Succession Planning By Vivek

www.vivekmehrotra.com
Malaysian HR Congress 2007
Succession Planning

 What if something happens to the CEO or to a
senior executive of my organization?
 Who will replace him?
 Will the new incumbent have the maturity and the
desired competence to execute all responsibilities?
 Are people other than him, groomed enough to fill
the void that would be created by his absence?

 Charlie Bell, President and COO of McDonald,
succeeded Jim Cantalupo, CEO hours after the
sudden heart attack death
 Mr. Zeien, succeeded Chairman and CEO Colman
M. Mockler of Gillette Co.'s when he died of a
heart attack in his office
The Wall Street Journal Online

Session Outline
 Succession Planning - an introduction
 Succession Planning @ family run business
 An approach towards Succession Planning
 Steps to effective Succession Planning
 Identifying and nurturing Hi-Pos
 Potential and Performance mix of a Hi-Pos
 Putting success into Succession Planning
 How to measure its effectiveness
 Conclusion

Succession Planning
 Is not just a process to merely find a deputy or 2IC
 It is a conscious process to ensure continuity of
 Business Operations
 Organization’s Policies
 Organization’s Culture

 Organic Business Growth
 Mergers
 Acquisition
 Promotions, Demotions & Transfers
 Business Re-engineering
Succession Planning
“Global aging (Over the 1998 - 2008 period), more job openings
are expected to result from replacement needs (34.7 million)
than from employment growth in the economy (20.3 million)”
(Braddock, 1999)

Succession Planning: an age old art
H Recruitment of appropriate candidate
etaining the good performers

Getting the right number of people
with the right skills, experiences, &
competencies in the right jobs
at the right time.
Workforce Planning
Nancy B. Kiyonaga, NYS Department of Civil Service

Succession planning ensures that there
are highly qualified members for all
important positions, not just today,
but tomorrow, next year, and
five years from now.
Succession Planning
Kathryn Towe Littleton

What does an organization lose if it does
not implement succession planning?
 Revenue?
 Market Share?
 Company’s Image?
 Stock Prices or Market Cap?
 Human Cap?
 Workplace will lose high performers
 Lack of skilled workforce that understand business well
 Right skill mix for the future
 Right leaders to accomplish organization’s Vision & Mission

Succession Planning = Commercial
Success
There is a direct correlation between:
 Organization’s ability to develop senior executives
& Confidence to meet future growth needs
 Organization’s ability to recruit highly able executives
& having well-organized program to develop Hi-Pos’
 Developmental ‘stretch’ assignments within company
& the personal involvement of the CEO
 Organization’s need to hire outside leaders
& Lack of confidence to meet future growth needs
HUMAN RESOURCE MANAGEMENT, VOL. 13 NO. 1 2005

A process that ensures…
• Right people to lead tomorrow… who live the values,
today
• Organization identify / recruit future leaders
• Employees develop new competencies & skills
• Organization alerts its rising stars to potential
leadership opportunities; well in advance
Succession Planning… what is it?

A process that ensures…
• Better talent retention
• Greater employee satisfaction
• Enhanced commitment to work by the employees
• Improved image of organization
Succession Planning… what is it?

Succession Planning… what isn't?
 Succession Planning is similar to Workforce Planning
 It’s an option with management to develop leadership

Succession Planning & Leadership Development are
 Two different HR processes
 Stand-alone activities coordinated by HR department
 Line Managers do not have much role in Succession
Planning & Leadership Development
 Lack of Succession Planning may not pose a similar
threat as accounting blunders or missed targets

Succession Planning: the reality
 Most globally recognized Indian organizations are
not properly equipped with a sound succession plan
 Very few Indian companies have been able to
effectively implement a succession plan for its
important and strategic positions
(A survey by the Associated Chambers of Commerce and Industry of India)

