Household names such as Procter and Gamble, Johnson and Johnson, Walt Disney and Philip Morris are among those who showed up on the list. Not bad a roster for bench-marking.
Eventually becoming a best-selling classic, the book Built to Last preached that what matters to these Visionary Companies is not how excellent their current performance is, but how they can ensure the continuity of operational excellence.
Thus, Succession Planning is thoroughly embedded in the fabric of the organization.
Fast forward today.
Looking at the business landscape, my observation is that Succession Planning is just a buzzword. Organizations toss it around and Executives demand their HR Heads to build one, yet often it’s nothing but just a hype, more of the proverbial flavor of the month.
Until it’s too late.
An Executive leaves and business operations is hampered. A key person decides to jump ship to a greener pasture and progress grinds to a halt.
Employee turnover, once tolerable, now becomes a nightmare.
So Succession Planning has come of age as organizations are now waking up to the value of having a business continuity plan in place.
Learning from and Building with the Best.
I’ve always been infected of the productive paranoia in ensuring continuity of exceptional performance long beyond my tenure, and as luck (actually, it’s God) would have it, not only did I get a front row seat of watching how to design one, I was given the reins in driving and developing the Succession Plan for an organizational behemoth.
A few years ago, the company I was working for got acquired by a prestigious and listed Filipino conglomerate and became part of its holdings company as a subsidiary.
To create alignment, each subsidiary’s HR Heads were incorporated to the holdings company’s HR Council.
In less than a month after the acquisition during our first meeting as HR Council, the announcement was made: all subsidiaries are mandated to align with the Succession Plan Model of the holding company and submit the Talent Development Pipeline of each individual subsidiary.
Obviously, Mommy doesn’t have time for pleasantries, so enough with the hellos and let’s get down to business.
The next month was a whirlwind.
I was scouring to and fro department managers offices, briefing each and all teams about what a Succession Plan is, what it means for everyone, facilitating workshops on how to do it, and fielding questions in between.
Looking back, it was one of the most profound and fulfilling experiences in my career, a core competency I enjoyed and acquired, and have since integrated with my Client Partners in our Executive Advisory engagements.
Let me briefly share a simple process on how to draft one.
First Step: Identify the Crucial Positions (Key Seats).
Business will continue if key seats are occupied. It’s pretty straight forward. So the first task in building a Succession Plan is to identify the seats that drive the company.
How will you know if a position is crucial? Let me share three things:
- Business Impact if vacant: Impact on Customer Relations, Development of New Products or Services, Business Growth.
- Scarcity of Skill-Set: Required skill for the position has low market of talent or they’re hard to find and develop.
Operational Impact: Impact on efficiency, if position is left vacant, slows down production.
Second Step: Identify the Crucial Traits.
Key positions require key traits, characteristics that would make the position work.
This will vary depending on the position and the company. But learning from the best, let me share some of the key traits we were asked to look for in a key role:
- Quick Learner.
- Team Player.
- Consistent High-Performer.
But that’s putting the horse before the cart.
Doing the first two steps will ensure a plan is ready. Over the years, however, I’ve seen that without a couple of little things, any Succession Plan Model is doomed to fail.
The Fundamentals: The Cart then the Horse.In 2014, JobStreet decided to find out who was the preferred company to work for by Filipinos. Up until 2017, the holdings company we belong to was ranked #1 for three straight years.
Not bad for a hundred year old company. This old dog definitely has a lot of new tricks up its sleeves.
Clearly, the enterprise’s Succession Plan proves a success and I believe it’s because of two simple things:
#1: It is driven by Top Management.
The company’s basic philosophy when it comes to talent development is that it is driven by top management. Proof?
A robust in-house leadership university is up and running, producing the kind of business leaders the company needs. Aside from that, all external training of each subsidiary must first be approved by the CEOs of their respected company and then forwarded to and be approved by the holding company’s President.
In fact, I have yet to encounter – before or since – a local company as hands-on when it comes to talent development like this one.
#2: As a company, the enterprise has a compelling reason to exist.
A Succession Plan is doomed to fail if the people inside the business do not have a compelling reason to continue running the business.
Profit, or money, though an awfully good reason, is not enough to sustain effort.
If the reason for an existence of a business is simply to make shareholders happy by making more money, I doubt the employees who run the business would stay when a more lucrative financial offer is given by a competitor.
In one of our HR Council meetings, a representative from the holdings company spoke of third party providers.
He explains the monumental value of being able to do business with the enterprise, citing other third party providers who landed new customers after mentioning that it is one of their clients.
More apparent however was underneath his discourse is the behavior that exudes the feeling that the company is so integral to the Philippine economy, we must never cease to operate or risk sending our nation into economic turmoil and bankruptcy should we suspend operation for a day.
One may comment on such tone as sheer arrogance. Perhaps. But it is difficult to deny that the company has found a strong reason to continue to exist.
And over 130 years later, they’re still here. And from the looks of it, with their recent success of the infrastructure division in their business portfolio, it seems they are just getting started.
Closing thoughts.
Performance excellence is not enough. Consistent and sustainable excellence of performance is the name of the game. And the key to sustainability is a robust Talent Pipeline.
Nevertheless, unless the company provides a compelling reason for its existence, sooner or later it will be difficult to sustain its energy to pursue excellence in performance.
Succession Plan works best when there’s a compelling answer to this question:
Why continue?
——————————————————Florentino Hernando is the Managing Director of FAHernando Consulting, a management consulting firm with the mission to build great companies
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Thanks FAH for writing this. Very informative and practical. Identifying crucial traits resonates with me and the job I do.
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