Grooming the Next Generation

Smart IT leaders take succession planning seriously.

Until recently, many CIOs hadn't given much thought to succession planning, thanks largely to tighter IT spending and low staff turnover. "People were lulled into a sense of complacency over the last five years, as there hadn't been much job movement," says Bill Homa, CIO at Hannaford Brothers, a supermarket chain in the US northeast. But that's starting to change. Spending constraints are loosening and, as a result, more top positions are opening up. More important, many CIOs are recognizing that they need to actively develop the next generation of IT managers and technical leaders as thousands of experienced baby boomer IT professionals near retirement age and universities churn out fewer computer science graduates (see "Beating the Boomer Brain Drain Blues", page 84).

"Ten years from now, we're going to be facing a big gap" in supply and demand for IT management and technical skills, says Maria Schafer, an analyst at Gartner.

Senior management at most companies has done a poor job of succession planning - not only within the IT ranks but throughout most corporate departments such as finance, customer service and human resources, says Schafer.

Still, some forward-thinking companies, like General Electric, have had succession management programs for years. "We place succession planning as an integral part of our leadership development process," says Chris Perretta, vice president and CIO at GE Commercial Finance in the US. Under a formal review process that's done for all GE employees each northern spring, managers conduct an exercise known internally as "Succession C", in which a rigorous, written succession plan is put together for each worker, says Perretta.

GE Commercial Finance has a succession plan for each of its 1200 IT workers, he adds. At the CIO level, Perretta and other executives are constantly assessing IT directors and other potential candidates for attributes such as curiosity, business focus and high energy levels. To help develop its next set of IT and other corporate leaders, GE developed a short-term international rotation program more than 10 years ago to move workers among various geographic locations in order to give them "tangible international experience", says Hank Zupnick, CIO at GE Commercial Finance Real Estate, a division of GE Commercial Finance.

Detroit-based DTE Energy launched a corporate succession-planning effort three years ago. The program was started following an executive repositioning in the wake of DTE's merger with MCN Energy Group and an early-retirement program that was more popular than expected, says Lynne Ellyn, senior vice president and CIO at the diversified energy company. As part of the effort within DTE Energy's 800-person IT department, Ellyn and other executives regularly review positions that are critical to the ongoing operations of the business, ensuring that there's a "farm club" of talented IT professionals to fill critical positions as needed, she says.

Ellyn also has "a very detailed succession plan" for her own role. She has identified several IT directors as candidates to replace her - a list that has been reviewed by DTE Energy's executive committee "so that it's well known", she adds.

Real-World Testing

Dan Demeter, Korn/Ferry International's CIO, looks for ways to try out his succession scenarios. "When I go on vacation, I put different people in charge," says Demeter, who manages a 60-person IT staff at the Los Angeles-based executive placement firm.

At other times, Demeter distributes his responsibilities among various IT directors and grants executive authority to one person. All this helps ensure that his management team will be ready to step in when needed.

For some IT managers, succession management within the IT organization isn't strictly a hierarchical exercise. For instance, when Marriott International considers candidates for an opening within its 1200-person information resources department, "we look across the organization, not necessarily down and up", says George Hall, senior vice president of human resources for the IT group at the hotel operator. By looking only vertically through the organization for the right person, he says, "you may be limiting your resources as to who may be the most effective person to step into that role".

Because some technicians want to take on leadership roles within their domains without having to become managers, Marriott has put together a leadership track and a technology track for its IT organization. People in the technology track can grow into a number of roles that lead up to the vice president level in terms of compensation, says Hall.

Like GE, Marriott also offers rotational assignments for IT and business workers alike. For example, one of its senior IT managers recently moved into a corporate HR role while a member of the finance department transferred to the IT department to work on financial applications, Hall says.

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In addition to rotating IT and business personnel, Hannaford Brothers' Homa says he likes to place people in roles "outside their comfort zones" to help them grow professionally.

For instance, the person who had been overseeing the grocer's Windows NT operating system group wanted to develop more managerial experience. So Homa recently placed him in charge of the company's IT support centre, where he'll be managing more personnel and responding "to a lot more problems", says Homa.

Truman Medical Centres recently launched a leadership pipeline program to identify people who are ready to move into roles with greater responsibilities. In addition to handling their usual work, the 11 people who were selected have each been paired with an executive mentor and have been asked to oversee a strategic project that was hand-picked for them by the company's CEO, says CIO Bill McQuiston.

The Kansas City-based health care provider has also established leadership programs to identify "raw talent" in the organization and to help existing leaders address deficits in skills such as communication or presentation that might keep them from cracking the executive ranks, says McQuiston.

Harder Than It Looks

As essential as IT succession planning is, it's also fraught with challenges. The first concerns the demands of technology itself. For example, DTE Energy needs IT workers who have a deep understanding of a particular technology, says Ellyn. But that focus can leave someone "inadequately equipped to move horizontally or in other areas" where interpersonal, business and other soft skills are needed, she says.

Another challenge is retaining people who have been groomed to move ahead. As companies invest in training and developing IT workers, they're also making them more marketable. One of the biggest challenges that Marriott faces is low turnover at the senior management level, which can hinder emerging leaders from moving up quickly, says Hall.

CIOs also have to gain a better understanding of what makes younger IT workers tick. In the past, "when people died off or moved on, you advanced", says McQuiston. Now, he says, "people are looking for a better road map" for their careers.

SIDEBAR: Successful Succession

Gwen Walsh, a senior consultant at Ouellette & Associates Consulting, offers these succession-planning tips:

DO identify roles and responsibilities critical to attaining strategic and tactical business goals.

DON'T limit your thinking to formal leadership positions; informal leaders may be critical to your business.

DO define the critical success factors and optimal profile for each position, including knowledge, experience, certifications, competencies and skills.

DON'T limit your analysis to fit the profile of the person currently holding the position.

DO determine whether there's a logical progression path that can be defined for each target position.

DON'T neglect to share the progression paths and let each person in your organization know where he fits into the big picture.

DO assess those currently in key positions, comparing their profiles with desired profiles and noting gaps.

DON'T hesitate to grow your current leaders to optimize today's contributions and results.

DO identify those who aren't currently holding key positions but who have high potential.

DON'T overlook a diamond in the rough.

DO work with high-potential candidates to create and execute a professional development plan, then track their progress and results.

DON'T miss the opportunity to find next-generation leaders within your organization.

DO create a matrix of key positions, success factors, profiles, incumbents and heirs apparent, including strengths, challenges and anticipated timing to reach each desired profile.

DON'T keep all of the information in your head; document it.

DO note key positions where there's no heir apparent and determine your immediate, short-term and long-term strategies should that key position become vacant tomorrow.

DON'T assume that the unexpected happens only to other people.

DO be certain that you have identified your own replacement.

DON'T limit your heir apparent to those on your team. Think outside the box; think diversity.

DO make leadership succession planning a dynamic process. Leverage it as you hire new talent, plan future strategies, look for resources in emergency situations, and raise the performance bar.

DON'T create the plan as a one-time event and allow it to grow stale and outdated.