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MHRM 6645: Building Organizational Capacity Through
Succession Planning
HRIS Product Analysis Template
Directions:
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table headings included below.

· Fill out each cell of the table with information you have
gained from your exploration of product websites and consumer
reviews.
· Write a 2-paragraph review for each of the products you have
listed in the table. Specifically, describe how each package
might align to an organization’s succession needs and goals.
HRIS Product #1
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Name:
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Solution
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Security Measures

Costs
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Considerations
Product Summaries:
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© 2012 Laureate Education Inc.

1
Effective
Succession
Planning
F O U RT H E D I T I O N
jjj
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American Management Association
New York • Atlanta • Brussels • Chicago • Mexico City • San
Francisco

Shanghai • Tokyo • Toronto • Washington, D.C.
Ensuring Leadership Continuity and
Building Talent from Within
William J. Rothwell
Effective
Succession
Planning
F O U RT H E D I T I O N
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other professional service. If legal advice or other expert
assistance is required, the services of a competent
professional person should be sought.
Library of Congress Cataloging-in-Publication Data
Rothwell, William J.
Effective succession planning : ensuring leadership continuity
and building talent from within / William J.
Rothwell.—4th ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-8144-1416-3
ISBN-10: 0-8144-1416-8
1. Leadership. 2. Executive succession—United States. 3.
Executive ability. 4. Organizational
effectiveness. I. Title.
HD57.7.R689 2010
658.4�092—dc22

2009032036
� 2010 William J. Rothwell.
All rights reserved.
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This publication may not be reproduced, stored in a retrieval
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written permission of AMACOM, a division of American
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About AMA
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Printing number
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www.amacombooks.org
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To my wife Marcelina, my daughter Candice,
my son Froilan, and my grandson Aden.
You are the people who matter to me!
This page intentionally left blank

Contents
List of Exhibits — xiii
Preface to the Third Edition — xvii
Acknowledgments — xxxi
Advance Organizer for This Book — xxxiii
Quick Start Guide — xxxvii
What’s on the CD? — xxxix
Part I
Background Information About
Succession Planning and Management — 1
Chapter 1 What Is Succession Planning and Management? — 3
Six Ministudies: Can You Solve These Succession Problems? —
3
Defining Succession Planning and Management — 6

Distinguishing SP&M from Replacement Planning, Workforce
Planning,
Talent Management, and Human Capital Management — 12
Making the Business Case for Succession Planning and
Management — 14
Reasons for a Succession Planning and Management Program —
16
Reasons to Launch Succession Planning and Management
Depending on
Global Location — 27
The Current Status of Succession Planning: What Research
Shows — 27
The Most Famous Question in Succession: To Tell or Not To
Tell — 29
Management Succession Planning, Technical Succession
Planning, or Social
Network Succession Planning: What Are You Planning For? —
30

Best Practices and Approaches — 31
www.amanet.org
vii
www.amanet.org
viii Contents
Ensuring Leadership Continuity in Organizations — 36
Summary — 41
Chapter 2 Trends Influencing Succession Planning and
Management — 42
The Ten Key Trends — 43
What Does All This Mean for Succession Planning and
Management? — 56
Summary — 56

Chapter 3 Moving to a State-of-the-Art Approach — 58
Characteristics of Effective Programs — 58
Common Mistakes and Missteps to Avoid — 63
The Life Cycle of Succession Planning and Management
Programs: Five
Generations — 75
Integrating Whole Systems Transformational Change and
Appreciative
Inquiry into Succession: What Are These Topics, and What
Added Value
Do They Bring? — 78
Requirements for a New Approach — 82
Key Steps in a New Approach — 83
Summary — 86
Chapter 4 Competency Identification, Values Clarification, and
Ethics:

Keys to Succession Planning and Management — 87
What Are Competencies? — 87
How Are Competencies Used in Succession Planning and
Management? — 88
Conducting Competency Identification Studies — 89
Using Competency Models — 90
Newest Developments in Competency Identification, Modeling,
and
Assessment — 91
What’s the Focus: Management or Technical Competencies? —
92
Identifying and Using Generic and Culture-Specific
Competency
Development Strategies to Build Bench Strength — 93
What Are Values, and What Is Values Clarification? — 94
How Are Values Used in Succession Planning and Management?

