THE LONDON TIMES: Trend watch - succession planning: We have a cunning plan to take over: “However, succession planning is never a done deal. Shell recently found that external forces can undermine the best-laid plans when its internal “people survey” found that less than half of its workforce felt that the company was well led, this after the company’s well-publicised oil reserves crisis.” (ShellNews.net) 24 Feb 05
Who’ll be in charge when the boss goes? Who steps in when his PA retires? Clare Dight takes a look at the growing interest in succession planning
February 24, 2005
EVEN if you knock on the CEO’s door only to announce the coffee tray, your name could be down on the company succession plan. Succession no longer means simply deciding who’s next in line at the top, but how to train and retain the small fry. Dramatic headlines and economic trends have prompted bosses and human resources directors to rethink succession planning.
“The US press has made much of the possibility that a whole US city could be lost to a terrorist attack. Some corporate leaders take that quite seriously,” says William J. Rothwell, the professor in charge of workforce education and development at Penn State University. “If that seems farfetched,” he says, “consider that 172 corporate vice-presidents died when the World Trade Centre collapsed.”
Throw in a few corporate scandals such as Enron and WorldCom — which are credited with causing CEO turnover to reach a five-year high according to a survey in Fortune (Feb) — and you have a hot topic. “At issue is that future leaders must be considered on the basis of more than their capability to get results,” Rothwell says.
Historically low unemployment levels in the UK’s ageing workforce mean that succession is starting lower and lower down the corporate structure. Petra Cook, the head of policy at the Chartered Management Institute (CMI), says that companies have realised that they need to “grow their own talent” as they may not be able to recruit suitable managers externally. Taking the long view can be tough though, given that business needs inevitably change over time.
“Companies can’t be mechanistic,” Cook says. “You can’t say, ‘We’ll need this in the next five years’, which is why you need to build a cohort of skilled managers to build flexibility into the company. You need to know the skills you have at all levels of the company then assess where the gaps are.”
A recent survey by the CMI identified a growing trend towards active talent management with up to 60 per cent of companies now career planning. There is also a new emphasis on how career planning and succession planning fit together, according to Rothwell. “Career planning is coming back because it is a way to double-check what people want to do with their careers and their lives, providing a necessary double-check on the senior executive wish list of successors,” he says.
Sucession planning is tightly bound together with career planning and strategy at Shell, the Anglo-Dutch energy company. James Smith, the company’s head of senior executive resourcing worldwide, says: “Shell has deeply embedded strategic planning for talent, bottom up, across all Shell businesses. There are 200 jobs designated as senior executive, that’s to say boardroom level. Six hundred people in the com- pany have the potential to take on senior positions,” he says. Who succeeds is decided by a series of assessments and considered at board level.
However, succession planning is never a done deal. Shell recently found that external forces can undermine the best-laid plans when its internal “people survey” found that less than half of its workforce felt that the company was well led, this after the company’s well-publicised oil reserves crisis.