Best Practices of Succession Management and Employee Retention The LGMA / GFOA Conference

Best Practices of
Succession Management
and Employee Retention
The LGMA / GFOA Conference
June 2, 2005
Lori Maida, MA, CHRP
Questions To Consider...
What % of your employees will
retire in the next 5 years?
Questions To Consider...
What % of your employees are
looking for other employment?
% of Employees Looking for
Other Employment
Conference Board of Canada
(2005) reports,
58%
of Canadian employees are open to
move to other organizations
So…what are you planning
to do about it?
Session Objectives
Briefly explore current trends
Understand succession management
versus succession planning – and the
alignment to employee retention
Understand best practice processes and
examine a few of the tools and
methodologies being used
Discuss the roadblocks and benefits of
implementation
Explore how to get started
Why the Interest in
Succession Planning and
Employee Retention?
 Numbers of people retiring and numbers of
people entering workforce
 Loss of organizational memory
 Skills shortages are acute
 Retention of talent
 Future of work – different needs for generations
of employees
 What else?
Trends and Forecasts*
 By 2008, more people will be leaving the
workforce than entering
 44% of workers aged 45-59 say they will
retire before 65
 10% of workers aged 50-59 who leave full
time jobs, move into part time within 2
years
 1/3 of workers aged 50-59 who leave full
time jobs, move back into full time
* Statistics Canada research
Trends and Forecasts*
72% of companies predict they’ll 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)
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
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?
The External Challenge
The market place for good talent will be
competitive
The good people will be able to pick and
choose their working environment
How do we create an organization in where
people want to stick around?
Who is responsible to
ensure you have the people
to get the job done?
Shift from Industrial Age to
Information Age
The Old Way
HR is responsible for people management
We provide good pay and benefits
Recruiting is like purchasing
Development happens in training
programs
We treat everyone the same
Source: “War for Talent”
Shift from Industrial Age to
Information Age
The New Way
 All managers are accountable for
strengthening their talent pools
 We shape our workplace, jobs, and strategy
to appeal to talented people
 Recruiting is like marketing
 We fuel development through stretch jobs,
mentoring and coaching
 We affirm our people, but invest differently
in A, B, and C players
Source: “War for Talent”
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?
One Approach…
It’s not just about having
the bodies.
It’s about the right bodies
doing the right things.
Creating an organization of
which people want to be a part.
Retention:
What keeps employees
happy?
Current Retention Trends
Towers Perrin (2002) Canadian study
59% are open to changing jobs
11% actively looking
45% passively looking
“To retain me, you’ve got to help me advance,
keep the good people, and provide competitive
pay….”
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
25.1
6.
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
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 team
6.
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
Understanding the Data
Employees are looking for job growth and
learning opportunities, or they are looking
for a new job
Are you offering the items on these lists to
your employees?
As managers in your organization, how
many of these items do you believe are
within your control?
Understanding the Data – Link
to Recruitment
Attraction 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
Link to Employee
Engagement
Research shows positive correlation of
engagement scores with:
Employee attraction and retention
Engagement scores also have a positive
correlation with:
Customer satisfaction
Revenue growth and shareholder returns
Employee productivity
Employee attendance
What is Engagement?
Say
Speak positively
about the organization
to co-workers,
potential employees
and customers.
Stay
Have an intense desire to be
a member of the
organization.
Engagement
Strive
Exert extra effort & are
dedicated to doing the very
best job possible to
contribute to the
organization’s business
success.
Calculating Employee
Engagement
Scores from the following six questions are used to
calculate the engagement score:
I would, without hesitation, highly recommend this organization
to a friend seeking employment.
Given the opportunity, I tell others great things about working
here.
Say
It would take a lot to get me to leave this organization.
I hardly ever think about leaving this organization to work
somewhere else.
Stay
This organization inspires me to do my best work every day.
This organization motivates me to do more than is normally
required to complete my work.
Strive
Succession Planning:
Helping you understand
who to focus on
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?
The Traditional Approach to
Succession Planning
Often highly political
Little thought given to what kind
of leaders required in the future
Done secretly
Focus on putting names in boxes
(“replacement”)
Few conversations held
Results of This Approach to
Succession Planning
Strategies become academic and
administrative exercises. Change happens
and rigid plans are not applicable – a
waste of time and money
Little focus spent on the development
of individuals
A Different Way to Think
About Succession Planning
Succession management is a process of
ensuring there are leaders and talent that
can implement the organizational vision
It requires the systematic identification of
those individuals who have the potential
to turn the vision of the organization into
reality
Elements of an Effective
Succession Management
Process*
3.
Group Discussion
and Review
1.
Individual Career
Planning and
Development
2.
Succession
Planning
Analyses
* The Gallup Organization
Succession Management
Focus on individual development
strategically aligned to future vision
Leadership development can ensure that
the potential identified through succession
process is realized
Result is long-term leadership
sustainability through attraction, retention
and development of talent
Succession Management
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”
Succession Management
Focus on integrating many elements of
organization development
High level steps need to be customized for
each organization
“Leadership Pool” approach is gaining in
popularity (identifying all potential
employees vs. positional replacements)
“There are no recipes or formulae, no
checklists or advice that describe
“reality”. There is only what we
create through our engagement with
others and with events.”
