By Guest Author Sean Conrad
Many business drivers – from corporate governance legislation, to skilled labor shortages, to generational demographic shifts - have placed succession planning on the agenda of executives worldwide. Research has also linked effective succession planning to improved employee engagement, retention and ROI on development resources[i], as well as superior corporate performance[ii], making the practice an even more compelling business imperative.
But tackling the problem is no small task. While the idea of succession planning is not new, it has historically been implemented as replacement planning: centered on fulfilling a specific position – often an executive role - with a clear timeline with which to accomplish the task of finding the ideal candidate. Succession planning for future workforce requirements beyond the C-level, and linked to development plans and talent pools, has now become a best practice.
Shredding the Org Chart Approach to Succession
With need to prepare for the mass exodus of Baby Boomers from the workforce, organizations must step up their succession planning efforts to ensure it is both effective and strategic.
Traditional replacement planning with org charts encourages promotions within “silos” of specialization. In contrast, talent-pool based succession planning encourages managers to consider talent in every part of the organization as a way to identify possible successors for positions that may come open. Talent pools may be identified underneath each “level” on the organization chart, but are not tied to specific positions at higher levels.
Talent pool based succession planning enables organizations to identify and groom a group of employees for promotion. This approach is effective because employees selected for talent pool development are typically more likely to stay loyal to the organization (even if they do not get selected for promotion), and it is easier to identify candidates that already have skills best aligned to the organization’s strategic plans.
There are various ways to select individuals for placement in a talent pool. One approach is to ask managers to assess and nominate people. Another is to apply objective assessment methods, such as performance appraisal history, to identify individuals who may be optimally developed for future responsibility.
Building a Succession Strategy
Whether your organization has done succession planning in the past, or you’re looking to revamp your strategy, a strategic succession plan should enable your organization to:
- Understand workforce potential and prepare for future retention requirements
- Prepare for succession in all areas of the organization – not just executive roles
- Create a talent pool and cultivate high-potential employees using career and development planning
Taking a strategic approach to succession planning, helps the company build long term sustainability and viability. Moving succession planning from theory to practice however requires executive buy-in to ensure it is a strategic effort driven from the C-Suite with input from HR. It is important to include not only the executive suite, but the company’s Board of Directors and/or owners. Without high level buy-in the succession planning effort will fail.
Once executive buy-in is secured, it is important that succession take a staged approach as part of the overall talent management process:
- Understanding Workforce Potential and Areas of Retention Risk: this stage is completed after running an initial appraisal process. It is designed to help target high-potential employees and understand talent areas most at risk.
- Developing Internal Talent Pools: prepare talent succession for all areas of an organization - not just leadership. This allows the organization to more easily align workforce requirements to meet the needs of corporate vision. Define competencies and development plans around skill groups (pools), conduct talent assessments and close gaps.
- Easily Identify Successors: recruit from within a larger pool of developed employees, reduce succession risk – and retain talent
Many firms opt to automate succession planning with online tools that simplify the process for HR and managers. More importantly, such tools give managers insight into potential, performance and areas of risk, while employees get better access to feedback and talent development opportunities. This development focus can be linked to higher levels of engagement since employees are aware of opportunities for future growth within the organization.
Now is the time for companies to tackle succession planning head on. Rolling out a strategic succession plan requires broad organizational change, and requires a commitment from all involved, but delivers long-term business results that can help organizations to stay competitive in the long term.
About the Author:
Sean Conrad is a senior analyst with Halogen Software. He is a frequent speaker and author on talent management strategies, trends and issues. He can be reached at [email protected] .
[i] Bersin & Associates, Succession Management: A Primer, June 2009
[ii] CedarCrestone2009-2010 HR Systems Survey (January 2010)