Planning Management Succession

Say the board of directors at your co-op has adopted a set of policies to ensure a successor for the general manager. Now management's work begins.

Thinking beyond mere emergency replacement for the general manager position (see sidebar), you can create a comprehensive management succession plan that could ensure smooth functioning of store operations, whenever a department manager leaves, because a trained replacement is waiting in the wings. And you can provide career development paths for staff so that they see good reason to stay.

Experts say that succession planning is particularly crucial during times of high turnover or high growth in your business. Perhaps management succession planning has seemed like a luxury up til now. But the shortage of qualified managers is not going to go away. Count on it -- you are going to lose your deli manager, your HBC manager, or your general manager in the next few years. Is your co-op ready to handle the consequences?

Succession planning: Four generations

William J. Rothwell, professor of human resource development at Pennsylvania State University, identifies four generations of succession planning.

Generation One: A simple replacement plan to cover the emergency absence of the general manager and a few other key positions.

Generation Two: Application of Generation One further down the organizational chart to cover all supervisory and highly skilled positions.

Generation Three: Evaluation of the actual skills and experience needed to fill each position, followed by development plans to bring internal staff up to the levels needed.

Generation Four: Identifying potential outside talent (e.g., from brokers, vendors, distributors) to be tapped in event of need. But, cautions Rothwell, you shouldn't be replacing more than 30-50% of key positions from outside your company. The rest should be developed from within.

If you are at Generation One, congratulations for thinking ahead. At least your co-op won't get caught in a situation where there is no one to sign checks or no one can find the insurance policy. If you're at Generation Two, you have realized that your co-op is thin in talent in certain areas. As Rothwell notes, "Even an organizational chart that shows two to three people to fill each position ... is useful. Just the exercise of completing such a chart can be an eye-opener."

Emergency Management Succession Policy

The General Manager shall not operate without a plan for emergency management succession. Accordingly, the General Manager shall not fail to:

1. Establish a "chain of command" to be used at any time the General Manager is unable to serve (planned or emergency absence).
2. Identify said persons to the board of directors and require the next in charge to attend at least one board meeting per year.
3. Establish and document systems and procedures so that others can find information needed to meet the co-op's obligations in a planned or emergency General Manager absence.
4. Actively prepare through training, coaching, development and access to information at least one staff member who could be a candidate for the General Manager position if needed.

-- by Marilyn Scholl and Carolee Colter, adapted from John Carver

Generation Three requires you to face a challenge that most co-ops have not squarely and consciously faced: to develop your current employees to the point where they could be qualified to fill a management or other key position. By carefully comparing the qualifications of the position to the skills and experience of the employee, you must pinpoint the areas where further development is needed. And even more daunting, you should be doing this not with just one potential replacement for each position, but several.

Starting at the top

Under our proposed emergency succession policy, the general manager will choose at least one person from among the staff to train and coach to the point where s/he could be a viable candidate for the general manager job. This person is not guaranteed the job, nor is s/he obligated to take it if it does become available. Nevertheless the co-op gains all around. First it gains someone who feels psychologically ready to take on the acting general manager job, if needed. Second, it gains an increased likelihood of having a qualified internal candidate in a labor market where general managers are tough to find. And possibly the co-op gains by keeping someone who might have moved on seeking greater opportunity for advancement elsewhere.

Should the person(s) in question be identified to the world as the general manager's heir apparent? For several reasons, I would suggest not. It is enough for the board to receive a report from the general manager that indeed someone is being "trained, coached, developed and given access to information" according to the board's policy. The person who has been so chosen could decide later that s/he is not interested in the manager job, or the general manager could decide that the person is not such a good choice after all. Either party could quietly end the arrangement without consequences to the co-op.

If someone is assumed by board and staff to be "the next general manager," the pressure on the board to accept that person for the job would be hard to withstand, even if s/he lacked some qualifications. This could unfairly block consideration of other candidates. If the board did decide not to hire the heir apparent, some staff and co-op members might feel that s/he was unfairly denied a job. It's likely that the grooming process by the general manager will not go unnoticed, and the identity of the potential general manager replacement may be surmised. But the whole thing could be downplayed by not making it public.

