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HR Pastime or Critical Business Strategy Enabler
“An organization is nothing more than the collective capacity of its people to create value.” Lou Gerstner former CEO of IBM
Largest potential gains in revenue and profits
for business leaders came from building bench strength when looking at a variety of talent outcomes*
*CLC Talent Management Effectiveness Survey: Corporate Leadership Council Research
According to Marshall Goldsmith, on average, the executives he meets give their succession planning process a grade of C+ and they give their execution of succession plans a grade of D
How are you doing?
Time
• To plan • To develop • To fill open positions with the right people • To think further down the road
Getting Feedback and Buy-In from Others It is Hard
• Requires tough and direct conversations
Not Defining the Business Case
Business
Strategy feeds
into talent
strategy
Executive
Commitment
and
Accountability -
Reinforcement
Identify Critical
Positions
Develop
competency and
assessment
model
Assess Talent
and ID
Successors;
Calibration
Talent
Development,
Acquisition and
Planning
Metrics that
Matter
Manage
Ongoing
process and
Action Plans
Succession Planning is an
Ongoing Process
Identify the External Trends in your Business Environment
Define your Business Strategy • How do you compete?
• What do you do better than the competition?
• Can you do this without the right people?
• What is needed now and what will be needed in the future?
• What kind of culture is needed to drive success?
Feeds into the Talent Needed
Business Strategy
feeds into talent
strategy
After Sarbanes-Oxley, Boards have become more involved with succession management
Leadership Responsibility should start with CEO
Talent Expectations for leaders and managers
Hold ongoing reviews, consider talent management results as part of bonus plan or performance management ratings
Executive Commitment
and Accountability - Reinforcement
Direct strategic impact on the business; can drive
competitive advantage
High variability in performance can have major impact on
business
Critical positions may require and receive larger and/or
differentiated investment and development
Make sure the discussion is around the position not the people
Identify Critical
Positions
Position Variability in performance
Impact on strategic outcomes
Scarcity of resource
Impact on other strategic activities
Total Score
Job A
Job B
Job C
Complete the table for each job using a scale from 1 (low) to 5 (high)
Highest Total Score = Most Critical
List 3 or 4 most important sources of competitive advantage for your company – examples:
Identify relative importance by allocating 100 points among them where no two sources of competitive advantage can have equal weighting
Using this list helps you identify core, technical capabilities/positions
Michigan Ross School of Business Executive Education
• Innovation
• Quality
• Branding
• On-time Delivery
• Cost
• Distribution
• First to Market
• Relationships
• Service
Defining Characteristics
“A” Position – Strategic
“B” Position – Support “C” Position - Surplus
Scope of Authority Has direct strategic impact and exhibits high-performance variability in the position, representing upside potential
Has an indirect strategic impact by supporting strategic positions and minimizes downside risk by providing a foundation for strategic efforts, or has a potential strategic impact, but exhibits little performance variability among those in the position.
May be required for the firm to function but has little strategic impact.
Primary Determinant of Compensation
Performance Job Level Market Price
Effect on Value Creation Creates value by substantially enhancing revenue or reducing costs
Supports value-creating positions Has positive economic impact
Consequences of Mistakes May be very costly, but missed revenue opportunities are a greater loss to the firm
May be very costly and can destroy value.
Not necessarily costly.
Consequences of Hiring the Wrong Person.
Significant expenses in terms of lost training investments and revenue opportunities.
Fairly easily remedied thru hiring of replacement.
