Why do so many newly minted leaders fail so spectacularly? Part of the problem is that in many companies, succession planning is little more than creating a list of high-potential employees and the slots they might fill. It's a mechanical process that's too narrow and hidebound to uncover and correct skill gaps that can derail promising young executives. And it's completely divorced from organizational efforts to transform managers into leaders. Some companies, however, do succeed in building a steady, reliable pipeline of leadership talent by marrying succession planning with leadership development. Eli Lilly, Dow Chemical, Bank of America, and Sonoco Products have created long-term processes for managing the talent roster throughout their organizations--a process Conger and Fulmer call succession management. Drawing on the experiences of these best-practice organizations, the authors outline five rules for establishing a healthy succession management system: Focus on opportunities for development, identify linchpin positions, make the system transparent, measure progress regularly, and be flexible.

This is an MIT Sloan Management Review article. Grooming in-house candidates for leadership roles is critical for companies that want to stay competitive. Leadership experts Robert M. Fulmer, Philip A. Gibbs, and Marshall Goldsmith provide insights about today's best leadership development practices, basing their observations on a recent study that benchmarked six best-practice companies. Arthur Andersen, General Electric, Hewlett-Packard, Johnson & Johnson, Shell, and the World Bank all recognize that keeping a steady stream of leaders moving up is important to the strategic vision. The authors pinpoint five essential elements of success: awareness (learning about the latest approaches to leadership development), anticipation (using forward-looking scenarios to envision the future needs of the business), action (finding ways to use executive learning programs to support strategic initiatives), alignment (ensuring that company documents used for performance appraisal, succession planning, and education are consistent), and assessment (evaluating how leadership education has improved business results). Approaches vary. The World Bank gives future leaders a stint in impoverished countries so they can do a better job of supporting the bank's goal of reducing poverty. At GE, the company's famed Six Sigma quality-improvement program and creative ideas for expansion in emerging economies flowed from presentations made at leadership development events. In the best-practice organizations, the most senior people set an example of support for leadership development programs.