Effective Succession Planning: Ensuring Leadership Continuity and Building Talent from Within

Effective Succession Planning: Ensuring Leadership Continuity and Building Talent from Within

by William J. Rothwell

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As baby boomers continue to retire en masse from executive suites, managerial offices, and specialized or technical jobs, the question is—who will take their places? This loss of valuable institutional memory has made it apparent that no organization can afford to be without a strong succession program. Now in its fourth edition, Effective Succession Planning


As baby boomers continue to retire en masse from executive suites, managerial offices, and specialized or technical jobs, the question is—who will take their places? This loss of valuable institutional memory has made it apparent that no organization can afford to be without a strong succession program. Now in its fourth edition, Effective Succession Planning provides the tools organizations need to establish, revitalize, or revise their own succession planning and management (SP&M) programs. The book has been fully updated to address challenges brought on by sea changes such as globalization, recession, technology, and the aftereffects of the terror attacks. It features new sections on identifying and assessing competencies and future needs; management vs. technical succession planning; and ethics and conduct; and new chapters on integrating recruitment and retention strategies with succession planning programs. This edition incorporates the results of two extensive new surveys, and includes a Quick Start guide to help begin immediate implementation as well as a CD-ROM packed with assessments, checklists, customizable guides, and other practical tools.

Editorial Reviews

From the Publisher
"This fifth edition incorporates the many changes to the economy over the past 15 years, including how succession plans were recast as a direct consequence of 9/11." —HR Professional

“… especially helpful for those who are early in their exposure to succession planning practices…Highly experienced practitioners will also find good nuggets of information, pointers, and reminders.” —PM World Journal

"An indispensable resource for any organization concerned with retaining the accumulated wisdom of its most valued employees." —Coaching Tips, The Leadership Blog

"Fifth edition of this seminal book, a vital resource for any organization looking to put in place a working, solid succession plan...comes with wealth of added and revised content." —TD magazine

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Effective Succession Planning

Ensuring Leadership Continuity and Building Talent from Within

By William J. Rothwell


Copyright © 2016 William J. Rothwell
All rights reserved.
ISBN: 978-0-8144-4916-5


What Is Succession Planning and Management?

Six Ministudies:

Can You Solve These Succession Problems?

How is your organization handling succession planning and management (SP&M)? Read the following vignettes and, on a separate sheet, describe how your organization would solve the problem presented in each. If you can offer an effective solution to all the problems in the vignettes, then your organization may already have an effective SP&M program in place; if not, your organization may have an urgent need to devote more attention to succession issues.

Vignette 1

An airplane crashes in the desert, killing all on board. Among the passengers are several top managers of Acme Engineering, a successful consulting firm. When the vice president of human resources at Acme is summoned to the phone to receive the news, she gasps, turns pale, looks blankly at her secretary, and breathlessly voices the first question that enters her mind: "Now who's in charge?"

Vignette 2

On the way to a business meeting in Bogota, Colombia, the CEO of Normal Fixtures (a maker of ceramic bathroom fixtures) is seized and held for ransom by freedom fighters. They demand $1 million within 72 hours, or they will kill him. Members of the corporate board are beside themselves with concern.

Vignette 3

Georgina Myers, supervisor of a key assembly line, has just called in sick after two years of perfect attendance. She handles all purchasing and production scheduling in the small plant, as well as overseeing the assembly line. The production manager, Mary Rawlings, does not know how the plant will function absent this key employee, who carries in her head essential and proprietary knowledge of production operations. She is sure that production will be lost today because Georgina has no trained backup.

Vignette 4

Marietta Diaz was not promoted to supervisor. She is convinced that she is a victim of racial and sexual discrimination. Her manager, Wilson Smith, assures her that that is not the case. He explains his reason to her: "You just don't have the skills and experience to do the work. Gordon Hague, who was promoted, already possesses those skills. The decision was based strictly on individual merit and supervisory job requirements." But Marietta remains troubled. How, she wonders, could Gordon have acquired those skills in his previous nonsupervisory job?

Vignette 5

Morton Wile is about to retire as CEO of Multiplex Systems. For several years he has been grooming L. Carson Adams as his successor. Adams has held the posts of executive vice president and chief operating officer, and his performance has been exemplary in those positions. Wile has long been convinced that Adams will make an excellent CEO. But, as his retirement date approaches, Wile has been hearing questions about his choice. Several division vice presidents and members of the board of directors have asked him privately how wise it is to allow Adams to take over, since (it is whispered) he has had a long-term, high-profile extramarital affair with his secretary and is rumored to be an alcoholic. How, they wonder, can he be chosen to assume the top leadership position when burdened with such personal baggage? Wile is loathe to talk to Adams because he does not want to police anyone's personal life. But he is sufficiently troubled to think about initiating an executive search for a CEO candidate from outside the company.

