Half day interactive open workshop in Toronto on succession planning from the perspective of Human Resources.

1. Planning to succeed by Toronto Training and HR March 2011

2. Contents 3-4 Introduction to Toronto Training and HR 5-6 Definition 7-8 Components of succession planning 9-11 Preparing for succession planning 12-18 Steps to effective succession planning 19-22 Succession management 23-28 Formal succession planning systems 29-36 CEO succession 37-46 Talent and succession planning 47-48 Common planning pitfalls 49-50 Case study 51-52 Conclusion and questions Page 2

3. Page 3 Introduction

6. Improving employee engagement & morale

8. Page 6 Definition What is succession planning? Formal succession planning Informal succession planning

9. Page 7 Components of succession planning

10. Page 8 Components of succession planning Recruitment of new people into the organization Creating the next generation of managers Identifying subject matter experts and creating knowledge transfer plans and processes

11. Page 9 Preparing for succession planning

12. Page 10 Preparing for succession planning 1 of 2 Determine trends, attrition rates, high risk departures to make a plan Get the numbers and understand them Target efforts to areas where the lack of competent employees will hurt you the most Undertaking an environmental scan

13. Page 11 Preparing for succession planning 2 of 2 Recruitment Knowledge transfer plan Criteria for identifying subject matter experts How to identify subject matter experts Lessons learned in knowledge transfer Communities of practice Management development General managers/specialists

14. Page 12 Steps to effective succession planning systems

15. Page 13 Steps to effective succession planning systems 1 of 6 SUCCESSION PLANNING MODEL Identify key positions Build job profiles for each position Competency gap analysis Development opportunities Personal development plans Maintain skills inventory

16. Page 14 Steps to effective succession planning systems 2 of 6 INTEGRATED SUCCESSION MANAGEMENT The CEO and executive team engage in succession management HR develops tools, structures discussions, facilitates the process, and assists in identifying and assessing high performers and high potentials Leaders have an enterprise view of talent, and do not limit replacements by function, business, or geography

17. Page 15 Steps to effective succession planning systems 3 of 6 INTEGRATED SUCCESSION MANAGEMENT Succession management is highly aligned with the business strategy Talent in professional and management tracks is highly valued; high performers in key positions who may have “topped out” are also highly valued These companies prepare for future needs while considering future changes, such as the restructuring, growth and development of new product lines

18. Page 16 Steps to effective succession planning systems 4 of 6 INTEGRATED SUCCESSION MANAGEMENT Managers are held accountable for carrying out action items from talent review sessions These companies are more transparent about the succession process and provide more focused development opportunities Succession management processes are linked to other talent management activities, including a strong integrated development component

19. Page 17 Steps to effective succession planning systems 5 of 6 They have smooth transitions They are able to identify the right developmental assignments They provide meaningful appraisals and feedback They use appropriate selection criteria They have a number of candidates for each position

20. Page 18 Steps to effective succession planning systems 6 of 6 Determining job requirements Determining high potentials Gap analysis Executing a development plan

21. Page 19 Succession management

22. Page 20 Succession management 1 of 3 BENCHMARKING THE BEST IN CLASS Quality and quantity Talent realities are driving succession management adoption The maturity class framework Internal challenges Pressure, Actions, Capabilities, Enablers Best in class strategies Making succession management more strategic

23. Page 21 Succession management 2 of 3 BENCHMARKING REQUIREMENTS FOR SUCCESS Competitive assessment Capabilities and enablers

24. Page 22 Succession management 1 of 3 REQUIRED ACTIONS For all organizations Steps to success

25. Page 23 Formal succession planning systems

26. Page 24 Formal succession planning systems 1 of 5 REASONS FOR ADOPTING Identify and prepare future leaders Assure business continuity Create opportunities for internal advancement Retention Fill future vacancies created through retirement Prepare for business growth/expansion Address projected talent shortages

27. Page 25 Formal succession planning systems 2 of 5 REASONS FOR ADOPTING Deal with a skills gap among employees Address change effectively Handle emergencies or threats effectively Reduce financial and operational costs for external recruitment

28. Page 26 Formal succession planning systems 3 of 5 BENEFITS Provides a specific connection to business and strategic planning Provides a more systematic basis to judge the risk of making particular succession and developmental moves Assists in developing systematized succession plans that fit with a distinct trend to codify, whatever possible, more general and comprehensive corporate palling actions Improves the identification of high potential and future leaders, whereby the organization can engage with them for leadership development initiatives

29. Page 27 Formal succession planning systems 4 of 5 BENEFITS Reduces randomness of managerial development movements Helps anticipate problems before they get started – and thereby avoid awkward or dysfunctional situations Provides logical approach for locking succession planning into the process of human resource planning – connecting formats (data, timing) with process (judgement, discussions, analyses)

30. Page 28 Formal succession planning systems 5 of 5 BENEFITS Facilitate integration of the many components of human’s resources planning after having done many of these separately in the past Improves internal promotion opportunity Provides early warning if succession does not exist for a position allowing for lateral hiring from the market.

