Succession management: An essential strategy for organizational success

Insight Article - September 11, 2020

Governance

Strategic Planning

Leadership Development

By Nicole B. Engler, MA, operations manager — Provider Relations Department, Mayo Clinic, Rochester, Minn., engler.nicole@mayo.edu.; Ronald Menaker, EdD, MBA, CPA, FACMPE, operations administrator — Radiology Department, Mayo Clinic, Rochester, Minn., menaker.ronald@mayo.edu.; Gloria D. DeBusman, MA, SPHR, SHRM-SCP, senior human resources advisor, Human Resources Department, Mayo Clinic, Rochester, Minn., debusman.gloria@mayo.edu.; Linda J. Rhodes, MBA, senior advisor, Leader Assessment & Development, Human Resources Department, Mayo Clinic, Jacksonville, Fla., rhodes.linda@mayo.edu.; and Anne A. Schletty, senior advisor, Leader Assessment & Development, Human Resources Department; Mayo Clinic, Rochester, Minn., schletty.anne@mayo.edu.



Achieving the outcomes of high-value care and health system goals require a foundation of talent1 within your organization.  

An organizational culture that values and invests in leadership development and succession management is employee driven, manager enabled and organization supported. This strategy will help facilitate the achievement of the organization’s mission and vision, reach higher levels of performance, and create a more engaged workforce with increased staff satisfaction and retention. To survive and thrive, successful organizations must be keenly aware of their leadership talent and how to best develop it across all levels.2

Many business leaders believe that succession management is a complex process restricted to the largest organizations with sophisticated organizational development departments. On the contrary, succession management can be of great value to smaller organizations that have fewer resources available for the formal, structured development of employees.3

What is succession management?

Succession management is a strategic process and mindset designed to ensure that a robust talent pipeline is ready for future leadership roles. A well-designed succession process creates a competitive edge for the organization and mitigates the risk of not having well-prepared leaders to assume critical leadership roles.

The Conference Board’s 2019 C-Suite Challenge survey found that attracting and retaining top talent was the No. 1 issue requiring CEOs’ attention for all five areas surveyed. Developing the next generation of leaders was second for Japan and third for both the United States and Europe.4 Leadership development remains a critical strategy, and C-suite leaders continue to recognize the competitive advantage of robust leadership development and talent management.  

Succession and strategic management and annual planning processes

Succession management has a close connection with several key human resources (HR) functions. Some functions — such as strategic planning or workforce planning — inform pieces of the succession management process, while others — such as leadership development — are outputs of a well-developed succession management process. 

Succession management is aligned with an annual review or strategic planning process. During the annual planning process, the overall goals, resources and key metrics for the upcoming year are identified. These critical success factors are imperative for downstream processes such as workforce planning, recruitment and succession management. They are all focused efforts to plan the human capital required for the future. 

The strategic planning process and annual planning process identify key strategic priorities for the upcoming year(s). These priorities serve as the road map for resources, metrics and deliverables. Each strategic priority has a human capital requirement to be monitored, in terms of amount of resources and critical skill sets for the future.

Workforce planning, as defined by the National Institutes of Health (NIH), is the process of analyzing, forecasting and planning workforce supply and demand, assessing gaps and determining target talent management interventions to ensure an organization has the right people with the right skills in the right places at the right time to fulfill its mandate and strategic objectives.5 The forecasts act as a complementary process to succession management, helping to inform where to focus leadership development efforts, new business lines and skill development focus areas. 

Once the talent pool has been identified, the data feeds into downstream processes. Leadership development resources should be prioritized for successors. Leadership development programs should be focused on building the required future skills sets. Internal leadership programs ideally would be customized to the evolving future skills and gap areas for leaders. As the organization and external environment changes, leadership programs should evolve with these new needs. A good succession management process will identify the development gaps for the current talent pools.

Building the team

A small team consisting of appropriate leaders along with an HR professional who is knowledgeable in succession management should complete the succession management process. Leaders must consider the strategic plans, and the talent must ensure the organization can execute the initiative. Succession management must be embraced and owned by the leaders to be successful. The leaders involved should also know the potential successors well enough to be able to assess their strengths and development areas.6

The succession management process



Mayo Clinic’s succession management process has three main steps: identify, assessment and development of talent (Figure 1). It is crucial to the succession management process to engage leaders who are knowledgeable about the strategic plan of the organization, know what new initiatives or service lines are pending, and understand workforce needs for the future to achieve those new priorities.