Easily remedied thru hiring of replacement
Source: “The Differentiated Workforce Transforming Talent into Strategic Impact” Adapted from “A Players” or “A „Positions‟? The
Strategic Logic of Workforce Management,” Harvard Business Review, December 2005
High Needs Development Meets Expectations Exceeds Expectations
Improve in current
role or reassign
Improve in current
role
improve in current role reconsider
Low High
Po
ten
tia
l
Performance
Prepare for future role
Develop Competency
and Assessment
Model
Hy-Vee ◦ Culture – how it drives
◦ Position Identification
Internal vs. External
Candidate Development and Assessment
Hy-Vee University ◦ Identification of Potential candidates
◦ Etc……
Mentors
Diversification tool
Reviewed External Environment, Trends and Current Performance
Redefined the Business Strategy and what Cultural
Capabilities we needed to succeed Analyzed the # of Director Level and Above Positions that we
Hired Externally the Prior Year Reviewed Current Number of Open Director and Above
Positions Calculated the Cost of Turnover
• Search agency costs • Relocation costs • Lost productivity/revenue from open positions
Business Strategy
feeds into talent
strategy
Senior Leaders have performance goals and objectives
specific to talent development and upgrade/acquisition
BU Leaders, HR Partners, CEO, CHRO Review of Succession Planning and
Talent Management and Upgrade Process
Senior Leadership Calibrates Talent Assessments and ID‟s Successors
MANAGERS Perform Talent Assessments
LEADERSHIP TEAM Identification and Alignment of Critical Positions
CEO Active Involvement and Accountability
Executive Commitment
and Accountability - Reinforcement
ID of Critical Positions
Understanding of company‟s cultural capabilities
Consideration of motivation, ability and engagement
Performance and Potential
Definition of competencies and derailers
Defined promotability and retention risk assessments
Develop Competency
and Assessment
Model
22
Motivation
Ability Engagement
23
Motivation Extent in which an employee wants: • Prestige and recognition in the
organization • Advancement and influence • Financial rewards • Work-life balance • Overall job enjoyment
Ability Engagement
Motivation
Resources • Employee career goals in
SAP Talent Profile • Regular development
conversations
24
Ability A combination of characteristics and learned skills to carry out day-to-day work: • Mental and cognitive ability • Emotional intelligence • Interpersonal skills • Functional and technical skills
Motivation
Ability Engagement
Resources • Employee competency
self-assessment in Skills Profile
• Performance history
25
Engagement Includes four elements of commitment: • Emotional commitment to the
organization • Rational commitment – a belief that
staying with organization is in the employee‟s self-interest
• Discretionary effort • Intent or desire to stay
Motivation
Ability Engagement Resources • Regular performance and
development discussions
26
Promotability Scale: Highly promotable (HP): Seen as having the ability and motivation to be
promoted two levels within five years. Include in succession planning. Promotable within 2 (P2): Seen as having the ability and motivation to be
promoted one level within two years. Include in succession planning. Promotable within 5 (P5): Seen has having the ability and motivation to be
promoted one level within 5 years. Include in succession planning. Lateral Development (LD): Consider for lateral move within the next 12 months
to broaden experience base and potentially enhance long-term promotability. Include in succession planning.
Well Placed (WP): Continue development in current role based on employee‟s
expertise and motivation. At risk: Not meeting current performance expectations; may be due to poor job
fit or poor performance.
