At a very fundamental level, succession planning is a strategic process. It’s about making sure you have future leaders to make sure a business can meet its goals, according to Kate Humphries, senior manager, resource planning and succession management, talent management, at the TD Bank Group in Toronto.
But, increasingly, the succession management process is also a competitive advantage, said Humphries, speaking at a Canadian HR Reporter roundtable sponsored by Queen’s University Industrial Relations Centre (IRC) .
“As we find that it’s harder and harder to obtain talent from outside in the workforce and capabilities become more scarce outside the organization, it’s really important for organizations to look inside and start building their talent. It really becomes a competitive advantage.”
If it’s so important, why do so many companies lack successors? For one, the planning is seldom integrated with business needs, according to Paul Juniper, director of the at the Queen’s University IRC in Kingston, Ont.
“What I see is often a disconnect between the strategic plan of the organization and succession planning — which hangs out by itself — and it needs to be so totally integrated and it’s not.”
And it can’t be a start-and-stop kind of thing that comes into effect when there’s a vacancy, he said.
“It can’t be looked at that way or you’re going to fail. It’s got to be something that’s a continuous process where you’re building bench strength, you’re building a future and it’s not just when somebody leaves that everything clicks.”
It can also be tough making the connection, said Lee Anderson of HR consulting firm Lee Anderson & Associates in London, Ont., citing one employer’s experience.
“It was on their radar screen (but) they were immobilized by the thought of how to translate the idea into a program.”
Having the resources and the right timing is also difficult, according to Betsy Smith, director of global HR at Umbra/TCH Group of Companies in Toronto.
“Most people understand that we need to develop the next layer but… there’s a restriction on resources and you don’t want to bring that talent in too early because it’ll go to waste and you won’t be utilizing that asset. But if you wait too long, it’s a very hard thing to catch up with.”
Succession planning doesn’t have immediate payoff, according to Les Dakens, principal at HR consulting firm Pineridge Consulting in Toronto.
“Human nature is ‘I’m going to work on the most immediate priorities and tuck away those investment projects’ and I think that gets in the way. And if you’re in a small company, for example, you’ve got a lot of priorities on a daily basis… your boss is not likely to be saying to you: ‘How’s your succession planning coming for yourself or your department?’ Whereas if it’s front and centre with the top management, that will encourage people to spend the time now for longer-term payoffs.”
The whole executive team needs to buy in, said Smith.
“Most executives understand the concept and the theory of succession planning — it’s when it gets down to the actual budgeting process and tying into the strategic planning process, it’s hard for people to think about losing a top performer and also adding onto their team and they might not need to now but they need to in nine to 12 to 18 months.”
If the head of HR has a partnership with the CEO and they both agree succession planning is a priority and part of business needs going forward, then together they can reward those who are doing it well, make sure it’s well-known that you value what they’re doing in terms of people development and you confront those who aren’t, said Dakens.
“But if the two of you aren’t in alignment and it’s just HR kind of driving the speech on succession planning… you’ll make inroads but it’s a tough sled. The CEO’s got to step up and say, ‘This is a priority.’”
It’s important to help managers and leaders to assess potential gaps, said Humphries.
“Being able to just look at capability needs and capacity needs and culture needs to plan for the future is difficult for leaders to do and… sometimes they feel like they’re being asked to look into a crystal ball: ‘How do I know what we’re doing in three to five years?’” she said.
“A lot of leaders don’t have the language so you need to support them in doing that and build the model that’s going to help them make that translation from strategy to people.”
There are so many disincentives to managers producing new people, said Juniper.
“They just want to keep the best people they’ve got and they’re doing a good job — why would they give them to somebody else, they’ve spent all the time and effort?” he said.
“One of the critical things is to… review managers once removed, so somebody another level up is looking over the talent pool two levels down and helping to make sure that manager develops those people and releases them.”
Culturally, it’s a mindset as well, said Lee Gonsalves, vice-president of HR at the Calgary Co-operative Association.
“I always say to my guys ‘It’s the job of leaders to create more leaders’ and so that has to be foundational… you’ve got to have a mindset that ‘It’s our job to do this, not just extra.’”
Do you tell potential successors?
One of the biggest questions when it comes to succession planning is whether or not to tell potential successors they’re up for succession.
The answer? It depends, said Humphries.
“What’s important is how the organization does it,” she said. “It’s about the way in which you tell high-potentials and tell talent that they’re important to the organization and that you’re going to invest in them and grow them. It’s not about saying, ‘You’re an X, Y, Z rating’ or ‘You’re on a list’ and next year ‘You’re off the list.’ It’s really important to help leaders have that conversation and give them the leader to do that.”
