Best Practices of Succession Management and Employee Retention--Centre for Exceptional...

7/29/2019 Best Practices of Succession Management and Employee Retention--Centre for Exceptional Leadership--June 2005

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Best Practices of

Succession Management

and Employee Retention

The LGMA / GFOA ConferenceJune 2, 2005

Lori Maida, MA, CHRP


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Questions To Consider...

What % of your employees willretire in the next 5 years?


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Questions To Consider...

What % of your employees are

looking for other employment?


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% of Employees Looking for

Other Employment

Conference Board of Canada

(2005) reports,

58%

of Canadian employees are open to

move to other organizations


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Sowhat are you planningto do about it?


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Session Objectives

Briefly explore current trends

Understand succession managementversus succession planningand the

alignment to employee retention

Understand best practice processes andexamine a few of the tools and

methodologies being usedDiscuss the roadblocks and benefits of

implementation

Explore how to get started


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Why the Interest in

Succession Planning andEmployee Retention?

Numbers of people retiring and numbers of

people entering workforce

Loss of organizational memory

Skills shortages are acute

Retention of talent Future of workdifferent needs for generations

of employees

What else?


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Trends and Forecasts*

By 2008, more people will be leaving theworkforce than entering

44% of workers aged 45-59 say they will

retire before 6510% of workers aged 50-59 who leave full

time jobs, move into part time within 2years

1/3 of workers aged 50-59 who leave fulltime jobs, move back into full time

* Statistics Canada research


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Trends and Forecasts*

72% of companies predict theyll have an

increasing number of leadership

vacancies over the next 3-5 years

76% of those same companies are less

than confident in their abilities to

adequately staff these positions

* Corporate Leadership Council research

(reported by The Gallup Organization)


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Current Economic Issues

Workplaces will lose high performers as

economy strengthens

Currently, workplaces that understand

future skills needed are having difficulty

recruiting

Recruitment strategies are strengthening

Retention of talent is increasingly

becoming a hot issue


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The Internal Challenge

Who is going to do the work?

What knowledge are we about to lose?What skills will we lose?

What traditions will change? Is this good?


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The External Challenge

The market place for good talent will becompetitive

The good people will be able to pick andchoose their working environment

How do we create an organization in where

people want to stick around?


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Who is responsible to

ensure you have the peopleto get the job done?


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Shift from Industrial Age to

Information AgeThe Old Way

HR is responsible for people management

We provide good pay and benefits

Recruiting is like purchasing

Development happens in trainingprograms

We treat everyone the same

Source: War for Talent


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Shift from Industrial Age to

Information AgeThe New Way

All managers are accountable forstrengthening their talent pools

We shape our workplace, jobs, and strategyto appeal to talented people

Recruiting is like marketing

We fuel development through stretch jobs,mentoring and coaching

We affirm our people, but invest differentlyin A, B, and C players

Source: War for Talent


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Questions To Reflect On

If the dam bursts today, what is the

impact to your organization?

How would you replace the people,knowledge, lost productivity?


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One Approach


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Its not just about having

the bodies.

Its about the right bodiesdoing the right things.

Creating an organization ofwhich people want to be a part.


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Retention:

What keeps employeeshappy?


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Current Retention Trends

Towers Perrin (2002) Canadian study

59% are open to changing jobs

11% actively looking

45% passively looking

To retain me, youve got to help me advance,

keep the good people, and provide competitive

pay.


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Top 15 Retention Drivers

Retention Items %

1. Exciting work & challenge 48.4

2. Career Growth, Learning & Development 42.6

3. Working with great people & relationships 41.8

4. Fair pay 31.8

5. Supportive management/great boss 25.16. Being recognized, valued & respected 23.0

7. Benefits 22.0

8. Meaningful work, making a difference & contribution 17.0

9. Pride in organization, its mission & product 16.5

10. Great work environment / culture 16.0

11. Flexibility 13.6

12. Autonomy, creativity and a sense of control 12.6

13. Job security & stability 10.5

14. Location 10.3

15. Diverse, changing work assignments 7.7

Source: Career Systems International, 2005


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Other Research

Retention Items

1. Career growth, learning and development

2. Exciting work and challenge

3. Meaningful work, making a difference and a contribution

4. Great people

5. Being part of a team6. Good boss

7. Recognition for work well done

8. Fun on the job

9. Autonomy, sense of control over work

10. Flexibility for example, in work hours and dress code

11. Fair pay and benefits

12. Inspiring leadership

13. Pride in organization, its mission and quality of product

14. Great work environment

15. Location

Source: Love Em or Lose Em, 1999


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Understanding the Data

Employees are looking for job growth andlearning opportunities, or they are looking

for a new jobAre you offering the items on these lists toyour employees?

