Business Focused Succession Planning

Shane Douthitt, Ph.D.

Scott Mondore, Ph.D.

Strategic Management Decisions

Learning Objectives

• Identify and assess employees on the competencies,

skills, personality tendencies, etc. that lead to high

levels of performance

• Utilize analytics to objectively:

▫ Assess High-Potential Talent; Differentiate High From Low

Performers

▫ Assess Overall Talent Pool Effectiveness

▫ Uncover Individual and Group Leadership Development

Needs

• Align succession planning efforts with strategic

business goals and demonstrate an impact on bottom

line results

About SMD:

Linking People Data to Business Results

Our Results

• Linkage of Talent Management (e.g., engagement

survey results, training, performance ratings,

competency assessments) to a variety of business

outcomes:

▫ Operations Metrics (e.g., operating margin)

▫ Financial Metrics (e.g., sales dollars, productivity)

▫ Customer Satisfaction

▫ Turnover/Retention

▫ Employee Safety

• Significant bottom-line improvements and

return-on-investment for our clients.

Our Platform

• Implement Talent Management processes based on analytics, linking

people to critical business outcomes

• Partner with our clients to create and execute people strategies that

drive business outcomes and maximize ROI

Connecting Employees

to Business Results • HR Strategy & Planning

• Human Capital Measurement

• Talent Management

• Leadership Development

• Executive Assessment & Coaching

• Organizational Effectiveness

Presenter Bio

Scott Mondore, Ph.D.

Scott has over 15 years of experience in the areas of strategy, talent management,

measurement, customer experience and organizational development. He has internal and

consulting experience across a variety of industries including transportation, healthcare,

manufacturing, pharmaceuticals, utilities, and hospitality.

Scott is currently a managing partner of Strategic Management Decisions (SMD). Before

SMD, he served as East Region President for Morehead Associates, a healthcare HR

company. Before joining Morehead, Scott worked as a Corporate Strategy Director at Maersk,

Inc. He also worked as an Organizational Effectiveness Leader at UPS, focusing on

employee assessment and measurement as well working as a consultant to large and small

organizations in both the private and public sector.

Scott is the co-author of “Investing in What Matters: Linking Employees to Business

Outcomes” (SHRM, 2009) and “Business-Focused HR: 11 Processes to Drive Results”

(SHRM, 2011). and has published several articles on various topics, including employee

turnover, employee safety, coaching, litigation and leadership.

Scott holds a master's degree and doctorate in industrial/organizational

psychology from the University of Georgia.

Presenter Bio Shane Douthitt, Ph.D.

Dr. Shane S. Douthitt is a co-founder and managing partner of Strategic Management

Decisions (SMD). He has more than 18 years of experience in the areas of measurement,

talent management, executive assessment and coaching, and organizational development

across a variety of industries. Before SMD, he was the SVP of Sales and Product

Management at Morehead Associates—a healthcare HR consulting company. Before joining

Morehead, Shane worked as a Senior Vice President of Human Resources & Leadership

Development at Bank of America. Shane also worked as a consultant for Towers Perrin and

IBM.

Shane is the co-author of “Investing in What Matters: Linking Employees to Business

Outcomes” (SHRM, 2009) and “Business-Focused HR: 11 Processes to Drive Results”

(SHRM, 2011). In addition, he has published several articles in leading journals on a variety of

topics, including HR strategy, measurement, teams, individual differences and diversity,

employee selection, group dynamics, and careers, and leadership development.

Shane holds a master's degree and doctorate in applied psychology from the University of

Georgia, as well as a master’s degree in industrial/organizational psychology

from the University of Tulsa.

RETHINK Your Approach to HR!

Make HR a Profit Center

• Quantify the impact of employees on business outcomes

• Calculate an expected ROI for investments in employees

• Define the relationship between HR processes and business outcomes

Connect Key HR Processes

• Provide a single, integrated view of key HR processes

• Reduce your HR related costs through integration and strategic alignment

• Connect HR processes to business results

Spend More Time Driving Results

• Align HR professionals, organizational leaders, & employees to focus on actions that drive results

• Provide customized analytics and simplified reporting through business-focused scorecards

Talent Link Key HR Processes

Business Outcomes

Performance Management

Selection

Employee Survey

360 Feedback

Succession Planning

Competency Builder

Career Development

Training

Examples of

Business Outcomes

People

• Turnover

• Employee engagement

Service

• Customer satisfaction

• Wait times

Quality

• Clinical outcomes

• Product Defects

Finance

• % to budget

• Cost reduction

Growth

• Sales growth

• Margin growth

Key HR Processes in One Place

SMD Publications

Published by

SHRM (2009)

Published by

SHRM (2011)

The authors’ practical

approach, “Focuses HR

leaders on where to put their

limited time, energy, and

resources to maximize both

individual and organizational

performance.”