— 96
Conducting Values Clarification Studies — 96
Using Values Clarification — 97
What Are Ethics, and How Are Ethics Used in SP&M? — 98
Bringing It All Together: Competencies, Values, and Ethics —
100
Summary — 100
www.amanet.org
www.amanet.org
Contents ix
Part II
Laying the Foundation for a Succession
Planning and Management Program — 103

Chapter 5 Making the Case for Major Change — 105
Assessing Current Problems and Practices — 105
Demonstrating the Need — 114
Determining Organizational Requirements — 118
Linking SP&M Activities to Organizational and Human
Resource Strategy —
119
Benchmarking Best Practices and Common Business Practices
in Other
Organizations — 123
Obtaining and Building Management Commitment — 128
The Key Role of the CEO in the Succession Effort — 131
The Key Daily Role of Managers in the Succession Effort —
133
Sustaining Support for the Succession Effort — 133

Summary — 135
Chapter 6 Starting a Systematic Program — 136
Strategic Choices in Where and How to Start — 136
Conducting a Risk Analysis and Building a Commitment to
Change — 137
Clarifying Program Roles — 139
Formulating a Mission Statement — 142
Writing Policy and Procedures — 149
Identifying Target Groups — 151
Clarifying the Roles of the CEO, Senior Managers, and Others
— 155
Setting Program Priorities — 157
Addressing the Legal Framework — 158
Establishing Strategies for Rolling Out the Program — 167

Summary — 168
Chapter 7 Refining the Program — 169
Preparing a Program Action Plan — 169
Communicating the Action Plan — 170
Conducting Succession Planning and Management Meetings —
173
Training on Succession Planning and Management — 177
Counseling Managers About Succession Planning Problems in
Their Areas — 185
Summary — 188
www.amanet.org
www.amanet.org

x Contents
Part III
Assessing the Present and the Future — 189
Chapter 8 Assessing Present Work Requirements and Individual
Job
Performance — 191
Identifying Key Positions — 192
Three Approaches to Determining Work Requirements in Key
Positions — 196
Using Full-Circle, Multirater Assessments — 201
Appraising Performance and Applying Performance
Management — 204
Creating Talent Pools: Techniques and Approaches — 207
Thinking Beyond Talent Pools — 212
Summary — 214

Chapter 9 Assessing Future Work Requirements and Individual
Potential — 215
Identifying Key Positions and Talent Requirements for the
Future — 215
Three Approaches to Determining Future Work Requirements in
Key
Positions — 218
Assessing Individual Potential: The Traditional Approach —
224
The Growing Use of Assessment Centers and Portfolios — 233
The Latest Issues in Potential Assessment — 236
Summary — 237
Part IV
Closing the Developmental Gap:
Operating and Evaluating an SP&M
Program — 239
Chapter 10 Developing Internal Successors — 241

Testing Bench Strength — 242
Formulating Internal Promotion Policy — 246
Preparing Individual Development Plans — 249
Evaluating Individual Development Plans — 257
Developing Successors Internally — 257
The Role of Leadership Development Programs — 265
The Role of Coaching — 265
www.amanet.org
www.amanet.org
Contents xi
The Role of Executive Coaching — 267

The Role of Mentoring — 268
The Role of Action Learning — 270
The Role of Acceleration Pools — 270
Summary — 271
Chapter 11 Assessing Alternatives to Internal Development —
272
The Need to Manage for ‘‘Getting the Work Done’’ Rather than
‘‘Managing
Succession’’ — 272
Innovative Approaches to Tapping the Retiree Base — 281
Deciding What to Do — 284
Summary — 286
Chapter 12 Integrating Recruitment with Succession Planning
— 287
What Is Recruitment, and What Is Selection? — 287

When Should Recruitment Be Used to Source Talent? — 288
Internal Versus External Recruitment: Integrating Job Posting
with Succession
Planning — 289
Recruiting Talented People from Outside — 290
Innovative Recruitment Approaches to Attract High Potentials
— 293
Summary — 296
Chapter 13 Integrating Retention with Succession Planning —
298
What Is Retention, and Why Is It Important? — 298
Who Should Be Retained? — 299
What Common Misconceptions Exist in Managing Retention
Issues? — 303
Using a Systematic Approach to Increase the Retention of