Vignette 6

Linda Childress is general manager of a large consumer products plant in the Midwest. She has helped her plant weather many storms. The first was a corporate-sponsored voluntary early retirement program, which began eight years ago. Because of the program, Linda lost her most experienced workers, and among its effects on the plant were costly work redistributions, retraining, retooling, and automation. The second storm was a forced layoff that occurred five years ago, driven by fierce foreign competition in consumer products. The layoff cost Linda fully one-fourth of her most recently hired workers and many middle managers, professionals, and technical employees. It also led to a net loss of protected labor groups in the plant's workforce to a level well below what had taken the company ten years of ambitious efforts to achieve. Other consequences were increasingly aggressive union actions in the plant; isolated incidents of violence against management personnel by disgruntled workers; growing evidence of theft, pilferage, and employee sabotage; and skyrocketing absenteeism and turnover rates.

The third storm swept the plant on the heels of the layoff. Just three years ago, corporate headquarters announced a company-wide process improvement program. Its aims were to improve product quality and customer service, build worker involvement and engagement, reduce scrap rates, and meet competition from abroad. Although the goals were laudable, the program was greeted with skepticism because it was introduced so soon after the layoff. Many employees — and supervisors — voiced the opinion that "corporate headquarters is using process improvement to clean up the mess they created by chopping heads first and asking questions about work reallocation later." However, because job security is an issue of paramount importance to everyone at the plant, the external consultant sent by corporate headquarters to introduce the process improvement program received grudging cooperation. But the process improvement initiative has created side effects of its own. One is that executives, middle managers, and supervisors are uncertain about their roles and the results expected of them. Another is that employees, pressured to do better work with fewer resources, are complaining bitterly about compensation or other reward practices they feel do not reflect their increased responsibilities, efforts, or productivity. And a fourth storm is brewing. Corporate executives, it is rumored, are considering moving all production facilities offshore to take advantage of reduced labor and employee health-care insurance costs. Many employees are worried this is really not a rumor but a fact.

Against this backdrop, Linda has noticed that it is becoming more difficult to find backups for hourly workers and to ensure leadership continuity in the plant's middle-and top-management ranks. Although the company has long conducted an annual succession planning and management ritual — in which standardized forms, supplied by corporate headquarters, are sent out to managers by the plant's human resources department — Linda cannot remember when the forms were used during a talent search. The major reason, Linda believes, is that managers and employees have rarely followed through on the individual development plans (IDPs) established to prepare people for advancement opportunities.

Defining Succession Planning and Management

As these vignettes illustrate, organizations must plan for talent to assume key leadership or backup positions on a temporary or permanent basis. Real-world cases have figured prominently in the business press. (See Exhibit 1-1.)

Among the first writers to recognize that universal organizational need was Henri Fayol (1841–1925). Fayol's classic 14 points of management, first enunciated early in the twentieth century and still widely regarded today, indicate that management has a responsibility to ensure the "stability of tenure of personnel." If that need is ignored, Fayol believed, key positions would be filled by ill prepared people.

Succession planning and management (SP&M) is the process that helps stabilize the tenure of personnel. It is perhaps best understood as any effort designed to ensure the continued effective performance of an organization, division, department, or work group by providing for the development, replacement, and strategic application of key people.

Succession planning has been defined as:

A means of identifying critical management positions, starting at the levels of project manager and supervisor and extending up to the highest position in the organization. Succession planning also describes management positions to provide maximum flexibility in lateral management moves and to ensure that as individuals achieve greater seniority, their management skills will broaden and become more generalized in relation to total organizational objectives rather than to purely departmental objectives.

Succession planning should not stand alone. It should be paired with succession management, which assumes that a more dynamic business environment in the capacity building of talent should occur in real time. It recognizes the ramifications of the new employment contract, whereby corporations no longer (implicitly) assure anyone continued employment, even if he or she is doing a good job. Succession management focuses on continuing, daily efforts to build talent and may include the manager's role in coaching, giving feedback, and otherwise helping individuals realize their potential. Both succession planning and succession management emphasize the importance of developing internal talent to meet current or future talent needs of the organization.

An SP&M program is a deliberate and systematic effort by an organization to ensure leadership continuity in key positions, retain and develop intellectual and knowledge capital for the future, and encourage individual advancement. Systematic "succession planning occurs when an organization adapts specific procedures to insure the identification, development, and long-term retention of talented individuals." Websites to support succession planning appear in Appendix I.

Succession planning and management need not be limited solely to management positions or management employees. An effective succession planning and management effort should also address the need for critical backups and individual development in any job category — including key people in the professional, technical, sales, clerical, and production ranks. The need to extend the definition of SP&M beyond the management ranks is becoming more important as organizations try to build high-performance and high-engagement work environments in which decision making is decentralized, leadership is diffused throughout an empowered workforce, proprietary technical knowledge accumulated from many years of experience in one corporate culture is key to doing business, and personal relationships critical to work are passed on from departing workers to their successors.

