Our panel of Young Professionals discusses succession planning. Toby Foster, of Marsh, explains how it should be implemented
Elliot Lane - Insurance Times (Chair)
Toby Foster Marsh - UK Retail
David Curry - HW Wood
Clair Hayward - Footman James
Ben Nicholson - Beachcroft
Jon Nottingham - AXA
Terri Grainger - Mansion House
Lynn Harris - Groupama
Toby Foster: What is succession planning? It's all about trying to ensure that we have the right people assets in place to meet the challenges that organisations face in the future. Now, that sounds easy and, for a long time, it was easy, because in our market nothing very much changed. Certainly, if you go back 10 years, much of the market activity that took place day to day, certainly in London and probably throughout the UK, would have been exactly the same as was done a generation or two ago. People tended to stay with their own company for many, many years; careers were linear; and jobs, organisations and markets didn't change very much. Succession planning in that kind of environment was a minimal issue. Things rolled on the way in which they always had.
Another way of talking about succession planning is to call it 'talent management'. The challenge that we have in the modern environment is that we are dealing with massive, rapid, sometimes unexpected and sometimes unpleasant, change. That means we have to think far more carefully about how we grow talent and what sort of talent we need, trying to ensure that it is at the front and centre of the strategy of the businesses that we run. It sounds easy, but it is very difficult when you try to put it into practice. In our industry and in others, the blue-chip organisations tended to have very straightforward, simplistic career development plans. They tended to be run almost in secret and they tended to apply overly to picking the most senior posts in the organisation. Everything else happened via a process of evolution down through the organisation below that.
Now everything has changed. Talent management and succession planning really start at the recruitment stage of the business and go all the way through to the final years of a career and embrace the most senior jobs in an organisation.
Traditionally, in broking it did not matter what you did when you came into the firm, the ambition was to become a manager. Consequently, highly talented professionals - brokers and client executives - all jockeyed for a relatively small number of management positions.
In the past 10 years so, of course, the weaknesses of that culture and approach have become apparent. These days, an organisation needs to have its best brokers broking, its best salespeople selling, its best client people doing client work and its best claims people doing claims work. I'm talking about this from a broker's perspective, but it would be the same for pretty much any kind of firm in our industry. It needs to have the best leaders leading and the best managers managing, and all of those skillsets are somewhat different.
If you look at the law, people's ambitions are not necessarily to become senior partner. In many law firms and modern consulting organisations, the ultimate ambition is to become a partner. You are absolutely top of the tree in terms of your dealings within your reputation among your clients. In the firms I know, that is not the case in the broking world.
One of the things we're doing to try to develop talent and change the historical culture is to be even more overt in terms of the value that the professionals bring to the organisation, so that we have most of our professionals aspiring to be at the top of the tree in their chosen discipline.
The big challenge remains cultural. Most people's ambitions are to enter the management stream. That is something that talent management and succession planning needs to address head on, if we're going to get the best out of the talent we have in our organisations.
There has been an influx of leaders from outside of the industry. A feature of succession planning at the top of organisations in recent years has tended to be a much-increased tendency to go outside of the business to fill top positions. There are obvious advantages to this; we are still, in many respects, an old-fashioned, inefficient industry, and we need to be continually shocked into the realisation that a lot of substantial change is still required to bring us up to the level of efficiency that our customers expect, our shareholders expect and we should be expecting as well.
One of the best ways of doing that is to bring in talented, experienced professionals from other industries and other professions, who also see the potential of our businesses for what they truly are, and also see the faults of our businesses much more clearly than those can who may have spent a lifetime working in them.
Good talent management relies on being able to grow plenty of your own. It is going to be increasingly difficult to hire the best talent from the open market. It is probably more expensive and disruptive to replace from outside. If you take the long view, it's almost certainly more cost-effective to grow your own talent and keep it, and keep growing it, than to buy too much in from outside.
While an important feature of succession planning has to be the outside look, the fresh thinking that can only be brought into the organisation from outside, the greater part of the organisation in my view is about doing a good job of talent management right from the word 'go'.
At Marsh, we have a graduate recruitment scheme, which feeds into what we call a 'leadership launch pad', which in turn feeds into another scheme, the 'accelerated leadership programme'. Those three stages will take you three-quarters of the way through the grade hierarchy in an organisation like Marsh. Then we have a leadership programme that takes you through the most senior stages.
