Global Succession Management at Amway: Moving Away From Being Another Replacement Planning HR Bureaucracy
The management of leadership succession in many organizations is often at best treated as another "check the box" exercise line leaders go through to get HR "off their backs." Worse, it is sometimes a purely mechanical process that allows leaders to feel they have fulfilled their obligations of treating "people as the most important asset" because they have spent time identifying a large group of their people as high potentials and then filing those names away for another year.
At Amway, a privately held $7 billion global corporation headquartered in Ada, Michigan, succession management is ultimately about the intentional (i.e. explicit as opposed to informal or opportunistic) development of those individuals who are viewed as having not only the potential and ability, but also the aspiration to want to move up successive levels of leadership. This does not mean that the development of everyone else is ignored or less important. Amway’s Leadership Succession Management Process is a part of the corporation’s comprehensive Talent Development strategy that places emphasis on both the development of people in general as well as the identification and development of future leaders for key positions (See Talent Development Strategies: A Values-Based Approach at Amway).
One of the key differentiators to Amway’s Global Succession Management Process is the fact that it has been designed not to be just a simple leadership replacement exercise where it is nothing more than an identification of specific individuals as possible replacements for specific positions. In a replacement planning exercise, there is usually minimal emphasis placed on development, which in the best case is left in the hands of the incumbent leader who may or may not have a motivation for developing someone to take over his or her job. Also, because it is position-focused, when a leadership vacancy becomes available an identified potential replacement is simply viewed as nothing more than another possible candidate together with other external applicants. No consideration is given to how the leadership opportunity can be a developmental experience for the internal candidate, which usually leads to the favoring of the external candidate and in the process destroying the credibility of the company’s stated commitment to internal development.
In contrast, succession management at Amway is much more of an active process. It is about ownership of the development of identified high potentials and has senior leadership accountability for the intentional (as opposed to the casual or informal) development of high potentials. There is also much more of an explicit integration of the process with business strategies.
Another differentiator that drives the success of Amway’s Global Succession Management Process is the clarity around the difference between high performers and high potentials. The distinction embedded in Amway’s process was nicely encapsulated in a recent Bersin and Associates Research Bulletin appropriately entitled "High Potential versus High Performance: What is the real difference?"
Essentially, high performers are a highly valued and critical part of Amway’s success. They are key contributors who consistently demonstrate high performance. They continue to grow within their profession and may be capable of lateral moves or broader roles within their function. In contrast, high potentials are high performers who have "the potential, ability and aspiration for successive leadership positions, typically two levels or more."
The Global Succession Management Process at Amway is built on four key principles. The first of these is the fact that we treat leadership as a job, not as a reward for high performance. Performing well is a prerequisite to being identified as a high potential. Leaders at Amway are expected to exhibit specific competencies, just as in any other job within the corporation.
The second principle is the focus on developing and selecting internal candidates for key leadership position. This does not mean that Amway will not bring in mid-career leaders from outside the organization. Consistent with recent research on high performing and growth organizations, we have "put a stake in the ground" that 70-85 percent of our leaders will come from within the organization’s ranks.
The next principle is our stance that the process is indeed global by looking at the development of leaders across different functions and geographies. We have also taken the position that we will be transparent to our identified high potentials (someone will know if he or she is identified high potential). This will require that our leaders be intentional about the development of these individuals and at the same time put emphasis on the need for ongoing developmental conversations so that in the event a high potential comes off "the list," there would be no shocks or awkward surprises.
Finally, we have declared that identified high potentials will receive intentional accelerated development.
The Process: A Quick Overview
The process of Succession Management at Amway can be divided into three broad phases. It begins with an examination of a division’s strategies with a corresponding examination of the implications for future leadership skills and attributes that will be needed to lead the organization. Our Global Leadership Competencies model as well as the Amway Leadership Passages model is typically used as the basis for this part of the process.
This is then followed by an open discussion of high potential candidates amongst the division’s senior leadership team. For an employee to be presented as a possible high potential candidate, he or she will need to be a high performer, which is indicated by being on the top right hand region of Amway’s version of the nine-box grid. Unlike most organizations that use a nine-box grid for high potential discussions, which often causes confusion by mixing two time frames into one chart, our version separates the indication of present performance (by having the performance score on the x-axis and competency score on their present job on the y-axis) from the discussion of future potential.
The capstone of the process is the putting together and execution of intentional development plans through conversations with the identified high potentials. There is also continual tracking and visibility across the senior leadership teams on the execution of these development plans. In fact, for a small select group of high potentials, their development plans are tracked directly by our Office of the Chief Executive.
First published on Human Resources IQ.