High-Profile C-Suite Moves Shines Light on Succession Planning Strategies
In the wake of shifts at the top for Apple, IBM and Hewlett-Packard, heirs in the pipeline can mean a stable transition both financially and in the workplace.
From turbulence at the top of Hewlett-Packard Co. to the smooth-but-tragic transition at Apple Inc., succession planning has gained unprecedented attention this year.
In the highest-profile move of the year, Tim Cook took the helm of Apple Inc. in August when the ailing Steve Jobs resigned. Virginia Rometty will become the first female CEO of IBM Corp. when she succeeds Sam Palmisano on Jan. 1, 2012. And Walt Disney Co. says it extended the contract of Robert Iger to March 2015 as it prepares for a "seamless succession" when he ends his much-lauded tenure as CEO.
"Succession management is probably as front and center as it has ever been," says Robert Conlon, senior vice president in the Chicago office of Sibson Consulting.
Apple and IBM both chose company veterans who had been groomed for leadership. Cook, the former chief operating officer who ran the company during Jobs's medical leaves, joined Apple in 1998. Rometty joined IBM in 1981 and earned admiration for her successful integration of PricewaterhouseCoopers Consulting into IBM.
"They have in common a strategic view of what talent is," Conlon says. "Those kinds of companies are still in the minority that recognize and treat their human capital as a fundamental element of success just as they treat their fiscal plan."
In fact, only 23 percent of organizations reported having a formal succession plan in place, according to a poll this year by the Society for Human Resource Management. Similarly, only 17 percent of organizations have identified a successor for their chief financial officers, according to a survey by Robert Half Management Resources.
Not having heirs in the pipeline can jeopardize companies.
Take Hewlett-Packard. The company has ushered in three separate chief executives in just 13 months. The cycle began when Mark Hurd abruptly resigned as CEO in August 2010 amid sexual harassment allegations. The board in September 2010 named former SAP chief Léo Apotheker. He left after 11 months, during which time the company lost more than half its market value. Former eBay Inc. CEO Meg Whitman became CEO in September, with hopes of gaining Wall Street's confidence.
"An orderly CEO transition attracts shareholders," says Jay Scherer, managing partner at human resources consultancy BPI group. "An abrupt or disorderly one doesn't."
Good succession planning determines the requirements for success, identifies candidates and assesses what, if any, development they need, Scherer says.
At Turner Broadcasting System Inc., succession planning focuses on directors and above and critical positions deeper in specific divisions, says Michele Golden, vice president of talent management. Turner owns cable television networks such as TNT, Cartoon Network and truTV as well as a sports division that produces NBA, NCAA and other sports shows for the company's channels.
Turner has identified competencies critical to achieving its business objectives. Leaders are evaluated against those competencies and individualized development plans are created to help employees understand what types of experiences and development they may need to advance.
"Overall, we're trying to foster richer conversations between managers and employees about their performance and career opportunities," Golden says. "We've found that transparency is helpful in having real honest conversations."
Julie Redfield, managing consultant in the New York office of PA Consulting, believes that succession planning should not be a closed process.
"Leaders as well as HR should be transparent with people about where they sit in succession plans," Redfield says, "and most importantly what it would take to accelerate their development."
See how others have used technology and what tools may help with your workplace challenges.
A Fortune 500 company that designs and builds facilities had two distinct segments in its workforce: those who had been there for 20-plus years and those who had been there less than five years. Employee development and succession planning became top priorities.
The firm rolled out learning management software from Lumesse, a global provider of talent management solutions.
Lumesse offers a free personalized succession score card at lumesse.com/be-inspired/hr-insight-tools.
Turner Broadcasting System Inc. uses software from Cornerstone OnDemand. The technology allows Turner's employees to select developmental opportunities and build skills based on performance feedback. Turner also uses the technology to better understand its pipeline of leadership talent, says Michele Golden, vice president of talent management.
Cornerstone OnDemand offers videos that explore talent management at cornerstoneondemand.com/employee-performance-management/.