Succession Planning

Executive Summary

Contrary to popular belief, succession planning is not a new phenomenon. Companies have been wrestling with ways to identify, develop, and retain their talent for decades.

So, why is succession planning suddenly popping up on every company’s radar screen?

Today’s organizations are facing higher demands in a global market with the retirement of the Baby Boomers and the widening talent gap. The home-grown and paper-based succession planning that companies relied on in the past is no longer meeting the needs of today’s workforce. Companies need to upgrade and redefine their succession planning initiatives to ensure that their process will benefit both the individual and the overall strategy of the company.

Despite the numerous benefits of a formalized succession planning process, companies have failed to make it a top priority. In order to achieve results, companies need to start with the basics, create a strong process and then invest in the tools and technology to instill a talent development mindset in their organization. By strengthening the process, companies are gaining support from senior executives, ensuring a “performance culture” and establishing a company-wide program. Once these steps are in place, companies can then leverage technology solutions such as 9-box models, organizational charts, scenario planning and career profiling tools to reduce turnover, increase productivity and improve bench strength. The data included in this report is derived from a survey conducted in partnership with the Human Capital Institute and interviews with senior executives in the human capital management community.

Key Business Value Findings

While 74% of companies are investing in a formalized succession planning process, companies still struggle to fill talent pipelines. In an ideal world, companies are looking to “grow leaders” within their own organization, ensuring that there is continuity for the future of their leadership and reducing turnover.

Our study revealed that the most critical drivers for implementing succession planning include:

Improve the company’s bench strength in key positions

Identify high potential early and devise strategies to retain talent.

Difficulty finding candidates outside the organization.

Unexpected loss of key leaders.

Best in Class companies are responding to these pressures by first strengthening their process and then investing in the following succession planning technology:

Career profiling tools

Performance management

Development tools

• Assessment tools

The Succession Planning Benchmark Report

Although it is imperative for companies to leverage technology to drive an actionable succession planning program, 62% of companies still rely on a paper-based solution.

(Figure 1) When asked why more companies were not investing in this process, a Program

Director at a non-profit health organization responded:

 Our biggest barrier to automated succession planning: high turnover, resistance by managers, jealousy at development of certain people and cost of implementation of software. Also, the speed at which decisions are made.”

Recommendations for Action

  In addition to the Best in Class actions, companies should also evaluate their processes to ensure they effectively accomplish the following:

- Educate your company on the new trends in succession planning and instill a strong process to build succession bench strength;

- Ensure that succession planning is integrated with other processes of talent management
including performance management, training and development, compensation and assessment;

-  Link succession planning to competency management and include a reporting
and analytics component;

Integrate with career development tools;

- Automate the succession planning process for greater efficiency and less operational risk; and Develop both a top-to-bottom approach and also a bottom-up approach for succession planning.

Need to find out more about how we could assist, please call us on: (02) 8860 9455.

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