The quickest way to stick a dagger in the heart of a succession planning strategy is for the CEO to delegate it to human resources. Doing so delivers a flashing message to the organization that leadership development is a low priority that doesn’t warrant serious attention.
That was my key takeaway from an interview last week with Michael Timms, a leadership development consultant and author of “Succession Planning That Works: The Critical Path of Leadership Development.” Timms shared some great information during the interview, which began with my asking him what letter grade he would give corporate America on succession planning. Without hesitation, he said it would have to be an F:
There’s actually a percentage on that. About a year ago, Deloitte did a global survey that asked executives in organizations big and small if they feel succession planning, or leadership development, is a top strategic priority. Eighty-six percent said succession planning is a top priority, so clearly, everybody knows it’s a big deal. And then the next question asked how many them feel they actually have a succession plan that works, and only 10 percent said they felt they did. So they’ve graded themselves, and given themselves a letter grade of F.
I asked Timms what he would attribute that to, and he explained that it stems from a lack of institutional will to change the culture of the organization:
This is how it typically goes: The board of directors has succession planning on its checklist of things for the CEO to do. The CEO says, ‘OK, sure,’ and turns around and delegates it to human resources. Well, that’s the kiss of death, right there. It’s not that HR isn’t competent enough to do it. It’s just that one of the key things about succession planning is that to do it well, to do it right, it’s a culture-change initiative.
You have to understand it’s changing the culture of the organization to embrace leadership development. If you don’t, succession planning is going to be done off the side of everybody’s desk. That’s what happens when it’s not led by the CEO. When the CEO delegates it to HR, what he or she is effectively saying is, ‘This is a very low priority for me — I just need to get this off my plate.’ Everybody in the organization gets that message. And there’s not a snowball’s chance in hell that the succession plan is going to work.
In the research he did for his book, Timms interviewed executives from nearly 50 companies, one of which was Sierra Systems, an IT management and consulting services firm in Vancouver. Timms said IT firms like Sierra often have an advantage, because the nature of their business is such that they go into different companies, so they’re able to gain some insight from them. He noted that Sierra Systems is doing a really good job with its succession planning:
The COO of Sierra Systems said a number their employees who have left have come back and said, ‘We have seen that the grass isn’t greener on the other side, and we appreciate everything you have done for us, particularly around our career development.’
In his book, Timms argues the case for taking advantage of existing talent and filling vacancies from within. I asked him if there isn’t an inherent danger of a corporate culture becoming too insular and incestuous if there’s too high of a reliance on that approach, as opposed to casting a wider net for fresh blood and new ideas. His response:
For sure, there are advantages to recruiting for talent. But when I work with clients, and we list the advantages of promoting from within vs. the advantages of recruiting, the list of advantages of promoting from within always ends up being at least twice as long.
The hidden cost of recruiting is the lost opportunity cost when vacancies are waiting to be filled. Sometimes this can take six to 12 months for senior positions. Who is doing the work of the position that is waiting to be filled? Either no one is doing it, or it’s being done poorly by someone not suited to do it, otherwise they would be the permanent solution. [It’s also the case that] external hires are more expensive than internal candidates.
Everyone knows that the quickest way to get a raise is to move to a different company. On average, external hires are paid 20 percent more than internal candidates. [Another advantage of filling vacancies from within is that] companies have fewer surprises when they choose an internal candidate over an external hire. One study found that organizations that rely on external candidates to fill middle-management positions have almost double the turnover of organizations that rely on internal promotions.
At the same time, Timms acknowledged that every company needs fresh blood and fresh ideas:
The companies I researched that have effective succession planning strategies focus their recruiting almost entirely on entry-level positions. They get those fresh ideas, and at the same time they’re able to develop that talent, and prepare them for specific positions that they know they’re going to need to fill three to five years down the road. For a lot of organizations, that may not be realistic — it’ll take a while to build up to that, because if there are core competencies that the organization lacks, you’re going to have to recruit for them.
But once you’ve got people with those skill sets, then you need to put in place a process where they’re training the next level of folks who can succeed them. … The alternative is that you’re effectively hoping that other companies will prepare your people better than you can prepare them yourself. It’s not a good idea to abdicate that responsibility to another company.
A contributing writer on IT management and career topics with IT Business Edge since 2009, Don Tennant began his technology journalism career in 1990 in Hong Kong, where he served as editor of the Hong Kong edition of Computerworld. After returning to the U.S. in 2000, he became Editor in Chief of the U.S. edition of Computerworld, and later assumed the editorial directorship of Computerworld and InfoWorld. Don was presented with the 2007 Timothy White Award for Editorial Integrity by American Business Media, and he is a recipient of the Jesse H. Neal National Business Journalism Award for editorial excellence in news coverage. Follow him on Twitter @dontennant.