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Background

Southern Company is an electric utility serving 4.4 million customers in the southeastern United States. Southern Company brands are known for excellent customer service, high reliability, and retail electric prices that are significantly below the national average. Southern Company employs approximately 26,000 people. A grow your own company, Southern Company historically hired at the entry level and relied on internal promotions rather than external hiring to fill leadership positions. A low turnover rate resulted in the leadership group being very stable and growing progressively older. In 2003, the average age of executives was fifty - two. The average ages of middle managers and first - line managers were forty - nine and forty - seven, respectively. This age bubble posed a potential succession risk.

Problems Identified
Basic processes were in place to identify & develop leaders. But, in early 2004, Southern Companys CEO initiated an in-depth review of succession planning and leadership development. The goal of the study was to review current practices and determine the steps necessary to advance leadership development to the next level and ensure an adequate supply of leadership talent over the next ten years. Several gaps were identified. During the interviews, leaders talked about knowing the high-potential talent in their organization very well. However, they did not know talent across Southern Company. A standard set of information was not available for comparing individuals. Southern Company lacked a comprehensive model that identified the key leadership practices necessary to achieve business success. Across Southern Company, there were a number of different definitions of leadership, and emphasis was placed on developing different skills and abilities. A person viewed as high - potential at one location may not have been viewed in a similar light at other locations. Managers also tended to promote individuals they knew and had working relationships with. The succession planning process placed too much emphasis on replacement planning and not enough on developing critical talent pools. A final gap noted information on succession plans and high-potential individuals was kept in a series of separate files located across Southern Company, making consolidated information difficult to obtain and use.

Actions Taken
1. Six levels of leadership were identified: Individual contributor, First : line manager, Manager of managers, Functional manager, Multi - functional manager, CEO/business unit manager/enterprise functional manager.

2. Performance standards (list the complete set of results expected of leaders at that level) were identified and grouped under the performance dimensions: Business (Operational, Technical, Financial), Management, Leadership, Relationships, Community/External Involvement, Customer. 3. Competency model was developed comprising of nine leadership competencies: Adapting and responding to change, Critical thinking, Deciding and initiating action, Entrepreneurial and commercial thinking, Formulating strategies and concepts, Leading and supervising, Persuading and influencing, Planning and organizing, Relating and networking 4. Identification of potential successors and high-potential individuals 5. Success profile was developed to help managers identify the right successors 6. Candidate profile was developed to identify the right development actions.
7. All of the information related to succession plans and high potentials is housed in Oracles PeopleSoft application.

8. Senior Leadership Development Program and Emerging Leader Programs were introduced.

The Leadership Pipeline Model


This model helps organizations grow leaders internally at every level, from entry level team leaders to senior managers. It provides a framework that you can use to identify future leaders, assess their competence, plan their development, and measure results. Putting simply, you can use the model to think about how you'll train your people to take the next step up the leadership ladder. According to the model's developers, leaders progress through six key transitions, in order to succeed. These six leadership transitions are show in Figure, below.

Each leadership stage needs different skill-sets and values, and, at each transition, leaders have to develop these in order to lead successfully. According to the model, senior leaders in the organization should mentor more junior managers through each leadership transition, to ensure that they're using the appropriate skills for their current level. Staying "stuck" without the right skills, even if the manager progresses upward can cause leaders to stagnate, become ineffective, and, ultimately, fail. Ref: The Leadership Pipeline-How to Build the Leadership-Powered Company Ram Charan, Stephen Drotter, and James Noel Published by- John Wiley & Sons, Inc., 2001

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