Future-proofing

You might think succession planning would be as natural for companies as budget reviews and monthly boardroom meetings. Think again. According to the US National Association of Corporate Directors, nearly half of companies with revenues over $500m have no CEO succession plan, while only one-fifth of the 276 large companies surveyed in 2004 by The Corporate Leadership Council were satisfied with their CEO succession planning process.

At Johnson & Johnson, leadership development is synonymous with our growth imperative. We recognise that without a well-established process to identify, evaluate and develop promising talent in our leadership pipeline, we will not be able to sustain the levels of growth that have made us a $50bn global healthcare enterprise.

It doesn't hurt, of course, to have a CEO like Bill Weldon, for whom succession management isn't just another one of his executive duties, but a truly defining feature of his leadership.

As he has explained, 'The most important responsibility all of us have is to develop the leaders of the future. It's the greatest challenge we have, and the most important legacy we can leave behind.'

This perspective defines my role as the leader of the global HR function for Johnson & Johnson. In this role, I am tasked with comprehensively preparing our CEO to lead discussions on the talent management and leadership development process. This requires me to have the courage to challenge assumptions and set the right tone for succession planning dialogues. I also have to be vigilant in identifying ways to improve the process in terms of candour, content and, ultimately, results.

HIGH STAKES

So what kind of discussion unfolds between the CEO and myself? First of all, we approach succession conversations as deliberate, in-depth discussions in which nothing less than the future direction and viability of the company are at stake.

So, how do we deliver these outcomes? At Johnson & Johnson, we use a series of tools, a few of which we will highlight in this article, specifically the global leadership profile, talent principles, and executive committee talent rhythms. These tools are used to link succession planning directly to business outcomes. They are specifically targeted to identify and develop leaders who are equipped to grow our businesses by consistently outperforming our competitors. Therefore, the conversation and the agenda with the CEO must be firmly focused on the standards and measures required to objectively and accurately deliver these outcomes.

THE GLOBAL LEADERSHIP PROFILE

The global leadership profile is the Johnson & Johnson senior leadership standard, which we use to evaluate and calibrate the performance of senior leaders on the basis of such criteria as:

Collaboration and teaming: he or she puts the interest of the company first; working well across functions and groups; building teams effectively.

A sense of urgency: he or she proactively senses and responds to problems as well as opportunities, and works to reduce cycle times.

Prudent risk-taking: he or she has the self-confidence to take sensible risks and learn from experience.

Performance-driven: he or she assumes personal ownership and accountability for business results and solutions; is willing to make tough calls; consistently delivers results that meet or exceed expectations.

Strategic thinking: he or she is driven to envision a better future; has a relentless dissatisfaction with the status quo; puts the customer first and keeps the focus on enhancing customer value.

Big picture orientation with attention to detail: he or she is able to operate in two worlds simultaneously; growth and cost control, enterprise- and operating company-focused.

Organisational and talent development: he or she motivates and empowers others to achieve results; attracts good people and knows how to instil confidence in them.

Intellectual curiosity: he or she is willing to experiment; cultivates new ideas; is comfortable with ambiguity and uncertainty.

DIVERSITY

Diversity is another important item for discussion in preparing our CEO and other senior leaders for the succession planning conversation. Johnson & Johnson values the many qualities that make each leader unique and believes that a rich diversity of leadership is essential in creating solutions for the world's most pressing health issues. Therefore, it is critical to look for diversity of thought, perspectives, ideas, culture, geography and function when assessing future leaders.

EXECUTIVE COMMITTEE TALENT RHYTHMS

Another area of focus is the executive committee talent rhythms. The executive committee (EC) of Johnson & Johnson is the principal management group responsible for the operations and allocation of the company's resources. It is important to note that talent management discussions occur with rigour and consistency across Johnson & Johnson, starting with the EC. Every monthly meeting of the EC commences with a discussion of talent, specifically with a review of critical vacancies, slates and the status of recent promotions or hires into critical positions.

Additionally, during each quarterly EC meeting, typically a five-day, off-site meeting, a full day is devoted to succession planning. This ensures that talent management is a routine part of the leadership development process throughout the year.

A NON-STOP TASK

The CEO-HR discussion on succession planning could hardly take place in a vacuum. It is actually the by-product of a comprehensive and sustained talent management process at Johnson & Johnson, designed to create a diverse, robust pipeline of 'extraordinary leaders'.

That process starts early – and runs deep. It begins by actively recruiting and hiring the best and brightest individuals, then thoroughly assessing them through a comprehensive performance management and development process, typically incorporating 360º feedback. We also develop and nurture our leaders through challenging jobs and assignments, executive education and coaching. Finally, we recognise and reward talent through a performance-driven total rewards strategy.

The rigour and consistency of this approach enables us to effectively leverage in-depth multi-source data for succession discussion. Yet I still consider these sessions as an opportunity to expand the knowledge base and to incorporate additional data and insights into the discussion in order to create the most comprehensive profile of the senior leaders under consideration/review.

I encourage the CEO to remain open-minded and intellectually curious with respect to each candidate. My responsibility and challenge, therefore, is to ensure that the CEO is firmly grounded, that he is getting an unabridged picture which allows him to make informed decisions and reach conclusions based on the facts.

EXPECTATIONS

It is also my job to challenge the CEO with this key question: is he modelling the behaviour that he wants other leaders within Johnson & Johnson – among them, perhaps, his eventual replacement – to follow?

Here, the company credo holds every member of our executive team, as well as every Johnson & Johnson employee, to an uncompromising standard, built on integrity and a genuine concern for the needs of our customers, employees, communities and stockholders. This credo provides yet another tool for calibrating how 'fit' an individual is to assume leadership of a complex global entity like Johnson & Johnson, with approximately 115,000 men and women in 57 countries throughout the world.

Clearly, both Bill Weldon and I are aware of the importance of our mission. There can be no more important goal for a company than to ensure an orderly succession at its executive summit. It sends a powerful and unmistakable message to customers, employees and, of course, the investment community. If I, along with our global senior leadership team, am successful in creating an environment that reinforces the rigour and the discipline of the succession and talent management process, then we can be assured of achieving a high level of success in developing the leadership pipeline, both now and in the future.