Creating a Succession Plan
and Talent Pipeline that Supports
Sustainable, Profitable Growth
NAW
October 9, 2014
Garrett J. Sheridan, President and CEO
Axiom Consulting Partners
ST R AT EGY 
O RG A N I ZAT I O N 
TA L E N T
Today we will focus on providing strategies and tactics
to help CEOs answer the following key talent questions:
1. Why are Talent Pipeline development and Succession Planning so critical and how can CEOs raise the bar and create a “talent mindset?”
2. Which organizational level capabilities (e.g., IT, Logistics, Sales) are most critical to your business in the future given your planned growth strategy and trajectory?
3. Which roles in your business exert the greatest influence on your ability to build competitive advantage?
4. How can you ensure that you are effectively identifying and developing the next wave of leaders?
5. How can you ensure that leaders approach talent management and succession planning with the same degree of discipline and focus you place on managing your customers and how you run your business?
NAW | Building a Talent Pipeline and Succession Planning | October 9, 2014
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Why build a talent pipeline and conduct succession planning?
Building a Talent Pipeline and conducting Succession Planning serves a singular purpose:
Ensuring that the business has the right number, type and quality of people in the right roles, at the right time, to execute its strategy. NAW | Building a Talent Pipeline and Succession Planning | October 9, 2014
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Failing to align talent supply with business demand has
significant economic and human capital implications
– 16%
– 2%
5‐yr TTR % vs. Peers (2012)
5‐yr TTR % vs. Peers (2012)
-3%
+ 1%
5‐yr TTR % vs. Peers (2012)
5‐yr TTR % vs. Peers (2012)
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Since 2010, Strategic Workforce Planning maintained its ranking
as a crucially important concern for leading companies
Source: 2012 online survey with 4,288 responses from companies throughout industries, 102 countries and six major regions; 2012 BCG/WFPMA analysis. NAW | Building a Talent Pipeline and Succession Planning | October 9, 2014
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…So why do we continue to see disconnects between business strategy and
how many companies manage talent?
1. Leaders understand the linkage between strategy and talent but not enough action occurs to address gaps
2. Underestimation of the true “cost” of talent
3. Valuable HR processes exist but the individual processes are not connected in ways that create insight and improve talent planning strategy
and decision‐making
organization
talent
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Talent pipeline development and succession planning must be grounded
in business strategy to establish clear priorities and desired outcomes
1
Translate strategy into organizational capabilities
Strategy
Translation
Determine actions/ investments and HR agenda to close gaps
5
2
Talent Strategy & HR Agenda
Workforce Composition & Segmentation
Identify gaps (including scenarios if needed)
Workforce
Planning & Talent Pipeline Development
4
Gap Analysis & Prioritization
Identify, categorize and segment talent relative to organizational capabilities
3
Talent Supply
vs. Demand
Determine future headcount supply vs. demand
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Linking talent pipeline development to business strategy
STRATEGY
VALUE DRIVERS
Deliver New Products to Market
Supply Chain Diversification
Customer Segmentation
Drive Top Line Growth
Maximize Penetration of Current Products
Reinforce Brand Prominence
Sustainable Profitable Growth Achieve
Bottom Line Results
Pursue Alternate Distribution Channels
Pursue Aggressive Operational Initiatives
CORE ORGANIZATIONAL CAPABILITIES
Factors that are critical to execute the strategy and deliver results
TALENT
REQUIREMENTS
VP Logistics and Transport
Channel Mix
Director Market Analytics
Grow/Maintain Customer Relationships
VP Customer Relations Develop Back‐end Capabilities to Support Supply Chain
Build Direct to Consumer Capabilities
Supply Chain Innovation
Supply Chain Manager
Market Knowledge
Warehouse Manager
Customer Centricity
Customer Relationship Mgr
Technology Backbone
Director Purchasing Reduce Costs through Footprint
Reduce Cycle Time
Fulfillment Director
Logistics Analyst
Talent Segmentation
Strategic
Core
Requisite
Implement Lean Techniques
Inventory Analyst
Implement ERP System
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Not all roles create equal impact…Talent segmentation is a critical element of
talent pipeline prioritization and management
Actions & Investments
Talent Segment
Yr 1
Yr 3
Roles that drive
competitive advantage in core capabilities
Strategic
Strengthen
Core
Roles that Protect
support
core capabilities
Requisite
Streamline/
Outsource
Roles that no longer support
core organization
capabilities
Surplus
Redeploy
Yr 5
Talent Portfolio Changes Over Time
Impact on Value Driver
Talent segmentation enables leadership to direct talent management actions and investments to
roles where it will yield the greatest return relative to executing the strategy.