(Margaret Wheatley,
“Leadership and the New Science”)
Vision and Competencies
Alignment to vision and strategy
Business plan for succession initiatives
Succession and leadership aligned to the
vision, critical business issues/skill gaps
Executive commitment
Develop leadership competencies
Develop a succession management
roadmap
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 details
and miss the ‘big picture’.”
(William Rothwell)
Talent Review Process
An interactive dialogue and discussion to
support the performance and potential of
talent in the organization
A process to look at key talent, open
positions, promotions and leadership
development
Discussion to support shared ownership
of the talent pool and development
opportunities
Talent Review Process
Robust Talent Review (“War for Talent”):
Full day on-site for each division
Discuss quality of incumbents
Review individuals and the talent strength
of each unit, and discuss other issues such
as retention or recruiting
Rigorous, candid and open debate
Talent Review Process
Robust Talent Review, continued:
Drive to a distribution of ratings
Specific action plans written and
followed up for each unit
As important and intense as the budget
process, with real accountability and a
performance focus
Talent Review Roadmap
Questions
How far down in the organization? What
groups?
High potentials or everyone?
Replacement or pool – or both?
Assess on performance and potential
Other assessments required?
Who will assess? Do they have the skills
to assess?
Pool versus Replacement
Identifying “bench weakness” (e.g.
managers, technicians)
Assess individuals
Develop as pool – stretch
assignments, leadership development
Track progress
Folio Map
5.0
New in Position/High Potential
3.6 Competent/ Capable
Potential
2.6
High Performance and Potential
High Performance/ High Professional
Needs Improvement
Outplacement
0
3.6
Performance
5.0
Identifying High Potentials
1.0
High
3.6
J
J J
5.0
Our leadership
“Talent Pool”
J
J
J
J J
J J
J JJ
J
J J J
J
J J
J J JJ J
J JJ JJ J
JJ J J J J J J
J
J
J
J
J J JJ
J J
3.6
J
Low
Performance
The “bar” is a rating
of 3.6 or above on
potential
Must be at least
competent in each
of the Standards of
Leadership
1.0
High
Folio Map
Permits participants to identify
specific developmental actions for
employees
Assists conversations regarding next
steps
Shows progress from year to year
Critical Positions/People*
Critical Position – A critical position in the
organization that is imperative to running
the business. Key strategic importance to
have back fill.
Critical Person – A critical person in the
organization which would result in a
significant adverse impact on the business
if the person left.
* Johnson & Johnson definitions
Example
Multi-level ownership
CEO
Reviews plan to monitor corporate future
President/Sr. VP
Review 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
Succession
Management
Retention
File it away…
Start having conversations!
Great Leaders
Make A
Great Difference
Turnover Percent
Leadership Effectiveness
and Turnover
22
20
18
16
19
14
14
12
10
8
9
Bottom 10%
Middle 80%
Leadership Effectiveness
Top 10%
Intention to Stay with
Company (% )
Leadership Effectiveness
and Retention
90
80
70
60
50
40
30
20
10
0
79
51
19
Bottom 10%
Middle 80%
Top 10%
Leadership Effectiveness
Leadership Effectiveness
and Customer Satisfaction
Ratings of Customer
Satisfaction (%)
100
82
80
50
60
40
21
20
0
Bottom 10%
Middle 80%
Leadership Effectiveness
Top 10%
Making Leadership
Development Work
 Identify, inform and invest heavily in talent
 Use 360s to build on strengths
 Set extremely high expectations for your
leaders – and 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 the
leadership potential
Senior Management Role
 Responsible for succession process
 Approve high potentials, individual
development, leadership development
 Determine success measures, next
steps and time frames
 Determine management
accountability
 Follow-up on actions
Measures
 Define up front what you want to
achieve in the broader scope
 Then…once succession data gathered,
define specific measures, timing and
accountability. Measure regularly.
 Track development of talent, and their
progress, regularly over the long term.
Assign accountability to managers for
progress, assign mentors, reward
Possible Succession
Measures
 By ___ 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
Employee Conversations
What needs to happen
in these conversations?
Individual Development
Planning
Actions
Goals and measures
Follow-up, follow-up, follow-up
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
Challenges
Time
Buy-in
Lose sight of big picture –
administrative nightmare
Employee/manager conversations
Cultural biases
Resource issues that arise
Results of Implementing
Succession Management
A high-performance culture that
continuously attracts and retains the right
people
Strong leaders who can develop others
Mentors that can provide a legacy
A culture of openness and focus
Results of Implementing
Succession Management
No “unspoken agenda” concerning
individuals’ aspirations and potential
Investor confidence – Hay (1988) and
McKinsey (1999) studies link effective SM
to increased ROI and annual return to
shareholders
Keys to Success
Top management must buy-in and be
active participants
Link succession efforts to needs and
strategic objectives of the business
Minimize paperwork and bureaucracy
Make succession and leadership
development a constant preoccupation
Keys to Success
 Identify high potential talent early –
devise strategies to retain that talent
 Recognize that effective succession
management is not fast
 Spend time to evaluate results and
provide feedback to stakeholders
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
Discussion
Where should we start?
What will be easy?
What will we stumble
over?
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 & JordanEvans
 Centre for Creative Leadership – www.ccl.org
 Statistics Canada – www.statcan.ca/
 “The Extraordinary Leader” – Zenger &
Folkman
Web:
www.exceptionalleadership.com
E-Mail:
[email protected]
Telephone: 604-899-4192
Toll free: 1-866-899-4182