We never stop training people. Developing the people you have in the business is a constant; it is not something you just do when you think you have a vacancy coming up, or you have to fill a particular post. It's a permanent process of the business - to assess talent and decide where the best places are to put that talent, and also to recognise that there are multiple career paths. It is not just about who we can get to manage that division or run that trading company.
Succession planning is about trying to ensure that the state of the organisation's people and the strength of the talent in the various divisions and operations are right for the conditions to be faced in the future.
It requires leadership vision; it requires the ability of the leadership to articulate that vision very clearly down into the business, so that at every level, in every part of the business, people are making the right hiring, training and promotion decisions.
Another feature of our marketplace is the intensity of competition. I'd also put forward a personal view that there is a general shortage of skilled and good people in our marketplace, so the battle to hold on to or acquire the ones that are truly skilled, just intensifies all of the time.
That clearly means you have to inspire and plan for these people's careers, so that you don't lose any of them. The reality is that you will always lose some. Succession planning is about recognising that you need a depth in your bench strength so that you can afford a certain amount of attrition.
Part of succession planning also, in my experience, is being able to respond very quickly to external events. At Marsh, we know all about that, and so you have to build into the succession planning an ability, particularly in your leading professionals, to be able to adapt very quickly to changing circumstances. In terms of leadership, you need people who are prepared to make, lead and participate in change.
Talent management and succession planning are about developing individuals' careers in such a way that they can see the organisation in terms of its breadth, rather than just a very narrow silo; they can see the world in terms of what it's doing.
We have to encourage people to look at the work/life balance. Most of that is about making clever decisions for yourself about how to run your own life, because there's a limited amount of time that the organisation can use to plan your life outside of work for you, but organisations do need to be careful that people are making the right decisions for themselves in terms of work/life balance.
In terms of how it works and the way we look at succession planning as a technique, we're looking more at job groups rather than individual jobs now. This gives us a broader pool of talent to pick from as we're looking to fill spaces, and it also means that we are more actively moving people across the business from division to division or country to country. It provides people with a broader view; it's the glue that holds a large and diverse enterprise together. It gives you much more flexibility, both as an individual, to pursue your career, and as an organisation, to pick from a bigger pool.
As you do that more clearly, a couple of things begin to happen. You begin to realise much earlier where you're likely to have a weakness or a gap, and so you can act much earlier to start to fill it. It also shows you where you have surpluses. One of the big problems, historically, with organisations like ours, is that we've had too many people jockeying for too few top slots, because they've all wanted to be the manager. Where we see that happening now that is the spur early on for us, for example, to look at that division and ask if it is clear culturally and structurally, and if it's obvious and transparent in terms of the rewards.
You do not have to go just for the manager job to be successful here. That is something again that is part of the constant circular process of ensuring we are learning from this and plumbing the results back into the business.
Succession planning here is also about being transparent, which is a much-abused word in our industry, but people have to understand how it works. If they understand how it works, they will behave in the right way. If you don't tell people how succession planning works in your organisation, they will be unguided as to how to develop their careers.
Succession planning is a two-way street. Individuals with ambition in any organisation have a duty to themselves, as much as anyone else, to talk to their manager or their HR people and say: "What I would really like to do next is this. Can I do it? When can I do it? If I haven't got the right skills, how can I get them?" It's very difficult to manage someone's career if you don't really know what they want to do.
I'm constantly amazed by the number of people who sit there and expect everything to come to them on a plate. There is a balance in the equation between the contribution the individual makes to his career plan and the contribution that the organisation makes.
Ben Nicholson: The process of succession management must cut across the whole strategy for the rest of the business. It has to be an integrated approach.
Toby Foster: When we update our three-year plan at Marsh, we incorporate a talent review, so that, at the senior levels in the organisation every individual is assessed, and then that assessment is put on one axis of the plan. As the business plan is developed, you overlay the two to say, 'Do we have the right people doing the right jobs here?'
Chair: The alternative is can your skills be better used somewhere else where they are more advantageous to the business?
Foster: If we're going to be true to the notion of recognising professionalism, we should be creating more career paths for people doing those specific professional jobs to reach the top of the organisation, both in terms of culture and in terms of reward and recognition.
Clair Hayward: If you look at any other industry, they're exactly the same. Everybody strives to be the manager. We're no different or no worse than any other industry in that.