As managers in your organization, howmany of these items do you believe arewithin your control?


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Understanding the Data Link

to RecruitmentAttraction is part of retention, so this

information also informs recruitment

practices

Employees will be attracted to organizations

that have well-developed mentoring

programs, career development initiatives,and job enrichment opportunities


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Link to Employee

EngagementResearch shows positive correlation ofengagement scores with:

Employee attraction and retention

Engagement scores also have a positivecorrelation with:

Customer satisfaction

Revenue growth and shareholder returns

Employee productivity

Employee attendance


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What is Engagement?

Say Stay Strive

Speak positively

about the organization

to co-workers,

potential employees

and customers.

Have an intense desire to be

a member of the

organization.

Exert extra effort & are

dedicated to doing the very

best job possible to

contribute to the

organizations business

success.

Engagement


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Calculating Employee

Engagement

I would, without hesitation, highly recommend this organizationto a friend seeking employment.

Given the opportunity, I tell others great things about workinghere.

It would take a lot to get me to leave this organization.

I hardly ever think about leaving this organization to worksomewhere else.

This organization inspires me to do my best work every day.

This organization motivates me to do more than is normallyrequired to complete my work.

Say

Stay

Strive

Scores from the following six questions are used to

calculate the engagement score:


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Succession Planning:

Helping you understandwho to focus on


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Quick Poll

Who has:

No succession planning in place?

Succession planning in place, but not sure it

is, or will be, successful?

A successful succession planning initiative?


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The Traditional Approach to

Succession Planning

Often highly political

Little thought given to what kindof leaders required in the future

Done secretly

Focus on putting names in boxes(replacement)

Few conversations held


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Results of This Approach to

Succession Planning

Strategies become academic and

administrative exercises. Change happensand rigid plans are not applicable a

waste of time and money

Little focus spent on the developmentof individuals


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A Different Way to Think

About Succession Planning

Succession management is a process of

ensuring there are leaders and talent thatcan implement the organizational vision

It requires the systematic identification of

those individuals who have the potentialto turn the vision of the organization into

reality


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Elements of an Effective


Process*

1.

Individual CareerPlanning and

Development

2.

Succession

Planning

Analyses

3.

Group Discussion

and Review

* The Gallup Organization


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Focus on individual developmentstrategically aligned to future vision

Leadership development can ensure thatthe potential identified through successionprocess is realized

Result is long-term leadership

sustainability through attraction, retentionand development of talent


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A key strategic initiative

Cannot be done in isolation to other

cultural and people oriented initiatives

in the organization

More than just putting names in

boxes


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Focus on integrating many elements of

organization development

High level steps need to be customized foreach organization

Leadership Pool approach is gaining in

popularity (identifying all potential

employees vs. positional replacements)


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There are no recipes or formulae, nochecklists or advice that describereality. There is only what we

create through our engagement withothers and with events.

(Margaret Wheatley,Leadership and the New Science)


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Vision and Competencies

Alignment to vision and strategy

Business plan for succession initiatives

Succession and leadership aligned to thevision, critical business issues/skill gaps

Executive commitment

Develop leadership competencies

Develop a succession managementroadmap


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Need for a Roadmap

Implementing succession initiatives

impacts culture

A roadmap shows how to get there

Without a roadmap, the likelihood is that

you will focus too much attention on detailsand miss the big picture.

(William Rothwell)


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Talent Review Process

An interactive dialogue and discussion tosupport the performance and potential oftalent in the organization

A process to look at key talent, openpositions, promotions and leadershipdevelopment

Discussion to support shared ownershipof the talent pool and developmentopportunities


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Robust Talent Review (War for Talent):

Full day on-site for each division

Discuss quality of incumbentsReview individuals and the talent strength

of each unit, and discuss other issues such

as retention or recruitingRigorous, candid and open debate


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Robust Talent Review, continued:

Drive to a distribution of ratings

Specific action plans written andfollowed up for each unit

As important and intense as the budget

process, with real accountability and aperformance focus


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Talent Review Roadmap

QuestionsHow far down in the organization? What

groups?

High potentials or everyone?Replacement or poolor both?

Assess on performance and potential

Other assessments required?

Who will assess? Do they have the skills

to assess?