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Talent management processes must be aligned and integrated to deliver
a capable workforce, at the right time
Business‐Based Talent Priorities
Axiom’s Integrated Talent Management Approach
Sourcing
& Recruiting
EVP &
Rewards
Strategic Objectives
Selection &
Assessment
Orientation
& Onboarding
Retention
Core Organizational Capabilities
Talent Strategy Engagement
Roles & Career Paths
HiPo ID &
Leadership
Development
Workforce Plan & Talent Segmentation
Goal Alignment
& Metrics
Training &
Development
Performance
Management
Talent Life‐Cycle
Acquire
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Deploy
Succession & Talent Review
Develop
Engage & Retain
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Identifying and developing the next wave of leaders
1
Design the Talent Pipeline and Succession Approach 2
Confirm/Develop Success Profiles
3
Determine Talent Pool(s)
4
Conduct Assessments
5
Analyze Assessment Data
6
Develop Reports and Facilitate Individual Feedback
7
Design and Implement Individual Development Plans
8
Facilitate Talent Reviews and Develop Succession Plan
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2
Confirm/develop success profiles
FOUR KEY ELEMENTS OF SUCCESS PROFILES 1
2
3
Confirm/Develop Success Profiles
Determine Talent Pool(s)
4
Conduct Assessments
5
Analyze Assessment Data
6
Develop Reports and Facilitate Individual Feedback
7
Design and Implement Individual Development Plans
8
Facilitate Talent Reviews and Develop Succession Plan
2.
Derived from strategy, critical tasks, and organizational competencies
Design the Talent Pipeline and Succession Approach 4.




Critical Experiences
 P&L Accountability
 Branch leadership
 Regional Leadership
Performance Metrics
Financial
Customers
Markets
People/Culture
1.
Key Accountabilities
and Responsibilities
Defined for each role
3.
Common, practical definitions for each role
NAW | Building a Talent Pipeline and Succession Planning | October 9, 2014
Critical Knowledge, Skills, and Abilities
(i.e., Competencies)




Business
Leadership
Interpersonal
Intrapersonal
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2
Confirm/develop success profiles continued
Role Purpose
Lead the financial architecture and management of ABC Group’s Finance Function to maximize shareholder value. Key Accountabilities
1. Ensures accurate and timely publication of financial statements in compliance with all regulatory standards
2. Ensures the optimal financial position required to implement the ABC business strategy
3. Ensures effective external relationships with key financial stakeholders (e.g., shareholders, analysts, investor community, rating agency and banking institutions)
4. Ensures financial controls, the successful execution of Finance processes, and the development of the capabilities required to execute the financial strategy of the business
5. Ensures effective execution of the enterprise risk management function (financial, regulatory and reputation)
Competencies
Business skills needed to achieve success in the role:
 Business acumen
 Investor relations
 Strategic thinking and planning
 Strategic financial management
Leadership skills needed to lead the organization:
 Developing talent
 Leading change
 Motivating & empowering others
 Vision
Interpersonal needed to be an effective team builder:
 Collaboration & teamwork
 Leveraging others strengths
Intrapersonal needed to be an effective team member:
 Communicating effectively
 Results/execution focus
Experience Sets
1.
Service as COO, CFO or higher‐level at a minimum $2 billion, US, public company
2. Technical financial skills utilized in a mature financial career
3. Proven managerial ability
4. Investor relations experience
5. Board interaction and corporate governance experience
6. Supply chain management
7. Service as a Director on a Board
8. Merger and acquisition experience
9. Experience with a decentralized organization
10. Experience with proprietary accounts receivable programs
Metrics
Market Metrics
 Total shareholder return
 Earnings per share
 Relative share price Financial Metrics
 EBITDA
 Cash flow
 Debt to equity ratio
 Return on capital employed
 Tax rate
Function Metrics
 Access to adequate capital at a competitive cost
 Investor perception study results
 Audit results
NAW | Building a Talent Pipeline and Succession Planning | October 9, 2014
People Metrics
 Talent development
 Talent retention
 Employee engagement
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3
Determine talent pools
ILLUSTRATIVE TALENT POOL MAP
CEO
1
Design the Talent Pipeline and Succession Approach 2
Confirm/Develop Success Profiles
3
COO
CFO
BU A
BU B
SVP
SVP
SVP
SVP
EVP
EVP
EVP
EVP
Director Director Director
Director
Determine Talent Pool(s)
4
Conduct Assessments
5
Analyze Assessment Data
6
Develop Reports and Facilitate Individual Feedback
7
Design and Implement Individual Development Plans
8
Facilitate Talent Reviews and Develop Succession Plan
Sr. Mgr
Sr. Mgr
CEO Talent Pool: A talent pool of 2 to 3 candidates will be generated from the EVP ranks for the CEO succession plan
Sr. Mgr
Sr. Mgr
Executive Talent Pool: A talent pool of 2 to 3 candidates will be generated below the EVP ranks for the EVP succession plan
Typically we see approximately 2 to 3 people in the internal pool for the CEO succession process.
