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Succession Planning as a Retention and Performance Management Tool

Succession Planning ChapmanCG Global HR Update

Succession plans don’t just protect a business from disruption. They also let employees know that it’s worth staying with an organisation to have a shot at the top spots.

The next generation of talent wants employers to take them through possible scenarios of how their career will develop. They expect a roadmap of where they will go – and how they will get there. These plans can be a powerful motivator for employees to deliver consistently strong performance. But despite their value, succession plans can be overlooked even in the largest companies.

A surprising number of large corporate organisations have been rocked by the sudden departure of well-regarded senior leaders who have been lured elsewhere – more often than not because they have not had their next progression options made clear to them, leaving them  feeling under-valued or unchallenged. Even worse, if that role was also lacking a defined succession pipeline, the gap left behind can cause significant disruption while the company scrambles to backfill the role. Not to mention the potential loss of intellectual property and subtle nuances that can’t be passed on in written form.

Patricia Waldron-Werner, former Executive VP, Global Human Resources and Corporate Social Responsibility at Orange Business Services, Orange Group, says large companies in France, where she is based, tend to have “very good talent management programmes overall”. However, when it comes to mid-sized and smaller companies, she notes that talent management isn’t as evolved and consequently, many enterprises are unlikely to have succession plans in place.

Susan Wrase-Derkach, Organisation Consultant and Coach, and former Head of Global Learning at Adidas, says that while succession plans typically exist, they are often not followed through. “We had people on a formal succession plan,” she notes, “But when the time came, there were sometimes factors that meant these plans did not move ahead as intended”. Either the business may have felt the person was not quite ready, the organisational structure may have changed, or for personal or professional reasons, the candidate couldn’t move into the role. Therefore, a key element of a good succession plan is that they not only incentivise workers but also offer flexibility to allow for a more agile environment.

Angela Geffre, Global Head of Talent at JLL, says that her team is paying particular attention to succession planning as part of the talent management process, specifically as they look to the future as the business transforms and JLL further evolves into a digital organisation. This brings a need for increased agility and diversity. “New leadership positions are emerging that do not have a succession plan in place, and we are purposefully considering diverse talent in our pipeline to help us think differently about our challenges ahead.”

Why Does Succession Planning Matter?

Waldron-Werner believes a strong talent management programme is a plus for both attracting and retaining talent. She cites the extensive measures taken at Orange, saying, “The company has an internal university. They’ve got ongoing training for managers, which can include coaching and mentoring. Talent is positioned in the areas they want to be, so they can grow into those roles, and they are tracked through their career.” The result, according to Waldron-Werner, is that Orange enjoys a low level of turnover among its management population.

An interesting feature of Orange’s talent management approach is that the door is always open for former employees. Waldron-Werner recalls, “Our Chief Digital Marketing Officer was a very bright, up-and-coming talent. She was growing up through the organisation. But she felt she needed to see more of the world outside.” Even after she left the company, Orange maintained contact with her. She later returned and was subsequently promoted the CDMO role.

“Retention isn’t just about keeping talent indoors,” notes Waldron-Werner. “It’s also the idea that you build a relationship with people, you want them to grow into senior roles, so it’s okay to let them see the world outside the organisation and learn more.”

Developing Talent Through Succession Plans

According to Wrase-Derkach, succession plans can be a key driver to engage high calibre talent. “It goes to a bigger topic of employees at all levels wanting to know what’s in store for them at the organisation,” she notes. “It’s about, ‘Is there a future for me here?’, and this applies from entry-level talent to senior leaders.”

“An organisation’s purpose is becoming a more common discussion,” adds Wrase-Derkach. “Millennials, in particular, are really attracted to purpose, and employees want to be able to connect themselves to that purpose. So setting a clear path of someone’s career and showing them what they could do in the organisation is really important.”

Geffre commented “At JLL, we focus on creating development plans with purpose. We want employees to make their plans very relevant to them and let them tell us what they want.  We encourage them to take a holistic view and take into consideration all factors impacting their lives when developing their plans.”

Avoiding a Siloed Approach

For Waldron-Werner, succession is not so much a performance management tool but rather a means of talent development. She notes that outstanding talent may be capable of taking on a variety of roles, and succession plans can incorporate training for a range of different positions.

