leadership case

8/2/2019 Leadership Case

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Leadership Development & Succession Planning atSMITHKLINE BEECHAM

In a Post- merger Environment

Best Practices in Leadership Development


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IntroductionIn 1989, SmithKline Beecham was formed through the merger ofS m i t h K l ~ ~ e Beckman Corporation, located in Philadelphia, Pennsylvania,and The Beecham Group in London. Beecham had comparatively fewprograms in the way of human resources development, while SmithKlineBeckman had a process but no r:onsistency in how it was implementedacross the corporation. 'Witbin a few years, after the company had resolved the most urgent post-merger problems, it had become apparentthat SmithKline Beecham needed a consistent, reliable, an d standardizedleadership planning, process. It was believed that such a process wouldhelp meld the two companies with their disparate cultures-that itwould help change SmithKJine Beecham from a multi domestic "we versusthem" culture to a global "us." It was also hoped that a company-wideapproach would enhance worker loyalty that had been diminished by themerger. Moreover, Smi thKJine Beecham was experiencing the same pressures felt by the industly worldwide to downsize and reduce its hierarchy,tilereby limiting opportunities for advancement.

Creating a Team to Design the Leadership DevelopmentPlanning Process

In early 1993, tht: k::'lan resources team was asked by senior managerriemto dc\'e!op thrt:c k ;,dership planning initiatives that could be appliedcompany-wide. The initiatives were a succession r.lat1l1ing process, an executi\e developrncr\: ?rocess, and a leadership competency model. Threeseparate teams "'Cre.' formed to attack these three separate targets. It didnOl take long, hO\\'c.'\ er, to recognize that the targets were all connected.The\' all led to the sin


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Smith Kline Beecham

Data GatheringThe next three months were spent gathering information through interviews with line managers and focus groups. From these, a strong impression was made that people '.'I'anted a leadership planning anddevelopment process that didn't stop at the top fifty executives but, rather,reached deeper into the ranks of middle management. "Leadership" hadnever been explicitly defined in the company's initial brief, so the teamfelt free to broaden the scope. They also reviewed the programs that werealready in place, and found there were no ft\vcr than seventeen different executive review and development programs in the merged company.In the area of leadership competencies, on the other hand, the humanresources team was working with a blank slate. However, the five core values that S m i ~ h K l i n e Beecham had recently defined as part of its mergerprocess helped them arrive at the twenty-one leadership competencieslisted in Table 15.1.

TABLE 15.1. THE TWENTY-ONE SMITHKlINE BEECI-:AMLEADERSHIP COMPETENCIES.

Innovation Customer Integrity Think strategically Irllprove systems and Lead courageously

. processes, Innovate Commit to quality .. Foster opencommunication Champion change Focus on customer needs Act with integrity

Performan


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Key Learnings of First R o u n ~ Development PlanningSeveral key learnings were made during the first round of developing thepilot for the Leadership Planning Process (LPP):1. Collect data from line managers on the design of the program2. The process must be "line-owned" and "line-driven"3. Approach division heads to develop a pilot program. For exarr.ple, a

new division head of the 'Vorldwide Supply Operations (WSO) neededinformation about the leadership needs and potential of the employ-ees he was managing, and agreed to implement a pilot.

4. Accept successes and failures during your pilot. You can learn as muchfi . k fi " . "om YOl.: r illlsta 'es as you can rom your wms.

S. Link the plan design to the needs and vision of the CEO and seniormanagement team, S m i ~ K 1 i n e Beecham's LPP was finally approvedby the CEO after a great deal of piloting and communication withthe CEO.

The Leadership Planning Process (LPP) Oesig-n\Vhile a variety of components make up the Leadership Planning Process,the main elements are two subprocesses, the Leadership and Devclop:-nentRc\;ew (LA.DR) and the Group Discussion. A description of each [o iio\,s .

Leadership and Development Review (LADR)This is the starting point of the process. It establishes \,-hat should be anongoing dialogue between an employee and his or her supervisor regard-ing (1) which of the t'vventy-one competencies are key to the employee's existing position; (2) the gaps between the employee's competency level andthose required by the job; (3) the employee's aspirations and what addi-tional competencies will be required to achieve them; and (4) a de\'elopment plan that will give the employee the exper iences that, in turn, willdevelop those required competencies. (see Exhibits \S.\ on page 432 andIS.2 on page 421).

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SmithKline Beecham

LADR is not a performance review; nor should it be linked to compensation. While performance reviews focus on past achievements (the"what"), LADR is primarily future driven and focuses on the "how." Itrequires the employee to articulate his or her aspirations , and the supervi-sor to determine whether those aspirations are ~ c h i e v a b l e and, if so, whatthe best steps are to achieving those aspirations. LADR does ask employ-ees to summarize their accomplishments and asks reviewers to comment.But most of this subprocess is devoted to identifYing what competencies arerequired for a particular joh, e s s i n how the incumbent p erforms againstthose requirements, and creating a development action plan. The goal isto facilitate a rich and fruitful discussion between reviewee and reviC\'\'er,which focuses on the reviewee's continuous improvement and development.

