Who's Next?

By Susan J. Wells Nov 1, 2003

HR Magazine, November 2003

A Growing Business Needs More Managers

For K. Hovnanian Enterprises Inc., developing a surefire succession plan is key to filling its fast-growing homebuilding empire with a crop of next-generation leaders.

“We initiated our program to make sure we have leaders in place to grow our company,” says Bill Moore, vice president of organizational development. Its growth needs are great: Fortune magazine recently named the Red Bank, N.J.-based company as the nation’s 15th fastest-growing company. It has acquired seven other homebuilding companies in the last three years.

The company formed a succession planning committee that includes the chief executive officer, chief operating officer, chief financial officer, vice president of HR, senior vice president of corporate operations and Moore. This panel selects and approves candidates and tracks their progress throughout a one- or two-year employee development program.

Before the committee reviews candidates, members gather data on each—including feedback from 12 to 14 direct reports, colleagues and senior managers. This confidential e-mail survey is designed to assess leadership ability.

Next, the panel examines the candidate’s employment history and experience for technical and managerial skills. The goal: To discover and fill any gaps in work history.

The committee lays out this information in a two-page spreadsheet and assigns grades ranging from 1.0 to 5.0. Any grade of 3.9 or below requires an individualized training plan.

After the committee accepts a candidate’s nomination, Moore and the candidate home in on any necessary training or coaching and map out an action plan. Candidates must spend 10 percent to 20 percent of their work time on this personal development plan.

Next, Moore says, the committee places each candidate into one of three categories indicating readiness to move up: ready in two years, ready in one year or ready now.

The succession plan has netted measurable results, Moore says. Internal candidates who completed the program and were promoted have been 100 percent successful, compared to executives hired from the outside, whose success rate is closer to 50 percent, he says.

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