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The pace at which Ratan Tata returned to take the reins of TATA Sons at 78, indicated the lack of a well-thought-out succession plan at the company. But such ‘comebacks’ have been made in other conglomerates as well. Media giant Disney faced a nightmare when Bob Iger stepped down at 69.
In both cases, the Board extended their retirement age and requested them to reassert their control. While it may be a stop-gap solution, the management must have a viable long-term strategy as these leaders eventually make way for the younger generation. You cannot retain the best talent forever. Hence, a timely understanding of who can match or outperform essential resources is crucial for your company. It would ensure a healthy talent pipeline. The lack of such a process can even cause existential crises for the companies, let alone its impact on investors, analysts, employees, customers and other stakeholders.
Facilitating succession planning is one of the essential components of broader human resource planning. It is akin to keeping indispensable employees tethered to the business, and a mandate for the CEOs and board members. Numerous advantages of succession planning ensure peace of mind and allow you to focus on the nitty-gritty of the business.
Succession planning is not a selection criterion. It is a well-thought-out, detailed and critical process to identify people who could immediately, or after targeted development, assume charge of key positions. It is a well-documented plan for management succession at all levels in the organization, especially when filling in leadership roles, mission-critical positions or niche roles.
Succession planning ensures that a company rises above dynamics, personalities and politics when concerns arise. JPMorgan Co-Presidents took charge at America’s largest bank, following Chief Executive James Dimon’s emergency heart surgery. This decision wasn’t an intuitive call. The development at JP Morgan underlines the importance of a succession plan and selecting the best people to steer a company toward the future to ensure continuity.
While many companies may scout for an ideal outside of their domain, we propose investing in the internal talent pool. It is likely to yield better results. However, one must get the process right for the desired outcome.
Here is an insightful, step-by-step approach to help you get started with the process of succession planning:
Firstly, deeply analyze and elucidate all functional roles in the organization to determine critical positions. You must review which among them are in tandem with the company’s vision, growth plans and long-term viability. You must analyze the role’s importance and the ease with which one can be trained. You must contemplate the cost of mistakes in this role or its criticality to the business strategy’s success.
Executive-level managers aren’t the only significant positions in a company. Middle-management functions, R&D, sales and marketing, liaisoning departments that are scarcely available in the workforce, are equally important. This step can determine the credibility and potential of roles to steer your business in challenging circumstances.
Competency mapping in succession planning involves identifying the behavioral requirements of a specific role to find the perfect fit. Understanding the role’s competencies is crucial when determining the best talent. It serves as an objective and structured set of criteria against which potential successors are evaluated. This process helps create a strong foundation. The process is popularly called ‘creating success profiles’ in the corporate world. It is a decision-making roadmap focussed on what is needed from a role.
The success profile/competency framework highlights the necessary current and future personality attributes, cognitive abilities, behavioral preferences and leadership skills to perform a role. Your evaluation is streamlined and objective, once you gain clarity on the pointers mentioned above. A meticulous competency list is a non-negotiable, considering the changing environment. It is an ideal means to drive efficiency, effectiveness and performance. Competency mapping can either be done by the organization via focused group discussions or visionary interviews.
Once you’ve created a well-defined list of critical competencies, it is imperative to understand which employee from the high-potential pool is a natural fit. This process ensures the discovery of your high-potential. A rigorous high-potential process identifies, finalizes and validates your shortlisted candidates’ talent. One of these high-potentials turns out to be your successor, whose intellect, drive, agility and leadership potential will enable them to successfully undertake broader and complex roles in the future. It is recommended to look across functions, departments and teams to gauge if employees in other departments match the potential successor’s criteria.
The process of assessment commences after the client approves of the succession candidature and competency list. There is no shortage of skills and abilities required to be demonstrated at the highest levels. Therefore, the assessment is a more in-depth analysis of each potential successor’s standing on relevant competencies.
Coherently, you must also assess the shortlisted candidate’s fitment in the company’s culture. Company culture is a predefined set of shared values, attitudes and practices that lends uniqueness to an organization. These traits are often deeply ingrained in the culture, and understanding whether the future successor possesses the qualities that define the organization is critical.
Once the necessary skills and competencies are identified and defined as per the organizations’ needs and expectations, a series of tools, including behavioral, personality and cognitive components, are integrated into a comprehensive assessment. It is used to analyze past behavior and forecast future behavior to assess the right successor.
For behavioral tools, it is vital to ensure that the context and complexity are designed to suit the target audience. Hence, to curate relevant content, inputs are collected from various stakeholders (current role-holders and other senior employees) in the client organization. Afterward, the content is validated from experts and shared with the client for their confirmation for the assessment.
Mercer | Mettl’s assessments are designed to help companies understand their current/prospective employees. The assessments are based on two crucial factors: the role/profile and the candidates’ experience level.
It is a suite of scalable, cost-efficient and tailor-made tools to identify your successor. These tools are designed for use as per the level and experience of the target audience. The complexity and types of tools vary in solutions. They are:
The ACDC toolkit consists of virtual and blended ACDC:
Virtual Assessment Development Centre involves a process of employing multiple online tools to evaluate the extent to which chosen participants display selected competencies. It is a detailed evaluation of individuals’ role fitment by assessing them on various aspects required to be successful in particular roles. Decision-makers gain a holistic understanding of the candidate through multiple lenses, with basic prerequisites, such as internet connectivity and computers.
Mercer | Mettl’s Virtual ACDC toolkit consists of:
Blended assessment centers are a combination of assessor-based activities and online assessments. Each competency is mapped to online tools with life-like simulations and assessor-based activities.