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4
Conduct assessments
SAMPLE ASSESSMENT METHODOLOGY
1
Design the Talent Pipeline and Succession Approach 2
Confirm/Develop Success Profiles
3
Determine Talent Pool(s)
4
Conduct Assessments
1. Competency‐Based Interview Assessments  Axiom interviews with participant, peers, direct reports, and superior.
 Questions focus on level of demonstrated mastery and frequency of demonstration on key competencies.
 Assessments also include questions to assess “Coachability” in terms of being able to hear feedback without being defensive, changing behaviors, and sustaining change.
 Each interviewee provides both numerical ratings and behavioral observations
2. 360° Survey Assessments:
5
Analyze Assessment Data
6
Develop Reports and Facilitate Individual Feedback
7
Design and Implement Individual Development Plans
8
Facilitate Talent Reviews and Develop Succession Plan
 A normative and validated 360° feedback survey developed Provides feedback on demonstration of leadership skills and behaviors that have been identified as being critical to executive success through over 40 years of research with thousands of top‐level leaders.  Normative comparisons to more than 3,000 other top level leaders as well as industry norms are available.
3. Leadership Assessments:
 Online self‐report assessments (e.g., Hogan that over half of the Fortune 500 companies have used to help improve the effectiveness of their leaders)
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4
Conduct assessments continued
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4
Applications of Hogan for CEO succession planning
 Based on 30+ years of psychometric research that identifies competencies, derailers and values of top leaders
Optimal CEO Level Hogan Profile
 The most common reason for leadership failure is the inability to build or maintain a team, which is typically a function of certain dysfunctional interpersonal tendencies
 Hogan identifies high‐potential leaders, from those that will be challenged, by assessing interpersonal tendencies
 The “optimal” leadership profile for a successful CEO is different than profiles for other executive roles

 Characteristics of top performing executives based on research conducted by Hogan Assessments on 457 senior executives.
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5
Performance, readiness and potential analysis
Succession Planning Assessment Components and Outputs
1
Design the Talent Pipeline and Succession Approach 2
Confirm/Develop Success Profiles
3
Determine Talent Pool(s)
4
Conduct Assessments
5
Analyze Assessment Data
6
Develop Reports and Facilitate Individual Feedback
7
Design and Implement Individual Development Plans
8
Facilitate Talent Reviews and Develop Succession Plan
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6
Sample succession plan and talent review output
John Doe Capability Profile: Leadership Strengths: Development Areas: • Competencies: Coaching and Developing Others, Fostering Collaboration • Competencies: Investor and Public Relations, Strategic Business Planning and Teamwork, Supply Chain Management
and Implementation, Business and Financial Acumen
Other Data:
Other Data:
• In ambiguous and complex business situations, Joe can easily link together • Tends to “fall down” on questions from analysts if he is not prepared for complex concepts and ideas
the question, specifically in the area of finance
• Joe adopts a holistic perspective and systems view when approaching complex problems
• Hasn’t had the opportunities to interact with certain financial bodies and participate in a significant role during investor calls
• Reacts proactively and aggressively when challenged by competitors
• Prepared Board presentations have been perceived as being too scripted, void of creativity, and lacking insights
Development Activities
Progress
Potential Upward or Lateral Moves: Serve as primary interface with the investor community by demonstrating business and financial acumen
Complete
Chief Executive Officer
5+ yrs
Chief Operating Officer
Now
Divisional SVP (Asia Pac)
1‐2 Yrs
Adopt a more flexible decision‐making style that considers the balance of various ideas
Lagging
Identify opportunities to lead the presentation of results with key investment and financial community
Not
Started
EVP Strategic Planning
NAW | Building a Talent Pipeline and Succession Planning | October 9, 2014
Readiness
Now
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Sample individual feedback report and development plan