27
28
29
30
31
Possible Ratings:
32
Possible Ratings:
33
Required – Indicate Next Position
34
Possible Ratings:
Talent development plans put into place for
• Internal successors listed for critical positions
• Individuals identified as promotable/lateral development
Talent acquisition plans put into place to diversify existing capabilities and fill in gaps
Action plans put into place for individuals “At Risk” as assessed
“Stay” discussions initiated where retention risks identified
Leaders and managers accountable for owning in partnership with HR
Tools to use throughout the year
Review action plans
Talent Development,
Acquisition and Planning
Consider experiences needed • Manage large groups of people
• Make significant decisions
• Work on cross functional teams
• Work in customer/client facing role
• Launch new business, initiatives or programs
• Assign a mentor – inside or outside the company
• Strong P&L knowledge
Consider knowledge/credentials needed
Create accountability for success in new roles (internal and external hires)
360 assessment tool
Talent Development and Planning
Name
Title
% Promotable: 0%
Name (WP)
Title
Bench Strength: .25
% Promotable: 0%
RN and/or 1-2 yrs: 1
Name (WP)
Title
Bench Strength: 1.00
% Promotable: NA
RN and/or 1-2 yrs: 1
Name (WP)
Title
Bench Strength: 1.75
% Promotable: NA
RN and/or 1-2 yrs: 1
Name (WP)
Title
Bench Strength: .75
% Promotable: 0%
RN and/or 1-2 yrs: 1
Name - Open
Title
Bench Strength: 1.00
% Promotable: 17%
RN and/or 1-2 yrs: 0
Name (WP)
Title
Bench Strength: 1.00
% Promotable: NA
RN and/or 1-2 yrs: 1
Name (P2)
Title
Bench Strength:0.00
% Promotable: 0%
RN and or/1-2 yrs: 0
Name (WP)
Title
Bench Strength: 1.50
% Promotable: NA
RN and/or 1-2 yrs: 1
Name (WP)
Title
Bench Strength: 2.00
% Promotable: NA
RN and/or 1-2 yrs: 2
Name (At Risk)
Title
Bench Strength: 0.00
%Promotable: 0%
RN and/or 1-2 yrs: 0
Name (LD)
Title
Bench Strength: 1.00
% Promotable: NA
RN and/or 1-2 yrs: 1
Name (WP)
Title
Bench Strength: .25
% Promotable: NA
RN and/or 1-2 yrs: 1
Name (WP)
Title
Bench Strength: .75
% Promotable: NA
RN and/or 1-2 yrs: 1
Name (WP)
Title
Bench Strength: .25
% Promotable: NA
RN and/or 1-2 yrs: 0
Name (WP)
Title
Bench Strength: 0
% Promotable: 33%
RN and/or 1-2 yrs: 0
Name (At Risk)
Title
Bench Strength: 0
% Promotable: 0%
RN and/or 1-2 yrs: 0
Name (LD)
Title
Bench Strength: 0
% Promotable: 33%
RN and/or 1-2 yrs: 0
Name (WP)
Title
Bench Strength: .75
% Promotable: 0%
RN and/or 1-2 yrs: 1
Name (WP)
Title
Bench Strength: .75
% Promotable: NA
RN and/or 1-2 yrs: 4
Name - Open
Title
Bench Strength: 0.00
% Promotable: NA
RN and/or 1-2 yrs: 0
Name (WP)
Title
Bench Strength: .75
% Promotable: NA
RN and/or 1-2 yrs: 4
Name (WP)
Title
Bench Strength: .75
% Promotable: 0%
RN and/or 1-2 yrs: 4
KEY
Indicates Critical Position
Metrics that Matter
Percentage of externally sourced successors versus internally sourced
Total number of internal succession candidates considered for open positions
Critical turnover - % of high potential employees leaving is higher than average or low potential employees
Time to fill critical positions
Cost of external hires versus internal promotions/development
What questions are you trying to answer or what decisions are you trying to make?