Talented
People — 305
Summary — 306
Chapter 14 Using Technology to Support Succession Planning
and
Management Programs — 309
Defining Online and High-Tech Methods — 309
Where to Apply Technology Methods — 315
How to Evaluate and Use Technology Applications — 315
What Specialized Competencies Do SP&M Coordinators Need
to Use These
Applications? — 327
Summary — 328
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xii Contents
Chapter 15 Evaluating Succession Planning and Management
Programs — 329
What Is Evaluation? — 329
What Metrics Should Be Used to Evaluate SP&M Programs? —
330
What Should Be Evaluated? — 331
How Should Evaluation Be Conducted? — 334
How Can SP&M Be Evaluated with the Balanced Scorecard and
HR
Dashboards? — 339
Summary — 347
Chapter 16 The Future of Succession Planning and Management
— 348

The Fifteen Predictions — 349
Summary — 370
Appendix I: Frequently Asked Questions (FAQs) About
Succession Planning
and Management — 371
Appendix II: Case Studies on Succession Planning and
Management — 377
Notes — 409
Index — 429
About the Author — 447
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A copy of the files on the CD-ROM can be found at
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www.amanet.org
www.amacombooks.org/go/EffectSuccessPlng

List of Exhibits
P-1. Age Distribution of the U.S. Population, Selected Years,
1965–2025 —xxi
P-2. U.S. Population by Age, 1965–2025 —xxii
P-3. Organization of the Book —xxvii
1-1. How General Electric Planned the Succession —7
1-2. The Big Mac Succession —10
1-3. Demographic Information about Respondents to a 2009
Survey on Succession
Planning and Management: Industries —17
Planning and Management: Size —17

Planning and Management: Job Functions of Respondents —18
1-6. Reasons for Succession Planning and Management
Programs —19
1-7. Strategies for Reducing Turnover and Increasing Retention
—23
1-8. Workforce Reductions Among Survey Respondents —26
1-9. Summary of Best Practices on Succession Planning and
Management from Several
Research Studies —32
2-1. Assessment Questionnaire: How Well Is Your Organization
Managing the
Consequences of Trends Influencing Succession Planning and
Management? —44
2-2. Sarbanes-Oxley Act of 2002 —50
3-1. Characteristics of Effective Succession Planning and
Management Programs —64
3-2. Assessment Questionnaire for Effective Succession

Planning and Management —68
3-3. Chief Difficulties with Succession Planning and
3-4. Simple Exercise to Dramatize the Need for Succession
Planning and
Management —76
3-5. Dow Chemical Company’s Formula for Succession —79
3-6. The Seven-Pointed Star Model for Systematic Succession
Planning and
Management —83
4–1. Interview Guide to Collect Corporate-Culture-Specific
Competency Development
Strategies —95
5-1. Demographic Information About Respondents to 2009
Survey on Succession Planning
and Management: Job Functions of Respondents —107
5-2. Importance of Succession Planning and Management —108

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xiii
www.amanet.org
xiv List of Exhibits
5-3. Making Decisions About Successors in Organizations
Without Systematic Succession
5-4. Questionnaire for Assessing the Status of Succession
Planning and Management in an
Organization —112
5-5. Worksheet for Demonstrating the Need for Succession
Planning and
Management —116
5-6. Interview Guide for Determining the Requirements for a
Succession Planning and
Management Program —120

5-7. Interview Guide for Benchmarking Succession Planning
and Management
Practices —125
5-8. Opinions of Top Managers About Succession Planning and
Management —129
5-9. Opinions of Human Resource Professionals About
Management —130
5-10. Actions to Build Management Commitment to Succession
Planning and
Management —131
5–11. Rating Your CEO for His or Her Role in Succession
6-1. Model for Conceptualizing Role Theory —139
6-2. Management Roles in Succession Planning and
Management: Grid —141
6-3. Worksheet to Formulate a Mission Statement for

Management —145
6-4. Sample Succession Planning and Management Policy —150
6-5. Targeted Groups for Succession Planning and Management
—152
6-6. Activity for Identifying Initial Targets for Succession
Planning and Management
Activities —153
6-7. Activity for Establishing Program Priorities in Succession
Planning and
Management —159
6-8. U.S. Labor Laws —161
7-1. Worksheet for Preparing an Action Plan to Establish the
7-2. Sample Outlines for In-House Training on Succession
Planning and
Management —179