She adds that at Orange, a siloed approach was put to bed many years ago. She explains, “In the early years, we recognised that HR needed to become better at financial topics. We needed to understand the whole economics of managing the flows of labour cost, managing the impact of recruiting, the impact of turnover, and how this was all connected with, and contributing to, the overall economics of the business.”

This led to finance profiles being introduced into Orange’s HR team. “It meant the finance guys were learning about HR. And HR was learning about finance,” recalls Waldron. Through this cross-pollination of skills, Waldron says a number of HR professionals within Orange have since gone on to become CHROs of the group’s subsidiaries. “Having a diversity of profiles inside the HR community will eventually help anyone who wants to go higher,” she observes.

Geffre says that JLL is taking a more global view towards succession planning. Historically, the company operated on a regional basis with restricted opportunities for cross-border mobility. Now that the company has moved to a global structure for support functions, JLL is having to apply a global lens to succession planning. The business lines are also taking more of a global perspective, such as using talent in regions with deeper benches to supplement regions that are not so strong. This is providing junior talent with more opportunities and aiding retention.

Leading by Example

Wrase-Derkach says opportunities for employees to move into new areas need to be demonstrated at the top. “If we don’t want people just being nominated as successors within their functions, we need to start with very senior people who are moving into leadership roles across different functions. It can be a very positive influence for change when people see that a senior leader can step into a role in a different function.”

Waldron-Werner agrees that avoiding a silo mentality calls for leadership by example:  “Even at senior levels, you can share different talents. You can have a person coming out of engineering going into operations, a person out of operations going into finance, or a person out of finance going into HR.”

Organisational culture matters too. Waldron-Werner explains, “At Orange, we look at people’s competencies and not necessarily their tag. If they have the ability to learn, we can grow them into a different type of role. We don’t pigeonhole talent.”

Boards Play a Pivotal Role in Succession Plans

Both Waldron-Werner and Wrase-Derkach agree that company leaders, all the way to Board level, have a role in succession planning. As Wrase-Derkach puts it, “HR may be the enabler of succession plans but accountability for the development of future leaders sits with leaders.”

In Waldron-Werner’s view, good succession planning starts, “at the very top of the organisation with the President.” She adds that the executive committee also has a part to play by reviewing succession plans and keeping them up to date. “This way, when a position opens up, the company is ready with potential candidates.”

The bottom line is that when a business can imagine a future for talent, it’s more likely that talent can imagine their future with the company. But it doesn’t happen by chance. Waldron-Werner says HR executives need to help their management team understand the risks of not having a succession plan in place. And there’s plenty of hard work in making it happen. “You have to remain persistent, you can’t let go,” she cautions. “You have to help and coach, you have to mentor your own colleagues.”

But the results are worthwhile. As Waldron-Werner notes, “At Orange, we have executives who now have grown up with talent management and succession planning. They see the benefits of the programme, and they have started getting better at it too.”

In Summary

Succession plans can benefit both the organisation and the employee – not just ensuring replacements for key leadership positions at the top, but for employees across all levels to ensure people feel valued, challenged and see their own opportunities for future growth.

It’s important to ensure any succession plan aligns with the employee’s own career goals (not everyone wants to or can be a CEO), with clear guidelines on how development can be achieved and how it will be recognised by the organisation. Today’s workforce is evolving, and salary is no longer the sole reason that people are moving companies, more often it’s in search of a satisfying position.

In the war for talent, succession plans cannot be ignored as a key tool in retaining top performers and motivating the entire workforce.

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Key Contributors:

Nicola Hasling

Director

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Consulting Team

Nicola Hasling

Director

Nicola Hasling is a Director with ChapmanCG and is based in Houston in the United States. She leads senior searches for ChapmanCG’s major clients across a range of industries and identifies high-caliber CHRO and senior HR executive talent.

Prior to joining ChapmanCG, Nicola was with Heidrick & Struggles International where she was a core member of the firm’s CHRO, CEO and Board of Directors, Private Equity, and Energy and Natural Resources practices.

She has over 15 years’ experience in executive search, including managing the Houston office of a United Kingdom-based search firm and conducting senior-level assignments across Europe. In her earlier career, Nicola also worked in human resources management roles, corporate sales and for the diplomatic service in London and Prague.

Nicola grew up in the United Kingdom and holds an MBA from Henley Management College, England. Now living in Houston, Texas with her family, she is a keen tennis player and enjoys spending time with her horse, including competing in eventing.