Succession Plans – A Checklist For Measuring Their Effectiveness

Part A Measures
Group 1 – Basic plan usage factors:
The target audiences for a succession plan are those managers that are responsible for making promotion and lateral transfer decisions for leadership jobs that are covered by the plan. A succession plan can’t be successful if it’s not distributed, read and utilized by managers that make such decisions. Some manager usage metrics to consider include:
Note: the comments in parentheses ( ) help explain why the measure is important.

1. It is a written plan (if a plan isn’t written, it can’t be distributed).
2. % of the target managers that have received a copy of the plan.
3. % of targeted managers that have actually read the plan.
4. Average satisfaction rate among users (low satisfaction rates can lead to low usage among hiring managers. Low satisfaction among plan employees can lead to having other employees be reluctant to be placed on the plan.
5. % of managers actually using the plan for “movement” decisions (the plan cannot be considered successful unless it is actually used by most managers to determine which individual should be promoted or transferred into a particular leadership position).
6. % of all movement decisions in which the plan was utilized (this is similar to the last measure, except it covers the percentage of movement decisions in which the plan was used as a guide).

Group 2 – Assessing whether your plan contains key design features.
You automatically limit the capabilities of any succession plan when you omit some of the essential design features. The best succession plans include each of the following key design elements:

1. Focuses not only on promotions but also on progression and movement for development purposes (calling it a “progression plan” is more appropriate because some movement options in the plan should include stretch project assignments, lateral transfers and job rotations).
2. Each participant has a written individualized development, challenge and learning plan. (Individual plans allow the employee to self-guide their own progress).
3. Multiple source are utilized in selecting individuals for inclusion in the plan.  (Utilizing multiple sources and allowing individuals to self nominate themselves increases the likelihood that a “less obvious” candidate will be included in the plan).
4. People on the plan are told they are on it. (Letting individuals know that they are on the plan is a prime motivator.  This transparency also allows excluded individuals to challenge their omission).
5. The plan provides direct rewards and recognizes managers that support the plan. Rewards and promotions for managers should be based on their record of successfully developing individuals that are eventually included on the plan.  Managers should also be rewarded for having their current direct reports placed on the plan, as well as for periodically releasing and not “hoarding” their employees on the plan.
6. The plan includes an element to “retain” and improve individuals that remain on the plan but that have not been periodically moved or promoted.
7. It includes a “Right Job” movement element. (Right Job movement means that the plan not only speeds up the movement into jobs but it also ensures that the position includes the appropriate or “right” elements that fit the candidates development needs (i.e. right manager, right motivators, right time, right team etc.)).
8. It includes external candidates to spur competition (having external candidates included in the succession plan can put pressure on developing employees to improve beyond normal expectations).

Part B Measures
Group 3 – Operational indications of plan success.
The best plans have goals (and measures) that cover each of these areas:

1. % of all management positions filled by internal candidates (this is the broadest measure of development success because it covers all management and leadership positions.  A high rate of internal placement (vs. external hires) can be considered as an indication that development efforts have been successful.
2. % of interviewees for plan positions that are on the succession plan where plan positions are those designated by the plan as ideal job for stretch assignments and leadership development (Ideally 100% of the interviewees for open plan positions will be “on” the succession plan).
3. % of actual “movers” that were on the plan, where “movers” are the individuals that were actually transferred to or promoted into any designated “plan position” (Ideally 100% of those actually selected from the interviews will come from the plan).
4. % of movers without the most tenure in the job (“natural” movement generally means that the candidate with the most tenure will receive the nod.  Effective succession planning periodically selects a “not so obvious” candidate from those being interviewed).
5. % of movers without the most seniority (effective succession periodically selects a “not so obvious” candidate with less seniority from among those being interviewed).
6. % of movers that are from another department/business unit (again, “natural” movement generally means that most positions are filled from within a department).
7. % of movers that jumped a level (“natural” movement generally means promoting individuals “up” one level.  Successful succession planning occasionally promotes individuals more than one level up).
8. % of “on plan” movers that get promoted again (if a promoted individual is promoted again within 3-years, that can be considered as an indication that the first promotion was successful).
9. % of movers placed in their targeted business cycle (effective plans place individuals in their “targeted” business cycle.  This means that innovators are placed in departments or business units that require innovation (i.e. start up business units).  On the other end of a business cycle, efficiency experts are placed in cost-cutting or commodity business units, where their skills are a better fit to the business cycle that the unit is in).
10. % of job openings predicted accurately (successful plans prepare the individuals for movement at a designated time.  Plans that successfully forecast openings within six months of their “projected time” are more effective than those that prepare individuals well before or way after they are needed).
11. % of jobs with a defined back-fill person for sudden openings (In some plans, having “backfill” replacements are considered to be a separate plan element.  Effective plans have pre-identified qualified and tested individuals that can immediately fill a sudden “unplanned” opening, without a loss in productivity).

Group 4 – Measures of direct business impacts.
The most powerful measures are those that demonstrate a measurable impact both on leadership development and business results.  The three most direct measures of business impact are:

1. Dollars saved by avoiding the added cost of outside hires (on average, external candidates for leadership positions receive a 65% higher salary than internal hires. Because of this cost differential, one of the most obvious advantages of effective succession planning is the cost-saving resulting from selecting a larger percentage of internal candidates).
2. % increase in team performance six to twelve months after an plan employee is moved into a leadership position (successful development and placement should mean that the placed individual produces measurable business results that exceed target.  Other less direct measures of successful placements might include the percentage of bonus that the mover receives (compared to the average), their performance appraisal score while in the job or their relative ranking in forced ranking exercises).
3. Program ROI exceeds that of other HR programs (successful plans demonstrate to cynical CFO’s that their benefits and dollar impact well exceed their costs).

Group 5 – Indications of plan failure.
In addition to the factors that make a plan successful, there are some “events” that by themselves demonstrate that the plan has at least in part, failed.  Indications of obvious failure include:

1. % of “on plan” movers that fail during their first movement after being put on the plan (an individual that must be removed from their first placement because of a bad “fit” or performance must be considered a failure).
2. % of “movers” that fail to stay in the “moved” position for at least two years (if someone must be removed or they voluntarily leave a position that they’ve been placed in, the placement can be considered a failure because of the obvious negative impact that it will have on business performance).
3. % of individuals on the plan that fail to stay with the firm at least four years (retention rates are important, so you must consider it a failure whenever someone that is on the succession plan is forced out or voluntarily leaves the firm within four years of being put on the plan).
4. % plan positions that are filled by external hires that were not “on the plan” (if a plan has a provision for including external candidates in your succession hierarchy, then you must consider it a major failure each time that an “off plan” external hire is made).
5. % of individuals that are removed from the plan (it is essential to keep the plan vibrant by periodically “dropping” those that have failed to meet their development or performance targets. However, too high of a percentage being removed each year must be considered as either a failure in selection or a failure in development).
6. % of plan jobs vacant for more than 30 days (effective succession processes fill plan openings rapidly, because the ideal candidate was successfully developed and prepared in advance.  As a result, whenever a plan position remains vacant for more than 30 days or when it must be filled with an unplanned “interim” individual, it must be considered as a failure).
7. % of “not promoted” finalists that leave in frustration within one year (whenever someone on the plan is moved into a plan position, obviously you have been successful.  However, if any of the other “finalists” that were “interviewed” but were later rejected for a particular position leave the firm within a year, you must also consider that promotion at least a partial failure. Turnover among second or third choices is not unusual, but it should be prevented whenever possible because of the high costs associated with losing any individual with sufficient qualifications to be considered a finalist).

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