8-1. Worksheet for Writing a Key Position Description —198
8-2. Worksheet for Considering Key Issues in Full-Circle,
Multirater Assessments —203
8-3. Relationship Between Performance Management and
Performance Appraisal —206
8-4. Approaches to Conducting Employee Performance
Appraisal —208
8-5. Worksheet for Developing an Employee Performance
Appraisal Linked to a Position
Description —211
9-1. Worksheet for Environmental Scanning —217
9-2. Activity on Organizational Analysis —219
9-3. Activity for Preparing Realistic Scenarios to Identify
Future Key Positions —220
9-4. Activity for Preparing Future-Oriented Key Position
Descriptions —221

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List of Exhibits xv
9-5. Steps in Conducting Future-Oriented Rapid Results
Assessment —223
9-6. How to Classify Individuals by Performance and Potential
—226
9-7. Worksheet for Making Global Assessments —228
9-8. Worksheet to Identify Success Factors —229
9-9. Individual Potential Assessment Form —230
10-1. Sample Replacement Chart Format: Typical Succession
Planning and Management
Inventory for the Organization —243

10-2. Succession Planning and Management Inventory by
Position —244
10-3. Talent Shows: What Happens? —247
10-4. Simplified Model of Steps in Preparing Individual
Development Plans —251
10-5. Worksheet for Preparing Learning Objectives Based on
Individual Development
Needs —253
10-6. Worksheet for Identifying the Resources Necessary to
Support Developmental
Experiences —255
10-7. Sample Individual Development Plan —258
10-8. Methods of Grooming Individuals for Advancement —260
10-9. Key Strategies for Internal Development —261
11-1. Deciding When Replacing a Key Job Incumbent Is
Unnecessary:
Flowchart —274

11-2. Worksheet for Identifying Alternatives to the Traditional
Approach to Succession
11–3. Tool for Contemplating Ten Ways to Tap the Retiree Base
—285
12-1. Worksheet to Assess How Often and How Well an
Organization Uses Traditional
External Recruiting Sources —291
13-1. Worksheet to Calculate the Cost of Turnover —300
13-2. Worksheet to Compare Your Organization on Best
Practices in Employee
Retention —307
14-1. Continua of Online and High-Tech Approaches —310
14-2. Starting Point for a Rating Sheet to Assess Vendors for
Management Software —312
14-3. Hierarchy of Online and High-Tech Applications for

Management —316
14-4. Worksheet for Brainstorming When and How to Use
Online and High-Tech
Methods —319
15-1. Hierarchy of Succession Planning and Management
Evaluation —332
15-2. Guidelines for Evaluating the Succession Planning and
15-3. Worksheet for Evaluating the Succession Planning and
15-4. Sample Incident Report for Succession Planning and
Management —338
15-5. Steps for Completing a Program Evaluation of a
Succession Planning and Management
Program —340
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www.amanet.org
xvi List of Exhibits
15-6. Checksheet for Conducting a Program Evaluation for the
16-1. Worksheet to Structure Your Thinking About Predictions
for Succession Planning and
Management in the Future —350
16-2. Worksheet to Structure Your Thinking About Alternative
Approaches to Meeting
Succession Needs —355
16-3. Age Distribution of the U.S. Population in 2025 —358
16-4. Age Distribution of the Chinese Population in 2025 —359
16-5. Age Distribution of the Population in the United Kingdom
in 2025 —359

16-6. Age Distribution of the French Population in 2025 —360
16-7. Important Characteristics of Career Planning and
16-8. Assessment Sheet for Integrating Career Planning and
Management Programs with
Succession Planning and Management Programs —366
www.amanet.org
www.amanet.org
Preface to the Fourth Edition
The world moves faster than ever. Since the third edition of this
book, many changes
have occurred to shape succession planning and management as
well as the related
field of talent management. Just consider the changes:
In the World

' The Recession of 2007 and Beyond: As this edition goes to
press, unemployment
in the United States has exceeded 9 percent, and the United
Nations projects
that the global unemployment rate could climb higher than 6.1
percent. As a
result, some business leaders question whether the time and
money devoted
to succession planning and talent management are worth it when
layoffs are
increasing.
' The Lingering Aftereffects and Legacy of 9/11: When the
World Trade Center
collapsed, 172 corporate vice presidents lost their lives. That
tragic event rein-
forced the message, earlier foreshadowed by the tragic loss of
life in Oklahoma
City, Oklahoma, that life is fragile and that talent at all levels is
increasingly at
risk in a world where disaster can strike unexpectedly. In a
move that would
have been unthinkable ten years ago, some organizations are
examining their
bench strength in locations other than their headquarters in New

York City,
Washington, or other cities that might be prone to attack if
terrorists should
wipe out a whole city through the use of a dirty nuclear weapon
or other
chemical or biological agent. Could the organization pick up the
pieces and
continue functioning without headquarters? That awful, but
necessary, ques-
tion is on the minds of some corporate and government leaders
today. (In
fact, one client of mine has set a goal of making a European
capital the alterna-
tive corporate headquarters, with a view toward having
headquarters com-
pletely reestablished in Europe within 24 hours of the total loss
of the New
York City headquarters, if disaster should strike.)
' The Aftereffects of Many Corporate Scandals: Ethics,
morality, and values have
never been more prominent than they are today. The Bernard
Madoff scandal

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xvii
www.amanet.org
xviii Preface to the Fourth Edition
followed on the heels of earlier scandals affecting numerous
Wall Street firms
and, years before that, Enron, Global Crossing, and WorldCom.
Many busi-
ness leaders have recognized that ethics, morality, and values
do matter. Cor-
porate boards have gotten more involved in succession planning
and
management owing in part to the requirements of the Sarbanes-
Oxley Act and
to the recognition that many senior corporate leaders are at or
beyond the
traditional retirement age. And corporate leaders, thinking about
succession,
realize that future leaders must model the behaviors they want
others to ex-

hibit and must avoid practices that give even the mere
appearance of impro-
priety. And yet some CEOs receive large performance bonuses
even when they
lead their firms into bankruptcy.1
' Growing Recognition of the Aging Workforce: Everyone is
still talking about the
demographic changes sweeping the working world in the United
States and in
the other G8 nations. Some organizations have already felt the
effects of talent
loss resulting from retirements of experienced workers.
' Growing Awareness That Succession Issues Amount to More
Than Finding Re-
placements: When experienced people leave organizations, they
take with them
not only the capacity to do the work but also the accumulated
wisdom they
have acquired. That happens at all levels and in all functional
areas. Succession
involves more than merely planning for replacements at the top.
It also in-
volves thinking through what to do when the most experienced

people at all
levels depart—and take valuable institutional memory with
them.
' Increasing Globalization of Talent: Workers in the West are
heading to the Far
East, where more opportunities exist even in the midst of
financial crises.
Talent is becoming more willing to travel where pay and
benefits, as well as
tax rates, are more favorable.
' Growing Interest in Tapping Retirees: Though experts may
argue over whether
a talent shortage has emerged or will emerge, business leaders
are increasingly
turning to their more experienced workers or seeking to find
them.
Changes in Succession Planning
' Wide Acceptance of Talent Management and Talent
Development: As is true in
so many areas of management, these terms may well still be in
search of

meanings. They have more than one meaning. But, in many
cases, talent man-
agement refers to the efforts taken to attract, develop, and retain
best-in-class
employees—dubbed high performers (or HiPers), high
professionals (HiPros),
and high potentials (or HiPos) by some. Talent development
may refer to
efforts to groom HiPers or HiPos for the future and/or to tap
them for transfer
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Preface to the Fourth Edition xix
the specialized knowledge of HiPros. Think of it as selective
attention paid to
the top performing 10 percent of employees—that’s one way it
is thought of.
' The Emergence of ‘‘Workforce Planning’’: Though some

people think that suc-
cession planning is limited to the top of the organization
chart—which I do
not accept, by the way—others regard comprehensive planning
for the future
staffing needs of the organization as workforce planning. It is
also a popular
term for succession planning in government, rivaling the term
human capital
management in that venue.
' Growing Awareness of Succession Planning: Decision makers
have become
aware of the need for succession planning as they scurry to find
replacements,
even in the midst of a global business slowdown, for a pending
tidal wave of
retirements in the wake of years of downsizing, rightsizing, and
smart sizing.
' The Recognition That Succession Planning Is Only One of
Many

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