Succession Management: How AmeriGas Does It Right

Your company probably has a succession management plan for your CEO, but what if one of your top performing mid-level managers submitted a resignation letter tomorrow?

Mid-level managers are the foundation your business is built on, and the cost of replacing them is significant. Some industry experts estimate it’s upward of 150 percent of the manager’s salary.

Creating a strong bench of capable, talented managers positions your company for success. Yet few companies have adequate programs in place to identify their high- potential employees and prepare them for leadership positions.

In fact, only 15 percent of North American companies surveyed by Harvard Business Review said they had enough successors in the pipeline for key leadership positions.

Recognizing the Need

This problem had become evident for AmeriGas, the nation’s largest propane company.

AmeriGas has approximately 50 Area Directors—leaders with teams of 10-12 District Managers. While AmeriGas had a performance management system that included annual reviews, it lacked a formal structure, according to Justine Staub, Director of Workforce Development. Employees who were promoted to Area Directors sometimes found themselves unprepared for the role, and were not set up for success.

She knew the organization could better prepare these leaders, but she didn’t know exactly what was missing or how to fix it.

Create A Profile Of Success

When OnPoint began working with Justine and the AmeriGas team several years ago, the first priority was establishing leadership competencies. We wanted to establish a set of behavioral traits and skills necessary for success in the Area Director’s position. We developed a Realistic Job Profile, an in-depth look at what a successful Area Director looks like at AmeriGas, including a narrative that covers a typical day in the life of someone in the position. This is more than a job description; it’s a common understanding across the company of what’s expected in the job. AmeriGas used the Realistic Job Preview as a vehicle to help potential Area Directors make an informed decision about whether the role was a good fit for them.

Accelerate the Development of High Potentials

As we dug further, it became clear that AmeriGas had a weak talent pool for the Area Director position.

“Every time a position opened, we started from scratch,” Staub said. “We needed to identify who within our organization had the potential to develop into an Area Director.”

To address this, OnPoint developed a high potential program for area directors known as the Accelerated Leadership Program (ALP). The entire management population was invited to sign up for the program if they had an interest in the Area Director role. Three hundred people applied.

Through a series of assessments and input from supervisors and senior leaders, we narrowed the number of participants to a cohort of 21 people for AmeriGas’ inaugural ALP.

Participants take part in a variety of assessments and simulations that are based on the Area Director role. The results of this robust assessment are integrated into a comprehensive feedback report for each individual, and people use this data to create an Individual Development Plan. AmeriGas now requires employees to complete the ALP assessment and development program before becoming an Area Director.

To provide additional experience and establish greater opportunities for evaluating internal candidates for an Area Director role, OnPoint helped AmeriGas establish a stepping stone position: the Assistant Area Director. Under the mentorship of an Area Director, the Assistant Area Director gains experience by working with the Area Director on a day-today basis and performing Area Director tasks. Gradually, they take on more responsibility and as they build competence and demonstrated success, they will be ready to be considered for a promotion to Area Director.

Making a Lasting Impact

The ALP program continues to attract a steady stream of employees interested in advancing their careers.

“Programs like these help people to feel a level of comfort with the fact that there is a clearly defined method of advancing within the company,” Staub said. “We are a national company with hundreds of locations and without programs such as this, it is easy for talented people with career growth aspirations to get lost in the organization and even go someplace else to get noticed. It’s seen by employees as an investment that AmeriGas is making in our people, and in the future of our business.”

It’s also a selling point for external candidates interested in working for AmeriGas.

Leadership development and succession planning go hand in hand. Through the ALP, AmeriGas can continue to develop those in the program to move into Area Director roles.

If you’re looking for an experienced firm to help you establish a meaningful succession plan or identify better ways to identify and train your future leaders, OnPoint can help. To learn more about our work in training, development and consulting, contact us today.