Win The War For Talent Through Best-In-Class Succession Planning, David Edwards

© 2013 The Corporate Executive Board Company. All rights reserved.

Win the war for talent throughbest-in-class succession planning

David Edwards, Head of Professional Services, CEB

7 October 2013

© 2013 The Corporate Executive Board Company. All rights reserved.2

• The Succession Landscape

• Reducing your succession risk - 4 key steps to success

• Questions and answers


Changing landscape of succession

• Changing requirements of leaders

• Corporate governance

• Focus on specialists and experts

• Critical roles

• Risk and cost of external hiring

• Shortage of available talent


Talent Management and Succession Planning

The agility to match key talent with strategic opportunities is critical tooutperforming in today’s dynamic and hypercompetitive global marketplace.

Talent Management Succession Planning

Starts with people Starts with jobs


Challenges we hear

Source: CLC Realising the full potential of rising talent 2005

“We don’t know if we are bringing theright people into our talent pools.”

of high performers currentlyhave the potential to rise andsucceed in more senior criticalpositions

Only

29%Source: The SHL Talent Report 2012

“We are concerned about the strength ofour leadership pipeline.”

have the potential to beeffective leaders in the nearterm1/15

Only

Source: CLC High Impact leadership Transitions, 2012

“The failure rate of transitioning leadersis high.”

of all transitioningleaders underperform46%

“Our HIPO programmes are not delivering areturn for the business. ”

of internal job moves made bypeople identified as “highpotentials” end in failure40%

Nearly

Source: CLC HIPO Program Operations and Outcomes Survey, 2012


4 key steps to success in succession

Step1 Step 2 Step 3 Step 4

•Know yourcritical roles

•Understand whatit takes to besuccessful

•Identify futurepotential

•Be clear about whatpotential means

•Build talent pools

•Nurture, motivateand develop your hi

potentials

•Assess forreadiness

•Give new leadersthe best possible

chance of success


Step 1 – Know your critical roles


Case story: ZHC

• Family owned business – second generation of 12 brothers run Zamil HoldingCompany (ZHC)

• About 40 companies in the group:

• Steel

• Air conditioning

• Glass

• Want to become more global in outlook, leveraging their brand and financial strength

• Also want to ensure that 3G family members assigned appropriate roles in the business

• Talent management at the top of the agenda, both for 3G and also for professional staff


Client goals

• Clear understanding of the future leadership requirements to deliver the Zamil strategy

• A robust and objective assessment regime to measure leadership capability andpotential amongst the 3G family members

• Individual and organisational data for all participants, including clear development plans


Zamil Leadership Talent Matrix

What

Potential How


Step 2 – Identify future potential


HIPOs contribute significantly to leadership pipeline

1.0x

1.9x

Value to organisation

Non HIPOs

HIPOs

25%

75%

Probability of Success at theNext level

High PerformersHIPOs

Source: CLC Human Resources High-Potential EmployeeManagement Survey; CLC Human Resources Head of HR FunctionSurvey.

HIPOs are more valuable and contributedisproportionately to the organisation’sfuture leadership pipeline

HIPOs are 91% more valuable to theorganisation than Non-HIPOS and three timesmore likely to succeed at the next level thanHigh Performers

High-Potential talent Management a topstrategic concern for CEOs and Heads ofHR

For 75% of organisations, HIPOmanagement is a top priority for both theCEO and HR

19%

6%

75%

High-Potential Management Is Not aTop Priority for the CEO but it Is aTop Priority for HR

High-Potential Management Is Not aTop Priority for Either the CEO or HR

High-Potential Management Is a TopPriority for Both the CEO and HRSource: CLC Human Resources Realising The full

potential of rising talent 2005


Inadequate measures of potentialMost HIPO identification systems fall short

High Performance:Necessary, but not sufficient on its own.

Tenure & Experience:Relying on these indicators alone would yield an accuracy rateof less than 9%

Leadership competenciesSuccess rates are far from ideal when using leadershipcompetencies alone

Source: CLC Human Resources Realising The full potential of rising talent , 2005

These strategies increase riskof selecting candidates thatmay be performing well intheir current roles, but are nottruly high-potential.

Only 29% of highperformers are also highpotential employees

The remaining 71% aremissing something neededto excel at the next level ofthe organisation

Most high performers are not high potential


SHL Model of High Potential

Assessment MethodologyThe indices are assessed online

utilising a combination of Personality,Motivation and Cognitive Ability Tests

(approx. 2 hours)

IntellectualAgility

MotivationAspiration

Individuals demonstrating these 3 key indices are3 times more likely to reach a senior executive position.


Step 3 – Accelerate high potential


Are you maximising High Potential?Have you identified High Potentials or

created Talent Pools?

Do you know what they have the potential for?

Are your HIPOs engaged and motivatedto deliver business results?

Have you set them up for success?

Do you know what support anddevelopment they need?


Mismanagement of HIPOs is costly• Employee performance is 14% better in organisations that invest in HIPO programmes

• HIPOs in such organisations are 69% more likely to succeed in more senior roles

• Organisations can maximise High Potential by:

• Leveraging employee relationships – ensuring HIPOs are surrounded by quality people (colleagues and theirmanager)

• Showing genuine organisational commitment to the individual by understanding their motivation andaspirations

• Structuring challenges within job experiences and designing a meaningful and achievable personaldevelopment plan

Identifying HIPOs does not guarantee business results.