One aim of SP&M is to match the organization's available (present) talent to its needed (future) talent. Another is to help the organization meet the strategic and operational challenges facing it by having the right people at the right places at the right times to do the right things to get the right results. SP&M should be a fundamental tool for organizational learning because SP&M should ensure that the lessons of organizational experience — what is sometimes called institutional memory — will be preserved and combined with reflection on that experience to achieve continuous improvement in work results (what is sometimes called double loop learning). Stated in another way, SP&M is a way to ensure the continued cultivation of leadership and intellectual talent, to manage the critically important knowledge assets of organizations, and to encourage the continuation of social relationships critical to business continuity and success.

Distinguishing Succession Planning and Management from Replacement Planning, Workforce Planning, Talent Management, and Human Capital Management

Terminology can confuse. That fact is as true for succession planning and management as it is for anything else. So how can succession planning and management be distinguished from replacement planning, workforce planning, talent management, and human capital management?

Distinguishing SP&M from Replacement Planning

Succession planning and management should not be confused with replacement planning, though they are compatible and often overlap. The obvious need for replacement planning is frequently a driving force behind efforts that eventually turn into SP&M programs — as Vignettes 1 and 2 dramatically illustrate. That need was only heightened by the 1996 death in a plane crash of U.S. Secretary of Commerce Ron Brown, which also claimed the lives of more than 30 other top executives.

In its simplest form, replacement planning is risk management. In that respect it resembles other organizational efforts to manage risk, such as ensuring that fire sprinkling systems in computer rooms are not positioned to destroy valuable computer equipment in case of fire or segregating accounting duties to reduce the chance of embezzlement. The chief aim of replacement planning is to limit the chance of catastrophe stemming from the immediate and unplanned loss of key job incumbents — as happened on a large scale when the Twin Towers of the World Trade Center collapsed and on an individual level when the CEO of McDonald's was stricken by a sudden heart attack. Replacement planning typically does that by focusing attention on each organizational unit — division, department, or work group — and asking the manager of each unit to identify up to three people from inside the organization as possible backups. (A tool to guide replacement planning appears in Appendix II.)

However, SP&M goes beyond simple replacement planning. Succession planning is proactive and attempts to ensure the continuity of leadership by cultivating talent from within the organization through planned development activities. It should be an important tool for implementing strategic plans.

Distinguishing SP&M from Workforce Planning

Workforce planning connotes comprehensive planning for the organization's entire workforce. Few organizations do that. The more common approach is to fill positions as vacancies become available or as demand requires people to do the work. The result is that the organization builds up many legacy employees who may be ill-suited to help an organization meet its strategic objectives.

To some people, succession planning and management refers to top-of-the-organization-chart planning and development only. The focus is only on preparing people to assume top-level leadership positions. But in this book, succession planning and management refers more broadly to planning for the right number and right people to meet the organization's needs.

Distinguishing SP&M from Talent Management

"Talent management is the process of recruiting, on-boarding, and developing, as well as the strategies associated with those activities in organizations." Like so many terms in human resources, "the phrase talent management is used loosely and often interchangeably across a wide array of terms such as succession planning, human capital management, resource planning, and employee performance management. Gather any group of HR professionals in a room and you can be sure to have a plethora of additional terms." Some organizational leaders associate talent management with efforts to devote special attention to managing the best-in-class talent of the organization — the upper 1 to 10 percent. Not limited to top-of-the-house planning, it may refer to investing money where the returns are likely to be greatest — that is, on high-performing, highly knowledgeable, or high-potential talent at any organizational level. Hence, efforts to develop talent strategically important for the organization's future means the strategic development of talent.

Distinguishing SP&M from Human Capital Management

Human capital management (HCM) theory is all about individuals and their economic value. Unfortunately, HCM has been (too) broadly interpreted to mean that individuals are calculating players who act out of self-interest only, that the only value of individuals is as economic commodities (and the saying "People are our greatest assets"), and that the social value of developing human resources resides only in summing the total value of individual development efforts. Like talent management, HCM is also a term in search of meaning. "Out of 49 organizations surveyed, just 11 said they attempted to measure human capital — and many of these confessed to being unsure what the term meant."

But a key point about human capital management is that people are valuable for more than the labor they can produce. Human beings are enormously creative — a key thing that sets them apart from machines, gizmos, and gadgets — and this ability to think creatively has economic value. Individuals, not computers, discover new ideas that can be turned to profit. As entrepreneurs, they found companies. They also discover new ways to serve customers, find new customers or markets for old products, and devise ways to improve work processes to increase productivity.


Excerpted from Effective Succession Planning by William J. Rothwell. Copyright © 2016 William J. Rothwell. Excerpted by permission of AMACOM.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Meet the Author

WILLIAM J. ROTHWELL (State College, PA) is Professor of Workplace Learning and Performance at Pennsylvania State University and President of Rothwell & Associates, a business consultancy with more than 35 multinational clients in the private, public, nonprofit, and government sectors.

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