Identify

Determine the critical roles within the department or organization. These roles are typically leadership roles but can also include those that require a specific skill set vital to the continued or future success of the organization. If a role has influence on the operational or strategic plan of the organization, it should be considered a critical role. After these roles are determined, review potential transitions, organizational initiative and strategic priorities. Data on potential retirements and turnover should be obtained and discussed. An assessment and discussion of new talent and skills is needed to support the strategic priorities at the organizational and departmental level.

The HR professional’s role in these discussions is to ensure that leaders look at long-term and short-term needs.7 Linking the organizational strategy to the succession management process is critical for leaders to achieve optimal return on investment. However, the linkage can be difficult to achieve since it is not always clear what the HR needs are and what skills and abilities are needed to achieve the desired future state.  

Comprehensive leadership pipelines involve diving deep into the organization when identifying the talent pool for succession management.8 Mayo Clinic performs succession management at the department level for both management and supervisory roles. Developing supervisors and managers provides a more robust talent pool for leadership roles across all levels.

After the critical roles and potential new opportunities have been identified, the talent pool for each role is identified. The leader should review the skills, competencies and experiences needed for the role and determine who should be nominated for this role based on their current performance and their potential for further development. Once the talent pool has been identified, an assessment of the readiness is conducted.

Assessment



After the critical roles and successors have been identified, the next step is assessment. Mayo Clinic’s Readiness/Potential Grid (Figure 2) is a useful tool to guide the discussion about who is:
  1. Ready now
  2. Emerging talent
  3. Future watch
  4. Early pipeline. 
 
  • Ready now successors are individuals who could step into the new role with minimal training and coaching. They are ready to take on more responsibility and have strong performance in their current role. They have shown ongoing pursuit of additional opportunities to grow and learn.
  • Emerging talent employees are those who are ready for additional assignments to broaden their knowledge of the organization and to broaden and strengthen their skill sets. They show a desire to learn and have a strong potential for development along with a zest for being mentored.
  • Future watch employees are performing well in their current role and show leadership promise. They are still learning the organization and their current role and show a desire to pursue leadership opportunities and stretch assignments.
  • A fourth category, early pipeline, identifies high-potential leaders who are too early in their career to be in the talent pool but have already proven they are rising stars. The early pipeline category provides Mayo Clinic with a watch list for the next generation of leaders.
 


Key leadership experiences and capabilities should be used to determine where a potential successor falls on the readiness grid. Mayo Clinic has a Leadership Capabilities Model that is used during succession management discussions (Figure 3). One of the key tools used at Mayo Clinic is the Leader 360 Assessment, based on the Mayo Clinic Leadership Model. This direct connection to the leadership model ensures we measure skills and behaviors most critical for a leader to be successful within our organization. The results from the Mayo Leader 360 Assessment are the foundation for building the leader’s development plan.

Calibration meeting

Another key component of the assessment step is the leadership calibration meeting: a broader group discussion with the leadership team after individual succession discussions have been held. The leadership team validates the talent pool; shares feedback about candidates in the pool; confirms readiness, strengths and development feedback; and discusses development opportunities needed to ensure readiness. The calibration meeting allows all team leaders to be aware of the experiential development needs of the talent pool to effectively match the opportunities with the need. Tying succession management to meet the business needs of the organization enhances support from leadership.

It is important to realize that high performance in a current role does not always mean that the individual has potential for leadership roles, as capabilities and competencies may differ.9 Individuals may move from potential watch to emerging talent or ready now, while other individuals may rotate off the readiness grid. The assessment of the talent pool is updated periodically. The goal is to have the talent review documented for future review and utilized as leadership opportunities arise.

Development

After the talent pool has been identified for a specific role, the next step is determining the development needs of those individuals. The focus should be on the individuals who are identified as emerging talent with the goal of moving them to ready now. There will be more urgency in developing the emerging talent if the ready now pool is empty. The development focus areas should be linked to the competencies of the new role. Leaders should work with these individuals to develop an individualized development plan with actionable steps.10 Without the development plan and action steps, the succession process becomes a documentation exercise instead of a strategic function.

