During a recent event I had the opportunity to visit with Dr. Jack Rowe, my predecessor at Aetna, and Mark Bertolini, the company’s current Chairman and CEO. As I reflected on our journey together during an especially turbulent time for Aetna, I was reminded of the important role well-executed succession and Talent Management processes played in ensuring leadership continuity and continued business success.
CEO succession planning, which is typically part of an overall Talent Management process, starts with the Board of Directors. It is their job to hire and fire the CEO. If the CEO has done his or her job, the Board will have well-qualified internal candidates from which to choose. But if a company must go outside to find the right candidate, then the Board and CEO have failed. This was the case at Aetna in 2000. Fortunately, the Board hired Jack Rowe who led the company to much success during his tenure. Jack and the Board had the foresight to implement a more rigorous succession planning process that would yield the next CEO from within the company. The Board and CEO succeeded again when Mark Bertolini was promoted and appointed CEO of Aetna.
Managing the Top Talent
While CEO succession is always top of mind, particularly in these uncertain economic times, the necessity of a rich and deep executive talent pool across the organization is essential for business success.
As a CEO, I found that the more you focus on the Talent Management process, the better the outcome. As a rule, my direct reports and I would start our biweekly executive committee meetings with Talent Management as the first agenda item. We focused on the top 200 positions and executives. These executives were viewed as enterprise assets and the executive committee was charged with managing their careers.
A typical agenda started with each executive presenting their open positions followed by a discussion of the candidates from the ‘ready-now’ list of potential successors. The final decision was always that of the lead executive. The conversations were extremely valuable and sent a clear organization-wide message that talent management was a key senior management responsibility. Unless a position required new competencies not historically found in the organization, going outside to recruit was an admission that we failed to develop the necessary talent.
We also would review the progress of newly assigned executives to ensure their results were on track. If not, we would question if they were getting enough coaching and support to help them get back on track.
In addition to our focus on business leader succession, we also formed functional talent pools to ensure we maintained a high level of skill within key functions including Clinicians, Actuaries, Finance and Marketing. Each functional talent pool had an executive sponsor who focused on the development of the talent within those pools.
Investing In and Making Talent Management Process Part of the Culture
Our process worked because the executive team was heavily invested in:
- Devotion of significant time to a collective rigorous annual review of the top 200 executives’ performance, capabilities and development needs.
- Succession planning and talent discussions to identify executives who were ready now, who would be ready in one to two years, and who would be ready in three years. One technique that was particularly effective was crystalizing the development needs of each executive into two key questions that required answers such as:
- Can they turn around a poorly performing unit by launching new innovative and profitable customer solutions?
- Can they inspire their team to improve customer service while reducing costs?
- Getting to know the candidates by giving them assignments that would bring them into regular contact with the executive team.
- Conducting annual and semi-annual performance reviews using a simple framework to guide frank discussions about an individual’s performance and potential by asking questions such as:
- To what extent is the leader achieving business results and demonstrating leadership behavior?
- What is the leader’s potential to move up at least two levels over time?
- Is the leader already in the right role and either does not have the capacity, or the desire to move into higher-level positions?
- Increasing the rigor of performance review discussions and decisions using a “one level up” process where I reviewed in depth, the performance reviews and development plans of my direct reports’ team members. My direct reports would then conduct in-depth reviews of the performance reviews and development plans of their direct reports’ team members. Our Human Resource partners participated in these discussions and helped bring consistency and rigor to the process.
Here are some additional tips on how to make Talent Management a more organic process:
- While important, don’t just rely on others’ opinions and paperwork when it comes to succession candidates. Get to know the candidates yourself.
- Don’t let people languish on the ‘high potential list.’ It’s not fair to them, nor is it fair to the organization. Through regular reviews, we were able to identify people who had been ‘ready’ to move up for some time, yet had not been promoted. That realization opened up candid conversations as to why and helped us determine a path forward. Sometimes that meant upward movement, a new lateral assignment, or removal from the list.
- Reinforce Talent Management as part of the culture by demonstrating to employees that you care about their development. Often, I would visit special development programs and spend time with the participants. As a result, I gained valuable insight into what was working and what needed improvement.
- Help employees make connections between development and the potential for career growth and advancement. For example, during our quarterly managers and all-employee meetings, I would highlight leaders who had been promoted, as well as the number of employee promotions throughout the company.
And finally, strategically managing talent should never be static. Rather it should be a dynamic process that if done well, will greatly contribute to the long-term viability of the organization.