Target Results Development Goals Tactics 3 to 6 Months 1
Design the Talent Pipeline and Succession Approach 2
Confirm/Develop Success Profiles
6 to 12 Months +12 Months 


3
Determine Talent Pool(s)
4
Conduct Assessments
5
Analyze Assessment Data
6
Develop Reports and Facilitate Individual Feedback
7
8


Design and Implement Individual Development Plans
Facilitate Talent Reviews and Develop Succession Plan
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8
Facilitate talent reviews and develop succession plan
9‐BOX PROCESS OVERVIEW
Organizations use performance/potential matrices (9‐Box) to guide succession planning. More specifically, 9‐Box allows an organization to: 



Make talent discussions more efficient
1
Design the Talent Pipeline and Succession Approach 2
Confirm/Develop Success Profiles
3
Determine Talent Pool(s)
4
Conduct Assessments
5
Analyze Assessment Data
6
Develop Reports and Facilitate Individual Feedback
7
Design and Implement Individual Development Plans
 Applies standard business‐aligned definition of performance trend and future potential across all segments of a business
Facilitate Talent Reviews and Develop Succession Plan
 Calibrates and aligns leader viewpoints to make subsequent talent discussion more effective
8
Drive targeted development
Determine which employees are most critical to engage
Assess bench strength
Benefits of this approach
 9‐Box creates common language that enables robust conversations for improving quality of bench strength assessment and development decisions.  Focuses talent discussions on high impact talent segments (Box #8 and 9)
 Visual talent snapshot that can be updated annually or as needed
 Clearly distinguishes between high‐potential talent and ‘solid’ performers
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Sample talent review for CEO succession planning
Talent Pools and Development Actions
HIGH
8
CEO CANDIDATE POOL
H
Potential to Be Future CEO
A
B
 Use current leadership roles (in the new structure) to develop required CEO competencies and experiences
 Implement targeted leadership development plans
 Accelerate leadership development, including coaching and mentoring
 Assess ability to deliver sustained business performance in his new role (H)
C
I
J
D
K
HIGH POTENTIAL POOL
 Expand opportunities to accelerate development and demonstrate leadership with larger teams
 Gain greater cross‐functional exposure, line and industry experience
 Understand career aspirations/motives (to retain)
 Consider coaching and mentoring
L
LOW
E
G
F
CORE LEADERSHIP POOL
LOW
HIGH
Skills and Experiences Aligned to Future CEO Profile
 Leverage organizational acumen and industry expertise to drive business results
 Transfer knowledge/mentor other high potential leaders
 Lead change while protecting the legacy and tradition that has made the company great
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8
Facilitate talent reviews and create development plans
continued
Axiom’s Adapted 9‐Box Framework for Talent Reviews: Development Implications NAW | Building a Talent Pipeline and Succession Planning | October 9, 2014
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Creating and sustaining a talent mindset
1. Line leaders are responsible for managing talent and supported by HR.
2. Managing talent is as prominent as managing customers and suppliers.
3. CEO spends a significant percentage of time on talent and people issues.
4. Rigor and objectivity build credibility and belief in the process.
5. Deployment decisions into new roles are consistently communicated in ways that reinforce the intent and value of managing talent effectively.
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Key take-aways: Talent pipeline development and succession planning
 Building a talent pipeline is an essential business process to ensure business continuity, strategy execution and stewardship of human capital.
 Talent Pipeline development must be linked to the current and future business drivers and strategic capabilities.
 Talent and Succession Planning should be ongoing with periodic, formal check‐ins and report‐outs on leadership pipeline strengths and risks.
 Succession Planning is not “replacement planning.”  Succession Planning for the CEO should be owned by the Board.
 Employee performance and employee potential are often confused and should be assessed independently.
 There should be multiple dimensions to development, with emphasis on building experiences and competencies necessary to step into broader roles.
 CEOs can and should create a “talent mindset.”
