Leading the Way Up: Succession Planning from

the Front Line to CEO

Jack Middleton Bob Turknett Lyn Turknett

The Shoemaker … and the Factory

Agenda Today

• Overview of succession today

– The succession management cycle

– Best practices

– Biggest challenges

• CEO Succession Case Discussion with:

– Jack Middleton

– Bob Turknett

Where are we now?

• Current State:

– If you had to grow your leadership team by 50% in 60 days, could you?

–Would 75% answer yes to this question: “I know exactly what it takes to be promoted in this company”?

• Demographic Challenges – do you know? – The average age is ____ .; ____ percent are

over 59 years of age. – The average length of service is ____ .

Where are we now?

0 5 10 15 20 25 30 35 40 45

Zero

One

Two

Three

Four

How many candidates from the internal talent pool are “ready now” to immediately assume the CEO position?

2014 Report on Senior Executive Succession Planning and Talent Development, Stanford Business School.

Where are we now?

0 10 20 30 40 50 60

Strongly Agree

Agree

Neither agree nor disagree

Disagree

The CEO and executive team are actively Involved in succession planning and talent reviews

2014 Report on Senior Executive Succession Planning and Talent Development,

Stanford Business School.

Confidence in Pipeline

“My direct reports have the skills to be part of the C-Suite.”

Percent Answering YES

CXOs 48%

CXOWs 41%

Bersin, Josh, “Executive Confidence Hurt by Lack of Leadership Development, www.bersin.com/blog, October 31, 2014

What is Succession Planning?

A systematic process designed to:

1. Identify key leadership positions and hard-to-fill positions

2. Identify the critical competencies that people in those positions require

3. Identify new critical competencies required by strategic and business plans

4. Prepare pool of talent and key replacements to ensure the continued ability of an organization to meet its strategic goals and supporting objectives

ROI of Top Talent Focus

0

20

40

60

80

100

120

140

Top 15 Percent Bottom 15Percent

Market Cap Growth 2004-2014

Companies scored on these criteria:

• Formal leadership identification and development process in place

• Commitment of CEO

• Depth of leadership funnel

• Number of other companies that recruit from company

Beyond “Hit by a bus…”

Replacement Planning

Succession Planning

Succession Management

Identification of Successors

Yes Yes Yes

Development of Successors

Little or none Yes Yes (often Talent Pools)

Managerial Levels

Top two or three

Top two or three

All, including any key

positions

Linkage to Strategy

Little Some Robust

Basic Succession Management Cycle

• Definition of Strategy and Competencies needed for the Future

• Talent Review

• High Potential Identification

• Assessment and Gap Analysis

• Development Planning and Leadership Development

Succession Management Cycle

Define for

Future

Review Talent

ID Top Talent

Assess

Develop

Talent for the FUTURE Define

for Future

Accelerated

Growth

Potential

Continuing investment

(May be recently promoted)

High investment, help improve performance

High investment and/or promote/give more responsibility

These “stars” are ready for an assignment at a higher organizational level – challenge them.

Solid

Growth

Potential

Monitor

Continuing investment

High investment, accelerate skill development

Stable

Growth

Potential

Monitor

Need to demand performance improvements

May be in wrong job or at wrong level. Consider reassignment.

Continuing investment Minimal investment but continue to reward, retain

9-Box Talent Grid

Needs Improvement Meets Expectations Exceeds Expectations

1/3

1/2

1/1

2/3

2/2

2/1

3/3

3/2

3/1

Past Performance

Gro

wth

Po

ten

tia

l Review Talent

Identify High Potentials

Charles Darwin

Janis Joplin

Stanley Kubrick

Ruth Ginsberg

Thomas Jefferson

Albert Einstein

Louis Pasteur

Henry Ford

John Kennedy

Natalie Wood

Marie Curie

Helen Keller

Mary Cassatt

Neil Armstrong

James Dean

Bruce Lee

Marilyn Monroe

Katie Couric

Johnny Carson

Charlie Chaplin

Winston Churchill

Napoleon Bonaparte

Past Performance

Gro

wth

Po

ten

tial

ID Top Talent

Assessment and Gap Analysis

• Assessment against core, leadership and functional competencies

• Gap Analysis for each person and for each position

• Sample Assessment tools:

– 360 Degree Feedback

– Hogan – Leadership Potential

– Hogan – Leadership Challenges

– Hogan – Values & Preferences

– Watson Glaser – Critical Thinking

– Life History/Leader Level interview

– Structured Behavioral Interview

• Assessment Center may be included

Assess

Plan for Development

• Create a specific developmental plan for each high potential

• Can include:

– Movement to a developmental role

– Cross-functional projects or teams

– Stretch assignments

– Mentors

– Executive Coaching

– Action learning projects

– University programs, etc.