To create a development plan for other management positions, the general manager could lead the management team, or perhaps a smaller group of managers, through a four-step process:

1. For each management position (and others thought of as key), list the essential qualifications in terms of skill and experience.
2. Identify the employees with some potential to fill each of these positions.
3. Analyze the gaps in skills and experience between what each employee has and what the position needs.
4. Come up with a plan to develop the needed skills and experience for each employee.

In the first step, listing qualifications, don't fall into the trap of thinking that the needed qualifications are the same as those of the person currently holding the job. Consider how the business environment might change. For example, even if a technology-phobe is now purchasing for HBC, her/his successor should be computer literate. In the second step, identifying possible successors, consider lateral moves among managers. Perhaps the front end manager has potential to become the member services manager.

SAMPLE: Development Plan for Potential Merchandising Manager

3 = outstanding in this area
2 = fully qualified in this area
1 = needs more skill or experience in this area
0 = completely lacking skill or experience in this areaQUALIFICATIONSRATINGDEVELOPMENT STEPSAt least one year of purchasing and merchandising a retail natural product department.2Continue buying for perishables. Cover ordering for Grocery and Bulk Manager vacations.Several innovative ideas for merchandising at this store.1Visit Co-ops A and B, Whole Foods Market, local chain store, independent specialty foods store, report back with evaluation of their merchandising. Attend merchandising seminar.Supervisory experience: hiring, training, evaluating, giving directions.0Fill in for Grocery and Bulk Manager vacations. Work regular Manager on Duty shift for 6 months. Attend supervisory training with management team in spring.Ability to coach and train others.1Attend supervisory training with management team in spring. Develop training checklist for receiving.Multi-tasking: ability to handle multiple demands.1Work one week shadowing Front End Manager. Report back with techniques learned for multi-tasking.Computer literacy.3 Organized, consistently follows through on commitments.1Read Covey's First Things First, attend Covey training seminar in December, and report on actions taken.Ability to read and interpret financial reports on sales, margin, turns, and firm grasp of margin pricing.2Meet with Merchandising Manager to review concepts. Then teach to grocery stockers.Knowledge of current trends in natural foods industry.2Get own subscription to Natural Foods Merchandiser. Attend Expo and report back on trends observed.Communications skills -- clear directions, good listener.3 

For the third and fourth steps of analyzing skill gaps and creating the individual development plan, a simple tool such as the one in the sidebar might help clarify your thinking. There are many resouces available for building up skills and experience that an employee lacks: CCMA conference, Cooperative Management Institute, Traveling Cooperative Institute, seminars organized by co-op suppliers, seminars at Natural Products Expo and the regional NNFA trade shows, the New Hope Institute of Retailing, commercial seminars on supervision, community college and university extension classes.

However, just as valuable for preparation are short-term job assignments and job rotations -- tools used in corporate development planning for years. Give people the experience of working in another department, covering for another employee's vacations or switching jobs with someone else for weeks or even months. A vital part of development is not only to give the person a training experience but to ask for something back to demonstrate what has been learned. After s/he has attended a seminar, for instance, ask for a report to a management team or department meeting, or ask her/him to train others in turn.

Who should know?

As with the general manager positon, the question arises: how public should succession planning be? Certainly there is no advantage to be gained by informing all the staff who is being groomed for which position. But should you even tell the employees who are themselves being groomed? On the one hand, you don't want to create the expectation that someone is entitled to a promotion. And if you later decide you made a mistake, you don't want to crush her/his self-esteem over a job that isn't even available. On the other hand, if an employee doesn't know your plans and leaves the co-op or doesn't want the position you are considering her/him for, what a waste of effort!

While there may be no ideal answer to this quandary, I suggest this approach: Don't tell anyone they are in line for a specific job, but do tell them that you'd like them to have a future as the co-op grows. Tell them that if they are interested, you will arrange for them to get the training and experience they need to prepare for openings that may arise in the future. Be very careful to emphasize that there is no guarantee of any future promotion, but that you will do everything you can to ensure the opportunity.