Furthermore, annual career discussions and frequent status updates on the progress of the development plan are critical to the succession management process. Leadership commitment and engagement are also vital to ensure that resources are aligned to develop talent and that individuals are prepared for these new opportunities.

Mayo Clinic leverages the Center for Creative Leadership (CCL) 70/20/10 model as a guide for development planning: 70% work experiences, 20% feedback and relationships, and 10% training.11 

Work experiences

Most of a potential leader’s development occurs through work experiences. The development plan should include an increase in the scope of one’s current role and stretch assignments. Asking the potential successor to lead a new initiative to enhance project management and leadership skills is another excellent way to prepare the successor for the next level. It allows the successor to develop relationships and provides networking opportunities. Assessing how the successor approaches barriers and handles successes and failures is essential to providing feedback to ensure growth and development.12

Feedback and relationships

Under the CCL model, feedback and relationships compose approximately 20% of our learning. Encouragement and feedback are prime benefits of the learning approach. Examples of feedback and relationship learning might be social learning, coaching, mentoring, collaborative learning or other methods of interaction. Feedback is one of the most powerful development activities for a leader. Sometimes leaders tell us that they don’t want to appear vulnerable in front of their colleagues by asking for input. Employees, however, tell us that they appreciate a leader’s willingness to be transparent and vulnerable. The direct reports have greater respect for a leader who is honest, engages them and asks for their input.

Training

While work experience, feedback and relationships compose most of the employees’ learning and development, traditional training continues to play an important role. The benefit of formal training is that it provides a solid base of knowledge and skill, and is appropriate for foundational leadership skill building.

Strategies to optimize succession management 

Just as strategies and business requirements are different within each organization, succession management should be tailored to fit the needs of the business.

Having a succession process is an investment in the organization and its employees. Dedicated resources (e.g., time, dollars and people) need to be identified to ensure success. The target and scope will also need to be clarified. To be effective, the succession management process should be formal, comprehensive and strategically linked.13

Formal

Formalizing succession management will provide leaders with the business need, process and tools to effectively develop leaders. Standardization will ensure that leaders know:
  • Why — Why is this important?
  • What — What are the expectations and accountability plan?
  • Who — Who is developed?
  • How — How do I develop others?

Comprehensive

It is important for senior leaders to think about the scope and depth of succession management for their organization. These include not only their roles, but other mission-critical roles throughout the organization. Is the focus only on the C-suite, or will it include mid-level and front-line management? Does the organization have the necessary tools and resources to manage the scope? 

Strategically linked

When launching a succession process, leaders also should link the process to the strategic plan of the organization. One of Mayo Clinic’s strategic goals is to invest in talent and technology. Succession management and leadership development align with this goal to ensure Mayo continues to sustain and grow a strong and talented workforce.

The mindset of leaders will be critical for succession work to add value. Leaders must not treat the process as an event or an annual activity, nor should they think of it as another task needing to be completed. Leaders should understand and embrace the business outcomes and engagement results that developing talent has for an organization. Therefore, leaders need to think about current skills and knowledge of the role and the skills of the future to address the changes and complexities in the healthcare environment.

Outcomes and lessons learned

Mayo Clinic’s succession process currently tracks more than 500 talent pools across its 70,000-plus employee population. Succession processes are more extensive and focused at the top of the organization, but they have been scaled across the organization and continue to go deeper into the organization to identify talent earlier in the pipeline. Within these more than 500 pools, there are more than 4,200 nominations of individuals to be included in the program among 2,200 unique individuals (who can be nominated for more than one leadership role).

In 2018, Mayo Clinic began creating a stronger link between assessment data and succession scorecards. Prior to this effort, overall readiness levels were determined via the succession interview with the chair and/or a calibration discussion. The Mayo Leader 360 Assessment was already tied to the Mayo Leadership model and provided a numerical score for each of the four leadership capabilities. However, while these scores were included as part of a leader’s profile, they were not formally connected to their readiness rating or included as part of the three key succession metrics Mayo uses to define the overall health of the talent pool.

