Based on the definition in the previous section, succession planning is the deliberate and systematic effort to project leadership requirement, to identify a pool of talents, develop leadership competencies in those candidates through intentional learning experiences and then select leaders from the pool of potential leaders. It involves three core agendas: a talent pool with bench strength for future needs, a leadership development program for leader development, and a succession plan for leadership position succession. If done well, succession planning minimizes the disruptions that often go with personnel changes, meanwhile maintaining the opportunity to implement business strategies and achieve the firm’s goals (Henman, 2007).
There is more research related to this subject, wherein many practitioners raise their view points for how to implement succession planning in practice. For instance, the State of Iowa (Iowa DAS, 2007) defines several stages: identify the needs, identify who is interested, assume who is a talent in the team, then develop capability of leadership, to end up with filling the vacant leadership position using a succession plan. Lolita et al. (2004) raises four stages: application of candidates, then assessment and selection of the best of them, final selection and approval, to finish with developing the succession planning. Another example is used in Philips internally as the following five stages for succession planning implementation:
Stage 1: selection; who are the right people to meet our business needs? Stage 2: performance review; how have they performed against business objectives and competencies/values? Stage 3: talent identification; what is their potential? What steps do they need to take to develop?
Stage 4: talent development; what learning opportunities are needed to support development?
And the last Stage 5: succession plan; who will fill our key positions now and in the future?
Integration of academic and business practices, in summary, the succession planning program can be designed for three phases: identification phase, development phase, and succession phase which aligned with the succession planning core agendas: set up talent pool, design leadership development program, and select the best talent to fill the vacant leadership position. Figure 2-1 shows the competency-based succession planning model, in which the leadership competency is a base for succession planning.
Figure 2- 1 Competency-based succession planning model
Phase I: Identification
1. CEO’s expectation & Commitment. What will be the firm’s direction, business plan, and goal for current and in the future? What are the highest executives expecting from each level of organization? (Henman, 2007). In addition, the CEO and his executive team members should give their commitments to fully support succession planning, and to be an owner of it.
2. Identify key leadership position. . A key leadership position has a critical influence on the firm’s activities at the operational or strategic level, or even both (Nova Scotia Public Service Commission, 2005). The evaluation should be considered the impact each position has in achieving the strategic goals and objectives, as well as the vacancy risk and marketability of the incumbent.
3. Talent selection. Individuals with potential for advancement will be the selected targets.
They are usually individuals who are capable of advancing two or more levels beyond their current placement within an expected duration. Normally, age and job grade are must be criteria that should be taken into consideration in the selection process. The 9-Box matrix model can be used for selection. In Figure 2-2, vertical represents the potentiality, while horizon is for performance result. Employees will be positioned in one cell by their managers after yearly end performance appraisal. With few exceptions, those who are positioned in cell 6, 8 and 9 will be selected as talent, comprising around 20% of total employees.
Figure 2- 2 The 9-box matrix model for talent selection
4. Talent identification. Potential is a key aspect of talent identification. The main obstacle to identify potential is its complexity to measure it. A combination of: “demonstrated capability (current and past performance), implied or future capability (prediction of future complexity), motivation and self-development (willingness to learn, to look for challenge, etc.), and career development and growth” (O’Callaghan, 2008). This process will consume much time involving the firm’s senior managers, in most cases, a development center to identify the talent and his development needs is essential. Then, the firm should set up talent pool with maintain a “talent” database, which includes talent’s potential, performance level, career interests and goals, and retention risk, etc.
Phase II: Development
1. Identify development required. The step combines the finding of the competency assessment with the gap analysis into a plan that address how the employees can acquire the competencies they need and do not yet possess or how they will strengthen competencies they possess to reach the level required by the jobs. A development program is very individual specific.
2. Provide development opportunities. This step implements the above step. It is important that this step be conducted fairly and equitably, both in actuality and as perceived by employees, to avoid and/or successfully defend against potential charges of pre-selection.
3. Coach & mentor. The purpose of a coach is coaching for performance mainly, as well as the mentoring is for development and career purpose. In practice, the direct supervisor will be the coach, whereas the mentor could be senior manager who comes from a different department or organization within the firm. An external mentor could be possible if there is no suitable candidate internally.
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4. Evaluation. After the development program been implemented for a period of time, the follow-up assessment is needed to evaluate the effectiveness of the development.
Evaluation is important because it provides people with an understanding of their current level of performance and their development needs. Any modification of the development program is essential when change can lead to better performance result.
Phase III: Succession
1. The succession plan. A succession plan is defined as “successful” if the firm can find at least one internal candidate for every identified key leadership boxes written on the firm's organizational chart (Deborah, 2008). Only few efficient firms such as GE or Microsoft, have at the highest levels at least of two or three people ready to replace directly the leaving jobholder (Margolis, 2005). The possible candidates for each key leadership position will be separated from two groups: those are well developed for succeeding within two years, and another group’s talents should be further developed at least two years preparation for succeeding. Each group had better have two candidates for each identified key leadership position. The succession plan should be reviewed from time to time when candidates or key leadership position holders move to another positions, take new assignment, or leave, etc.
2. The selection process. The selection is a complex process. The key elements of evaluation includes leadership competencies, past and current performance, experience, knowledge and skill, growing potentiality, and learning agility. This is, the best, a group decision making for selection result, but CEO or top manager makes decision by himself.
When is the right time to start succession planning? If you start five or even ten years before the estimated departure of the CEO and other key leaders, because Henman (2007) considers that succession planning has to be made more than 10 years before the estimated departure otherwise it might be not efficient enough afterwards. Implementing succession planning is never started too early. It is proved in the previous section that succession planning is a source of sustained competitive advantage to a firm.
The most critical implementation of succession planning will be leadership development in phase II, and successor selection in phase III respectively. Therefore, this study will focus on how to design the leadership development program for talent development, as well as to set up one mechanism for best fit selection for succession.