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Features

Published April 2007

Managing Succession Plans and Career Paths

  Shelly Heiden

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In 2006, corporate America experienced a dramatic increase in high-profile turnover at the C-Level. Many executives resigned amid poor corporate performance or corporate scandal, and others simply retired.

In fact, several of these household-name companies — including BJ’s Wholesale Club, Gateway, The Home Depot, Radio Shack, Sun Microsystems, UnitedHealth Group and Williams-Sonoma — lost their CEO last year. Some of these companies were able to quickly and effectively identify, appoint and transition a new CEO based on long-term succession plans that had been established. Others scrambled to place interim executives until a permanent successor could be named.

When a succession is fractured, it becomes front-page news. When succession planning achieves the intended or desired result, the transition is smooth and not necessarily newsworthy.

When evaluating best practices for succession planning, organizations often associate successful succession management with Jack Welch’s tenure at General Electric (GE) and how his leadership shaped and elevated GE’s philosophy, practice and legacy of growing leaders by grooming talent from within the organization.

Welch served as CEO of GE from 1981 until he retired in 2000. In a 1991 speech, he stated, “From now on, choosing my successor is the most important decision I’ll make.” GE has continued to define itself as an organization strongly committed to developing leaders within its own employee base. The company’s commitment to this philosophy has yielded positive results — for both employees and for GE — and it is a major reason its leadership development programs have been so widely emulated at global organizations.

Effective managers always anticipate the need for successors, and they are prepared. Because organizations cannot assume the mere existence of a talent pool guarantees the succession neatly will fit into place, effective succession management requires careful planning, mentoring and grooming.

Developing Critical Talent from Within
When considering talent acquisition, retention and replacement within an organization, it is important to keep in mind all employees and positions, not just high-level executives.

Organizations tend to focus the majority of their succession planning efforts on high-level talent, primarily “C-level” executives. Although those might be the highest-visibility positions, organizations must engage in succession planning at every level. Because the critical skills and knowledge that fuel corporate success can reside in any or all levels, effective succession plans must analyze and identify the critical talent needed for success, then anticipate, address and plan accordingly for vacancies and shortages across the entire company.

Today’s forward-thinking organizations are re-evaluating their strategies for building the workforce, by “farming” rather than “hunting” for the right skills and planning ahead for succession. As these organizations achieve better balance between acquiring and developing talent, they will keep skilled employees longer, avoid the risk of vacant mission-critical positions, decrease training costs, and reduce or eliminate hiring cycles.

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