As a first step, statistical analysis was conducted to validate the Mayo Leader 360 scores. Upon analysis, there was positive correlation between the Leader 360 and other key performance metrics. After the tool was validated, Mayo Clinic identified minimum thresholds for scores tied to each level (ready now, emerging talent and future watch). 

The succession scorecard and key succession metrics were adjusted to include the Mayo Leader 360 scores as a formal component. This multi-factor approach provides a more accurate view of the readiness of individual leaders and the overall strength of the pool. This has led to more valuable leadership development conversations and focused development strategies.

In addition to strengthening the data relative to readiness ratings and succession scorecards, Mayo Clinic also measures the success of its leadership development programs. The Accelerate! program, which offers a structure for women and minorities to strengthen leadership capabilities and accelerate readiness for future leadership roles, resulted in 70% of participants in new leadership roles within two years of program completion.

Mayo Clinic has experienced several key areas of learning during the evolution of its succession work over the past few years. Building its leadership development strategy in alignment with the mission and strategic direction of the organization has been crucial. Understanding where the organization is headed and translating that into the critical skill set required for the future are the first steps.

The Mayo Clinic Leadership Model has been woven into the fabric of all leadership development activities. Identification, assessment and development programs — even recruitment and selection — are based on the critical skill sets outlined in the model. This model is regularly reviewed by senior leadership to ensure it remains relevant to the needs of the organization. 

After the leadership skill sets are identified and measured, they should become the foundation for all leadership development activities. In today’s busy world, professionals do not have time to attend a class they do not need. Recognizing this, high potential leaders have development plans based on individualized needs. Moreover, Mayo Clinic has shifted away from formal classes and programs to focus more on leveraging experiences, stretch assignments and new exposures to grow skills.

An additional key learning was to focus on leadership transitions as key developmental opportunities. Not only is the transition from one leader to another a vulnerable process that can make or break the work area, it is also when learning acceleration occurs. Focusing development efforts on leaders who are new to a role is a springboard for substantial growth for the leader.

Discussion

The partnership of operational managers with HR leadership helps ensure the role of systematic succession management as an investment in leadership continuity and organizational success.14 Leadership’s recognition of the importance of succession management will help shape the process to ensure that individuals understand their role to identify the experiences, feedback and development discussions necessary to foster talent for the future. Creating and fostering a culture of continuous succession management built into the strategic plan will facilitate the planning for organizational readiness to address current and emerging challenges. 
  • Acknowledgment: The authors acknowledge the assistance of Lucy Bahn, PhD, in preparation of this article.

Notes:

1. Kaplan RS, Norton DP. The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. 2001. Boston, MA: Harvard Business School Press.
2. SHRM. “Engaging in Succession Planning.” Available from: bit.ly/38cz355.
3. Ibid.
4. Mitchell C, Maselli I, Ray R, van Ark B. C-Suite Challenge 2019: The Future-Ready Organization. The Conference Board. January 2019. Available from: bit.ly/3dJq7oO.
5. Office of Human Resources. “Workforce Planning.” National Institutes of Health. Available from: bit.ly/3eIPfxn.
6. Rothwell WJ. “Laying the Foundation for a Succession Planning and Management Program.” In Effective Succession Planning: Ensuring Effective Leadership Continuity and Building Talent from Within. American Management Association, 94-175.
7. Church AH. “Succession Planning 2.0: Building Bench through Better Execution.” Strategic HR Review, October 2014, 233-241.
8. Griffith JA, Baur JE, Buckley MR. “Creating comprehensive leadership pipelines: Applying the real options approach to organizational leadership development.” Human Resource Management Review, 29(3), 305-515. doi:10.1016/j.hrmr.2018.07.001. 
9. Rothwell.
10. Ibid.
11. CCL. “The 70-20-10 Rule for Leadership Development.” Available from: bit.ly/3i7C9fb.
12. CCL. “Leadership Training Programs.” Available from: bit.ly/31EEZmb.
13. McElgunn T. “Keys to effective succession planning: Talent management special report.” HR Morning. March 11, 2019. Available from: bit.ly/38dy1pl.
14. Khoury G, Green A. “Don’t Leave Succession Planning to Chance.” Gallup. Nov. 9, 2017. Available from: bit.ly/2VoKhOD.
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