Succession Planning @ Family
run businesses
 More than half of the top 100 companies are family
owned
 De-merger of business families, with trauma and
acrimony, is fairly common in India.
 Reliance Industries – Mukesh & Anil Ambani
 Bajaj Auto – Rahul & Shishir Bajaj
 Escorts – Rajan & Anil Nanda
 Jumbo Group – Bhavika, Kiran & Komal Chhabria
Sahad P.V. - Family Values

run businesses
 Family run business groups, which dealt with
Succession issues successfully
 Murugappa Group
 Dabur India
 Thapars
 GMR Group
Sahad P.V. - Family Values

Succession Planning @
GMR group’s Succession Plan
 Clearly articulated set of rules to deal with
 Management succession
 Ownership succession
 Control and power sharing
Sucheta Dalal, CHEQUES AND BALANCES

 Family Constitution
 Family Business Board
 Laid down policies on
 Consensus in decision making
 Media policy
 Code of conduct
 Process of inducting family members into the business
 Providing benefits to those who do not want to enter the
business

 G M Rao to step down at the age of 70
 Three next generation successors to decide next chairman
 Dead lock trustee
 Induction of family members is on merit and are paid on par
with other professionals employed
 The economic benefits of shareholding will be separate
Sucheta Dalal, CHEQUES AND BALANCES

run businesses
 Ownership Vs. Management
 Family owns the controlling shares, but inducts
professional managers to run their business.
Retail giant
 Rob Walton - Chairman
 Lee Scott - CEO
"Successful business families are those who run
businesses as capitalists and families as socialists."
N. Srinivasan

India's largest pharmaceutical company
 1952, Bhai Mohan Singh founded Ranbaxy
 1967, Dr Parvinder Singh, Bhai Mohan Singh's son, a
doctorate in pharmacy from the University of Michigan
joined the company
 1982, he became the company's Managing Director
 1993, D.S. Brar joined as Business Development Manager,
became the President (Pharmaceuticals) and a whole time
Director
ICFAI - Center for Management Research

 1997, Brar revealed his retirement plans to retire in
2002.
 2003, Dr Brian Tempest (President, Pharmaceutical
Division, Ranbaxy) took the reigns of Ranbaxy from
Brar as CEO and MD
 2006, Malvinder Singh has taken over as CEO & MD
India's largest pharmaceutical company

Succession Planning @ Corporates
Long Term Succession Planning
Who is completing his term this year?
Who have the skills to replace this position?
Who has necessary skills & ready for a larger or a different role?
Short Term Succession Planning
Who needs immediate replacements?
Whose professional career demands relocation?
Who would like to choose other volunteer options?

Department (A)
Key Position (1)
Key Position (2)
Department (B)
Key Position (1)
Key Position (2)
Department (C)
Key Position (1)
Key Position (2)
Current / Future Competencies and expected vacancies
Assessment & Evaluation to identify Hi-Pos
Profiling of Prospective Leaders
Individual development plans/Job rotation/Simulation workshops
Independent Assignment
Assessment of individual’s competency and skill gaps
Bottom - up Succession Planning

Understand
organization's
long term goals &
objectives
Determine
Critical
Positions
Assess
individual’s
competency
and identify
skill gaps
Identify
current and
future
competencies
for positions
Identify
expected
vacancies
Evaluate
potential
candidates as
successor for
key positions
Determine the
individual’s
current
performance &
future potential
Design
individual’s
development
plans
Review
individual
development
plans to ensure
needs are
addressed

Steps of Succession Planning
Follow-up
• Assist with leadership transition and development
• Develop & implement coaching and mentoring programs
• Develop an evaluation plan for succession management
• Monitor progress of succession candidates

(Talent Review and Planning)
• Review of Business Strategy
• Identification of Critical Roles
• Stock of Talent Inventory
• Identification of Potential Successor
• Assess individual’s competency and identify skill gaps
• Individual Development Plan in terms of
• Job Rotation
• Training
• Coaching
• Performance Counseling
• Follow-up on individual development plans to ensure
that all developmental needs are addressed
Express computer online

(Talent Review and Planning)
Lifecycle leadership development programs
• New Leaders Program
• Wipro Leaders Program
• Business Leaders Program
• Strategic Leaders Program

Current performance is not the sole predictor
of future success
Future potential is a sign of prospective results
Performance V/s. Potential

Performance
Performance is an assessment of Hi-Po’s
• Past Business results
• Past Performance review results
Identifies mainly the areas of low performance/weakness
• Build a poor image of the employee
• Minimal level of performance from Hi-Pos’ leading to
• Wasted resources
• Low morale
• Unsatisfactory performance
• Higher degrees of employee turnover
PotentialV/s.

