Cast the net wide, and create a succession pool with people who demonstrate the desirable values and behaviour
THE traditional model of succession planning involved earmarking an individual as a replacement for someone and investing in that person.
In an environment where the only constant is change, such a process is clearly limited.
With the shift from succession planning to succession management, the consensus is to build a pool of executive leadership talent a pool of potential successors, says David Conradie, innovation practice leader at Deloitte & Touche Human Capital Corporation's change and development division.
"Roles and functions change and the person earmarked may no longer be appropriate once the time comes for them to take over," he says.
The traditional model works only in a static environment an increasingly rare phenomenon.
While organisations may identify specific successors at the level of CEO or chief operations officer, the new approach to succession management is to establish a culture of continuous leadership development, says Conradie, who recently returned from a conference in the US.
The drivers of the different approach are:
A leadership shortage (globally, not just nationally);
The lessons learnt from Enron and other companies that recently experienced leadership problems; and
New governance requirements.
"Organisations should focus on how they identify and develop executive board level talent. They should focus on the right people and plan in advance."
Many organisations keep a secret succession list, accessible only to human resources staff and top management.
This kind of secrecy is no longer prudent, says Conradie. It creates a perception of favouritism, breeds cynicism, and prompts good staff who fear they are not on the list to leave.
"Globally the process has become more inclusive and transparent. It is not just a case of referring to an organisational chart with potential successors marked on it."
Companies must take ownership of the succession process and form governance and executive board committees composed of human resources and senior management.
The issue requires a
holistic approach, says Conradie.
"Executive leadership and succession are no longer soft' issues. They are strategic business issues. Shareholder activism is growing and investors want to know what plans an organisation has in place for retention of talent and executive succession."
One of the change elements that has to be factored in is HIV/AIDS.
The perception that this disease is more of a threat to people lower down the scale is erroneous, says Conradie.
"Executives are just as vulnerable. The risk profile at senior level depends on the industry."
The risk in the investment banking sector, for example due to lifestyle factors is high.
Organisations should report on this issue, ascertaining prevalence rates if they perceive the disease to be a threat, he says.
He is concerned that SA companies are mindful to reflect their employment equity and affirmative action initiatives, but are less willing to report on the AIDS threat. "While investing in people and achieving the right demographics, they appear to be unaware of the immense cost of losing an executive. There needs to be a real acknowledgment of what the HIV/AIDS threat is the magnitude of the problem for organisations," he says.
The prevalence of AIDS does not only affect the company concerned and is not only a social responsibility issue, says Conradie.
"It has an impact on the sustainability of our economy."
Unfortunately, says Conradie, many organisations and executives wake up to the reality of the effect of AIDS only with the loss of a colleague. "It is an issue that is fundamental to organisational sustainability."
Embracing succession management requires a shift in mindset, says Conradie.
"Organisations should invest in identifying and growing leadership potential, in building a leadership capability and a succession management structure."
Ideally, the pool of potential successors should consist of staff who have been with the company for some time.
"Look for people who demonstrate the values and behaviour that are desirable; people who are interested in personal development and corporate ethics. Cast the net wide when looking for leadership potential. In the past, managers nominated people. Make the process more objective and guard against getting more of the same. Involve and include management, and make senior managers accountable for it."
Global players are opting for self-nomination against known criteria, says Conradie.
This process eliminates perceptions of favouritism and ensures that nuggets in the business are not passed over during the search for leadership potential and talent.