Is It Time To Create a Succession Crisis?
By Paul Plotczyk
Although companies have promoted the idea that employees are their biggest source of competitive advantage, the reality is that most have not acted accordingly. The majority of businesses have little in place to keep their “best and brightest,” and are completely unprepared for the pending departure of key talent. Although there are some people whose departure may be welcomed, the unplanned exodus of the more experienced and knowledgeable workers can create an unwelcomed and costly problem. Is your company ready?
Why Are You Not Ready?
Putting a plan together now for the smooth transition of leaders and key employees is more important than ever for a variety of reasons. Chief among them include:
· Management Focus. The attention of management has been elsewhere. During the past several years, out of necessity management has been focused on the financial crisis and its fallout.
· Shifting Demographics. Since the first of 79 million Baby Boomers began turning 65 in 2010, we have entered a nearly two-decade span in which an unprecedented number of Americans will be retiring – with some sources estimating that over 10,000 Baby Boomers will reach the retirement age of 65 each day this year. That’s a staggering number of individuals leaving the workforce each business day – and it is expected to increase in 2015!
· Economic Changes. Financial conditions resulting in massive downsizing and increasingly flat and dynamic organizational structures have produced an increase in attrition in executive level positions, as well as a shortfall in the number of potential future leaders. Additionally, with an improving economy retirement has become more of a possibility for aging, knowledgeable, often hard-to-replace employees.
· Reduced Loyalty. Despite a focus on employee engagement and involvement for many companies, in my conversations with managers’ the majority believe employee loyalty continues to decline.
· Globalization & Technology. Is there any corner of the world, from Mumbai to Manhattan, where one cannot walk down the street or enter a restaurant without seeing someone talking, texting, or surfing the internet on their smart phones, laptops or tablet? Information technology has become ubiquitous and is changing every aspect of how people all over the world live their lives.
And globalization has accelerated the change so that technology is now at the forefront of our world with technological innovations sprouting new jobs. Additionally, social networking allows individuals to connect and rapidly share career opportunities from around the world.
As a consequence of the above, most management teams are currently without a strategy to deal with the loss of know-how that will soon be leaving the building!
What Can You Do?
So what is a manager to do? The reality of the presence of the above factors and their impact is no surprise. Economic changes, the impact of demographics, the spread of social networking, etc. will continue to advance. They are forces outside the control of managers.
However, there are a few key moves a manager can make that will ensure that management has an impact on traffic flow – the arrivals and departures of talent – regardless of the size and type of business. The activities outlined below form an integrated, disciplined methodology that will drive the success of the enterprise, and generate the performance required of an engaged workforce.
1. Define the Future
Outlining the planned destination of the business is not only the most important first step it also functions as a framework and a set of guideposts throughout the planning process. It is where management sets strategic context. This step can also force a conversation within the executive team that generates alignment, engenders pledges of commitment and produces the overall discipline that can be quite useful when there are the inevitable unplanned bumps in the talent road.
2. Select the Talent
From completing the step above, it should be pretty clear that the strategy and activities that the enterprise used in the past, and was reflected in the talent management activities – the recruitment, retention and development of employees – is most likely not what is required in the future and may require whole scale revamping.
A relatively simple exercise that is described below can be a useful tool for this step. It can jump start the whole process by combating denial, get the attention of management and underscore the need to develop a bench for critical positions.
There are various assessment tools that many companies have a preference for. (We are most familiar with the Cloud-based, 360 feedback tool skillrater TM which is focused on measurable changes in behavior and actions over time, and seems to fit very well with today’s more open, transparent and collaborative environments.
Identifying core competencies and key activities are important elements in this step that are often short-changed in planning. They are enormously useful in moving from a personality-based mindset to a performance based outlook, and can be used to drive a revised talent management process.
3. Create Individual Development Plans
Purposeful, deliberate and well-organized IDP’s combat the notion that the skills and competencies required will develop through osmosis – just being on the job! This “natural spontaneous process” may not produce the right results rapidly enough and the skills and competencies will not be aligned with the strategy.
4. Guide and Coach
Typically, if each successor and their executive/mentor finalize the IDP, this allows the opportunity to detail specific expectations, assignments, locations, milestones, timelines, and an agreement for coaching. This will help ensure that the developmental experiences lead to a deeper knowledge of the business and the many different cultural environments in which the company may operate.
Not Ready To Do a Plan? Create A Crisis!
What will it take for you to be ready? Like most US companies you may need a crisis. A key technical person will give notice. Or an up-and-coming-promising-leader suddenly leaves. But, why wait? You can create your own crisis! The following is an exercise that I have used with a variety of companies – large and small.
The most recent situation yielded results typical to the outcome of other companies who have used the technique.
This particular situation was with a client that is a 300 plus employee, Massachusetts based company in a rapidly expanding sector of the insurance industry. They have limited HR support personnel, solid employee loyalty, and strong profitability. A major concern is the impact of technology on the enterprise in the future, as well as a projected shift in the skills and competencies required of the workforce.
The exercise was preceded by a very preliminary discussion with the President about his perspective on their strategic outlook, especially regarding the technical acumen required by employees for the future. Additionally, he reported that other members of the executive team were not “on board” with the need to create a succession plan.
The result of this quick and simple exercise was the realization that they were in danger of losing 30% of their current workforce through retirements as well as planned and unplanned departures – in an expanding market! As the President of the company stated, “This is tomorrow’s crisis that needs to be addressed today!”
The Planned Crisis Exercise
This is a simple, seat-of-the-pants, rudimentary, and easy to do 4 step exercise. It may force a conversation and produce expected results – or it may raise anxiety!
Step 1. List all of your key management and technical employees, including their role
Step 2. Indicate your assessment of their retention. That is, estimate where you think they will be in 3 – 5 years, based on their age and generally known level of satisfaction/interest in their work. Will they be in the company? Same job? New position?
Step 3. Specify who their immediate internal successor could be, or who the internal candidate would be with additional development. Or, if an external hire may be required.
Step 4. Answer two questions:
– How will this impact our business?
– Are we ready?
Organizations and marketplaces are dynamic, evolving systems. Succession plans shouldn’t be static. The key to ensuring an organization has a viable, active process, and one that has the right people at the right time to maintain it’s competitive advantage is clear: succession is not a stand-alone process. Nor is it the sole responsibility of HR. Top leaders from across the enterprise need to be involved. All too often succession plans are viewed as just another task for Human Resources, leaving executives and other key personnel completely out of the mix.
Viewing succession planning as an integrated approach often requires a shift in mindset as well as major reform to the tools, practices and procedures used to source, recruit, onboard and manage talent. The resulting changes will also necessitate a widespread discipline in order to ensure that the follow through, thoughtful execution and coaching outlined in the approach above is consistently integrated across the enterprise.
So, are you ready? Or, do you want to struggle each time there is an unplanned change in a key position?