– Inclusion in special leadership development processes

Develop

Top Methods of Development

TYPE OF DEVELOPMENT % USING

Coaching and Feedback

57%

Developmental Assignments/ Action Learning

49%

Informal Information-Exchange Sessions 48%

Mentoring One-on-one 43%

Exposure to Senior Executives

34%

From “2015 Best Companies for Leaders,” Chief Executive, January/February, 2015.

Top Five Challenges

1. Succession not well connected to strategy

2. Executive team not closely involved, or focused only on risk reduction

3. Potential not well defined, and not well differentiated from performance or readiness

4. Culture doesn’t support open and honest feedback

5. Development plans not well executed

Top Five Challenges - Do you have…

• Solid linkage between strategy and talent planning?

• Ownership by senior executive team?

• Good definition of potential?

• A climate that supports developmental feedback and open discussion?

• Great follow-through on development plans?

Challenge #1: Strategic Alignment

Career Development

Selection & Succession

Systems

Leadership Development

(e.g., 360)

Job Descriptions

Structured Behavioral Interviews

Training

Performance Management

COMPETENCIES LINKED TO STRATEGY

Challenge #3: Distinguish between Performance, Potential, Readiness

Challenge #3: Specifying Criteria for Potential

Potential Criteria Description

Learning Agility Ability to learn from experience, self-reflect and grow, adapt to change, etc.

Social Skills Basic social ability – emotional intelligence

Demonstration of Values/ Character

Demonstration of the organization’s values; integrity and character

Motivation to Advance

High energy, wants to move to higher levels

Likelihood to Advance

Ability to succeed at higher positions within a specified amount of time

Markers of potential are essential for senior leadership but more difficult to develop.

25

Development Plan – Last Updated Jan 2015

Name: Pat Leader Current Position: Business Development

Past Positions: Engineer, Associate Projects Manager, Field Project Manager

Possible Next Position: Recently moved to Bus Dev role; next move TBD

Development Activities Core Competency Development

Competency and Goal Key Steps/Actions Timeframe

Leverage strong interpersonal skills to increase business

acumen

Identify key leader to build a relationship with; request quarterly meeting with him/her to learn more about their area of the business

Q1 and thru year

Improve openness to change and change leadership Identify a suboptimal Bus Dev approach/process; recommend a way to improve it; develop and implement a plan to make the change

By Q3

Increase influence/negotiation skills Read a book on effective influence tactics/strategy. Select 2-3 tips and adapt them to current job. Read by Q1; Use tips thru

yr

Critical Business Experiences

1. More exposure to crisis management

2. Attend meetings that are highly financially oriented to learn more about Finance function of the company

3. Assign to team involved in a cross-functional or cross-company project

Education: Attend Influence/Negotiation program at local university business school (Emory, Univ of GA, GA Tech, GA State)

Networking: Join and be active in one new community or professional organization

Mentoring: Interested in a mentor, but does not currently have one

Other: Attend professional conferences 1-2 times per year

Assessment

Business Experiences Not Yet Some Obtained

Competency Development - Business

Strategic planning/taskforce

Competencies Score Budget planning/management

Leadership Lead major/complex initiative or project

Leadership Significant customer interface

Openness to Change; Adaptability/Agility Lead cross-functional initiative/project

