemical or biological agent. Could the organization pick up the pieces andcontinue functioning without headquarters? That awful, but necessary, question is on the minds of some corporate and government leaders today. (Infact, one client of mine has set a goal of making a European capital the alternative corporate headquarters, with a view toward having headquarters completely reestablished in Europe within 24 hours of the total loss of the NewYork City headquarters, if disaster should strike.)' The Aftereffects of Many Corporate Scandals: Ethics, morality, and values havenever been more prominent than they are today. The Bernard Madoff scandalAmerican Management Associationwww.amanet.orgxvii
xviiiPreface to the Fourth Editionfollowed on the heels of earlier scandals affecting numerous Wall Street firmsand, years before that, Enron, Global Crossing, and WorldCom. Many business leaders have recognized that ethics, morality, and values do matter. Corporate boards have gotten more involved in succession planning andmanagement owing in part to the requirements of the Sarb
Dec 09, 2012 · Chapter 3 Moving to a State-of-the-Art Approach —58 Characteristics of Effective Programs —58 Common Mistakes and Missteps to Avoid —63 The Life Cycle of Succession Planning and Management Programs: Five Generations —75 Integrating Whole Systems
run. It is an ideal way of planning for succession across several levels in an organization: Leadership succession planning: Non-leadership succession planning: Connect with an expert Types of succession planning Each business structure will require a different type of succession plan. For example, sole proprietorships and partnerships, the
What Is Succession Planning, and Why Is It Needed? Succession planning, sometimes called succession management to emphasize the active and continuous nature of the effort, is a process for preparing people to meet an organization's needs for talent over time. As I defined it in my book Effective succession planning (2005, p. 10), succession .
3. Topic: Succession a. Activity: Succession Notes, Succession Packet b. Textbook: Section 4.3 c. Practice: i. Complete the Venn Diagram comparing Primary and Secondary Succession Primary Succession Secondary Succession which is _ (longer/shorter) than _ succession. Look at Year 1-3, what letter does the graph look like?
Staff Departure-Defined Succession Planning vs. Emergency Succession Planning3 Departure-defined succession planning occurs when a key leader identifies an exit date two to five years in advance of his or her departure. Departure-defined succession plans usually consists of specific, detailed steps for organizational leadership to take during a .
Emergency Succession A sample template to provide guidance on writing an . Emergency Succession Plan Emergency Succession Planning Template . Other . Bonner Consulting's Blog , contains several recent articles on Succession Planning and Leadership Development Daring To lead 2011
Succession Planning Introduction Succession planning is a process for identifying and developing employees and candidates with the potential to fill leadership positions in an organization. Succession planning aligns current talent development with future leadership needs. It aims to identify and develop high potentials so that when a vacancy
What is primary succession? 3. When a disturbance changes a community without removing the soil, what type of succession follows? 4. Describe the process of succession in an ecosystem. 5. Why does secondary succession typically proceed faster than primary succession? 6. Use the Venn diagram to compare the two types of ecological succession. Primary
In this article, I will further define succession planning and lay out an easy, step-by-step plan to assist in its successful execution. Succession Planning Succession planning has two parts: Replacement planning. The process of identifying the candidates and replacing the owner as the leader of the firm. Exit planning.