You have to remember it’s a promise, said Gonsalves.
“So if you don’t deliver, you’ve got another part of the equation to manage overall,” he said. “If you’re going to identify someone as a high-potential, you have to deliver and everybody’s got to get onboard with the success of the individual.”
High-potentials have probably figured this out on their own anyway, said Dakens, with recruiters telling them how good they are.
“The only thing I would do is hedge the bet a bit because if I’m given a list of high-potential people and it’s generated through the organization, I might hedge my bet that I’m going to tell 80 per cent of that 100 per cent that they’re high-potential because I know the other 20 per cent’s probably not accurate. And they may not be on the list the following year,” he said.
“And... if your HR people are pretty good at what they do, they’ll add more credibility to the predictability of that list.”
The list will change, the people evaluating will change and it’s a promise and an expectation, so you really need to manage that expectation, said Smith.
“I’ve seen it go wrong several times. I’ve worked in an organization where we went too far with telling the top performers who they were, the high-potentials who they were, and then we didn’t end up having enough positions for all these fabulous people. So you can run into trouble that way.”
Internal or external?
But many companies choose to look externally for potential successors. It’s more costly to buy talent in but sometimes you have no choice, said Juniper.
“The research says that if you buy talent in, it’s less loyal and doesn’t stay as long as if you develop people internally… you do need to have a plan for both, you do need to have both those strings active and delivering people into your organization.
“The balance is going to change from time to time, depending on your needs, but we’re always going to have a crisis where somebody’s gone from a job where there is no successor and you are going to have to go outside.”
It does really depend on strategy — not just the overall organization strategy but the sub-businesses within the organization, said Humphries.
“If you are growing in a different area or you have a business plan that’s going to require new capabilities, then you may very well need to go outside and have a much stronger percentage of external hires than development.”
It also depends on the size of the organization, said Dakens.
“Larger organizations, there’s no excuse, no excuse to be going outside — if it’s a successful company, you’ve got people who are already delivering the goods for you. But at much smaller companies, 1,000, 500 (people), you’re not always going to have exactly the right person in place,” he said.
“Intuitively, internal is always the best because they know the business, they’re respected by the people they work with and they have a higher chance of success, versus the outsider who you just don’t know until they arrive how successful they’re going to be.”
It’s time to be more proactive in talent management
By Paul Juniper
Why DO SO many companies lack successors? I think many organizations are of six minds about it. Why spend time grooming someone for a position that may not become vacant, and why train someone so she can go elsewhere if you make her wait too long?
It’s all very uncertain and there are so many other things that seem urgent NOW.
When I talk to groups at Queen’s IRC training programs about strategic workforce planning, I always ask the following two questions: If you were considered a high-potential employee by your current employer, would you want to be told? And, do you currently work for an employer who tells people? Consistently, people say yes, they would want to be told (usually more than 80 per cent of people asked) and they do not work for an employer who tells them (somewhere in the 60 per cent to 70 per cent range).
Research shows recruiting from outside an organization costs more and results in a lower retention rate than building from within. In the end, most companies are forced to do some of each. It is worthwhile to have an internal discussion about “What is a healthy level of voluntary turnover for us and how will we keep it there?” Many employers continue to be reactive on this subject.
I am continually surprised by employers that wait until they have a vacancy before scanning the market for hard-to-find candidates. And even fewer are proactive about finding those who are not looking; usually, the best candidates are happily employed now — passive methods will not attract those candidates.
We are in a country that is wide open to international trade. Many of the hard-to-find candidates — such as process engineers with experience in the petrochemical industry — are not located in Fort McMurray. They may be in Caracas, Houston or Aberdeen, Scotland.
If you are not on Twitter, you may be invisible to those under 30. It sure isn’t your parents’ recruitment market nor technology. It’s all part of a comprehensive talent management and succession planning strategy for growth in changing times. The need for strategic workforce planning is continuing to increase. Do you have a comprehensive plan? Do you have a plan to create a plan?
The Queen’s IRC Strategic Workforce Planning program helps you develop succession plans and partnership strategies that can survive the blinding speed of a rapidly changing technological world. Our instructors use real-world experience and evidence-based tools to help you understand the core components of succession planning and identify gaps in your current workforce planning. The program offers exceptional benefits to leaders who want to stay ahead of the curve.
For more information, please visit us at www.irc.queensu.ca.
Paul Juniper is director of the Industrial Relations Centre (IRC) at Queen’s University. For more than 75 years, Queen’s IRC has provided practitioner-centred programs to human resources, labour relations and organizational development professionals, delivered in an experiential learning environment focused on core competencies, practical tools, networking opportunities and strategic process development.