Influence and Negotiation Drive/Lead major organizational change

Results Represent Colonial externally

Business Acumen Rightsizing and/or restructuring

Execution; Drives & Delivers Results Crisis management

Accountability Merger/Acquisition

Customer Driven Business turnaround

Critical Thinking and Decision Making Competency Development - People

Problem Solving Influence/manage w/o formal authority

Sound Judgment/Decision Making Recruit/ hire team members

Strategic Thinking Supervise/Manage small team

Innovation Supervise/Manage large team

People Manage significant subordinate performance problems

Interpersonal Skills & Team Building Lead highly diverse team

Developing People Lead in an extreme adversity

Values and Personal Characteristics Skill/Expertise/Learn Business

Transparency Operations

Values and Character Finance

Business Development

Projects

HR

Compliance

Challe

nges 2

and 5

Organization

Core Competencies

General Session

Knowing Yourself

Team A

Team B

Team C

Team A

General Session

Knowing Others (Teamwork)

Team B

Team C

General Session

Leading Effectively

Team C

Team B

Team A

General Sessions - conducted with entire group in one location. The focus is on character as the foundation of leadership, and on Leader Level development using constructive-developmental theory, reinforcing the key organizational messages and developing the particular critical competencies essential to successful leadership in the organization. Senior leaders can serve as teachers or providers of content and values.

Individual Coaching - Focused on feedback and real learning and growth from assessment. Includes 360-degree feedback, personality assessment feedback, and work on development plans, with character and level of development as a continuing lens.

Action Learning Teams – Small groups focus on projects identified as useful to the business. Teams learn about the business and also focus on working effectively together. Results are usually presented to senior leadership.

Individual Coaching Sessions

Individual

Coaching Sessions

Leadership

Character and Leader Levels

Continuing Lenses

Challenge s 2 & 5: Sample Leadership Development Process

Challenge 4

• Create a DDO – Andy Fleming, Robert Kegan, Lisa Lahey

• Train for forthright, respectful conversation with Crucial Conversations

• Study Jack Middleton…

General CEO Succession Cycle

• Board and executive team agree on strategy for the future and on skills, competencies, attributes needed by new CEO

• Internal candidates selected and assessed

• If needed, external candidates sourced and assessed

Put CHARACTER at the core.

Turknett Leadership Character Model™

“Middleton’s values-based leadership has been of paramount importance to the organization’s success over this time.”

The SMC3 Story

• About SMC3

• Laying the groundwork: succession management at SMC3

• CEO Succession – informing the board

• Profiling the position

• Internal Candidates

• The broader pool

• Making the decision

• Making the transition

The Assessment Phase

• Create a Competency Profile – List of important competencies – Ranking competencies based on importance

• Design Assessment Protocol – Occupational Personality Questionnaire (OPQ) – Universal Competency Report (UCR) – Hogan Motives, Values, Preferences Inventory (MVPI) – Hogan Development Survey (HDS) – Watson Glaser

• Structured interview based on most important competencies

Competency Rating Sample

Competency Importance and Ratings

Importance 0=Not Important 1=Minor Importance 2=Important 3=Critical

Points

Total must equal 100

Leading and Deciding

Deciding and Initiating Action

3 6

Leading and Supervising 3 6

Analyzing and Interpreting

Writing and Reporting 1 3

Applying Expertise and Technology

3 5

Analyzing 3 5

Competency Comparison Sample

Values Comparison Sample

Comparison of top-rated competencies

Communica-tion

Building Relationships

Judgment Leadership

Candidate A Strong Fit Moderate Fit Strong Fit Moderate

Fit

Candidate B Strong Fit Moderate Fit Weaker Fit Strong Fit

Candidate C Weak Fit Strong Fit Strong Fit Strong Fit

Candidate D Strong Fit Moderate Fit Moderate

Fit Strong Fit

Based on Hogan Assessments and Watson-Glaser.

Putting it in practice: Some questions to be answered…

• Who will lead the succession planning initiative at your organization?

• How will the process be linked to strategy? What are your core competencies?

• How is management involved in succession planning?

• What are your critical positions? Key developmental positions?

• How is “high potential” defined?

• What is your talent review process for identifying employees with strong potential and for identifying organization gaps? How will calibration occur?

• How will high potential employees be assessed?

• How will hi-pos receive developmental feedback?

• How will development planning be done?

• Will the process be open? Will high potentials know they have been identified?

Thank You!

Contact us for more information:

770.270.1723 2310 Parklake Drive Suite 500 Atlanta, GA 30345