Let’s do a short quiz. One of your high-performing managers or employees has just announced they are leaving. Is your response:
- Mad panic because they are the only member of the team that has important skills, and knows how to do crucial tasks
- Anger that they would dare to leave you company after all the opportunities (you think) you’ve given them, followed by denial and lack of action as you hope they won’t leave after all
- Sadness that they are leaving (they’ll be missed), but you’re also pleased that they are able to move onto a new opportunity, and you already have strategies in place to replace them.
I hope that you picked number three, but it’s likely that you didn’t. That’s where succession planning strategies come in.
Succession planning involves identifying and training talented employees so they can fill key roles across your company when high-performing managers or employees leave, or move to another role or department.
If you haven’t got a strategy in place, you’re not alone.
According to research firm Gartner (available to paid clients only): “Companies have to adopt new technologies and develop digital capabilities, but many are behind in preparing their leaders and staff with the skills and competencies required to respond to disruptions and fulfil evolving digital leadership needs.”
Succession planning will only become more vital as a generation of workers leave the workforce, and the talent shortage becomes more acute, with a shortage of digital skills and talent.
In fact, according to research, a shortage of skilled candidates is the biggest challenge recruiters will face over the next 12 months.
Not being able to fill key roles, taking months or even years to find external candidates, and coming up with a half-baked interim solution, leads to a serious drop in productivity and can put your business at risk.
A CEB (now Gartner) succession management survey revealed that organizations with weak leadership benches grow at only half the rate of those with strong benches. The survey also showed that the time to productivity is twice as long for external hires versus internal hire.
According to Gartner: “The issue of an aging workforce and impending retirements of key talent, if unaddressed, can create significant, hard-to-fill gaps in technical, business operations, industry partnership and customer expertise. This puts the organization’s ability to recover productivity loss and to maintain business performance at an acceptable level at risk.”
Below we’ll outline succession planning strategies that can help lower this risk, ensure you avoid creating hard-to-fill gaps, and are well prepared for the digital talent shortage.
These strategies focus on:
Plan: Focus on the company as a whole, not individual roles
Companies often only think of succession planning when one key senior manager announces that they are leaving. This role-driven, reactive approach is more “replacement planning” than succession planning. It also focuses on like-for-like replacements, assuming that you should replace the skills and traits of one manager with an exact replica.
However, in this digital era, the skills needed will shift rapidly, as will the responsibilities of the job.
Companies need to assess what skills they will need in their workforce to be able to respond to future digital disruptions, and to harness new technologies to gain competitive advantage. Here are some examples below to get you started.
To do this, there are several questions companies must ask themselves:
- What business activities and performance levels must be maintained, and how will the skills needed change with time?
- What are strengths and weaknesses of our business model and what kind of skills and resources will the company need to effectively respond to threats and opportunities in the future?
- What leadership, business and technical skills will we need to fulfill strategic objectives, and how will this change with time?
- What skills do we lack or roles we find difficult to fill at the moment, and how can we start to plug these gaps internally?
According to Gartner, organizations also need to: “Shift from defining individual role-specific profiles, to broadly defining a portfolio of skills and competencies essential to performing many pivotal roles in your organization.”
Execute: Identify and develop a diverse pool of talent
According to research from DDI, the Conference Board and EY, less than half of positions could be filled by an internal candidate immediately. Yet 35 percent do not have a program to develop high potential talent.
But do you decide who to develop, and which learning and development programs you should use to equip this pool of talent with the skills, competencies and experience they need to meet the needs of the business, now and in the future?
The first step is to define the characteristics of the employees you want to develop. According to CEB, there are three key characteristics of high-potential employees: ability, aspiration and engagement.
You can do this internally, or by using a tool such as CEB’s SHL High-Potential Solution.
The second step is to perform a skills gap analysis of the kind of competencies you’ll need to meet the challenges of your market in the years to come, and to take full advantage of opportunities. This should be at an organizational level, as opposed to on a per-role level.
It’s important to note here that you may need to source those skills internally if internal candidates are not the best fit, or if the company is moving in a different direction. If this is the case, make sure you are open and transparent with your employees about why this is happening, and communicate this approach as early as possible.
The third step that brings this together is to implement a learning program to develop the necessary skills in the right people.
According to Gartner, this should be: “a combination of experiential learning (workplace-based, on-the-job development activities) along with learning from others (coaching and mentoring) and formal learning (classroom-based, instructor led training).”
Adapt: Continuously measure and review
Succession planning is not something you do once, and then only revisit when there is a role you can’t fill, or skill you can’t source. Instead, you need to measure the success of your succession planning strategies, and adjust and refine as necessary.
The first step is to implement a set of metrics on which you can base the success of your succession planning. Gartner suggests the following:
- “Track progress, such as, size and quality of high-potential talent pool, percentage of ready-now versus ready-soon candidates, diversity of talent pool.
- Measure impact, such as, turnover of identified HIPOs, percentage of new digital roles filled by internal candidates, and the achievement of digital business results in teams led by succession candidates.”
Secondly, you need to determine how you will track this. This could include:
- Formal and informal employee feedback.
- Assessments of the success of your learning and development programs through more frequent talent management reviews.
- Prioritizing the discussion of the success of your succession planning strategies at board meetings.
- Appointing a group of cross functional managers and employees to take ownership of succession planning, and ensure that changes are identified and made.
Next steps in succession planning
If you want to make life easier for yourself, you could invest either in a standalone succession planning solution, or look for a core HR solution that has these capabilities built in. Here are some resources that can help: