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Create a pool of internal talent to ensure a flow of successors to top HR spots.
HR often does it for every department but its own—succession planning. Studies and anecdotal evidence suggest HR executives are not succeeding in developing their staffs to take on top-level HR positions.
Recently, Carlson Companies, Cigna Corp., Gap Inc., Hewlett-Packard Co., McDonald’s Corp. and Monsanto Inc., to name just a few, hired externally to fill their top HR position. A study by Capella University, an online university headquartered in Minneapolis, revealed that since 2000, 10 of the nation’s top 40 corporate employers have replaced their top HR executive with an external hire.
Relying on search firms to fill top HR spots isn’t the best course of action. John Doyle, co-leader of the human resource practice at Spencer Stuart, a global executive search firm based in Chicago, says the demand for chief HR officers exceeds the supply. “In the past 24 months, we’ve seen a 39 percent increase in searches for executive human resource positions.” He adds, “Executive HR positions are some of the hardest to fill because the pool of qualified talent is so small.”
That’s why you need to develop HR executives internally. A lack of planning and a shortage of HR talent within a firm diminishes the continued effective performance of the HR function, according to Bill Conaty, senior vice president of corporate human resources at General Electric (GE) in Fairfield, Conn. This can serve as a severe threat to an organization’s ability to execute its business strategy. (For more information, see “Warning Signs of a Weak HR Bench,”.)
As they do for other functions, organizations need to plan for their future talent needs in HR—and should focus on developing professionals internally. A review of companies that have successfully developed HR talent identified key elements, including creating a formal program, garnering executive support, ensuring accountability, identifying the right competencies and growing through stretch assignments. The result is a deeper bench at or near the top HR positions, and it ensures that the internal talent pool of a firm is rising.
Develop a Formal Process
Without establishing a formal process to build the pipeline for future HR talent, organizations could end up relying exclusively on traditional development methods, such as on-the-job training and classroom training, which may not provide maximum value in preparing future HR leaders.
By contrast, formal, well-planned succession programs have proven track records, such as the one at Kraft Foods. The Northfield, Ill.-based global food and beverage manufacturer and marketer established Advancement Planning, a deliberate, systematic effort to look at the performance and potential of the company’s approximately 570 human resource professionals.
Advancement Planning brings Kraft’s HR executives together annually to review the business forecast and organization drivers and, based on conclusions, to discuss the necessary staff changes within HR, according to Thomas Thurman, senior vice president of human resources. The HR executives look at the accomplishments and developmental needs of their direct reports and other high-potential members of the HR team. They discuss the HR professionals’ performance records, promotion potential and learning needs. Then executives help to define the next jobs for some of their future leaders to help ensure that they are developing the capabilities necessary to advance to positions of higher responsibilities within Kraft.
The Advancement Planning process at Kraft allows the organization to track the job experiences of its HR organization and ensures that appropriate development plans are in place. Thurman says, “This process allows us to identify who is ready now for a position of higher responsibility, who will be ready in one to three years, and who will be ready in three to five years.” The result is a deep pool of internal HR talent.
Such a formal process helps enhance an organizational mind-set in which jobs are viewed as developmental assignments instead of just “work to be done.”
Executive Support and Accountability
Effectively developing a strong pool of HR talent requires executive participation and support. At Kraft, having executive HR involvement motivates participation and ensures that other members of the HR organization will devote time and effort to leadership continuity programs, Thurman says.
Thurman adds that executive support is essential because executives make the final decisions about how competence and performance will be assessed for present positions, as well as how to measure potential.
In addition, HR executives must be held accountable for developing the next level of management. Without this accountability, development of the next generation of HR leaders may not occur, according to Melissa Siebert, director of leadership development at Tribune Co., the broadcasting and publishing company based in Chicago.
Siebert says that all HR executives at Tribune are evaluated on their ability to develop a strong HR team. Those who fail to develop future HR talent will receive poor marks on their performance review and will limit their own chances for advancement.
The expectation of developing future HR leaders is part of Tribune’s corporate DNA, adds Siebert, and much of this is attributable to the high level of accountability for talent development. Evidence of talent development includes successful completion of stretch assignments and feedback from other executives regarding the skill and knowledge the HR team possesses.
Tracy McCarthy, HR director at Lakeview Technology, a 300-employee software development firm in Oakbrook, Ill., is evaluated by her CEO on how well she is developing her six-person HR team. “By making it part of my review, the CEO holds me accountable for the development of my team members, and this makes it easier to dedicate time and energy to their growth.” Development of her HR team is measured by improvement in their overall performance management ratings and by successful execution of a learning plan, which includes formal training and certificates.
Similarly, at GE, Conaty assesses the ability to build a talented HR team when he reviews his top HR executives. An HR executive who is achieving a high level of individual performance but ignoring his talent management responsibilities will not advance very far at GE, says Conaty. With an HR organization of approximately 3,000 professionals globally, including about 300 at or above director level, this accountability helps to create a culture in which GE’s HR leaders are expected to develop their HR team.
At GE, top HR executives report to Conaty functionally, and each also reports to his or her business unit president. This ensures that the HR executives are supporting the business needs. Conaty works with business unit presidents to evaluate HR leaders. Each year GE pulls together the executives of each business unit to review the performance and potential of key executives. HR executives within the business unit are included in these reviews. Additionally, a “Session C” meeting is held exclusively to review the talent within the human resource function. Conaty facilitates a discussion among business unit executives to review the best and brightest within the HR function, and he uses this discussion to identify future development assignments.
