Avoid Getting Boxed In By Conventional Succession Planning Methods

Badly managed CEO and C-suite transitions have erased close to an estimated $1 trillion in S&P 1500 company market value, according to a Harvard Business Review analysis.¹ That’s more than the GDP of most countries.²

Poor succession planning often results in bad hiring decisions. For manager roles, Gallup found that organizations fail to choose the candidate with the best talent fit for the job 82% of the time³ -- a misstep that can severely weaken company performance and competitiveness.

In a Gallup survey of large-company CHROs, a mere 3% strongly agreed that their organization is excellent at identifying and selecting the right candidate for manager positions. And with respect to succession planning, while two in three CHROs (64%) say their companies employ the 9 box grid for this purpose, only 9% strongly agree that it is an effective approach for their organization.

The 9 Box Grid: A Flawed Model?

The 9 box model is a widely used talent management tool designed to evaluate and compare employee performance and potential and inform leadership development and succession planning decisions. Employees are placed in one of nine “boxes,” or classifications, along the grid’s two dimensions: potential on the Y axis and performance on the X axis.

Unfortunately, the 9 box grid may be doing more harm than good.

The challenges of assessing potential are not new. One of the most common failures in selection and succession decisions is inexact measurement of candidate potential. One benefit of the 9 box model is that it provides a structure to assess criteria that inform succession planning. Unfortunately, this benefit is frequently undermined by unintentional subjectivity or bias or by comparisons between dissimilar people and roles.

In 1955, long before accomplishing his Nobel Prize-winning work on the psychology of decision-making, Daniel Kahneman was a young man fulfilling his military service in the Israeli Defense Forces. The IDF tasked him with improving its interview process to assess new recruits for combat-readiness and aptitude to serve in various military functions. The existing process consisted of unstructured interviews which, as Kahneman observed, were riddled with biases and led to bad decisions. In his seminal book Thinking, Fast and Slow, Kahneman notes that the process "was almost useless for predicting the future success of recruits."⁴

Kahneman discovered that defining a set of objective criteria is essential to measuring potential. One of the problems with the 9 box grid is that the criteria are often subjective and can be influenced by interviewer biases. These unconscious biases can influence individuals’ placement on the grid and affect future career and development opportunities.

For employees, the 9 box grid process can inhibit motivation. Employees assessed as “LoPo” (Low Potential) can become discouraged and disengaged -- particularly Gen Z and millennial employees who have begun to join the leadership ranks. Young future leaders may perceive a poor 9 box grid assessment as limiting their career or preventing them from achieving their potential.

The 9 box grid also does not make a clear distinction between the two key dimensions it aims to measure: performance and potential. Often, this is because the attributes in each dimension are poorly defined or assessors do not understand how to differentiate them.

Rethinking the 9 Box

Profound shifts in generational priorities, accelerating adoption of digital and AI technologies, and mounting organizational complexity have fundamentally changed the demands of leadership. More than ever, organizations require effective leadership succession planning that fulfills future leadership requirements. Widely used assessment tools like the 9 box must evolve if they are to serve their purpose.

Here are three changes to improve the traditional 9 box grid-based succession planning process:

1. Root Out Bias

Gallup research shows that scientific assessment of employee talents is more effective than subjective or biased evaluations of their leadership potential and that bias can be reduced by considering objective and subjective measures to understand where they align or diverge.⁵

Effective succession planning requires rigorous objective assessment of a candidate’s talents for specific roles and levels of leadership or management. When a predictive talent assessment is used to evaluate candidate potential in managerial roles, the top 25% of managers have a 46% greater probability of success, team engagement that is 13% higher, and achievement of financial outcomes that is 37% higher.

A rigorous, talent-based assessment should also offer insights into how employees should be developed to fulfill their leadership potential. High-potential employees require targeted development interventions.

A combination of indicators that gauge potential and identify opportunities for key experiences can help employees progress into leadership roles. Modifying the 9 box grid to include a composite measure of potential can help organizations identify the high-talent future leaders who will benefit most from development.

2. Explore Alternative Methods

In addition to the risk of bias, subjective assessments of talent can be harmful. In a 9 box grid, ambiguous labels like “Enigma,” “Up or Out Dilemmas,” “Workhorses,” or “Dysfunctional Geniuses”⁶ can obscure a candidate’s real potential and undermine self-confidence and motivation.

Gallup’s experience in assessing leadership talent reveals two effective alternatives:

Assess Readiness: Define talent based on employee readiness and exposure to key leadership challenges required in a future role. Based on where an employee is in the organization’s hierarchy, they could be classified as “ready now,” “ready next,” “expert” or even “game changers” equipped to coach and mentor others. In this way, potential is based on where employees are on their leadership journey, and organizations can individualize learning experiences to prepare them for higher-order challenges.

Instead of annual reviews, organizations should adopt a continuous feedback approach. Employees who have regular check-ins with their manager can make timely adjustments and build readiness that supports their individual development needs.

Define Stages of Development: Organizations should consider forming employee peer groups at similar stages of development. These small cohorts can work together to improve collaboration, achieve shared goals and offer mutual support.

One large organization Gallup studied defined cohorts based on stages of growth and talent maturity. The organization’s succession model includes three stages:

• Growth needed: Leaders with undiscovered talents not fully materialized or maximized.
• Developing: Leaders who have begun to develop talent, strengths, skills and technical competencies and understand what is required to move into a higher role.
• Accelerated: Leaders who exhibit key success competencies, understand their strengths, and are invested in developing specific future-focused technical competencies and skills.

These definitions are respectful and acknowledge that all employees participating in the succession planning process need to be supported through various stages of growth and personal development.

3. Refocus on Development

Only 22% of employees strongly agree their performance is managed in a way that motivates them to do outstanding work. Organizations should redesign their performance review processes to align with organizational values and business goals, helping identify specific employee development opportunities. Objective data with performance metrics, assessments of potential and development progress foster individualized development and lead to better succession planning decisions.

Leaders should also consider involving multiple stakeholders (e.g., managers, peers and other employees) in talent reviews. These diverse perspectives can offer a more holistic assessment of an individual’s performance and potential that can accelerate their development. Technology can also enhance the talent review processes. Digital platforms can track data, facilitate discussions and update development plans, allowing managers more time to discuss individual development needs.

Thinking Outside the 9 Box

The mark of any successful talent review process should be how well it supports targeted, actionable development plans for employees. It should serve to identify areas of potential growth, training opportunities, key experiences and career paths and help managers deliver constructive feedback and coaching.

Despite its flaws and limitations, the 9 box grid continues to enjoy wide use. But like Kahneman’s military recruit interview process, it can be improved by reducing subjective bias, employing alternative methods that determine employee readiness and stage of development, and refocusing on employee development.

Organizations now have the opportunity to rethink the 9 box grid to ensure their succession plan strategy meets the future demands of leadership.