Succession Planning: The HAIR System

Introduction

Selecting the right leaders is most important not only in commercial businesses, but also in Government services, non-profit organizations and monarchies. This underlines the importance of succession planning.

Importance of Wealth Creators

Nglam Tong Dow, former Permanent Secretary in Singapore Prime Minister’s office, the Ministry of Finance, the Ministry of Trade, the Ministry of Communications and the Ministry of National Development lamented that:

“Though our education system has produced an abundance of wealth managers, we have precious few wealth creators. Graduates in accounting, law, economics, engineering and medicine, rush heading for managerial jobs in banks, industry and government.

Only a tiny few take the plunge to start their own enterprises. Why so? In my contact with successful entrepreneurs, the singular characteristic that differentiates the wealth creator from the wealth manager is that the tycoon thinks out of the box. The CEO thinks within the box.

When the best and the brightest of Oxbridge and the Ivy League head straight for the City of London and Wall Street on graduation, their countries will inevitably go into relative economic decline. While wealth management may reward the talented individual banker handsomely, it does nothing to increase the wealth of their country.”

Interestingly, Andrew Yang, author of “Smart People Should Build Things” shared the same view as Nglam Tong Dow and decided to start Venture for America.

Dr. Goh Keng Swee

In a future article, I will write about Dr. Goh Keng Swee, one of the founding fathers of modern Singapore to illustrate the point that Nglam Tong Dow has made. Singapore was lucky to have had a team of capable ministers when it became a republic, to steer it from third world to first.

Background on Royal Dutch Shell

Royal Dutch Shell (or Shell for short) is Europe’s largest energy and oil company. It was formed by the merger of Holland’s Royal Dutch and Britian’s Shell in 1907. The BBC reported in early 2007 that the Anglo-Dutch company earns US $2.5 million per hour.  In 2013, Shell topped the Fortune Global 500 list of the world’s largest companies, with revenues in excess of $467 billion (or 84 per cent of the Netherland’s GDP). It has 92,000 employees in 70 countries. Until recently, it was considered one of the best companies.

Shell in Singapore: Shaping our future today

What is a Leader?

There is no universal definition of what is a leader. There is even some confusion between what is a leader versus a manager, a supervisor and a team leader.

For the purpose of spotting potential leaders, we must first know what we are looking for.

I choose to adopt the 2 statements made by Joel Barker:

  • A leader is someone that you choose to follow to a place you would not go by yourself.
  • The role of leadership is to find, recognize and secure the future.

According to Fons Trompenaars in his paper “The Quest for a New Paradigm of International Leadership,” there are inadequacies inherent with the three categories of leadership theory (trait theory, behavioral theory and situational theory”. Instead of hatching an independent theory, he was trying to formulate an integration theory.

The Singapore Civil Service

In his book “Public Administration Singapore Style”, Jon S.T. Quah spoke about the adoption and adaption of Shell International’s HAIR performance appraisal (sucession planning) system.

“In his memoirs, former Prime Minister Lee Kuan Yew revealed that he had ‘checked with corporate leaders of multinational corporations how they recruited and promoted their senior people, and decided that one of the best systems was that developed by Shell…….After trying out the system and finding it practical and reliable, he adopted it for the public service in 1983, replacing the British system that it inherited……Shell’s focus on identifying the long-term potential of its employees was ‘ deemed worthy emulation due to its perceived applicability to the SCS and emphasis on personnel development………The officer’s short term potential is based on the likelihood of his promotion to the next grade. His long –term potential is measured as the currently estimated potential (CEP) which is the current estimate of the highest level at which an administrator can finally measure to perform successfully, assuming unlimited opportunities.”

As a disclaimer, I am not aware of the details of how the HAIR performance appraisal system is being implemented in the Singapore Civil Service nor whether is it still in use today. My first and only encounter with it was when my former employer, a Singapore bank was either using it or making reference to it. I only saw it in the archives.

HAIR Qualities

J.Van Lennep and Herman Muller were commissioned by Shell Petroleum International to devise a new appraisal (succession planning) system for Shell’s ageing and increasingly inadequate system. The qualities used for assessment are:

  • H (High level vision from a Helicopter)
  • A (Power of Analysis)
  • I (Imagination)
  • R (Sense of Reality)

Minister Mentor Lee Kuan Yew praised this system for its simplicity and clarity of focus.

Minister Mentor Lee Kuan Yew, Guest of Honor at Shell’s 120th anniversary celebrations in 2011. He was asked about the HAIR system at 5:40 minutes portion of this video.

Minister Mentor Lee Kuan Yew was at NUS Kent Ridge Ministerial Forum 2009 and in an answer to the floor spoke about how Ministers were being selected

The 9 Box Grid

The 9-box model is also called the Performance and Potential Model. You can see for yourself that it is ineffective for assessing employee performance and their future potential simply because the qualities for assessment have never been defined. It is only a slotting tool.

