Succession Management - · PDF file© Wipfli LLP Session Highlights Getting the People...
Transcript of Succession Management - · PDF file© Wipfli LLP Session Highlights Getting the People...
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Succession Management
Date or subtitle Iowa Bankers Association
Annual Convention September 2015
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Session Highlights
● Getting the People Thing Right
● Talent Management and Succession
Management
● Succession Management Processes
● Key Tools
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“If we don’t get the people thing right,
we lose. It’s the most important
thing in all our businesses.”
– Jack Welch, Former CEO, General Electric (GE)
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Capital Adequacy
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Human Capital
•Well capitalized?
•Adequately capitalized?
•Under-capitalized?
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Managing the Human Capital Portfolio
Managing the Risks:
• Vacancy Risk – Risk of critical leadership positions
being vacant
• Readiness Risk – Risk of underdeveloped
successors
• Transition Risk – Risk of poor assimilation of
executive talent
• Portfolio Risk – Risk of poor deployment of talent
against business goals
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Workshop Exercise
What do you know about your
Human Capital Portfolio?
Human Capital Portfolio Risks
Vacancy Risk
Readiness Risk
Transition Risk
Portfolio Risk
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Why Now?
Competitive Changes
• Economic rebound – more opportunity
• Human capital as a differentiator
Labor Market Changes
• Demographic trends
• More dynamic labor markets
Organizational Changes
• New organizational structure
• New focus on leadership and governance
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CEO Age and Bank Sale Correlation
Is this also a causation?
Data reflects medians
Source: SNL Financial and KBW Corporate Finance
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The Changing Work Force
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The Swing: 2010 to 2020
Work Force Demographics: 2010 and 2020*
Boomers
X’ers
Millennials
NextGen
Traditionals
Boomers
X’ers
Millennials
*Projected data
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“People aren’t a company’s
most important asset . . .
. . . the RIGHT people are.”
- Jim Collins, Good to Great
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The Link to Business Strategy
Business
Strategy and
Drivers
Human Capital
Strategy
Talent Strategy
Identify Talent
• Formal Assessment
• Internal Screening
• Performance
Reviews/Promotions
Develop Talent
• On the job/Off the job
• Job Assignments
• Coaching and Mentoring
Progress Talent
• Organization Structure
• Performance Management/
Rewards
• Career Paths
Business strategy and
drivers determine
“talent for what?”
Strategy is future
focused: What we have
today may not be what
we need in the future.
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Succession Management
An integrated set of proactive processes
within the overall talent management system that identifies and prepares successors for key
roles needed to deliver the business strategy.
Processes include:
● Talent Assessment
● Succession Planning
● Development Planning
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Three Simplified Steps
1. ID what you need and don’t need in critical
roles.
2. Assess talent you have and don’t have and
risks.
3. Develop and/or invest toward success!
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Succession Management Cycle
SUCCESSION ASSESSMENT Talent Pool Assessment
-Incumbents
-Known Successors
-Unknown Talent
Succession Readiness -Gaps
-Risks
STRATEGIC PLAN Goals
Mission-Critical Roles/Functions
SUCCESSION PRIORITIES (3 yrs.)
Mission-Critical Roles
Key Talent
SUCCESSION PLAN (1-3 yrs.)
Goals, Objectives, and
Measurements
Action Plans
Budgeting
IMPLEMENTATION Performance Against Plan
Development Outcomes
PLANNING TEAM /PROCESS
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The Role of CEO and Human Resources
This is a top-down process that needs to be owned
and led by the CEO. Partnering closely with human
resources and senior leadership, the CEO ensures
the Bank is taking a long-term review regarding the
development and management of its talent to
support the strategic direction today and into the
future.
HR serves an integral role in ensuring the necessary
processes and tools are in place to ensure accurate
data collection and accountability.
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Execute the Plan
● Demonstrate intentionality, commitment, and
sustainability
● Ensure effective talent management to achieve
strategic goals today and into the future
● Prepare the Bank and individuals for change by
developing critical competencies
● Promote continuity of organizational culture
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The people . . .
in the seats . . .
for the time.
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Focus First on the Most Critical
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What Are Mission-Critical Roles?
Critical to strategic goals
Key leadership and functional expertise
Defined by:
• Key Responsibilities – WHAT is to be
accomplished
• Competencies – HOW work gets done
(knowledge, skills, and abilities)
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Mission-Critical Roles: Identification
Identifying mission-critical
roles in the organization
Goal Rationale
Identify which jobs are
mission-critical
Less than 15% of jobs
Top players should be
in mission-critical roles
Strategy executed by
mission-critical roles
Top performers impact
the bottom line
Don’t want “B/C” players
in strategic roles
Mission-Critical Roles refers to positions that are
essential to the achievement of long-term strategic
business priorities through their strategic impact
and/or contribution of unique capabilities.
