Succession planning used to be relatively straightforward. Traditionally, large companies would use a structured approach to identify potential internal replacements to be prepared for the day when a senior manager would retire, hopefully ensuring a smooth succession and the least possible disruption to business as usual. Mr X (and it was invariably a Mister) would get his gold watch and head off to the golf club, while Mr Y would gleefully move his clutter into the cushy corner office. Article by Lisa McGuinness, Director – Rullion.
Fast forward to today and the process has become far more complicated for a plethora of reasons. The retirement of the baby boomers is widely acknowledged to be one of the biggest challenges facing workplaces in our lifetime, given the potential loss of organisational knowledge, especially for companies that do not manage the process well. Companies are experiencing higher staff turnover, reduced employee loyalty and critical skills shortages, underlined by a significant change of mind-set by younger employees about the concept of work. The 2016 Deloitte Millennial Survey found that 66 per cent of this cohort, roughly defined as people who reached adulthood in the early 21st century, expects to change jobs in the next five years. Much has been written about the sense of entitlement among twenty-something employees – they want to feel special, they don’t see themselves being in the same role for more than a year or two, they want to feel they are making a difference, they want flexible hours etc., etc. – but can you really blame them when they have grown up seeing their parents work long hours in positions that could be made redundant in a heartbeat during a restructure?
The advent of the gig economy means talented millennials really do have a reason to be smug. Those with sought-after skills can channel their abilities into working smarter, not harder, taking on freelance or short-term contracts for a number of clients, maximising work-life balance as well as profit. If Tinder is the millennials’ answer to commitment-free dating, then creating your own start-up is the corporate equivalent.
So, where does all this leave companies hoping to attract and retain future leaders?
The focus of succession planning – identifying and developing talent to fill key positions down the track – has not changed since the days of gold watches and cigars. What is needed now, however, is for corporate decision-makers and facilitators, including chief executives, senior managers, line managers and HR personnel, to reconsider the ways they tackle the problem in order to develop a holistic, integrated strategy that takes into account the specific strengths and challenges facing their business.
It sounds complicated, but it does not have to be. Nor does it have to mean a raft of extra work for already over-stretched HR teams. Here are the key steps:
1. Building on the existing HR framework
Succession strategies are by nature aligned with key areas of medium to long-term business planning, such as recruitment, in-house training and development, mentoring, increasing engagement and performance review. The analytics and databases already used by your HR team to support these tasks can also be utilised to identify and develop potential leaders. It just requires adding an extra dimension to existing processes.
For example, during recruitment, candidates should be assessed to determine not just whether they have the skill set for the role they are applying for, but also their potential to fill other roles at a later date. If a candidate is interested in other roles/departments, what skills would they need to develop to make their goal achievable? In what ways could HR facilitate the development of these skills?
2. Thinking Sideways
Traditional succession planning methods fail because they are usually hierarchical and narrow, focussing on executives and heads of department. While it would not be economical or realistic to develop an individual succession plan for every staff member, particularly in a large company, it makes sense to consider having an action plan for the departure of staff who may not be senior management, but who nevertheless play a crucial role.
For example, what about that PA who has worked for the company for 15 years and has a who’s who of important clients in her head? Or that IT expert who is perpetually on call because he can not only seemingly fix any computer problem, but is a highly effective communicator with an understanding of the workings of various departments?
Successful succession plans take into account the possibility of sideways movements as well as upwards ones. In any large organisation, there are inevitably employees who are interested in working for a department or sector outside of their immediate field of focus, but who do not know how to go about making their ambition a reality. HR staff are in a prime position to note these individuals and support them to transfer their skills into alternative roles through the regular processes of performance reviews, engagement assessment and employee development.
Once individuals are identified as potential leaders, then a bespoke plan can be made for their career pathway which aligns with future organisational requirements, taking into account opportunities for mentoring, coaching, participation in training courses and such.
3. Open Communication
At a time when workplace rules are being rewritten, ensuring everyone from senior directors to new recruits is aware of succession strategies is essential. Employees in their twenties and thirties may be more likely to switch jobs than their parents or grandparents, but they are more likely to stick around for longer if they are kept in the loop about opportunities for promotion and advancement, including the opportunity to diversify their skills, and made to feel included in the wider picture of organisational success.
Succession planning can tap into younger workers’ desire to make a difference. However, in order for this to happen, employees need to fully understand the succession process and the kind of jobs they may be considered suitable for in the longer term. A succession plan needs to be highly visible, effectively communicated and noticeably supported by the CEO, board members and HR. The plan should be monitored and updated regularly to ensure it is keeping pace with change.
4. Promoting Fairness and Diversity
Succession planning should be aligned with overall principles of fairness and diversity. Indeed, it makes sound business sense. In an environment of critical skills shortages and anxiety about future leadership, it is rational to explore all avenues to identify potential talent both internally and externally. For example, one large cohort of under-used talent is mid to senior level professional women who have been out of the workforce for several years due to family commitments. An increasing number of UK firms are tapping into this talent pool by offering paid returnships of up to six months to suitable candidates, with the prospect of a permanent role at the end of the course.
5. Adapting to the Gig Economy and Flexible Work Practices
The gig economy, a market in which employees work short-term contracts or are paid by the task rather than by the hour, has inevitably created huge challenges for conventional organisations. It may have been an unsurprising outcome of global economic turmoil and a work culture where old-fashioned loyalty between companies and employees has broken down, but it has left business management and HR directors alike with the gigantic quandary of how to lure potential leaders who could easily make more money working fewer hours for themselves.
Part of the solution is again for businesses to think differently about the problem at hand. Yes, a gig economy means more workers will choose to go part-time, to start up their own companies, or expect more flexible conditions and the opportunity to work from home.
However, the gig economy also gives organisations access to a deeper talent pool which can be drawn upon swiftly to temporarily fill the gaps during periods of heavy workload or transition. While recruiting and training a new employee takes months, briefing a freelancer who has the specific skills and experience to tackle a particular project could be the work of a single email. HR’s role is to ensure that the organisation has access to a ready bank of already vetted, qualified freelancers in fields where gaps may arise.
Secondly, a skilled freelancer who has a great track record with your company is worth keeping on your radar. If their circumstances change and they wish for the security of a permanent position, you have a potential employee who already has a desirable skill set, some working knowledge of organisational culture, and a proven ability as a motivated self-starter.
In conclusion, developing an operational succession plan in today’s shifting corporate culture is going to have to take into account a raft of factors that would not have been considered ten years ago. That said, most companies already have the kernel of a successful plan in the recruitment, retention and talent management programs and processes already in place. The challenge is for senior management, HR directors and their teams to work strategically together to develop an overall plan which will give their organisation the best chance of identifying and retaining future leaders, and developing their talents further.