Anticipate Future Needs
Having a formal process and holding executives accountable will do an organization little good if future HR leaders are groomed with skills that will be outdated by the time they reach the top. Although it is difficult to say precisely what those skill sets need to be, companies that do this well start with the business’s needs.
McCarthy tries to keep her HR team 12 months to 24 months ahead of the business. Every October, she participates in planning sessions that look where the business is heading in the next few years. Recent planning sessions indicate a transition to a more decentralized work structure and the use of new software development technologies. She is now preparing her team to operate in this new environment and is developing new recruiting strategies. Such an approach helps to match the organization’s currently available talent to its future talent needs and creates a strong HR bench.
When General Mills acquired Pillsbury a few years ago, HR facilitated a future competency assessment, which was part of the total integration planning process. A dozen business and functional leaders, including HR, reviewed the talent within their organizations with the CEO and his team. This talent review involved analyzing the new businesses and mapping them to competencies that would be required from the HR organization.
“The insight achieved through this process was a need to strive for broader HR talent, and we’ve put a plan in motion to address this gap by designing more cross-functional assignments as part of our process to groom future HR leaders,” says Kevin Wilde, vice president and chief learning officer at General Mills, the Minneapolis-based food company.
Learning by Doing
The most common way to cultivate HR talent from within an organization is through planned developmental job assignments. If used effectively, job experience strategies are geared to emphasize the building of competencies leading to advancement beyond the next job.
By using job assignments strategically, an organization can ensure that as HR professionals achieve greater seniority, their management skills will broaden and become more generalized in relation to total organizational objectives rather than to purely HR objectives.
For instance, Kraft’s Advancement Planning process ensures that the company’s HR professionals experience a mix of jobs, including line and staff assignments as well as both field and headquarters assignments. Thurman says, “By providing exposure to different business units through stretch assignments, we are enhancing the business acumen of our future HR leaders.”
Leveraging job experience for developmental purposes means that organizations must look at their job opportunities differently. In an effort to give high-potential HR professionals exposure to specific locations and cultures, Kraft considers where jobs are located when determining next assignments. Key questions include whether the person would benefit from working in a field location and whether an international job assignment would give the person a more global perspective.
Job assignments are sometimes made not because of the job’s location but because of the people with whom the HR professional would work. For instance, at Tribune, pairing high-potential HR professionals with individuals who have special talents or management styles worthy of emulation is often a key consideration when determining job assignments.
Also, a job opportunity can be used to give a high-potential HR professional exposure to time-sensitive assignments. Making HR professionals responsible for integrating a company quickly after a merger or for helping a business execute a quick turnaround can be effective in developing future HR leaders.
Development through formal job assignments is more challenging for small and mid-size firms than for large companies because there are simply fewer positions. Smaller organizations focus on development through key projects.
Isaac Dixon, vice president of human resources at the 120-employee Telco Community Credit Union in Portland, Ore., says the size of his firm prevents him from creating a formalized career development program. “I am interested in providing my current three-person HR staff with as much opportunity as possible to build cross-functional skills and thinking whenever we can,” Dixon says. “I have them work on project teams outside their areas of expertise to build confidence, knowledge and internal networks beyond the HR function.” (For more information on organizationwide succession plans, see the November 2003 HR Magazine cover story “Who’s Next?”)
Along with leveraging job assignments strategically across the HR function and in other business units, organizations have created special development programs for high-potential individuals in HR.
GE has a two-year human resource leadership program designed to prepare new HR employees to be business partners. The program consists of three eight-month assignments—two of them in HR—aimed at developing broad business skills through hands-on experience. In the third assignment, which is cross-functional, the HR professional may work in finance or in a Six Sigma role. The program also includes formal classroom training in HR leadership and business skills. (For more information, see “GE’s Talent Pipeline Process.”)
Tribune also has a formal leadership program called the Human Resource Development Program. The first of the program’s two phases helps to provide exposure to various HR functions as well as to educate participants on the organization’s broad range of businesses. In the second phase, participants focus on key business processes to improve their knowledge of the business. For example, most recently, program participants shadowed a reporter working at one of the company’s broadcasting businesses. This allowed HR participants to see how a reporter develops a story and gave them a stronger understanding of the business.
Similarly, new HR team members at General Mills participate in “Human Resource U”—an in-depth, perspective-building program designed to accelerate the understanding of both the company and the HR function.
Investing in the Future
Organizations with solid HR bench strength do not necessarily have smarter or more inherently talented workforces than other companies do. Their advantage stems from the investment they make in growing their own HR leaders.
“HR competencies do not arrive overnight,” says Juliana McMeans, human resource manager at the Bingham McCutchen LLP law firm in Boston. “HR professionals need years of nurturing and mentoring to understand the intricacies of the numerous functions and how they are incorporated into the overall business strategies.”
The vision of every HR executive, regardless of the size of the firm, should be to have an HR organization that has an abundance of credible business partners. HR executives today have an obligation to invest in and prepare a new generation of HR leaders who are more qualified, more insightful and more able to do the work of the future. Doing so ensures that the pipeline of future HR leaders is full.
Robert Rodriguez, Ph.D., is a faculty member in the Human Resource Program in the School of Business at Capella University in Minneapolis, where he teaches graduate- and doctoral-level courses in human resources and diversity.
Warning Signs of a Weak HR
The following characteristics can signal the need for enhanced emphasis on leadership continuity within the human resource function, according to William Rothwell, professor in charge of workforce education and development at the Pennsylvania State University in University Park and author of Effective Succession Planning (Amacom, 2000):
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