By Ronald C. Pilenzo, PhD, SPHR
Some recent studies reveal that companies with global succession plans are more successful not only in the management of talent, but by the measured results of the bottom line. The following is a brief discussion of why this is so.
In the United States, succession planning is a hit and miss affair. Many companies, large and small try it but most fail or come up short due to a number of reasons such as the lack of board participation and support, the scope of the plan, and/or the focus on primarily the replacement of CEOs. Although grooming internal candidates to become a CEO is important, what is more important is the ability to find talent wherever it is – from the bottom of the organization to the top. This does not mean that investing in the development of first line or middle management talent is wrong, but at a minimum, succession planning should include a much wider scan for talent.
Succession planning with varying degrees of intensity should include people with potential at all levels and all locations of the company. In essence, organizations that seem to “cast a wider net, seem to catch more fish.” In most instances a plan with wider scope seems to result in identifying more talent than one needs but also ensures greater flexibility in directing talent to where and when the organization needs it. Finally, a global succession planning system also becomes “a supply chain for expat positions” and generates the cross-organization sharing of the company’s entire talent pool.
The well-established values of a succession plan are; a) assured succession of a business by owners/families; b) stability that is recognized by lenders, investors, suppliers, vendors and customers; c) an additional measure of protection of the organizations most precious assets – its people and d) creating a competitive advantage. Other advantages are creating bench strength, cross-organizational sharing, a diverse pool of talent, future leadership and a reduction of people costs – usually the number one cost of doing business. (Edwards. www.linkageinc.com)
Some examples of organizations that successful global succession plans who are recognized for their development of talent in the U.S. are IBM, Apple, General Electric and Proctor and Gamble. Those who have not been so successful recently are Microsoft, Ford, General Motors and several large banks and investment institutions. However, in the end, the key measure of an effective succession plan is the ability to develop and promote internally, the establishment of a cross- cultural approach to global operations and expat assignments and significantly lower recruiting costs and turnover. Some companies are so good at it that many of their high potential people who are passed over for senior executive positions, move to other companies as CEOs – a testament to their succession plan. It is far better to lose some good people than not have enough to meet your own needs.
In summary, organizations, especially those with global operations, should place a high priority on the recruitment of a wide range of talent for current and future needs that adds value to the organization and its customers or clients. This is not just a HR objective, but a business objective shared by all that results in the potential for increased stockholder value and a solid return on investment program – the objects of every board of directors’ affections and the goal of every Chief Human Resource Officer.
Prepared by: Ronald C. Pilenzo, PhD, SPHR
President & CEO
The Global HR Consultancy