Succession planning key to management diversity
It’s a best practice that too many organizations neglect
Many organizations that claim to be committed to diversity continually end up with leaders that look pretty much like the executives they’re replacing. The reason is often a failure to integrate diversity into succession planning, experts say.
“While diversity programs typically focus on bringing difference through the door in the form of new hires, enthusiasm appears to evaporate when it's time to choose the next CEO or vice president” according to Martha Frase-Blunt in HR Magazine.
The problem is real. Almost half (43 percent) of corporate directors say their companies don’t have a clearly defined succession plan for CEO transitions, and less than one-third expect the transition to a new CEO would be smooth if he or she left today, according to the Second Annual Directorship/RHR International Board Survey.
"It's disconcerting that so few are prepared for the inevitable loss of a CEO," said Constance Dierickx, a senior consultant with RHR. "Succession planning needs to be front and center, particularly at the CEO level.”
“It's not just succession to the top, it's getting the right person in place for every job,” according to Dr. Robert Fulmer, Distinguished Visiting Professor of Strategy at Pepperdine University’s Graziado School of Business. “Some of tomorrow's key jobs may not even exist now. If a firm plans to double in size in five years, they will need more talented managers," he says. "This is true for small firms as well as large ones.”
The “mini me syndrome”
"Those being positioned as future leaders tend to look and act an awful lot like people in those top positions," says Tom McKinnon, executive consultant with Boston-based diversity consultants Novations/J. Howard & Associates. This doesn’t necessarily mean that companies aren’t trying, he says. "It simply reflects an adherence to traditional methods of succession planning."
Many otherwise forward-thinking companies expect employees with leadership skills to simply rise to the upper levels of the organization and wait there, “ready to be anointed,” Frase-Blunt writes. But according to McKinnon, employees typically rise to the top because the organization rewards those who have received the plum opportunities along the way. “And it's likely that those advantages came about because of the candidates' resemblance to those they hope to replace.”
Frase-Blunt calls it the "Mini-Me" syndrome. “Executives seem to feel more comfortable when critical organizational roles are filled by people who are similar to the incumbent. That resemblance is often manifest in age, education, leadership style, industry experience, career trajectory and, of course, race and gender.”
"These attitudes are understandable," says Jason Richardson, CEO of Cutting Edge Information, a business intelligence and research firm in Durham, N.C. "It takes convincing evidence to persuade the top brass that changing the traditional makeup at the top is a good idea, particularly when homogeneity has worked well for the company for eons."
Breaking the mold
A report by Bridge Partners says “the most promising organizations “are the ones that are currently identifying and developing high potential executives, of any age, culture, ethnicity, gender, geographic background or sexual orientation.” The group says, “With appropriate succession-planning strategies and training, these individuals will broaden their leadership skills and step into senior management roles when the appropriate time comes.”
The key, according to Richardson, is helping leaders understand that the rewards of diversity are as critical at the top as at every other level of the company. "When you demonstrate to managers and employees that it works at their level, and combine that with a unified commitment from the top, you start to see this being woven permanently into the corporate culture," Richardson says.
The concept of diversity includes character and leadership qualities as well as gender, race and age. Many companies “have become hooked on a particular personality style at the top, anointing only those with the narrowly defined ‘right stuff’ to leadership roles,” Frase-Blunt says. "We often find that organizations tend to promote certain personality types which suit their objectives well at this point in their development," Carol Kallendorf, president and founder of Delta Associates, an Austin, Texas-based HR consultancy that specializes in assessment tools like the Myers-Briggs Type Indicator. "But what works for current market conditions won't help them when business changes. They can't shift gears and solve problems."
“Designing a succession planning process gives an organization the perfect opportunity to redefine leadership requirements to hit the right balance of problem solving, strategic thinking, quality improvement, visioning and team development,” according to Frase-Blunt. While few leaders will have all these qualities, she writes, a diverse leadership team can cover them all.
Languishing on the bench
“Typically, a company's succession plan will include the ready now bench, the ready in one to three years bench, and the ready in three to five years bench,” according to HR Magazine. “Historically, women, people of color and other nontraditional candidates tend not to be in the ready now category but are warming the other benches, and there they languish.
"Companies take their eye off the ball," says Sandra Bowe, global director for diversity and work-life at chemical manufacturer DuPont in Wilmington, Del. "Once they are satisfied with their succession plan, they don't do much to continue to develop their bench or check it against their diversity goals."
DuPont tackles the challenge of keeping future leaders engaged and ready through defined, continuous, dynamic metrics. "The HR director in each specific business unit has the responsibility for its succession plan because they are closest to it," Bowe says. "And, periodically, our corporate diversity office and top leadership look at the whole picture, from hiring to development, and try to illuminate the progress that's being made and opportunities for improving the system. We keep measurement cards to check on our success in terms of representation." In addition, at least once a year, "Employees capture and document their contributions to the company, verified by their supervisors. And that feeds into the employee development plan."
Sixteen firms sponsored a study with the American Productivity and Quality Center into the succession management practices to learn best practices of this “complex art.” The study sponsors choose Dell Computer, Dow Chemical Company, Eli Lilly and Company, PanCanadian Petroleum, and Sonoco Global Products as firms they would like to study.
The companies in the American Productivity and Quality Center study did not succeed in their first efforts at succession management, and none have rested on their laurels since having their process up and running. “They continually see and adjust their programs as they receive feedback from line executives, monitor developments in technology, and learn from other leading organizations,” according to Professor Fulmer.
Organizations with effective succession planning make it an integral corporate process and linking it to overall business strategy. This link gives succession planning the opportunity to affect the corporation's long-term goals and objectives. Human resource departments help develop tools and processes while business and line units are responsible for using the system to manage their own staffing needs. And technology, Fulmer writes, plays a critical role in the succession planning process. “Ideally, technology serves to facilitate the process -- make it shorter, simpler, or more flexible -- rather than becoming the focus of the process or inhibiting it in any way.
Best practices identified by the 16 studied companies include: Developing a cyclical, continuous identification process to focus on future leaders; using a core set of leadership and succession management competencies; and emphasizing the importance of specific, individualized development plans for each employee.
Asked for insights that might help other organizations improve their succession planning, respondents gave four main recommendations: Keep it simple, engage technology to support the process, align succession management with overall business strategy and finally secure the senior level support for the process.
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