Succession Planning Critical Amid Workforce Shifts

“Succession planning and management can help an organization become what it needs to be, rather than simply recreate the existing organization.” GAO

Maximizing Employee Talent

Leading companies like Deloitte and Touche, Dell Computers, Dow Chemical, and the BBC are constantly striving to stay on the competitive edge in their industries and they are succeeding. One way they accomplish this is by understanding the impact of the changing workforce on their business.

“…These organizations identify, develop, and select successors who are the right people, with the right skills, at the right time for leadership and other key positions.”, GAO . Each of these businesses has learned to maximize their own talent pool. One important aspect of maximizing your talent pool is to know what is in it, what you can create with it, and when this needs to happen, or in other words Succession Planning.

More and more studies concerning Talent Management are indicating that corporate America is failing to make good use of its talent pools. And just like water in the desert, those in the talent pool are in short supply. A study by the Aberdeen Group indicates 85% of human resource executives surveyed consider the “single greatest challenge in workforce management is creating or maintaining their companies' ability to compete for talent.” The companies competing in “The War for Talent” are creating succession planning strategies that include online competency driven solutions that allow them to retain, develop, align and in some cases redeploy their workforce making best use of internal talent.

Offering employee development resources and tools linked to succession planning systems can contribute to building the type of leadership you want in the hierarchy of your company. "The quality of leadership, more than any other single factor, determines the success or failure of an organization,” states Fred Fiedler and Martin Chemers in Improving Leadership Effectiveness. William C. Byham, co-author of Grow Your Own Leaders and chairman and CEO of Development Dimensions International, a Pittsburgh consultancy and career coaching firm states, "We have very good research that shows that 50 percent of the people you hire from the outside for senior management positions don’t work out," whereas 65 percent of those internally promoted are successful.

Without strategic plans in place to maximize the existing talent pools in their own companies and to bridge the talent gap that will be created as baby boomers retire, many businesses are operating in the dark.

Turnover and Baby-Boomer Gaps

The average cost of replacing a customer service representative (CSR) earning $18,000/yr is $58,000, according to What Good People Really Cost. This outrageous sum is over three times the average pay of a CSR. Reporting this type of spending to CEOs and finance departments can be a daunting. On the other hand, further developing an employee costs considerably less and the pay off for your company is their increased productivity, talent, commitment to the organization along with a measurable savings in recruitment cost. Determining the cost of turnover is one step in creating a succession planning strategy.

Just one of Deloitte’s motivations for implementing a succession planning strategy is that “…11% or more of their workforce is scheduled to retire in the next two or three years”, says Deloitte and Touche’s 2005 Talent Management Strategies Survey. Baby-boomers are a large part of the current U.S. workforce, but during the next 15 years, 78 million U.S. baby boomers are projected to retire, according to The Human Capital Institute’s Retirement Planning: Not Just a Financial Game report. Not all businesses will be hit the same, below are some of the industries expected to experience serious shortages.

SHRM’s recent research report Talent Management: Driver for Organizational Success states “…customer service, health care, computer support and technology repair are areas where there is an anticipated acute talent shortage. In addition, as noted in SHRM's 2005 Future of the U.S. Labor Pool Survey Report, the anticipated loss of talent in the next decade will vary by organization size, sector and industry. For example, large organizations—as compared with small and medium companies—are more concerned about loss of talent from the retirement of the baby boom generation, and public and government organizations are more concerned about the loss of potential talent than private companies.”

Succession Planning Needs

Global workforce and labor trends contribute to the need for customized online succession planning systems. With each organization’s succession planning priorities being unique there are typical requirements of online solutions including:

• easy integrate with present human resources technology,
• ability to incorporate global knowledge management,
• measurable metrics & drivers,
  
• drives change management initiatives & increases communication,
• lower cost as in Software as a Service with quick deployment and
• focus on execution of the overarching succession plan initiatives.

A sound succession planning strategy includes the implementation of widely accessible resources and tools to assist in employee development lending itself to a more skilled talent pool from which organizations can fill openings as they arise.

“Tracking the progress of individual participants is a necessary dimension of a best practice succession process. The most successful systems must also measure their own record, identifying developmental opportunities, filling them with the right people at the right time and spotting looming shortages or gaps in both talent and developmental positions to rectify these gaps quickly.” Keys to best practice succession management

Identifying the right organization to partner with to assist in the design of a customized succession planning initiative is critical. An equally critical component in the creation of the succession plan is obtaining insight on the organization’s unique needs. According to research conducted by the US General Accounting Office, there are three main points that need to be understood to discover how to best maximize the solution to your needs.

• Understanding the organization's long-term goals and objectives
• Identifying the workforce's developmental needs
• Determining workforce trends and predictions

Creating an overarching strategic succession plan and implementing the online tools to support that plan may seem a daunting task. But partnering with a committed, knowledgeable organization that will continually work towards the end result to maximize your talent pool will contribute substantially to its success.