31. Page 29 CEO succession

32. Page 30 CEO succession 1 of 7 The goal of CEO succession is finding the right leader at the right time CEO succession is a board-driven, collaborativeprocess CEO succession is a continuous process The board should ensure that the CEO builds a talent-rich organization by attracting and developing the right people Succession planning should be driven by corporate strategy

33. Page 31 CEO succession 2 of 7 SYSTEMIC STRATEGIC CHANGE You’re always in CEO succession Create a valid CEO model Evaluate both competencies and character Create a culture of leadership development at the top Assess top internal candidates against the CEO Model and create enterprise/CEO leadership development plans

34. Page 32 CEO succession 3 of 7 SYSTEMIC STRATEGIC CHANGE Get key candidates exposed to the board Consider benchmarking the external market No halos allowed! Develop the new senior team Cascade leadership development to support strategic change

35. Page 33 CEO succession 4 of 7 BEST PRACTICE Using an experienced third party to assess external and internal candidates in order to bring the requisite objectivity and uniformity Giving the third party extensive exposure to the organization, its structure, culture, and aspirations Defining the job specifications for the CEO in terms of the company's future strategy and the competencies that will be required to achieve it

36. Page 34 CEO succession 5 of 7 BEST PRACTICE Ensuring that the third party evaluates all internal and external candidates using proven, quantitative and qualitative methods of assessment Using the results to guide development activities for internal candidates

37. Page 35 CEO succession 6 of 7 Addressing the disconnect Start with a vision Strategic alignment Addressing human nature Pull and push

38. Page 36 CEO succession 7 of 7 GETTING IT RIGHT Establish a succession committee Review succession plans early and often Identify your gaps Build a strong candidate list Know your strategy Learn from best practice Evaluate the process often and make changes when appropriate

39. Page 37 Talent and succession planning

40. Page 38 Talent and succession planning 1 of 9 Critical conversation one Critical conversation two Critical conversation three Critical conversation four

41. Page 39 Talent and succession planning 2 of 9 Internal dialogue of employee Systematic dialogue of employee with immediate stakeholders Employee/organization dialogue Social networking dialogue

42. Page 40 Talent and succession planning 3 of 9 ROUTE TO THE TOP Insiders Outsider Insider-outsiders Board members Former executives

43. Page 41 Talent and succession planning 4 of 9 IDENTIFYING HIGH POTENTIAL LEADERS Strong track record of performance, proven results, and success in past or current roles Strong interpersonal skills—understanding the people-side of business Strong verbal and written communication skills Drive, initiative, or an ambition to increase level of responsibility or readily accept new challenges An ability to create and articulate company vision and strategy, set direction, execute objectives, and understand the total business

44. Page 42 Talent and succession planning 5 of 9 DEVELOPING LEADERSHIP TALENT Exposure (to peers, executives, board members, decision makers, different levels of the organization, or the global business). Increased responsibilities. Special assignments/projects (including stretch assignments). Job rotation. Coaching, feedback, mentoring, and development planning.

45. Page 43 Talent and succession planning 6 of 9 PREVENTING DERAILMENT Increase feedback and communication. Develop an action plan. Minimize the impact of stressors and personal problems. Improve levels of maturity. Offer coaching. Provide new opportunities or challenges.

46. Page 44 Talent and succession planning 7 of 9 PROMOTING PEOPLE WHEN THEY ARE NOT SUITED TO THE NEW ROLE An underdeveloped or non-existent leadership strategy. Lack of a leadership model. Inability to be honest, authentic, and transparent with high-performers. No common definition of high potential and high performer.

47. Page 45 Talent and succession planning 8 of 9 EVALUATING BOARD DIRECTORS It is imperative for boards to have standards of performance metrics. Without these, the board cannot assess its own successes and failures Directors should be held accountable for the responsibilities for which they are paid. Evaluations make them aware of this accountability One size does not fit all. Good governance is an organic process, and evaluations should relate to the unique situation of a particular company

48. Page 46 Talent and succession planning 9 of 9 EVALUATING BOARD DIRECTORS As an evaluation progresses, it must serve one clear objective: to provide guidance that will create superior long-term shareholder value The development of an evaluation process often occurs in stages, building from CEO evaluation to full board evaluation to individual director self-assessment and, finally, to peer evaluations To evaluate itself, a board should compose a description of its specific duties/goals/objectives, and then set about measuring its performance against those responsibilities

49. Page 47 Common planning pitfalls

50. Page 48 Common planning pitfalls Concentrating on a succession plan for the senior leadership team only Attempting to “clone” the incumbent Assuming that good performance at one level will guarantee good performance at the next Viewing a succession plan as merely a replacement program

51. Page 49 Case study

52. Page 50 Case study

53. Page 51 Conclusion & Questions

54. Page 52 Conclusion Summary Questions