Potential is an assessment of Hi-Po’s

Willingness to perform
 Open-mindedness
 Personal Accountability
 Willingness to learn from successes & failures

“Future work potential is based on accumulated skills
and experience as evidenced by past achievement,
ability to learn new skills and willingness to tackle
bigger, more complex or higher quality assignments.”
Charan, Drotter & Noel, The Leadership Pipeline, Jossey-Bass, SF, 2001

Criteria for deciding Performance V/s. Potential mix
• Industry
• Job Profile
• Tenure
• Learning Curve
BPO, Science & Technology, IT, Media
R&D, Sales, Finance, Manufacturing
Entry Level, Middle Level, Sr. Managers
Management Trainees,
Newly Promoted Managers,
New Job profile

How to assess pool of Hi-Pos:
 Negative feedback
 Change in behavior based on the feedback or …
 Learning from mistakes/successes in past
 Hunt for new information for self development or to
improve workgroup
 Learning & Demonstration of new skills
 Development of Team mates
leaders@jacksonleadership.com

H
L H
Performance
Potential
Competent / Capable
Needs Improvement
Plan exit
Long Term employee
New employee
Misfit in the position
High Performer in current role
Able to get things done
Recognize the technical expertise
Organize the transfer of knowledge
Performance role model
Lack ability to manage
Determine career aspirations
Assist in developing leadership skills
Misses performance expectations
Unorganized working
Identify if unhappy in current role
Create development plan
Performance below expectations
Rigidity in behavior
Recruitment error
Consider exit options
Average Performer in current role
Demonstrate desire to achieve
Provide training & coaching inputs
Recognize potential; offer support
Despite competence, performing low
Awareness about perf. deficit missing
Counseling to understand culture
Help him in setting priorities
Offer challenging stretch
assignments
Offer opportunities to develop
others
Jackson leadership

Putting Success into Succession Planning
Management succession is a process and not an event
• Strong commitment of senior managers
• Process is to be owned by the line management
• Simple and tailored to unique organizational needs
• Flexible and linked with strategic business plans
• Evolved from a thorough human resources review process
• Based upon objective assessment of candidates

Role of CEO & Senior Executives in
Succession Planning
 Culture of coaching and mentorship
 Focus on the company's competitive advantage and
sustainable growth
 To withdraw from the key roles for short or even
medium-term periods
 To take corrective steps in case of gaps arising due to
their withdrawal

Role of CEO & Senior executives in
Succession Planning
 CEO is a dispensable resource
" Take a bucket and fill it with water,
Put your hand in it right up to the wrist,
Pull it out and the hole that's remaining
Is a measure of how you will be missed"
"Indispensable Man"
Bryan Hattingh

How to measure the effectiveness
of the Succession Planning
 The number of senior positions filled internally
 The overall retention figure
 The leadership talent created and provided to
the industry

Succession Planning - Check list
 Within x months, assessment for all key departments and
positions will be completed
 Within x months, developmental plan for all Hi-Pos will be
completed
 By year 20xx, increase in job rotation of Hi-Pos’ by x%
 By year 20xx, increase in Hi-Pos’ leaders by x%
 Over x years, increase in Hi-Pos’ retention by x%
www.exceptionalleadership.com

Conclusion
 Succession Planning is as critical as creating a business
strategy
 Succession Planning is as important as running the
business profitably
 While identifying successors appropriate weightage needs
to be given to both performance and potential
 For an effective implementation of Succession Planning
involvement of CEO and line managers is a must
 Measuring the effectiveness of a succession planning
program is as critical as its implementation
Washout visual – Courtesy TOI

Thank You
Visual – Courtesy TOI

Succession Planning By Vivek

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