 9 Square Grid

Source: PinQConsult

My Principles for Succession Planning

The first principle that I adopted for succession planning is this: Performance appraisal is used for appraisal of performance in the current job and for any merit salary adjustments; potential appraisal is for assessment of potential for the next job or higher job level.

The second principle that I adopt is leaders are found and not develop.

The third principle is leaders may lie hidden at any layers of the organization structure. Opportunities for performance and grooming will help with the uncovering of people with the required qualities. However, a person that you groomed will shine only if they possess the required qualities.

The fourth principle is that the direct supervisor or manager should not be the one to write the potential appraisal report because of the possibility of bias. Very few people would want to promote their subordinates to the same level or to a higher level than themselves.

An experienced appraisal panel is essential.

The fifth is evidences of the required qualities in terms of results need to be collected over time so that decision when made is based on facts (results).

Update on 18 April 2015: Life’s Passages as a Facilitator of Leadership Development

“Leaders who have endured adversity are most likely to be the ones with the resilience and resolve to succeed. Very often, the lessons learned from confronting fear and uncertainty, and from experiencing frustration, transform good leaders into great ones.

We call these adverse and diverse experiences ‘passages,’ because they take you from one place to another: You see the world and yourself differently after you’ve gone through the events and emotional states that define each passage.

In many companies today, leadership development tends to be managed in a fairly narrow way. Attributes of leadership are identified, usually based on performance competencies of current high-visibility leaders. Leadership development aimed at this target is then undertaken in a classroom-oriented, skill-based, cognitive environment.

But when competencies define selection and promotion, individuals who become leaders may be strong performers but not strong leaders, only because the depth of experience is often not defined by competencies and leadership models.”

Source: “Adversity: What Make A Leader the Most” Written David L.Dotlich Published in Ivey Business Journal January/February 2005

Update on 16 April 2015: How Lee Kuan Yew Groom Succeeding Ministers

The following is an excerpt taken from Mr S.Dhanabalan Eulogy for Minister Mentor Lee Kuan Yew:

“The second point is how he planned succession. What is still vivid in my mind is the time and mental energy he spent to prepare us for the responsibilities ahead. Much of the time in Cabinet meetings was spent with him sharing his experience in politics, in policy making and policy implementation. He circulated and discussed critically, essays and commentaries from journals and newspapers.”

“When he made official visits and went to conferences, he always made it a point to take a few of us in the younger team along with him to familiarise us with how to interact with the leaders of other nations and observe how to probed, to get a better understanding of global events. He would always try to seek the relevance to Singapore of his, as well as our observations.”

“We were deeply sensitised to looking at everything in terms of what we could do in and for Singapore or, equally important, what we should avoid doing. Mr Lee never tired of repeating his war stories, observations, and conclusions about events and personalities. To me he was Minister Mentor from the time I started working with him.”

Goh Chok Tong 1990

Source: The Life of Mr Lee Kuan Yew Written by Gregory Leow, InSing website 24 March 2015

Event in 1990

After 29 years, Lee Kuan Yew stepped down and Goh Chok Tong became Singapore’s second Prime Minister, after a brief swearing-in ceremony on 28 November 1990.

“I had been Prime Minister for 31 years. To have stayed on for another term would have proved nothing except that I was still fit and effective. On the other hand, if in the years that I had left, I was able to help my successor get a grip on his job and succeed, that would be my final contribution to Singapore.” Lee Kuan Yew

Lee Hsien Loong

 

Source: The Life of Mr Lee Kuan Yew Written by Gregory Leow, InSing website 24 March 2015

Event in 2004

Lee Hsien Loong (right) became Singapore’s third Prime Minister succeeding Goh Chok Tong, who was in power for 14 years. Later, Goh became Senior Minister as Lee’s closest adviser.

“Many of my critics thought this smacked of nepotism, that he was my unduly favoured because he was my son. On the contrary, as I told the party conference in 1989, the year before I resigned, it would not be good for Singapore or for Loong to have him succeed me. He would be seen as having inherited the office from me when he should deserve the position on his own merit…For several years Chok Tong had to endure the jeers of foreign critics that he was a seat warmer for Loong. But after Chok Tong won his second general elections in 1997 and consolidated his position as his own man, the jeering stopped.” Lee Kuan Yew

REFERENCES

The Quest for a New Paradigm of International Leadership Written by Fons Trompenaars

http://www.thtconsulting.com/Articles/The%20Quest%20for%20a%20New%20Paradigm%20of%20International%20Leadership.pdf

Leaders in Wealth Creation: Jurong Versus Shenton Way? Written by Nglam Tong Dow

http://www.eng.nus.edu.sg/iel/LEADERS%20IN%20WEALTH%20CREATION.pdf

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