Groomed for succession

Succession planning isn’t just the domain of agriculture and farming industries. As Lynnette Hoffman writes, more and more companies are realising they must identify and grow key talent in their organisation or they risk losing them

ost companies find the process of developing the next generation of leaders a struggle. Last year, the Hudson Report surveyed 7,688 employers across a range of industries and found that 49 per cent of the managers who responded had not been formally assessed for their leadership skills. Managers were left to figure out their own weaknesses and strengths and set their own development tasks, which were subsequently generic and untargeted.

According to the report, organisations that do not formally assess their management “have an incomplete picture of the leadership potential in their ranks, often limited to the top tier of management”.

Still, Hudson says it expects a shift towards more formal assessments as organisations start to see “the importance of knowledge retention and the strategic value of growing leaders from within”.

Two companies that have successfully put new assessment and development plans in place are BASF Australia, the chemical company, and Victoria’s Department of Human Services (VDHS). Both organisations have set up a range of programs to find high-potential staff and mould and “stretch” them. About 10 per cent of BASF’s staff are currently enrolled in its development program. BASF’s strategy has included everything from team building to a formal mentoring program for their marketing staff.

VDHS recently piloted a “leadership bank” to develop high-potential, first-tier executives and pre-executives. The nine-month program involved everything from networking sessions to facilitating question and answer sessions to mentoring, group coaching around common areas of concern and round-table leadership discussions. Twenty-eight individuals, about 4 per cent of the department’s staff, were enrolled in the program.

Realising a need

BASF Australia’s move came after its multinational parent company introduced a “core competency framework” into everything from performance appraisals to hiring. The Australian division of the chemical company realised it had nothing in place to identify those who were meeting the core competencies and, just as importantly, nothing to help mentor people and develop their skills in the key areas.

“We only had very traditional methods like appraisals to see how well people met the competencies,” BASF business division service platform manager David Hawkins says. “There were a number of things that triggered the decision, but in essence we realised that the region in its entirety hadn’t identified high performers particularly well. We realised we needed to get a bit more sophisticated.”

So 18 months ago BASF began setting up a development plan to rectify the situation. The goal was to have local staff at a high enough calibre to be leading processes on the floor at a regional level, something that hadn’t happened before, Hawkins says.

For VDHS, the path to a formalised plan stemmed from a more urgent need to plan for the future. Bronwyn Johnson, the department’s associate manager of learning and performance, explains: “The department has an aged population, and so there was a critical need to develop up and coming talent to make sure that the future needs of the department and its workforce were being targeted. Up until this there hadn’t been a proactive approach.

“The organisation tended to think of development in terms of a deficit model; something people did when they weren’t performing … it was never really targeted and there wasn’t a lot of push behind it. There was no specific, articulated strategy that had executive buy-in and endorsement,” she says.

The goal was to improve retention and opportunities for high performers as well as to create a change in culture so people would see development as a positive and constructive process, and actually seek the programs that foster it.

Making it happen

Getting key stakeholders on board for these sorts of programs can be challenging because often the benefits come in the long-term. Also, news of a problem lurking can be confronting for the management responsible for the way things are going. Hawkins says the push for a development program met with varying degrees of resistance from key stakeholders at first.

“In the end we didn’t try to sell it on dollars and cents,” he says. “One of our strategic pillars was to become the best team in the industry, and we thought this would help us do that.”

Johnson says it took some “alarming” statistics and data to show that the program was needed, especially given the ageing workforce in the department. In both cases, board members were eventually brought on side.

Overcoming challenges

When it comes to implementing a program as vast and significant as one to find and develop future leaders, there are sure to be challenges. For the DHS one of them was deciding what criteria to use to identify high performers in the first place, given the myriad views among the decision-makers. Ultimately, they used a mixture of self-assessment and assessment by management and more objective measures such as performance history, ratings against executive capabilities and the department’s values, career history and career intention and stakeholder feedback.

But inevitably, people are going to be left out and organisations must address disappointment from those parties. “We worked hard to keep morale up among those who didn’t get in the program and to make sure those people knew they were still highly regarded and valued,” Johnson says. That involved offering additional support and advice, encouraging those people to reapply for future programs and to apply for other external development programs.

Along similar lines, there’s also the potential for the programs to become too successful. Leadership development can be given too much of a profile, which may have been the case at the VDHS.

“The spotlight has been on these really high performing people and that sometimes leaves it open for people to perceive there’s not much happening below, but that’s not the case – we need to keep things balanced and we need the middle group to know they are valued and not become alienated,”Johnson says.

Benefits and rewards

The big pay-off comes in the long run, but there are smaller, more immediate benefits in the meantime. Both BASF and the VDHS say they are in the process of assessing the results of what they have set up so far, so it’s too soon to determine the return on investment, but both organisations say the process has been worthwhile and they would do it again.

“It’s part of us getting smarter,” Hawkins says. “Our process of identifying leaders is a lot more formalised. We used to rely on just management observations but now we have many more tools and profiles and outsiders’ views, which can be invaluable.”

The development and succession plans at BASF are much more targeted and the program has increased self-awareness in participants who now have much more external feedback.

At the VDHS there’s been a marked increase in the number and calibre of applications for leadership development programs, a testament to the changing culture there, Johnson says. And significantly, there’s evidence the group of high performers is going places. Since beginning the program five participants have received internal promotions, three have received external promotions and a further nine have moved jobs at the same level.

“We’ve absolutely made inroads in learning and development in the last two years. We’ve increased understanding of what’s expected and influenced the culture here so that people realise it’s important for everybody to develop not just in those areas where there are skills gaps,” Johnson says.