Metrics that Matter
Business Case: Connects Business Strategy and Needs into Talent Strategy
Should be ongoing and dynamic as business is
Executive Level Commitment and Accountability
Reinforce the Importance of Talent Development and Acquisition throughout Organization
Identification of and Agreement on Critical Positions
Assessment of Current Talent and Identification of Successors
Calibration and Discussion
Targeted Talent Investments, Development and Planning
Internal
External
Measure what Matters
Ongoing Management through the Four Succession Risks
Vacancy Risk - focus on most vulnerable and critical areas of business
Readiness Risk - provide needed development experiences and enable movement across company
Transition Risk - understand transition derailers, manage expectations of new hires and create accountability for success in roles
Portfolio Risk - ensure talent is aligned and deployed against evolving business priorities
Example of a Succession Planning Checklist
Manage vacancy risk – focus succession efforts by
translating business strategy into talent strategy
Manage readiness risk by providing needed development experiences and enabling movement across the organization
Manage transition risk by understanding derailers, manage expectations and create accountability for success in roles
Manage portfolio risk by effectively aligning and deploying talent against evolving business priorities
2006 Corporate Executive Board
Manage Ongoing
Process and Plans
Employee Information
Name: Current Job Title:
Date of Meeting/Interaction: Individual/s Providing Feedback:
Cultural Capabilities – Provide any feedback on behaviors related to our cultural capabilities
Tenaciously Resourceful
Dynamically Responsive
Passionately Aligned
Leadership Competencies: Ratings: (N/A – Not Applicable, IE – Ineffective, SE – Somewhat
Effective, E – Effective, VE – Very Effective, O – Outstanding)
Business Acumen: Dealing with Ambiguity: Decision Quality:
Developing Direct Reports and
Others: Drive for Results: Interpersonal Savvy:
Managerial Courage: Managing Vision and
Purpose: Managing and Measuring Work:
Describe purpose for rating/s above, be as specific as possible:
Functional Competencies:
Derailers: List any of the following you witnessed and explain what you witnessed:
Betrayal of Trust, Defensiveness, Lack of Ethics and Values, Failure to Staff Effectively, Insensitive to
Others, Performance Problems
Leadership Competencies Rating:
N/A – Not Applicable IE – Ineffective SE – Somewhat Effective E – Effective
VE – Very Effective O - Outstanding
Name of Individual
Bu
sin
es
s A
cu
me
n
Dea
lin
g w
ith
Am
big
uit
y
Dec
isio
n Q
ua
lity
Deve
lop
ing
Dir
ec
t
Rep
ort
s &
Oth
ers
Dri
ve
fo
r R
es
ult
s
Inte
rpe
rso
na
l S
avvy
Ma
na
ge
ria
l C
ou
rag
e
Ma
na
gin
g V
isio
n &
Pu
rpo
se
Ma
na
gin
g &
Me
as
uri
ng
Wo
rk
Pri
ori
ty S
ett
ing
Pro
ble
m S
olv
ing
Str
ate
gic
Ag
ilit
y
Cultural Capabilities Rating: N/A, IE, SE, E, VE, O
Derailer Assessment Rating:
NP – Not a Problem PNP – Probably Not a Problem NS – Not Sure PP – Probably a Problem DP – Definitely a Problem NEI
– Not Enough Information
Name of Individual
Te
na
cio
us
ly
Re
so
urc
efu
l
Pa
ss
ion
ate
ly
Ali
gn
ed
Dyn
am
ica
lly
Re
sp
on
siv
e
Dera
ile
rs:
Be
tra
ya
l o
f
Tru
st
De
fen
siv
en
es
s
La
ck
of
Eth
ics
& V
alu
es
Fa
ilu
re t
o S
taff
Eff
ec
tive
ly
Ins
en
sit
ive
to
Oth
ers
Pe
rfo
rma
nc
e
Pro
ble
ms
Business Strategy - Current and Future Needs, External Environment
Succession Management – Link Business Strategy into Talent Strategy:
Commitment, Assessment, Actions, Measurement
Talent Development and Retention - how and where should we target
our development investments? What experiences are needed? How are we
communicating to employees?
Talent Acquisition - what skills, capabilities and gaps did we identify that
we might want to find externally?
Performance Management - how are we defining, measuring and
rewarding work performance – does it tie to strategy? Do we consider
talent management performance for managers and leaders?
In Real Time, how do we keep this front of mind versus quick fix solutions when openings occur?
Not just an HR responsibility
Calibration – does it sound easy? It‟s not!
Assessment Tools
Employee Ownership
How and what should you communicate?
How do you build breadth at the entry to mid level roles?
What about positions that aren‟t critical?
Generational differences and expectations
Define your culture and business needs • Use your company‟s culture – don‟t force it
What is your process today? • Can – should you develop internal candidates?
Do you have senior leadership enthusiastic support and accountability?
Discussions are crucial for success – amongst leaders, with employees, etc.
Model Succession
Evaluate
Plan
Review
Evaluate
Recommended