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Pool versus ReplacementIdentifying bench weakness (e.g.

managers, technicians)

Assess individuals

Develop as pool stretch

assignments, leadership development

Track progress


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Folio Map

Potential

Performance

3.6

3.6

High Performance/ High Professional

New in Position/High Potential High Performance and Potential

5.0

5.0

Outplacement

Needs Improvement

Competent/ Capable

2.6

0


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Identifying High Potentials

High

Low HighPerformance

JJJ

JJ

J

J JJ

J

J

J

J

J

JJ

J

J

JJ

J

J

JJ

JJ

JJ

JJ

JJ

JJ

J

JJ

J

J

J JJ

J

J

JJ

J

J

J

J

Our leadership

Talent Pool

The bar is a ratingof 3.6 or above on

potential

Must be at least

competent in each

of the Standards of

Leadership

3.6

1.0

5.03.61.0


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Folio Map

Permits participants to identify

specific developmental actions for

employeesAssists conversations regarding next

steps

Shows progress from year to year


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Critical Positions/People*

Critical PositionA critical position in the

organization that is imperative to running

the business. Key strategic importance to

have back fill.

Critical PersonA critical person in the

organization which would result in a

significant adverse impact on the business

if the person left.

* Johnson & Johnson definitions


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Example

Multi-level ownershipCEO

Reviews plan to monitor corporate future

President/Sr. VPReview functional plans & Develops Company level plan

Functional Area/Company Managers

Identifies high potentials across area

Drafts succession plan

Manager

Discussion with employee & functional manager re. development/succession

Employee

Create Development Plans & Performs Leadership Assessment


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Succession

Management

Retention


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File it away


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Start having conversations!


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Great Leaders

Make AGreat Difference


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Leadership Effectiveness

and Turnover

19

9

14

8

10

12

14

1618

20

22

Bottom 10% Middle 80% Top 10%


TurnoverPerc

ent


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and Retention

19

51

79

010

20

30

40

50

60

70

80

90



In

tentiontoStay

with

Company(%

)


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and Customer Satisfaction

21

50

82

0

20

40

60

80

100



Ra

tingsofCustomer

Satisfaction(%

)


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Making Leadership

Development Work Identify, inform and invest heavily in

talent

Use 360s to build on strengths

Set extremely high expectations for yourleadersand measure their results

Make leadership development a long term

process and not an event Use the succession process as an

opportunity to develop and measure theleadership potential


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Senior Management Role

Responsible for succession process

Approve high potentials, individualdevelopment, leadership development

Determine success measures, nextsteps and time frames

Determine management

accountability Follow-up on actions


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Measures

Define up front what you want toachieve in the broader scope

Thenonce succession data gathered,

define specific measures, timing andaccountability. Measure regularly.

Track development of talent, and their

progress, regularly over the long term.Assign accountability to managers forprogress, assign mentors, reward


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Possible Succession

MeasuresBy ___ 90% of development actions complete

Increase movement of high potentials to other

areas of workplace Increase employee engagement/satisfaction

By year 20xx, increase high potential leaders by

x%Over x years, increase high potential retention by

x%

External measures - attract high potentials


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Employee Conversations

What needs to happenin these conversations?


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Individual Development

Planning

ActionsGoals and measures

Follow-up, follow-up, follow-up


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More Best Practices (Hewitt)Senior management lead the charge

Maniacal focus on the best talent

High potentials are carefully identified

Compensation is highly differentiated

Assignments drive high potentials growth

Tracking progress is critical


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Challenges

Time

Buy-in

Lose sight of big pictureadministrative nightmare

Employee/manager conversations

Cultural biasesResource issues that arise


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Results of Implementing

Succession ManagementA high-performance culture that

continuously attracts and retains the rightpeople

Strong leaders who can develop others

Mentors that can provide a legacyA culture of openness and focus


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Results of Implementing

Succession ManagementNo unspoken agenda concerning

individuals aspirations and potentialInvestor confidenceHay (1988) and

McKinsey (1999) studies link effective SM

to increased ROI and annual return to

shareholders


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Keys to Success

Top management must buy-in and be

active participants

Link succession efforts to needs andstrategic objectives of the business

Minimize paperwork and bureaucracy

Make succession and leadershipdevelopment a constant preoccupation


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Keys to Success

Identify high potential talent early

devise strategies to retain that talent

Recognize that effective successionmanagement is not fast

Spend time to evaluate results and

provide feedback to stakeholders


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Keys to Success

Ensure leaders have an opportunity to

apply the skills they are learning

Ensure everyone is, and can be,responsible for their own development

Ensure effective role modeling of

leadership excellence Measure behaviour change


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Discussion

Where should we start?

What will be easy?

What will we stumbleover?


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Resources

War for Talent McKinsey & Co.

Leadership Pipeline Ram Charan

Grow Your Own Leaders W. Byham

Effective Succession Planning W. Rothwell Love Em or Lose Em Kaye & Jordan-

Evans

Centre for Creative Leadershipwww.ccl.org

Statistics Canadawww.statcan.ca/

The Extraordinary Leader Zenger &Folkman


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