Vicki Escarra, President and

CEO

Feeding America

#3 SHRM Best-Seller

Session Agenda

• The current state of succession planning

• Building a business-focused succession plan

▫ Performance versus Potential

▫ Assessing the Business Impact of People Data

▫ Examining Organizational Strengths & Gaps

▫ Identifying Top Talent through Comprehensive Talent

Review Sessions

▫ Aligning Development Planning with Business Needs

Applied Research and Trends

2011 SHRM Poll

426 Organizations of all sizes

• Less than a quarter (23%) of organizations currently have a formal succession plan in place

• More than one-third (38%) have informal succession plans

• Almost one-third (30%) of organizations evaluate or update their succession plans once a year.

• Almost one-half (43%) of the respondents indicated that more immediate requests take precedence in the organization over developing a formal succession plan.

• Other organizations stated that they have not yet given consideration to succession plans (16%) or feel that their staff size is too small (15%).

Succession Planning Obstacles

Study of 29 Multinational Companies (Guthridge, Komm & Lawson)…

39%

47%

50%

51%

52%

54%

Succession planning processes not rigorous

enough to matching right people to right roles

Senior leaders not aligning talent mgmt. with

business strategy

Line managers unwilling to differentiate top

and bottom performers

Organization is siloed; limitations in sharing of

resources

Line managers not committed to people

development

Senior leaders not spending high-quality time

on talent management

What Our Clients Are Saying…

“We just don’t spend much time on succession and talent planning.”

“We move people around when we have to.”

“Our high-potentials are often identified by their likeability.”

“Employees have to be ‘noticed’ by a senior leader to get any real development opportunities.”

“Our ‘9-box’ talent reviews are dominated by the biggest titles and loudest voices.”

Typical Approach to Succession Planning

• Focuses only on replacing the CEO

• Provides generic leadership development

opportunities

• Produces highly subjective ratings of performance

• Creates subjective pools of ‘high-potentials’

• Is misaligned with career aspirations of talent

• Does not leverage employee data to

focus on key business drivers

The Opportunity

• To discover the competencies, skills, experiences, etc.

that drive business outcomes

• To identify top talent based on performance on key

business drivers

• To make succession decisions based on analytics and

data—not on likeability

• To align succession planning with the business

strategy and drive results across the organization

• For HR to take the lead in making the process

business-focused

Aligning the Business Strategy, People Development Strategy,

and Program Design

What is Succession Planning?

Succession Planning

Leadership Development

Career Assessment/ Development

*Succession Planning should

not occur in a vacuum*

A comprehensive approach to ensuring the right people are

in the right jobs at the right time.

Succession-Planning Process

Identify Critical Roles

Assess Leader Performance &

Potential

Calibrate Ratings Based

on Business Drivers

Identify Potential

Replacements

Develop Leaders and Talent Pools

Ready Now Replacements when Needed

Employee Provided Information

Identify “Critical Positions”

Goal: To predict future performance

• The best way to predict future performance is to look at past

performance (i.e., the “what” and the “how”) and systematically

assess future potential.

The Foundation of Succession Planning:

Performance vs. Potential

Sample Performance Scale:

1 – Fails to Meet Expectations

or Unacceptable

Performance

2 – Sometimes Meets

Expectations or Needs

Improvement

3 – Meets Expectations or

Quality Performance

4 – Consistently Exceeds

Expectations or Superior

Performance

Sample Potential Scale:

1 – Placement Issue

2 – Grow in Position

3 – Promotable

4 – High Potential

Clearly Define Potential

Provide Even More Clarity

Traditional Succession Planning Process

Identify High Potential

Talent

Assess Development

Needs

Build & Execute

Development Plans

Monitor & Review

Assess Critical

Positions

Our Business-Focused

Approach takes succession

planning to the next level by:

• Utilizing analytics to

differentiate high from low

performers

• Assessing both individual

and systemic development

needs

• Aligning development

plans with the business

strategy

Assess Business Impact:

Business Partner RoadMapTM

1. Determine Critical

Outcomes

2. Create Cross-Functional Data

Team

3. Assess Measures

4. Analyze the Data

5. Build Program &

Execute

6. Measure & Adjust

Business Partner RoadmapTM

Assess Business Impact:

Succession-Focused Assessment

Integrated Assessment

Skills/ Competencies

Personality

Employee Survey Results

Experience

• A best practice in

succession planning and

leadership development

programs is to include

leader assessment,

feedback, and

development planning.