L\DR is designed to be processed electronically from start to finish.Information from each individual's LADR is then added to a central elec-tronic database that, as the repository of information about competencies within the company, becomes a valuable tool in SmithKline Beecham'sinternal candidate searches (described later). The data are also used in theQroup Discussion .

Group DiscussionThis subprocess has been describe.d as the heart of the LPP. It is a facilitateddiscussion among a "natural team"-a peer group--of supenrisors who re-view the competencies, aspirations, development needs, an d developmentaction plans of their direct reports within the context of Smith KlineBeecnam's needs. There are both lint: discussions and functional discus-sions; thus, a single individual can be the focus of more than one group dis-cussion. Discussions begin at the lowest level at which LADRs arecompleted, and exceptional employees can be "bubbled" or "cascaded" upfor discussion at the n ~ x t level. The process culminates with the group dis-cussion by the chief executive an d his team of direct reports. Leadership'vVatch candidates (known in other companies as "high potentials") are alsoidentified an d reviewed during the Group Discussion process.

for the approximately 7,000 SmithKlinc Beecham employees who un-dergo the LPP each year, the company holds about 240 group discussions.


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This means that, on average, each group discusses thirty-five to forty people, allocating twelve to fifteen minutes per person; the discussions may becompressed into an intense all-day session or continue over two days. Atthe lower levels, each individual's development plan is reviewed. At the top,there is a


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SrnilhKline BeeLilam

pre-LADR discuss ion, asking them to evaluate the individual in termsof com petencies, and integrates their input with his or her obsf'IVations.

Exchangeoj LADRJorms. BetweenJanuary 15 and March 15, reviewerand reviewee exchange drafts electronically of the forms they have com-pleted and schedule a follow-up discussion. During this period, LADRtraining is also offered to reviewees who are unfamiliar ""ith the process.([his is in addition to the instruction on LPP that is included in new em-ployees' orientation or induction.)

LADR discussion and completion. In February and March, reviewer andreviewee conduct the LADR discussion, covering all elements of theLADR form. Specific topics to be discussed in this meeting are (i) sum-mary of accomplishments, based on personal observations as well asinput from key customers; (2) rating one's own competencies againstSmithKline Beecham leadership competencies plus any additional functional and/or technical competencies; (3) reviewee's career interestsand aspirations; and (4) the development action plan. Prepared jointlyby reviewee and reviewer, the development action plan identifies specific steps employees sh9uld take to improve competence whererequired. Th e plan also hdps clarify t.he reviewer's e x p e c t a t i o ~ s of thereviewee for the coming year. Reviewers have access to a LeadershipDevelop men t Resources Guide, recently introduced by HR, to helpthem in development p lanning. The completed LADR form is forwarded to H R.Croup Discussion. Held from April toJuly, the group ~ c u s s i o n is intendedto achieve consensus in four key areas: (I) enhancementsw the de"el-opmcnt action plan drafted in the LWR discussion; (2) the issue ofwhetl1er a development move should occur within the next twelvemonths, based on personal development and business needs, an d w h ~ t positions the reviewee could potentially fill; (3) positions that individuals could potentially fill \vithin one to three years; and (4) short-term successors for team members participating in the Group Discussion. vVithinten days of the Group Discussion, team members must tecd back to theirdirect reports the team's consensus on the reviewec's strengths, devel-0pment nceds, and recommended moves, if any. Development ActionPlans arc adjusted accordingly.


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Succession Planning ProcessSuccession planning is an integral part of the LPP and particularly ofgroup discussion, as indicated above. Succession planning has been refined using survey data that indicated a greater need to match organizational needs to individual competencies. In addition, Smith KlineBeecham's top management expressed the desire to precipitate greatermobility. Succession planning now breaks down into three subprocesses:business assessment, organizational succession planning, and an internalcandidate search.

Business AssessmentThis action, which occurs prior to group discussion, is intended to determine the critical positions, areas, and functions within each of SmithKJineBeecham's businesses, and assess the level of succession planning required .If the requirement is low, it is sufficient to use the individual su


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SmithKline Beecham

Mter the Group Discussi()ll, a succession plan matrix is produced andupdated continuallywith both organizational changes and changes involvingindividual candidates. As part of their regular meetings, management leamsreview succession plans and progress towards individual development.

Internal Candidate Search (ICS)Supplementing this ongoing s u c c e ~ ~ : : ; : 1 ptanning process, SmilhKlineBeecham has also imp!emented a subprocess of LPP called InternalCandidate Search (leS), which is used when a position opens up at thecompany (see Exhibits 15.4, 15.5, and 15.6 on pages 435-437). While openings had routinely been posted in the past, allowing interested candidatesto apply, the leS proactively seeks matches between openings and em-ployees. The system, which uses a database of LADR and Group Discussion information called Executrac, runs a company-wide computerizedsearch for candidates with the competencies required for a speGific job; italsG searches for other criteria, such as job level, willingness to make a de\elopmem move, and willingness to relocate. The leS process should beused before seeking an external candiqate to fill a \ acancy. Thanks to theprocess, SmithKline Beecham saved S1.8 million in 1998 by filling openings internally, versus using executive search agencies or headhunters.


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