HIPOs need to be individually understood and nurtured to ensure they fulfil potential.

CLC – ‘Realising the Full Potential of Rising Talent’, CEB Research, 2005


HIPO programmes deliver worrying low ROI

36%

64%

EffectiveIneffective

Source: HIPO Program Operations and Outcomes Survey 2012

HIPO programmes target future leaders, yetstruggle to do so effectively

The top objective of most HIPO programmes(81%) is to build a pipeline for successionmanagement

But few HIPO programmes deliver expectedtalent outcomes

Only 36% of HIPO programmes are effective atbuilding a pipeline succession management

Refers to percentage of respondents who choose Very Effectiveor Effective on a 7 point scale

Percentage of internal job moves made by High Potentials that end in failure.

40%

60%

FailureSuccess

With dangerous consequences

Nearly 40% of internal job moves madeby people identified as “high potentials”end in failure.

Source: CLC HIPO Program Operations and Outcomes Survey, 2012


Validating and accelerating HIPOs @ EDF EnergyContext & Objectives• Quantify and validate the capacity and capability of the leadership talent pool• Build sustainable development plans and set stretch expectations• Engage the executive• Benchmark leadership talent

Programme OverviewBriefing withTalent and

HRBPs

Onlinediagnostics

Career profilereview

Briefing withTalent and

HRBPs

Onlinediagnostics

Career profilereview

Stretching“day in the life”

simulation

In-depth careerachievement

and aspirationinterview

Stretching“day in the life”

simulation

In-depth careerachievement

and aspirationinterview

Personal report3-way Feedback &

Development Planning

Personal report3-way Feedback &

Development Planning

Talent ReviewIndividual Profiles

Predictive Talent Analytics

IdentificationIdentification DevelopmentDevelopment


Individual profiles and group benchmarking


Step 4 – Assess for readiness


Effective leadership transitions affects revenue and profit

13%

16%71%

Succession Readiness Among Leaders’ DirectReports (percentage of potential successors)

Ready now

Ready in more than1-12 monthsReady in more that12 months

But few organisations prepared forleadership vacancies

Less than 15% of business leaders’ directreports are ready for immediate transition intothe next role

Nearly one third will not be ready within nexttwo years

Source: CLC, Improving Business Leaders Effectiveness Survey 2008

Source: High-Impact Leadership Transitions: A TransformativeApproach 26 October 2012

High performing transitioning leadersreach full productivity nine months beforetheir average peers

Attrition risk for their teams is 13% lowerthan average, and their teams showdiscretionary effort levels that are 2% higherthan average

These factors combineto generate potentialimprovements inrevenue of 3% to 5%and profit of 2% to 5%


Difficult transitions have wide reaching impact

Ineffective transitions cause a ripple effect

Direct reports of a struggling transition leader perform,on average, 15% worse and are 20% more likely toleave the organisation or be disengaged, than thosewho report to a high performing one

A significant percentage of transitioningleaders underperform

Only one-half of transitioning leadersperform solidly during the course of theirtransitions

100%

51.4%

46.3%

2.5%

Total population oftransitioning leaders

SolidPerformers

UnderPerformers

At Risk ofDerailment

Source: High-Impact Leadership Transitions: A TransformativeApproach 26 October 2012

Source: High-Impact Leadership Transitions: A Transformative Approach26 October 2012

Underperformanceproves more likely(and troubling) thanderailment.


Assessing readiness at The Coca-Cola Company• Marketing talent is critical to the success of The Coca-Cola Company

• Inability to fill a critical marketing leadership role from within raised seriousquestions about the marketing leadership pipeline

• Having to look outside to fill vacancies was:

• Expensive

• Risky

• Demotivating for top talent


The succession challenge• Pipeline challenges

• Employees not completely engaged

• Organisational feedback


The goal• The Coca-Cola Company’s goal was to

complement their People Development Forumswith objective and relevant data that enrichesunderstanding of the potential and readiness oftheir talent in global marketing

• Who has the potential to make the transition?

• What do they need to make them ready to makethe transition?


Assessing for readiness: A comprehensive approachKnowledge –organisational andmarket know how

Behaviour – leadingand developing thebusiness, inspiringothers to deliver

Experience – leadingteams, managing in adownturn, managinga P&L

Qualities – drive,resilience, learningorientation


The resultsIn Year One alone By 2012• 93% of senior marketing roles filled

internally

• 71% of participants promoted or takenon significantly expanded jobresponsibilities

• Many moves have been acrossgeographies

• Nearly 100% of critical marketingleadership roles filled internally

• Programme extended to 3 levels ofmarketing leadership and customerand commercial leadership

• Ownership and commitment fromsenior leadership

• Reduced regrettable turnover

”Now we can make sure that the right people with theright skills and behaviours are in the right place at the

right time.”

© 2013 The Corporate Executive Board Company. All rights reserved.

Thank youDavid EdwardsHead of Professional Services, [email protected]

Come and see us on stand B30

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