• The assessments are

intended to identify

strengths as well as gaps in

leaders’ skills, abilities,

competencies; particularly

to expose gaps in critical

competencies identified

earlier.

Assess Business Impact:

Potential Assessment Tools

• Behavior-based assessment

▫ Quantitative 360 feedback;

▫ Competency Ratings from performance reviews

• Personality

▫ Hogan Personality Inventory

▫ 16PF

• Professional/Leadership Experiences

▫ Experience Profiler

• Employee Survey Results

(management style/effectiveness)

• Traditional data analysis includes: • Qualitative analysis or gap analysis (strengths/weaknesses) • Correlation • Regression

• Advantages of SEM: • Consider multiple independent & dependent measures

concurrently • Imply causality • Calculate ROI • Correct for measurement errors

• SEM is commonly used in other industries (econometrics, market research)

Assess Business Impact:

Analytic Approach – Structural Equation Modeling

Assess Business Impact:

Executing the Analyses

• “Apples to Apples” Comparison: Line up each leader’s

individual data (e.g. 360, employee survey) with their

performance outcomes (e.g. percent to goal on

business outcomes)

• Identify Key Drivers: Run statistical analyses (i.e., SEM)

to identify the individual factors that evidence the

strongest relationships with performance outcomes

• Get help on the analyses—don’t let it be a barrier to

executing the process

Assess Business Impact:

Linking People Assessments to Business Metrics

Critical Business

Outcomes

Leadership

Competencies

Personality

Factors

Experience

The linkage analysis will

demonstrate the level of

impact that each

competency, experience,

skill, etc. has on individual

performance and business

outcomes.

This allows leaders to

focus on the most

important competencies,

skills, experiences and

determine the appropriate

level to invest in

developing each area.

Identifying Critical Competencies/Experiences that Drive Business Outcomes

Employee

Attitudes

Technical

Skills/Abilities

Examine Strengths and Gaps:

Business-focused Ready Now ScorecardTM

Key Drivers of Business Outcomes

Utilize the Ready Now Scorecard to Assess Overall Talent Pool Health…

• Refer to the scorecard during talent review sessions; incorporate

stakeholder ratings of performance and potential to identify true

Ready Now talent

• Assess performance strengths and gaps across the entire talent pool

Calibrate Performance & Potential

9-Box Report

Identify Top Talent:

Goals for Facilitating Talent Review Sessions

• High Potential Assessment

▫ Evaluate ‘expandable’ talent based on performance on

business drivers

• Comprehensive Talent Review

▫ How much and what type of talent do we need to sustain

success and execute on our strategy?

▫ Have we made a sufficient number of talent moves and filled

necessary gaps from the last time we had a talent review?

▫ What lateral moves/promotions/special projects have we

moved our high-performers and high-potentials into in the last

year?

• Achieve diversity goals and/or organizational goals, as

needed

Identify Top Talent:

Goals for Facilitating Talent Review Sessions

• Role Clarity

▫ What jobs ‘feed’ the role; what jobs come next?

▫ Focus on creating career paths for critical jobs

• The “9-Box” Discussion

▫ Using analytics, it differentiates talent based on business driver

performance

▫ Great companies continue to leverage its effectiveness

• Performance Management

▫ Hold leaders accountable for individuals in “does not meet

expectations” categories

▫ Make decisions of “up or out” on talent in critical roles

Selecting Ready Now Replacements

Launch Leadership Development Program:

Alignment with the Business Strategy

Step 1: Explicitly outline the organization’s leadership strategy; The leadership strategy and goals will provide the “blueprint” for the actual program

• Factors that influence a leadership strategy:

▫ External business trends

▫ Key business strategies

▫ Required organizational capabilities and competencies

▫ Leadership and business priorities

▫ The organization’s culture

▫ Performance objectives

Business Strategy

Leadership Strategy

Leadership Program Design

Launch Leadership Development Program:

Alignment with the Business Strategy

Step 1 Continued…

• Create a Leadership Development committee

or conduct a series of key stakeholder

interviews to provide the necessary input. Key

factors to consider:

o How will the business strategy impact the

organizational design in the next 3-5 years?

o Given the business strategy over the next 3-5

years, what types of leaders are needed?