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Garrett Sheridan
President & CEO
Axiom Consulting Partners
gsheridan@axiomcp.com
Office: 312.202.3009
Mobile: 773.620.7473
www.axiomcp.com
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Garrett Sheridan
Expertise
Professional Background
Garrett specializes in aligning strategy, organization and talent to deliver superior results. He has served clients in North America, Europe and Asia Pacific, and is widely published and quoted on strategy alignment, organization design and human capital management issues. He has a strong change management and implementation focus that serves to engage employees quickly in understanding and committing to proposed change. Prior to joining Axiom Consulting Partners, Garrett was Vice President and North American practice leader for Hudson Human Capital Solutions. In 2003, MPact Consulting, which he co‐founded in 1998, was acquired by Hudson Highland Group. Prior to co‐founding MPact, he was a Senior Consultant at Sibson & Company where he specialized in the design and implementation of balanced scorecards, business process redesign and sales force effectiveness. Previously, he worked for Boyle & Associates, a boutique consulting firm specializing in mobilizing broad‐scale change. In his consulting career, he has served companies in numerous industries, including pharmaceuticals and chemicals, energy, basic materials, high technology and durable goods manufacturing.
Notable Achievements
 Led the integration of four legacy businesses within a $6B diversified technology company to establish a common strategy, product and solution portfolio, organization design and leadership team operating model
 Developed and implemented a complete go‐to‐market strategy for a large global ERP applications provider, including sales strategy, customer segmentation, territory design, quota and compensation design
 Partnered with the executive leadership of a UK PLC to conduct a strategy assessment and organization restructuring to improve operating leverage and ensure sustainable growth
 Completed a territory realignment initiative for a software company to improve sales force productivity and performance that achieved 12% revenue growth
 Developed a web‐based scorecard system and executive dashboard for a large U.S. telecommunications company’s sales force
Education
Garrett has a Master’s Degree in Organizational Psychology and a Bachelor's degree in Psychology, both from University College, Dublin, Ireland. Professional Affiliations/Published Works
Garrett is co‐author of Shockproof: How to Hardwire Your Business for Lasting Success (Wiley & Sons 2011). Garrett has been published in Management Review, HR Intelligence, Business Plus (Ireland), and he is also frequently quoted in business publications including Human Resource Executive Magazine, US News and World Report, Management Consultant International and Workforce Management. Garrett has been a frequent speaker on translating strategy into results, under the aegis of Federated Press, the European Foundation for the Improvement of Living and Working Conditions, the International Quality and Productivity Center and Institute for International Research (IIR), and Executive Club of Chicago. Garrett was a guest speaker at the 57th Annual SHRM conference in San Diego, CA, in June 2005 and currently sits on the Human Capital Institute’s Talent Strategy Board. NAW | Building a Talent Pipeline and Succession Planning | October 9, 2014
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Axiom’s Value Proposition
strategy We help clients develop and implement strategies that create competitive advantage:
 Business Strategy Development
 Strategic Cost Structure Rationalization & Resource Allocation  Value Analysis (Value Tree Mapping)
 Leadership Alignment and Change Management
 Growth & Sales Effectiveness
 M&A Integration
organization
We help clients design and build organizations to support effective execution and deliver results:
 Organization Design & Restructuring
 Governance & Operating Model
 Business Process Improvement
talent
We help clients get the right mix and quality of people, deployed in the right roles for maximum impact:







HR strategy
Strategic Workforce Planning Reward Strategy & Compensation Program Design
Succession Planning Talent Assessment and Selection Systems
High Potential and Executive Leadership Development
Employee Engagement & Value Proposition
We work with leaders to align strategy, organization design
and talent to improve execution and deliver results.
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Axiom’s Brand Promise and Profile
Brand Promise
Our Firm has a closely guarded reputation and brand promise based on how we:
Our services help clients:
 Focus on the highest priority sources of value.
 Align strategy, organization design and talent to improve execution and deliver results.
 Help clients understand their situation more deeply, make choices with wisdom and take action more decisively to create an enduring impact.
 Identify the primary obstacles to success and the root cause of each one and then overcome those obstacles.
 Listen, more than tell. Act, rather than just recommend. Deliver solutions that create an enduring impact.
Firm Profile
 Help clients create and maintain better linkages among their strategy, organization design and talent.
 Founded in 2005 to help leaders improve execution and results by aligning strategy, organization design and talent.
 Collaborate with clients to achieve superior results in complex situations.
 Axiom’s professionals have an average of 20 years experience as consultants and corporate executives developing and implementing solutions that enhance organizational capability, effectiveness and performance.
 Deliver an appropriate balance of process consulting and technical expertise.
 Value and practice straight talking and plain speaking.
 Six locations: Austin TX, Chicago, New York, Washington, D.C., Brussels and Dublin (EU).
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Partial Client List
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Insight & Thought Leadership
Our Firm's thought leadership helps leaders consider talent in a strategic context. NAW | Building a Talent Pipeline and Succession Planning | October 9, 2014
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