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If ever there was an area of talent management to which the maxim, "There's no time like the present," should be applied, it's succession planning.
"Because of baby boomers retiring, because of the lack of leadership development within organizations, because of attrition -- due especially to millennials job hopping -- about 85% of organizations will have a significant leadership shortfall within five years," said Michael McGowan, managing director and practice leader for leadership and talent at BPI group, a talent management consultancy. "That's why succession management is important and why companies should be doing it more than they are today."
He defined succession planning as more than simply grooming the next CEO. It's a process that allows an organization to continuously develop and recruit in a way that builds -- in both the short term and long term -- the next generation of leaders at all levels, regions and business functions.
According to McGowan, the underpinning of this successful succession planning strategy is once or twice yearly meetings where HR and business leaders meet to identify key talent across different levels. That includes both high-potential employees destined for the highest leadership roles, as well as what are called high professionals -- strong contributors the company needs to retain, but who aren't destined for or don't want leadership roles beyond functional or technical areas. In both cases, employee learning and development processes are created to support the succession plan.
Like many industry watchers, McGowan said he believes failing to develop the next generation of leaders, specifically, and the talent pipeline, more generally, will impede companies' ability to compete in today's market. To that end, he discussed important succession planning best practices and challenges and why communication and collaboration are critical.
Integration key to successful succession management
What's one critical truth about succession planning best practices that companies and their HR teams should know?
Michael McGowan: Succession management is the critical process that needs to be integrated with the rest of the organization's talent management ecosystem [both in terms of strategy and software] -- everything from performance management to leadership development and developmental training. It needs to be tied to recruiting, retention efforts, etc.
So, the way I view succession management is that talent management is at the very top of the umbrella, and then everything else is underneath that -- succession and talent reviews, performance management, talent acquisition and recruiting, and engagement. Then, all of those areas need to be tied together and integrated together to be successful.
Without this integration, what we've found is that succession management alone -- or really any of these areas alone -- they become too complex, they become too siloed, which, unfortunately for many organizations, results in eventual abandonment of the process, because they're not able to link everything together, and it becomes too cumbersome.
What are people getting wrong?
McGowan: As just one example, we've worked with a huge beverage company that has what I would consider a relatively mature talent management function, where they have a sophisticated performance management process, they have a corporate university that has a lot of developmental programs, recruiting, etc. -- and succession.
But here's where it falls apart: They do these succession processes -- they do the talent review process, they identify who the key talent [is]. They say, 'Here are the high potentials, here are their strengths, and here are their gaps.' And then it just ends. Nothing changes with the approach to development.
So, those employees are going to training sessions, but they may not be developing the skills identified through the succession management process because the succession people weren't talking to development. Or, the corporate university wasn't aware of what skills gap these employees have. So, unfortunately, there're no new offerings to deal with developing the employees.
Same as with the recruiting function. 'OK, we identified through the succession management process that these are the type of high-potential leaders we need to develop, but also who we need to recruit to be successful.' But, unfortunately, the recruiting function doesn't have access to that succession-focused information, so they turn to their own profile of who they need to recruit.
You can probably tell just by these few examples that when each of these functions stands alone because they're not talking together, succession planning is really a waste of time. Why do the succession process if you don't use that information to develop employees or can't recruit them the way you want to do so?
What would more of a succession planning best practices approach -- essentially, the opposite of that -- look like?
McGowan: In that scenario, you have a succession process that completely outlines the strengths and developmental areas of employees. That then informs the developmental function. And you use that to say, 'Here's what you need to offer these particular people so that they can be successful. Here, recruiting people, here's the type of people we need, so update your job specs to find the right people for all these different levels within the organization.' That's what we mean by trying to integrate these processes together.
Collaboration key to succession planning best practices
Given that both business leaders and HR are participating in succession planning, who takes ownership and oversees the process?
Michael McGowanmanaging director and practice leader for leadership and talent at BPI Group
McGowan: It's your top HR leader [such as the chief human resources officer]. But succession planning is an activity that really needs to be driven not only by HR, but also by the business -- it's not just an HR process.
The succession process is critical for the ongoing success of the organization, and HR alone isn't going to know who does what and why a given person should be a high potential. It's really the business leaders who know that and can clearly articulate who they want on each path and what they need the organization to provide employees with to be ready for that next level.
How do the employees' own desires factor in?
McGowan: That usually comes from more informal discussions with the manager and business leaders throughout the year. But, more importantly, it comes through the goal-setting process each year that typically involves a career development component.
From my research, it doesn't seem like a lot of companies are giving succession planning enough attention.
McGowan: Yes. Unfortunately, you're right. A majority of companies do not place enough emphasis on succession planning. The reason for that is it's time-consuming, it involves a lot of resources, etc. But, unfortunately, this results in a lot of failed leadership changes. A lot of companies that don't do succession planning, or don't do it well, hire externally.
[This is a problem because] No. 1, this is a lot more expensive, and No. 2, it often fails, because the external hires don't fit well within the company culture and they don't know what the expectations are. Without succession planning, even when the company promotes internally, those employees are not appropriately developed, and they're not ready to take on their new position. So, that's the really bad outcome of these companies not doing succession management at all or not doing it well.
What are some final thoughts on succession planning best practices?
McGowan: Here are just a few:
- Keep it simple. Overengineering the process is time-consuming and will eventually result in it being abandoned or not followed correctly.
- Minimize time investments. If it's too time-consuming, managers will find ways to cut corners or abandon it completely.
- Realize that it's not just about high potential; it's all types of talent.
- Before you buy software packages, architect the process for your organization. Then, seek out technology vendors who can adapt their technologies to your specific processes.