Succession planning for purchasing execs
By Elizabeth Baatz -- Purchasing, 4/22/1999
The idea of backing up key files on a company's computer system is nothing new. But how many companies are identifying potential backups for key positions in the materials and procurement function?"Twenty-five years ago only a few big multinational companies did succession planning," says Dr. Shirley Ross, a consulting psychologist and succession expert with Hagberg Consulting Group in Foster City, Calif. "Then a lot of companies tried a queue approach, but with the administrative burden too heavy and complicated, the plans often fell by the wayside." Now, says Ross, the human-resource function in most major corporations helps executives to identify a pool of potential successors, groom the pool and, when an opening comes up, select from the pool.
Robert A. Rudzki, vice president and chief purchasing officer at Bethlehem Steel, says management succession and development planning is an annual event at his company that gets a lot of high-level focus from the chairman and the top five officers. "This is a very significant process for us," says Rudzki. "Our objective is to ensure continuity in management and to make sure we have a diverse pool of candidates."
But the emphasis on managing a succession plan does not just end with the top-level execs at Bethlehem Steel. Now the company focuses on developing leadership at all levels. To that end, cross-functional talent is groomed. Indeed, today about 70% of the people in the purchasing and transportation department have worked in other departments. Five years ago, that figure was only 30%. A formal mentoring program for purchasing has also been put in place under Rudzki. "We view employees as an investment, not a cost," says Rudzki.
Xerox Corporation also has a formal succession plan for managers in its global purchasing group. "Each organization looks at the management team and develops replacements down to the lowest manager level with at least one person identified as an immediate backup," says Mary Beth Miller, people development manager for global purchasing in Corporate Strategic Services. "Most have a replacement identified for every purchasing manager as well as higher-level managers."
Management development of about 20 to 22 "early high potential" employees (out of a base of 345 people in global purchasing) is also a critical part of Xerox's planning. "Early high potentials are assigned mentors and participate in 'lunch and learn' meetings where they gain exposure to high-level executives," says Miller. "They also are required to participate on a quality-improvement team where they gain experience in problem solving and team work."
At Deere & Company, the vice president of worldwide supply management, Dave Nelson, has lined up several potential successors for his job, even though he has held the newly created top supply officer job for just a year. "I've hired a number of director-level people in the past six months," says Nelson. "They are well paid and all are possible successors....But I plan to be here a while, even though I'm 61." (Note: Nelson is a member of Purchasing's Editorial Advisory Board.)
Most major companies do have a formal succession plan, notes Nelson, but in his experience the plans are rarely followed. "Good candidates tend to be promoted internally or find better jobs outside," he says. The best succession plan, says Nelson, includes several options. What is Nelson's key succession strategy? "Surround yourself with extraordinarily capable people," he says. "As they mature and season, it becomes obvious who the successor should be."
Keith Erickson, director of purchasing for Intel and member of Purchasing's Editorial Advisory Board, also has four to five potential successors to his job already identified. "We have a job succession plan at the senior staff level in which materials VPs have looked at potential candidates throughout the entire materials organization and even outside of materials," says Erickson. Discussions with potential successors, in which the candidates are informed of their status, take place. Skill gaps are explored. "Some are ready now, some in a year and some in three to four years," says Erickson.
Does having a replacement lined up make any of the top level purchasing executives a little paranoid? "Not at all," says Erickson. "People move around a lot at Intel. That's our culture, so it is perceived as a positive to have people ready to take your job."
Successful succession plans are...
* Tailored to the organization's needs.
* Driven by top management, owned by line management, and guided by HR.
* Focused on individual development by using cross-functional and cross-sector job assignments, executive coaching, and mentoring.
* Grounded in an understanding of the corporate culture.
* Aligned with future strategic direction.
ADAPTED FROM "KEY LESSONS FROM BENCHMARKED COMPANIES," BY HAGBERG CONSULTING SERVICES, FOSTER CITY, CALIF.
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