Assessors gain insightful and data-backed outcomes by deploying various simulation-based activities and thereby expanding the means and methods of measuring a potential candidate’s readiness/fitment. These inputs, along with the use of standardized and customized online tools, allow factoring in different perspectives in the outcome of each competency.
In addition to the online tools mentioned-above, Mercer | Mettl’s Blended ACDC toolkit consists of:
A comprehensive group of standardized or customized assessments can quickly enable organizations to zero in on their successor. These assessments are mapped to the organization’s competency framework or specific needs. With evidence-based assessment, companies can seek an in-depth measurement of critical, work-relevant personality traits and behavioral tendencies. The core of these tests is the in-house team of industrial-organizational psychologists. They have benchmarked each test globally to find stable results across gender, age, language and ethnicity. Their pertinent experiences, validation methodology and development of psychometric assessments provide real-world analytics and insights. Assessments can either be administered independently or as part of ACDCs.
The various assessments are:
Personality traits are the determining characteristics exhibited consistently despite changing circumstances. In succession planning, it is critical to gain a more comprehensive understanding of personality at work, especially at the mid and senior level. Hence, Mercer | Mettl’s Mettl Personality Map (MPM) measures personality via a unique and innovative 28 facet and a 4-factor structure of personality that goes beyond the traditional framework of personality. It is a contemporary, evidence-based personality assessment that undertakes an in-depth measurement of critical, work-relevant personality traits and behavioral tendencies. It determines the overall role-fitment and evaluates the likelihood of handing integral work-related activities.
Behavioral assessment tools are advanced tools that measure behavioral competencies in a simulated work environment. With a combination of skills, knowledge and traits in an individual, behavioral assessment tools require candidates to demonstrate chosen behavioral competencies in one or multiple exercises that mirror actual workplace situations. Different types of behavioral assessments can be used independently, or in combination, for a holistic overview of an individual.
Cognitive assessments assess critical thinking and reasoning logic related to on-the-job performance. Whether succession planning for top or middle management, cognitive tests help check the aptitude required by leaders to achieve excellence in the work in alignment with the business goals. It also measures the ability to comprehend, understand, and go beyond existing knowledge about the job to make sound judgments. Effective cognitive tools provide organizations with the power to quickly and effectively differentiate the great from the good.
For companies seeking candidates for technical roles, our ready-to-use technical competency framework handbook lays a strong foundation for identifying stellar technical skill sets. Our specialized tests provide detailed insights into job-relevant behavior, and technical knowledge required to be successful on-the-job.
In succession planning, it may also be insightful to gather stakeholders’ perspectives, with whom the potential successor works or interacts regularly. Seeking feedback from multiple stakeholders would enable employees to understand others’ perceptions of their readiness to take on future roles. Leveraging this information could help the employees to develop a more well-rounded understanding of their performance, skill levels and behavior as perceived by others. Using a multi-rater feedback mechanism, such as Mercer | Mettl’s 360-Degree Feedback Survey, allows one to understand whether the concerned employee has demonstrated the qualities needed in a leader. Using this tool as an additional metric to determine the right fit would ensure that multiple perspectives are factored in when making the final decision.
An employee’s superiors, peers, direct reports and sometimes even clients can come together to evaluate the concerned employee’s performance. The 360-Degree Feedback Survey is easy to understand, offers intuitive insights, highlights an employee’s behavioral dynamics observed on-the-job and suggests developmental steps. Competencies, survey statements and reports – all of them can be customized.
A real-time customized report, called the integrated competency-based report, answers various questions that put the next step of succession planning into perspective. It has overall scores as well as tool-wise scores (optional for Assessment and Development Centers). This report can also include IDPs for the competencies identified as areas of development. The management now needs to decide how they plan to use the information. Would they chart a career path for the candidates, or would they nurture them for a leadership position? Would they wait for openings before advancing them through the ranks, or would they create opportunities for each individual to grow and mature? Chalk a dynamically tailored way-forward, considering an individual’s standing on concerning competencies.
The most significant step in succession planning is assessing its effectiveness by acting on it. Advanced analytics and post-program assessments empower your organization to track the identified successors on their standing in the readiness journey to become future leaders. Whether it is sharpening their skill or expanding their knowledge and abilities, act according to the new baseline generated by the report. In case of any unforeseen or unexpected requirement of vacancies in the near future, essential job roles should be filled without delays. The success of the entire process will only then be truly measured.
People often ask about the time needed for undertaking succession planning. A succession planning strategy isn’t a one-off process. It can’t be done once in a company’s lifetime and then not looked at until a situation arises. Succession planning is an on-going process and starts early. It is undertaken at least a few years in advance. If potential successors need training or development, there should be sufficient time to expose them to the firm’s full spectrum of opportunities. According to a global authority on talent and leadership, Claudio Fernandez-Araoz – the art of great ‘who’ decisions–marks the difference between success and failure. Judging someone in a leadership role depends much on their responsiveness and the ability to do things.
In today’s complex business landscape, with economic uncertainties, even a year ago, we never envisaged dealing with a new ‘normal.’ How do you plan to manage this abnormal yet new normal? What is your edge? Having the right leadership pipeline, poised to seize every opportunity, would be your primary differentiator.
Originally published July 24 2020, Updated July 29 2020
Shirisha has been helping countless brands gain traction with her content. Her deep understanding of the education sector and sound knowledge of technical skills have helped her structure the most creative solutions for key stakeholders. Shirisha has also ghosted pieces for several industry honcho’s successfully published both online and offline. When she's not keeping up with the world, you're sure to find her catching up on bollywood stories or gramming for fun.