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MTD White Paper Management Development, Talent Management & Succession Planning Peter Freeth Training Director September 2012

MTD Training, 5 Orchard Court, Binley Business Park, Coventry, CV3 2TQ Web: www.m-t-d.co.uk Phone: 0800 849 6732 Email: info@m-t-d.co.uk Š MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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The Management Landscape The management landscape is changing, and since the mass redundancies and corporate downsizing of the early to mid 1990s, the role of a manager has changed radically. We no longer have layers of „middle managers‟ whose only function is to manage staff; managers carry sales and performance targets, have direct interaction with the supply chain and are expected to deliver all of this on top of their line management responsibilities. At the same time, employees are becoming better informed, more autonomous and more demanding. With „Generation Y‟ now entering the workforce, the pressure on managers to deliver staff development is increasing, yet the investment that they make in themselves often takes second place. The current economic climate has only served to focus this situation further, and at the same time, small and medium sized businesses become more and more dependent on their staff. Capturing tacit knowledge and providing a working environment that encourages loyalty is a major concern for business owners today, because so much of their organisational value is held within Intellectual Property that can‟t be locked in a safe because it‟s inside the minds of a minority of employees. In the corporate world, the notion of „talent management‟ and „succession planning‟ has long existed to prepare „high potential‟ employees for future leadership positions. There‟s no guarantee of a future promotion, or even that the employee will still be around to step into a leadership role, however a succession plan must be part of any corporate strategy, because people are fundamental to the survival of any business. A succession plan now sits as a board agenda item alongside such issues as risk management, corporate governance and corporate social responsibility. What happens when organisations don‟t adopt a strategic approach to succession planning? Kneejerk appointments at senior levels leave the organisation exposed to rapid culture change, impacting on both employee and customer relationships. Tacit knowledge, intellectual property and goodwill literally walk out of the door, and a thriving business can disappear altogether within months. Popular TV series such as „The Hotel Inspector‟, „Back to the Floor‟, „Kitchen Nightmares‟ and „Troubleshooter‟ show, time and again, how a business suffers when the owner/manager stays too close to the business for too long and fails to take a long term approach to succession planning. It‟s not just the owner‟s financial interest that must be considered; the entire business ecosystem of suppliers, customers and employees are dependent on a seamless transition from an owner managed business to one where professional, well trained and experienced managers drive growth and ongoing success through operational excellence. The risks are similar in the corporate world, where senior managers build an „empire‟ and fail to consider the wider impact when they hand that empire on to an inexperienced successor, or worse, fail to care about what happens to the business that they are moving on from. When Babcock, a global engineering group, appointed us to support their „future leaders‟ in a two year talent coaching programme, their situation was fast approaching a cliff edge. 50% of their most highly skilled and experienced technical design staff were due to retire within three years. Historically, their solution to this problem meant one of two things; either bring the retired employee back as a contractor or make a highly reactive and ultimately unsuccessful internal appointment based on entirely subjective selection criteria. Neither of these options were good for the business, its employees or its customers. The retirement problem was one that could have been foreseen much sooner, but when a business is successful, the owner or the senior managers often put off issues that aren‟t causing an operational problem today. Succession planning is a simple, strategic approach to minimising the risk of those issues and protecting the business both today and long into the future.

© MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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Developing Managers What does a succession planning and management development activity actually look like? The first stage in any project is to look at where you want to be; your vision. The current state of the business is, by definition, a „status quo‟, limited by what people know, the facts of the situation and the implied rules of the working environment. The better the business is performing, the more „stuck‟ it is, because managers don‟t have any need to change or grow. Yet when the market takes a turn for the worse, it‟s often too late to react. For many years, Sony‟s unofficial mission was to put itself out of business and its vision was one of technological and market leadership. They recognised that the market is fiercely competitive, with radical product innovation being within the reach of any rival manufacturer. New entrants are joining the market, joint ventures are being formed and technology innovation is accelerating. Sony‟s CEO reasoned that their competitors were trying to put Sony out of business, so the only way to stay in front was to be more challenging than any competitor. Do you know how your competitors plan to put you out of business? Or will you find out too late? In the mid 1980s when the UK telecoms market deregulated, BT‟s market share was almost 100%. BT‟s vision was one of consolidation and protection, and BT consequently failed to innovate in several key areas, even disposing of divisions such as Cellnet, its mobile telecoms business. Cellnet became O2 which was later acquired by Telefonica Group, which now has annual revenues of £25Bn compared to BT‟s revenues of £19Bn. Internal competition within BT was practically prohibited, and new products could not be introduced which threatened the revenue of existing products. The result was that competitors introduced those new products, and BT‟s market share has fallen to around 40% with its annual revenue declining by 6% in the last year alone. Are you too comfortable with the way things are? Do you fear „rocking the boat‟? Which of your competitors will rock it for you? The reality of your business is neither good nor bad; it is merely a statement of where you are. After stating your vision, the next step is to make a realistic comparison to the current situation. You may already do this for financial and operational strategy, and the same approach is applied to developing the skills of managers and employees. HR Directors used to say, “people are our greatest asset”, which positions employees in the same way as stock, machinery and working capital. The current view is that people are a strategic asset, seen in the same light as stakeholder value, intellectual property, investment potential and market perception. Your people are no longer the foundation of your business; they are the future of it. Stating your vision sets a direction for the business and its people. Gathering realistic feedback on your current position is an honest and often challenging exercise which must be conducted openly and objectively, otherwise any course of action will be ineffective at best and damaging at worst. One of the most common reasons for the failure of coaching or development programs is that they don‟t start from an honest analysis of the current situation, and it‟s impossible to move forward from anywhere other than where you are, right now.

© MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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Gathering Feedback One of the most effective ways to understand the „current situation‟ of management skills is with a „360º feedback‟ process. This simply means that a manager isn‟t only evaluated by their manager, they are also evaluated by their team and other stakeholders.

It is becoming increasingly common for companies to be audited by their customers and stakeholders, and the 360º feedback process simply extends this to management practices. There are a huge number of assessment tools to choose from; at MTD, we have custom developed a tool, specifically designed for the needs of developing managers. The output of a 360º feedback tool such as MTD360 gives you the following: As a senior management team you will receive a feedback report with all of the manager‟s scores and comments “rolled up” into one overall report. You can see the whole of the organisation in a snapshot with regards to how your managers rate against your competencies and principles. As a senior management team you will receive a feedback report for each individual department with all of the manager‟s scores and comments “rolled up” into one overall report. You can see any differences between departments and each Head of Department will have a 121 session with the course leader on this Each manager will receive their own individual feedback report. This will be discussed and covered in a personal 121 coaching session pre-training. This enables the manager to see where their strengths and areas of development are and they can develop an action plan going into the programme to make it very specific to them.

© MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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Creating a Succession Plan One of the greatest risks to any succession plan is subjectivity; that the people „in charge‟ of the plan select the people who they like as future leaders. Liking someone is not a prerequisite for business success, and this approach will breed a culture of favouritism and disengagement. The „favourites‟ are more likely to sit back, thinking that their future is secured, and everyone else will realise that they don‟t have a chance of promotion, no matter how good their performance is.

For a succession plan to have any credibility, it must be entirely objective. An objective plan is flexible and defensible, and will allow your business to evolve. To create an objective succession plan, the starting point must be a set of criteria which you then assess each candidate against. These criteria may be drawn from existing recruitment processes, or you may define a set of cultural values and behavioural skills. Evaluation of candidates against criteria is then carried out in a number of ways, including 360º feedback, psychometric profiling, annual performance reviews and assessment centres. A succession plan is not necessarily a static map of who will succeed who; think of it as a „talent pool‟, with the objective being to identify and develop candidates into rounded leaders who could step into any of a number of positions. This protects your business from unforeseen changes, so if a senior manager is unexpectedly taken out of the business for an extended period of time, his or her workload could be distributed to a number of managers, or any of a number of managers could step in to the temporary vacancy. This creates a flexible and resilient organisation which becomes less dependent on a small number of key individuals. Succession planning is therefore not about creating a plan of who will move into which role, because such a static plan contains many elements which are not under your control. A good succession plan identifies and develops the people who you have identified as the right future leaders of the business, independent of their current knowledge and responsibilities.

© MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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Creating a Management Development Programme Traditionally, training programmes focused on knowledge, using theoretical models and dry concepts. Today‟s learner is far more demanding, and learning must be delivered using a variety of methods and, most importantly, exactly when the learner needs it. We live in the Google generation, where staff don‟t want to spend the whole day learning how to use a piece of software; they want to try it for themselves, and if they get stuck, they press F1 and ask a specific question. Microsoft has moved from the inch-thick printed user guide, through a talking paper clip to a search engine style help interface which aims to provide intuitive, relevant assistance, collated from multiple sources. Even with the most advanced, dynamic and engaging delivery, much training is still ineffective. As previously mentioned, one reason for this is a lack of understanding of the current situation. When someone tells you that they are an „expert‟ in a subject in order to hide their lack of knowledge, any expert level training will be a waste of time because the person doesn‟t have the basic levels of knowledge in place. We are all on a learning journey, and there should be no stigma attached to a lack of knowledge. Even experts were beginners, once, and an openness to learning is always the best attitude to have. What are the other factors in the failure or success of management development training?

Training is often seen as something that people are “sent on” or the techniques and strategies that are covered are too theoretical to be put into practice in the real world. Sometimes, people attend a course and their colleagues see noticeable differences for the following week or so, only for the person to fall back into their old habits of working in the longer term. The most effective training programmes have an ongoing developmental theme that is centred around the individual‟s needs, with time spent both learning and then applying that learning back at work with the facility to discuss experiences, successes, what went well and what didn‟t go so well on later training modules or in one to one coaching sessions. This, coupled with a blended approach to training and post-course turns a training course into an ongoing learning process.

© MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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For decades, research into learning theory has shown that learning is not a one-time event, it is an ongoing process. In 1984, David Kolb published a theory which showed learning as a four stage cycle, with each stage building on the previous experience and providing the foundation for the next. Peter Honey and Alan Mumford later developed the concept of four learning „styles‟ from Kolb‟s original work, these styles being the Activist, Reflector, Theorist and Pragmatist.

These four styles define a „preference‟ for learning in a particular way, although it is very important to understand that learning is still an ongoing cycle, not a static process. To label someone an Activist does not mean that they will only ever learn in one way; it means that this is their preferred starting point for the learning cycle. In developing any learning programme, it is vital that all four stages of the cycle are incorporated so that each individual‟s needs are met. A good training provider can then work with you to understand your requirements and build a comprehensive development programme, an example of which can be seen on the next page.

© MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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Return On Investment After any development programme has taken place, it is important to conduct another 360º assessment to determine the improvements in observed management behaviour. This serves to answer the question, “did we get to where we intended?” and can be used to measure the success of the development programme.

As managers continue to develop their skills through real practice and peer support, the effectiveness of the programme will increase over time when it is properly supported through regular reviews and further developmental input. This doesn‟t necessarily mean more training; it can include such resources and activities as coaching, secondments and job shadowing, Action Learning Sets, books, online learning resources, mentoring and peer reviews. The previously mentioned attitude of an openness to learning is the most important asset, and will always drive further development and personal growth. The last 650 managers who have been trained by MTD have experienced an average improvement in pre and post programme assessments of 19% and these have included:  Xerox – 225 managers – 21% improvement  Friends Provident – 50 managers – 24% improvement  IDEX Corporation – 84 managers – 27% improvement  NHS Counter Fraud Services – 35 managers – 20% improvement  PD Hook – 42 managers – 22% improvement

© MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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About MTD MTD, the management training specialists, has been working with a wide variety of clients, both large and small, in the UK and internationally since 2001. Since that time we have delivered training in over 23 different countries to over 2,000 different organisations and have helped over 50,000 managers. Our head offices are based in the Midlands where we have our very own training centre, including a multi-media suite that enables us to provide a full range of blended learning solutions including video, podcasts, e-learning and online support solutions. We specialise in providing:  In-house, tailor made management training courses  Open courses, delivered throughout the UK at various locations  Management & leadership development programmes  Blended learning solutions  Corporate and executive coaching Our team of highly skilled and experienced trainers and consultants have all had distinguished careers in senior management roles and bring with them a wealth of practical experience to each course. At MTD Training we will design and deliver a solution that suits your specific needs addressing the issues and requirements from your training brief that best fits your culture, learning style and ways of working.

Our Key Unique Selling Point Bespoke, practical and quality training delivered by a trainer experienced in your industry is a “given”. Where we really make a difference is how we help your managers to embed and implement the learning after the course. We offer industry leading post course support to make this happen so you get a real, tangible return on your investment

© MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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Ongoing Coaching, Support and Resources How your staff embed and put into practice their learning will make the greatest difference to your success. The worst thing that can happen is for your staff to attend a course, say they‟ve had “A good couple of days” and then just slip back into their old habits. We recognize that this is always a threat and perhaps a real concern for you. Therefore we give your staff a number of ongoing resources and tools to help them transfer their learning and practice different approaches back in the workplace.

Pre-Course Questionnaire Sent to All Managers All of your staff will receive pre-programme questionnaires so they can have an input into the training. The questionnaire looks at strengths and areas for development and also asks for any particular scenarios that the manager would like specific help with, increasing your Return on Investment by getting your staff engaged in the learning process and ready to take responsibility for their own development.

Unlimited Lifetime Email Support, Unlimited Lifetime Telephone Support & Unlimited Lifetime Access to Our Online Management Academy Each of your staff will receive a unique MTD Lifetime Membership Card which gives them a login and password to our Management Academy which has over 6 hours worth of online training sessions. Our MTD Management Academy has 13 different topics such as performance management, delegation skills, emotional intelligence, team building, and change management and communication skills. The sessions are short, punchy and focused on real world practical techniques, and the Academy also has a forum where your staff and managers can discuss the challenges that they face. Your staff can also email or call us for any help whatsoever as they apply the training.

Ongoing Weekly Management Email Tips Each week, the staff and managers who have attended the courses will receive a management tip delivered straight to their inbox. The email will contain a short tip to help them become more effective in their role. They can also reply to the tip with comments or questions and receive a personal reply.

Feedback Report to the Sponsor – Scores, Graphs, Comments At the end of each course, we will ask your staff for feedback on design, content and delivery. We then analyse the feedback and send this to you with scores, graphs, and delegate comments and development plans.

© MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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Further Information If you would like to discuss anything within this white paper, or any other development questions that you may have, you can contact the author using the following details. Your Contact:

Peter Freeth

Telephone:

0800 849 6732

Email:

peter.freeth@m-t-d.co.uk

Direct Line

02476 233158

Š MTD Training 2012

Web: www.m-t-d.co.uk

Telephone: 0800 849 6732

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Succession Planning and Management Development