The workforce is about to undergo a dramatic shift. With Baby Boomers reaching retirement age and the competition for qualified talent intensifying, companies are beginning to understand the importance of succession management and making it an essential part of their recruitment strategies. In order to survive this demographic shift without a hitch, it is crucial to take into account your strategic vision and corporate culture and pair the needs of your company with those of your top employees to build future leadership.
Lee Hecht Harrison has taken a close look at three approaches to succession planning and come up with some practical advice on how to develop a successful program within your organization.
Strategic approaches to
succession planning.
Many Baby Boomers have spent the majority of their careers with one company, 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. However, successful succession planning goes beyond simply retaining vital information and identifying the next in line for key positions. It is just as crucial to provide your young talent with growth opportunities they may not receive elsewhere. 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.
So what approach should your company use to fill senior positions with appropriate young talent while making certain that the necessary knowledge is transferred during the shift? There are three main models companies use when succession planning – each has certain advantages and disadvantages, so your company should take a close look at its goals and level of commitment before choosing a model that best suits your needs.
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Emergency replacement planning.
This is the most common model of succession planning. When a vacancy arises due to retirement, growth or contraction of business, a successor must be identified quickly to avoid any missteps in customer service and to retain knowledge that is about to be lost. The current employee often plays a large role in identifying the best successor for the position. Generally, HR will try to fill the role from within, but often must go outside the organization if no one has the skills required for the job.
Benefits of emergency replacement planning include: |
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• Simple and cost-effective |
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• Involves current employees |
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• The Foundation of Coaching |
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• Generally, existing systems can be used to create solutions
Disadvantages of emergency replacement planning include: |
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• Lack of long-range vision for the company |
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• Can lead to “cloning” – replacing an employee with a carbon copy of the old employee regardless of whether or not those skills are a perfect fit |
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• Rarely makes employees part of their own growth path |
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• Does not portray your organization as one that values your employees’ future goals |
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All companies engage in emergency succession planning to some extent, but other types of planning may help your business grow more effectively and in line with corporate strategy.
Long-term planning.
Long-term planning focuses on the future needs of the organization, often looking at the organization from eight years out. Working within the strategic framework for the company’s future goals, senior management identifies the positions necessary for growth and the best candidates to fill those roles. Some companies invite their employees to take part in an assessment process, while others have managers identify leadership candidates.
Many companies with strong long-term planning programs offer employees leadership training that includes mentoring, coaching and action-learning programs combined with university programs. This approach engenders loyalty and commitment and breeds a culture of success at all levels.
Benefits of long-term planning include: |
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• Identifies a broad talent pool |
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• Defines and builds future skills needed for the success of your organization |
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• Empowers employees by involving them in their career growth
Disadvantages of long-term planning include: |
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• Costly and time-consuming to develop and maintain
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• Existing employee-base may not have (or develop) the required skills for critical posts and outside hiring can lead to resentment |
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• Managers may be frustrated by not being allowed to choose a successor
If your company wants to grow leaders from within your existing talent pool and has the time and resources to develop a useful long-term planning program, effective talent management will become a key component of your long-term human capital strategy.
Combination or complete plans.
A complete succession plan combines emergency and long-term planning. This model allows senior management to plan for the long-range growth of both the company and individuals within the organization, and prepare for last-minute replacements to ensure that service is not interrupted by knowledge loss or lack of staff.
The advantages are the same as many of those listed in the long-term model, but there are some unique disadvantages of which HR representatives should be aware. The complexity of the model can be difficult to develop, maintain and communicate to employees, and, without proper explanation of the system, some employees may start to believe that an office elite exists. |
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Establishing a 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.
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Strategic planning.
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: |
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• Does our current mission statement reflect the company’s goals? |
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• Does the succession plan reflect the mission statement? |
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• Are there key growth initiatives planned in three to five years and do we have the proper talent in place to meet those objectives? |
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• 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 leaders believe in it and see it as ensuring the future growth and success of the organization. A steering committee should be convened, consisting of leaders from the organization including human resources, senior management, communications and any other key, front-line departments. Your HR team should consider conducting interviews with senior management to determine: |
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• What direction will the company be taking? |
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• What kind of evaluation criteria do they want future leaders to meet?
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.
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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 what roles they believe to be critical and what criteria are needed to fill those roles. Would the loss of a person in a certain position cause a disruption to your company’s day-to-day operations?
Monitoring these critical roles and planning for each of them will help keep on-the-job know-how within the organization. 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 future leaders and allowing them to work side-by-side with the experts currently in place will help your organization develop new talent and retain crucial information. |
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Talent management.
Once vital roles have been identified, appropriate candidates must be found to fill those positions. The majority of companies use a combination of general competencies and organization-specific criteria to identify the right candidates and manage their talent.
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 necessary to expand their potential. Without defined growth paths for leadership candidates it is impossible to achieve an effective succession plan. |
Communication is critical.
To be successful, your succession plan must become part of your company’s culture. Workshops should be held for managers across all levels of the organization 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 how the succession plan will work. 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.
Retain institutional knowledge today. Grow leaders for tomorrow.
Identifying and training existing junior 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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