Foster: In fairness, all of those professions carry with them very significant material awards at a senior operating level. We haven't universally cracked that in the broking business yet.
Nicholson: In the legal profession, at the top, it's very rare in law firms that the senior partner is the best-paid lawyer. I would imagine a number of top law firms are in that position. It is usually the leading partners practising, who are bringing in the cash and therefore taking in the reward.
Jon Nottingham: We also have a legacy from this culture in which we have people who are good at what they do being put into management roles, which has not always meant that we have the right managers in place. We then have the good managers going into leader roles. They are distinctly different roles. From this legacy that has been created, do we have the right leaders in the industry now creating the right environment to bring all those people through?
Terri Grainger: A lot of insurers are becoming more compartmentalised in terms of having a claims unit and a separate unit for another function. There are not necessarily lots of ways to cross over. '
' Lynn Harris: Larger organisations also offer courses and the ability to cross-train. This happens a lot at Groupama. People have moved from claims into underwriting or sales very successfully.
Hayward: But how do you translate that to a smaller organisation, which still needs succession planning and diversity of talent but doesn't have the organisational structure or size to support it?
Harris: I've worked in a smaller organisation of about 150 people and I very much agree with Toby that in smaller firms it's important to understand the business strategy. It is imperative to understand what people are capable of and you need to send them on training courses and allow them to get the skills. If you don't train people properly, you'll be left high and dry when the bigger roles come up. But it's not necessarily true that only bigger firms can train people. Smaller firms have different budgetary constraints, but if the person takes responsibility for their own career, then that makes a difference. And objective setting at the beginning of the year comes into play.
Grainger: That may be the reason why, for example, lots of brokers are selling up, because people are reaching a certain age and don't have the succession sorted out.
David Curry: Implementation is key in all of this. I am a big fan of career path planning, but the problem that I've had, from my experience in a previous firm in which I worked, was where the implementation was done incorrectly. If it didn't have the structures that Marsh or someone like that had, it could have certain negative effects - people being over-promoted.
Foster: Absolutely, but don't just think that these mistakes happen in small firms. They happen everywhere. It's probably easier to correct or replace in a large firm, where you could swap somebody around more quickly. What exists around the small firms now, for example, are external bodies like the CII, which are getting much better at helping people to manage their careers. There is an awful lot of external assistance that individuals and organisations can take advantage of if they choose to in the market today. That's likely to increase.
Harris: There are a number of opportunities to put your hands in air and say: "This is what I want from my future." People have the opportunity to take exams. These days they don't have to go through whole ACII process, instead they can take different modules depending on their circumstances. You can now set your own level in terms of training.
Nottingham: Personal development is something they have to own. They have to own it; they have to drive that succession planning as an employee. There are paths for everybody to find, but it's for them to own and to drive.
Harris: I agree, individuals need to own their own career and work with management in objective setting, one to ones with managers, annual reviews and KPIs.
Hayward: One of the things big organisations don't get right when they do that is that they give everybody this expectation that they can be a manager. We all know that's not the case. Everybody thinks they're going to be the next chief executive, but there's no way that can happen. You have to be so careful about how you manage that.
Nottingham: Do we think there are enough inspirational people in the industry and enough inspiration generally in the industry?
Foster: We could do with some more, because we have so much changing to do. We do not have enough inspirational leadership because we haven't had to do very much changing before.
Grainger: There doesn't have to be top-level inspiration all the time though. It could just be your line manager.
Foster: I couldn't agree more. It's this leadership thing. You can lead almost from your first week at an organisation. Every year there's a cadre of new entrants, and they become that year group. Very quickly, leaders will emerge.
Nottingham: Mentoring is fantastic if done well, but it has to be driven by the individual.
Harris: Mentoring can be done in a number of ways - passively as well as actively. In the appraisal process, we gain feedback from other members of staff and encourage them to be open and honest about the person. That person can become a sort of passive mentor.
Foster: We consciously try to mentor across the organisation. It doesn't necessarily work for every individual. I mentor a couple of people, but I do it my way, because I only have one way of mentoring and sometimes that doesn't suit someone who wants to be mentored.
Nottingham: It is a fight for talent. There are insurers announcing 4,000 jobs lost. Our talent pools are reducing; our numbers are reducing. We're improving the way we're managing those people and we're trying to win that fight. Smaller companies, if they ignore training, and keep relying on sourcing employees from bigger organisations, will lose that fight. IT