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The workforce is about to undergo a dramatic shift. With Baby Boomers reaching retirement age and the competition for qualified talent intensifying, companies are increasingly recognizing the importance of a well-conceived and executed succession management program; making it an essential part of their human capital strategies. In order to survive this demographic shift without a hitch, it is crucial to begin aligning your business needs with the development efforts and aspirations of your top talent.
Lee Hecht Harrison has worked with organizations of various sizes and levels of sophistication around this issue. As we take a look at what the key success factors have been in those solutions, we have found that there are universal considerations to address before designing any succession program.
Retirement, knowledge transfer and high potential development.
Many Baby Boomers have spent the majority of their careers with just one or two employers, building up vast amounts of company and industry-specific knowledge that will be lost without an effective plan for transferring it to the next generation of leaders. Knowledge and skills transfer are clearly critical components of an effective succession program.
The challenge can be to determine which skills and knowledge are most important to transfer, and then build the capabilities to do that effectively through your managers and top performers. By establishing a continuous flow of information and skills, you will help your current leaders to develop your next generation of leaders. Providing them with growth opportunities they may not receive elsewhere is both good for your business and for your people. Helping up-and-coming employees grow into the leaders of tomorrow will create a stronger, more loyal group of future managers and executives, and will save your company extensive recruiting and hiring costs over the long-term.
Working within the strategic framework for the company’s future goals, a succession program should be able to provide you with the resources to target the skills and competencies your organization will need as it moves further into the 21st century. Knowing what behaviors and capabilities your leaders will need to remain competitive allows you to begin to utilize your current resources more effectively. If your development efforts are not tightly connected to specific business goals and the capabilities needed to achieve them, they could result in less effective results for the business.
While knowing what talents your organization will need in the future, knowing who you have today is often where pragmatic HR teams start. Often, companies invite their employees to take part in an assessment process to evaluate current areas of skill and capability, and then map the areas of strength, mobility factors and areas for development investment to where they are trying to go.
Many companies then move to create leadership development that includes on-the-job mentoring, coaching and action-learning programs. Yet whatever your approach for succession, measuring your return for the time and money spent along the way is critical to assure you are achieving the results you want.
Ask the right questions before you begin.
So what should you be asking to insure that your program succeeds? Here are some of the most common questions HR professionals are asking today.
• “Generally speaking, what are the best practices and pitfalls of large scale assessment or succession planning projects?”
Before your company begins to develop (or revise) its succession plan, key members of the organization must look at the company’s future plans. Your succession plan must align with your organization’s future goals, initiatives and business strategies. In addition, it must take into account your company’s current size, future plans for expansion, need for diversity, technological needs, culture and values to be truly effective.
A few key questions for your organization to consider include:
- Does our current mission statement reflect the company’s goals?
- Does the succession plan reflect the mission statement?
- Are there key growth initiatives planned in 3 to 5 years and do we have the proper talent in place to meet those objectives?
- Can our current structure handle growth?
At this point in the process, it is vital for senior management to be involved. Succession planning will not be effective unless the company’s leaders believe in it and see it as ensuring the future growth and success of the organization. A steering committee may be convened, consisting of leaders from the organization including human resources, senior management, communications and any other key, front-line departments.
Once these questions have been answered and the succession plan has been properly aligned with the strategic vision of the company, the succession planning team can turn its attention to identifying the roles that are mission critical to the organization.
• “Should we create a pool of successors/high
potentials or do we need to identify successors for specific positions?”
That depends on several factors, such as:
- Composition of your senior-level positions and degree you anticipate that it will change over time
- Differences in requirements of senior level positions
- Outcomes you are looking for; what business problem or concern are you trying to solve through this initiative?
• “We have defined our competencies and generally identified our top performers. What should we do next?” Let’s talk about the competencies. What process does your organization use to define them? Many organizations have competency models that are not fully-owned or understood by their leaders. Ensure that the competencies are strong, actionable and valid for where the business is going – if not, the solution should initially focus on closing any gaps.
Let’s talk about the top performers. How does your organization define “top performers” and what processes do you use to select or identify them? Does your definition of top performers address how your business is changing? For instance, for many organizations, the formula for success as a leader is different than it was just 5 years ago.
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The factors that used to be at play to succeed as a leader have changed and they are now looking toward a different model. And different generations of leaders may have different learning preferences and will need to lead differently in the future. It is important to use the right criteria and an effective process to select top performers.
• “What are the best ways to measure potential?”
There are several ways to measure potential. The approach for your organization will be dependent on your culture, leadership styles, appetite for assessment, and other key factors. We typically look at some combination of the following data points:
- Behavioral interviews to uncover leadership capabilities
- 360 degree assessments with peers and managers
- Last, but not least, the key factors of a future leader in your organization could include such factors as the ability to innovate, global literacy, leading virtually and strength in working in ambiguity. These are factors all organizations will need to include to some degree, beyond the unique skills and talents for their specific leaders.
• “Which specific elements should we measure, (e.g., potential, performance, fit, mobility, interest, language, etc.)?”
That depends on your business and overall leadership requirements. For instance, one client could be looking at 250 or more leaders across 15 countries. Other organizations may choose a smaller pool for fewer positions. Whatever your scope, you will want to focus on a set of core factors, such as leadership potential, performance against plan, global mobility, ability to manage P&L at department, division, or LOB level, to insure you have represented your organizations’ needs.
Establishing the succession plan for your organization.
Understanding demographic shifts and models are only important when you put that knowledge to use and create an effective succession plan for your organization. There are three key issues that you should consider.
• Knowledge retention: which roles are critical?
Once the strategy has been set, your succession-planning teams will want to look to the company leaders to determine which roles they believe to be critical and what criteria are needed to fill those roles.
Monitoring these critical roles and planning for each of them will help keep on-the-job know-how within the organization and minimize your organizations' risk. In fact, according to a study by the AARP, more than 60% of companies in the U.S. are using retirees as contractors or consultants to hold on to tactical knowledge. This type of knowledge is hardest to duplicate because it consists of the creative solutions developed through experience. Identifying emerging leaders and allowing them to work side-by-side or in a mentoring relationship with the experts currently in place will help your organization develop new talent and retain crucial information.
• Communication is essential.
To be successful, your succession plan must become part of your company’s culture. Managers across all levels of the organization need to understand why the company is undertaking this process, how it will work and what will be expected of them. Information should be provided to employees on the succession plan. Any changes to the program should be communicated through written materials, and selected candidates should be spoken to on a regular basis to see if their goals are being met. Finally, members of the planning team must continue to communicate with each other to make certain the program is staying on track and meeting the company’s goals.
• Talent management to execute your strategy.
Once vital roles have been identified and appropriate candidates assessed against those roles, the task at hand is one of managing the development of these candidates and charting their progress.
There are numerous human resource tools that can be used: from talent identification questionnaires to management software programs that move candidates through a series of progressive interviews, skill tests, and feedback channels. Web-based systems allow for worldwide access and large-scale integration of data which is effective for both tracking employees around the world and sharing knowledge globally.
Once you have identified and hired the right people for the job, give them the tools and guidance they need. Defining growth paths for leadership candidates is necessary to achieve an effective succession plan.
Retain institutional knowledge today. Grow leaders for tomorrow.
Identifying and training existing high-potential talent and guiding them with the help of current company leaders will allow a smooth transfer of knowledge and ensure future success. By making succession planning an integral part of your human capital strategy today, you will have an advantage as the current generation of leaders retires.
To learn more about succession planning and how to build your workplace of the future, contact your local Lee Hecht Harrison branch today. Visit our website at lhh.com for more information or to locate an office nearest you.
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