(Experiences Required? Competencies

Needed?)

o How will future leadership roles be filled?

(internal, external, or a mix)

Business Strategy

Leadership Strategy

Leadership Program Design

Develop Top Talent:

Program Design and Components

• Your business-focused leadership strategy and program goals determine the program’s design and content.

• Consistent with best practice, potential program components include:

▫ Assessment, feedback, and development planning

▫ Coaching and/or executive mentoring

▫ Action learning teams focused on real business issues

▫ Exposure to the strategic business agenda

▫ Job assignments or rotations

▫ Group learning activities

▫ Team building/development

Phase 1.

Design Program

• Define program objectives and create “blueprint”

• Select and build customized program components

• Build customized leadership assessment process

• Match & train assessors

Phase 2. Assessment & Feedback

• Kick-off program and orient participants; complete assessments

• Aggregate assessment data and produce an overall leadership report

• Provide feedback to participants and build development plan

Phase 3. Group Learning

• Execute group learning sessions.

• Execute learning action team projects

• Observe and provide feedback & coaching

Phase 4 . Coaching & Program Review

• Provide coaching during periodic 1:1 meetings

• Participants have, as needed, access to coaches throughout the process

• Wrap-up program

• Evaluate program effectiveness

Develop Top Talent:

Sample Leadership Program Overview

Business Focused Succession Planning:

Success Metrics

• Business-focused assessment of the organization’s

Talent Pool

• More “Ready-Now” Candidates in the Leadership

Pipeline

• Overall Talent Pool Health Assessment & Tracking

• Expanded Opportunities for High Performers:

▫ Lateral Moves

▫ Cross-Functional Projects

• Reduced High Performer Turnover

• Increase Perceptions of Career Opportunities on the

Employee Survey

Integrating Succession Planning and Compensation

0-20% 20-40% 40-60% 60-80% 80-100%

High Potential

Mitch Daniels Billy Ryan

Meggin Gowen Tom Tuberville

Matt Madson Carol Johnson Amy Andrews

Mary Matlock Scott Donovan Jill Rogers

John Doe Jane Doe Sam Smith Jim Johnson

Promoteable

Shane Donovan Sasha McDonald John Mondore

Katie Bradford Carter Smith Jason Kidd

Julie Jones Sam Bradford

Grow in Position

Tommy Timmons Ricky Bobby Brett Favre

Erin Dry Marc Ward Gena Vantuyl Sherry Hartnet Chris Payey Jason Murry

Placement Issue

Mike Roberson Jerry Jones Kim Klover

Bobby Bean Janice Smill Jill Vantuyl Mike Kelly

Billy Simmons Jodie Johnson

Potential and Position in Pay Range Director Level Employees

Performance ratings are integrated with your compensation philosophy to

pre-populate merit, incentive and equity recommendations

The Art & The Science

ART SCIENCE

▫ Customizing the approach to

the organization based on

current/future business

challenges (which can come

with assumptions)

▫ Facilitating Talent Review

meetings with leaders

▫ Getting high potential talent

on the right career path

▫ Linking employee data to

business outcomes

▫ Assessing Talent Pool Health

▫ Creating leadership programs

based on true talent pool

development needs and

individual needs that drive

business

outcomes

Practical Tips

• Engage stakeholders early in the process:

▫ Ask stakeholders to identify the critical business outcomes

▫ Use stakeholder interviews to engage leaders across functions

• Focus on mid-to-upper level management positions—

not just the CEO

• Develop pools of talent for critical roles

• Make all leaders responsible for talent planning

• Remember to include a comprehensive approach to

career development and leadership development to

build the most effective pipeline of talent

What We Have Covered

How to make succession planning business-focused by:

▫ Using analytics to discover key talent performance on elements that drive the business (individual and group)

▫ Assessing and tracking talent pool effectiveness—using the Talent/Succession Scorecard

▫ Making succession planning decisions based on facts and data

▫ Effectively facilitating talent review sessions

▫ Aligning succession planning with career development, leadership development, and the business strategy

To Contact Us:

Scott Mondore, Ph.D.

Managing Partner

smondore@smdhr.com

(404) 808-4730

www.smdhr.com

Shane Douthitt, Ph.D.

Managing Partner

sdouthitt@smdhr.com

(704) 975-6820