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Mission-Critical Roles: Characteristics
Has direct impact on the bank’s culture, strategic
success, and profitability
Having significantly more top talent in these roles
would enhance the success of the bank’s business
model
Usually less than 15% of an organization’s
positions qualify
Not determined by hierarchy but rather impact
High variability in performance across incumbents
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Two Distinct Components
1. Mission-Critical Positions
2. Mission-Critical Talent
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Assess Talent
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Talent Assessment
Dimensions of Talent:
Performance – Delivering on goals, results, and
accountabilities
Potential – The ability to adapt to and “fit” into
increasingly complex roles and environments:
- Personal and professional motivation
- Intellectual curiosity
- Innovation and insight
- Engagement
- Determination
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Performance: Track Record of Success
Most recent performance review ratings
Feedback from others – 360 feedback
Stretch goals and contributions
Questions to ask:
Does this person have a proven track record for
accomplishing impressive results?
Are any potential inconsistencies “derailers”?
Are they already performing at the next level?
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Assessing Potential
It is multifaceted
Prioritize most important facets to evaluate
Values
Competencies
It is always a judgment call
Minimize subjectivity through comprehensive
involvement
The more evidential experience, the better your
judgment will be
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Questions to Consider Potential
How do unexpected changes affect this person’s
performance?
How does this person respond to obstacles?
Does this person inspire others and lead through
persuasion and influence?
Does this person have initiative and seek additional
responsibility?
Does this person continually offer solutions and new
ideas?
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Talent Assessment The Talent Assessment Matrix
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ARC Model
For purposes of focusing on succession
management:
• “A” – Accelerate development; test potential
• “R” – Retain and motivate; continue to grow
• “C” – Coach or change; improve performance
Remember: All positions and all employees are
important to the organization!
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Plan Forward
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The process of identifying potential
successors and the knowledge, skills,
and abilities needed to successfully
perform a role.
Succession Planning
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Replacement Planning vs. Succession Planning
Replacement Planning Succession Planning
Reactive Proactive
Risk Management Talent Management
Replacing/Substituting Renewing/Energizing
Unstructured Approach Organized Alignment
Exclusive Inclusive
Rigid Flexible
Source: Grow Your Own Leaders Authors: Byham, Smith, and Paese
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Components of a Succession Plan
1. Organizational Summary of key issues and
risks
2. Current Organization Chart (Mission-Critical
Positions)
3. Current Job Description(s) Key responsibilities and accountabilities
Competencies needed for success
Qualifications
4. Readiness Chart(s)
5. Profile(s) of potential successors
6. Development Plans for potential successors
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Succession Readiness
Five Stages of Readiness:
• Interim
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Readiness Level Chart
SUCCESSION PLANNING READINESS CHART
Position Title:
Position Key Competencies:
Current Incumbent:
Evaluator:
Candidate Name
Current Position Title
Current Department
Readiness Level
Strengths
Development Needs Interim
Ready Now
2-3 Years
3-5 Years
Long Shot
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Readiness Level Chart
SUCCESSION PLANNING READINESS CHART
Position Title: Commercial Banking Manager
Position Key Competencies: Results Focused, Problem Solving/Analytical Thinking, Leadership, Delegation
Current Incumbent: Jerry Blue
Evaluator: Janet Jones
Candidate Name Current Position Title
Current Department
Readiness Level
Competency Strengths
Competency Development
Needs Interim
Ready Now
2-3 Years
3-5 Years
Long Shot
Jane Doe Commercial Banking
X Results Focused Coaching/Performance, Leadership, Delegation
Jim Brown Commercial Banking
X Leadership Initiated Delegation, Results Focused
Sally Snow Market President X Problem Solving, Initiative, Results Focused
Coaching/Performance Management, Leadership, Delegation
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Composite of Succession Readiness (aka Portfolio Risk)
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Invest for Success
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Develop Talent
Important part of Succession Management
Most often overlooked or underinvested
Training AND Development
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Best Practices
• The right training at the right time for the
right person
• Development plans for all employees, specifically
high performers and hard-to-replace talent
• Align the performance management
process/system
• Coach for performance (including leadership)
• Formal performance appraisal one to two per year
• Informal checkpoints up to 12 per year
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Where Leaders Learn
Challenging Assignments
• Increase in scope of responsibilities, job rotation,
responsibility for creating change
Developmental Relationships
• Bosses and superiors, difficult people, non-work guides
(community leaders), mentor or coach
Adverse Situation
• Crises, mistakes, career setbacks, ethical dilemmas
Coursework and Training
• Self-initiated, employer-arranged
Personal Experiences
42 Center for Creative Leadership, Handbook of Leadership Development, pg. 68-80
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Summary
Your Human Capital Strategy should
unequivocally support your strategic plan
Manage risk of not fulfilling strategic plan
Identify your mission-critical roles
Assess your talent portfolio
• Manage readiness risk with “tests” not guesses
• Identify what you have to divest and reinvest
• Develop the rest to their best
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Cheryl Thomas Director,
Strategic Advisory Services
414.259.6729
www.wipfli.com
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