SUCCESSION PLANNING DURING PERIODS OF BUDGET TURBULENCE April 12, 2011 Copyright ©2011 by The Segal Group, Inc., parent of The Segal Company and its Sibson Consulting Division. All Rights Reserved

1 Staying the course sometimes means charting a new course. Our Goal Today Is to:  Show how effectively dealing with today’s realities can lead to a greater chance of institutional success  Identify how succession management is even more important in tough times  Gain your perspective and engage in dialogue  Provide our perspective and offer new ideas for moving forward  Show Succession Management in action

2 Bad News? Good News? CURRENT MALAISE—NO BOTTOM?

3 Bad News? Good News? CURRENT MALAISE—NO BOTTOM?PREDICTIONS—SIGNS OF LIFE?

4 Bad News? Good News? What is an institution to do with such conflicting information? CURRENT MALAISE—NO BOTTOM?PREDICTIONS—SIGNS OF LIFE?

5 Higher Education— Experiencing the Same Downdraft, but…

6 …Some Different Factors at Work  Increased demand for services:  More students entering institutions  Greater demand for graduate programs due to soft economy  Local and regional pressure to maintain standards, performance, and rankings  Competitive hiring pressures for top faculty and coaches  Higher concentration of still hard to find critical skills  In some states enrollment caps are becoming more common and necessary  Succession issues at the top of the institution

7 Consequences of Current Budget Cut Environment  Fewer advancement opportunities  More retirement-eligible staff staying on due to:  Erosion of assets  Uncertainty  Fewer people left to do the job (a sense of obligation)  Retirement “tsunami” moved out, but becoming even larger  Informal study indicated 60% of college presidents not renewing contracts  Less bench strength—a hollowing out of the institution  Perceived inability to reward and motivate top performers and critically skilled/high potential staff Why would succession management be important now?

8 Succession Planning Overview Succession planning is a business process aimed at ensuring the institution has the quality and depth of senior leadership needed for the present and the future. The outcomes of succession planning are as follows:  Improved understanding of the leadership talent portfolio through leadership assessments that ensure the institution has the right leadership capabilities in senior leadership roles  Identification of leader potential and measurement of the leadership pipeline ensuring that adequate talent exists to move into senior leadership roles, thus allowing for appropriate succession planning  More breadth and depth of talent ensuring that senior leaders will possess a broader range of capabilities, allowing greater success in their current and desired future leadership roles  Improved leadership development characterized by emphasis on developmental feedback, coaching, mentoring, and performance improvement SUCCESSION PLANNING OVERVIEW

9 Effective Leadership Succession Planning Has Four Key Components The components of succession planning process should include: 1.Establishing Leadership Expectations around the knowledge, skills, and abilities that leaders are expected to develop and demonstrate in order to achieve results 2.Leadership Assessment and Selection based on demonstrated performance, potential, and organization and role fit 3.Leadership Development aimed at measurably improving leadership capabilities based on opportunities identified in leadership assessments; coaching and role expansion/special assignments are critical components of leadership development 4.Bi-Annual Leadership Talent Review to identify the slate of leadership succession candidates, readiness, retention risks, and actions required to strengthen leadership capabilities SUCCESSION PLANNING COMPONENTS

10 Contingency Planning: Leadership Departures Can Have a Cascading Impact Scenario: After 15 years as the President, Dr. Smith announces immediate retirement because of health reasons. The Board appoints the Chancellor as the interim President, but believe an external search is warranted because of the stretch this role would have on the Chancellor’s leadership abilities. While there is a potential successor for the Chancellor role, the benchstrength is weak for the Associate Dean because of poor succession planning. Recommended Actions:  Initiate assessment, coaching, and development focused on closing the performance gaps of the Chancellor and other key leadership roles  Initiate initial scan of external market for University Presidents and assess against internal candidate(s)  Implement an ongoing succession planning process and talent review to proactively identify and plan for contingency through improved leadership development 1. Target role for succession (e.g., President) 3. Initiate succession process for candidates to backfill Chancellor Dean One leadership vacancy set-off a cascading effect that if unplanned for can create a significant challenge. 2. Chancellor is identified as only viable successor and external search is initiated ProvostDeanDept Chair President Ready +24 Months Ready +12 Months Ready Now Different Career Path Succession Process Dept. Chair Chancellor DeanAssoc. Dean 4. Initiate succession process for candidates to backfill Dean External Search LEADERSHIP CONTINGENCY PLANNING

11 Establishing Expectations Is a Critical Phase in the Process Critical Knowledge, Skills, and Abilities (i.e., Competencies) Performance Metrics  Financial  Customers  Institutional  People / Culture Common, practical definitions for each role Derived from strategy, critical tasks, and institutional competencies Critical Experiences Set  Integration/divestiture  Cross-Functional exposure  Turn-Around Key Accountabilities and Responsibilities FOUR KEY ELEMENTS OF LEADER ROLE REQUIREMENTS Defined for each role  Function/Technical  Interpersonal  Institutional  Strategic  Accountabilities identify the specific outcomes each role is expected to achieve relative to the strategy  Responsibilities identify the primary tasks and activities each role is expected to perform in order to achieve the outcomes expected of the role  Performance Metrics are focused on measuring outcomes, not activities; enable focus on achieving impact and drive greater ownership for institutional impact  Competencies identify the knowledge, skills and abilities most critical to successfully fulfilling the accountabilities of the role; focus on those competencies that differentiate superior performance  Critical Experience Sets identify the experiences that best prepare someone to fulfill the requirements of the role  Required experiences  Desired experiences  Targeted years of experience Existing competencies can be used to develop the role requirement.

12  Talent Acquisition  Retention of Critical Skills  Engagement  Performance  Cost  Identify your institution’s place in the new reality  Envision the future with mindful flexibility  Cultivate your internal fortune  Invest in critical talent now  Productivity  Customer Quality  Innovation  Speed  Growth  Reputation Bringing It All Together Consider the future realities when charting your course:  Stay ahead of the curve when the outlook improves  Protect the bond with top employees and maintaining employer of choice  Minimize the amount of disruption while achieving the results Institutional Outcomes Employee Outcomes OPTIMIZATION CHECKLIST