Sunday, December 30, 2007

Lies, Damn Lies, and Succession Planning

Based on a conversation I witnessed a couple of years ago...

CEO: So, this chart indicates that we should be four-deep in this mission-critical Director position yet we only have two Directors that are capable today, one Area Manager that will be ready in 1-2 years, and four that will be ready in 3-5 years.
Consultant: Yes, exactly. Clearly you need to accelerate the development of the Manager that is only a year away from being ready and hire externally to fill the other gap.
CEO: What about the other Directors that are currently in this position? Where is the information about them?
Consultant: We found that the current Directors did not match the profiles of Directors at Fortune 500 companies that we have previously benchmarked. Their developmental needs were so large we felt that they would not be ready in 3-5 years. Therefore, they did not show up on this chart.
CEO: What are recommending that we do?
Consultant: Being a full-service consulting firm we have proposed that we assist with outplacement of displaced personnel as well as sourcing and selection of external candidates. We will also supply your company with executive coaches and training for the Manager that will be ready in one year and the four that will be ready in three to five years.
CEO: Two of the Directors that did not show up on this list led the fastest turnaround of under-performing divisions in this company’s history. One of the other Directors was the best Manager three-years running and is getting rave reviews from his peers and direct reports just four months after moving up. Did the benchmark data you are referencing focus on companies in our industry? Companies in our market? Companies with our culture?
Consultant: We benchmarked high-performing Directors in high-performing companies. By setting the bar higher we are helping you pull your company up, and thus, avoid being satisfied with average or the lowest common denominator. We have found….
CEO: What you have found is that this company is unique. And we are a solid number 2 in our industry. Tell me this, how did you determine that some people were 1-2 years from being ready and others were 3-5 years away?
Consultant: We assessed all Director and Area Managers against the competencies from our High-Performing Director Profile. As some competencies are more difficult to develop than others we calculated the time to develop the required competencies wherever there were gaps between what was in the profile and what the employees had.
CEO: What is the formula you use to calculate time to readiness?
Consultant: The partners in our firm have over 200 collective years of HR experience and we confer on all projections such as these.
CEO: So this is not a calculation of readiness this is your best guess. Did you take into account how quickly each of these Directors can learn? How receptive each is to change? Did you look at the opportunity to learn what they need to know from their present jobs? I believe that experience is one of the best teachers a man or woman can have.
Consultant: As we only used the competencies from the profile we were not able to evaluate learning agility, which you are calling quick or receptive learners. Of course, their jobs require the competencies from our profile so their jobs have those exact experiences by default. The fact that they have those gaps after being in the position for some time strengthens our case that they will take longer to learn than you seem to be suggesting.
CEO: So, if you did not assess them against enough data to determine their ‘learning agility’, did you bother to assess them against enough data to determine where they do fit in this organization?
Consultant: We would be more than happy to provide your company with additional assessments so that you can make additional succession planning decisions. That will also help us better place the incumbents who should be removed.
CEO: Maybe you are not listening to me… I am not about to remove the incumbent Directors. You have brought very limited data that is based on a benchmark that does not align with our business or our culture. You have taken a process that could easily rely on science and you have butchered it with art, opinion, circumstantial evidence, whatever you want to call it. You provided a limited view of the capabilities of each of the people you assessed in what seems to be an attempt to sell more assessments. I am afraid to ask how you determined that we should be four-deep in this position to begin with.

Fortunately for this company, the CEO knows enough to challenge the mystical art of succession planning. Whether internal or external, succession planning consultants are finding more and more highly-educated and street-smart executives questioning their practice and their recommendations. Even mainstream executives are asking tougher questions and not getting the answers they were looking for. In an age when information and technology are so ubiquitous, why are we continuing to put up with psuedo-scientists that disguise their opinion as expertise?

More than thirty years of research into executive performance and potential has resulted in some clear relationships and causal factors that should be used in any succession plan. The traits that predict success in the short and long term are known and have not changed significantly over time. The problem is that even amongst the professionals who know what those traits are there is considerable disagreement about how to use the information. In the example above the consulting firm was using a validated commercial competency model. They were also relying on well-known and documented benchmarks. They even know what ‘potential’ looks like (learning agility). Yet they failed to put it all together in a way that fully capitalizes on the most effective and scientific data collection, retention, and querying practices. As the CEO so eloquently put it, they used art instead of available science.

So, how can we take advantage of available research and best practices and avoid the art of succession planning? First, collect relevant data. Commercial competency models give you, at best, 60% of the answer. Technical competence accounts for a great deal of success as well. Always assess against all available data so that you can use that data to make all kinds of decisions. By limiting the data in the assessment the consultant above saved a few minutes of time, but now he cannot answer some very critical questions. Assess, store, and query the data from a common database. The consultant above used manual, pen-and-paper methods for storing data that was collected via an online 360 (multi-rater) assessment. To make calculations based on that data is extremely painful and probably accounts for a lot of the reasons behind why his firm uses ‘200 years of experience’ instead a mathematical formula. Even storing the data in Excel and running queries across multiple spreadsheets can be painful and requires significant spreadsheet expertise. If the data was collected and stored in a common platform then a lot of questions can be addressed to drive more effective succession decisions. This includes the ability to run queries to discover the high-performance model specific to your company. Companies wanting to replicate something that is only an aspiration and will never be a reality have thrown a lot of good money away.

It is time for executives to take control of the governance of their organizations now and in the future. The technology is there, the research is available, and successful practices have begun to withstand the test of time. Become an educated executive and you can expect to reap the benefits and avoid the pitfalls of succession planning.

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