establishing a sustainable succession planning program · program outline – take stock....

Baker Tilly refers to Baker Tilly Virchow Krause, LLP,an independently owned and managed member of Baker Tilly International.

Keeping your workforce vibrant:

Establishing a Sustainable Succession Planning Program

2015 Accounting Leadership Conference & Chief Audit Executives Conference

ParenteBeard and Baker Tilly merged in October, 2014

Today’s agenda

1. State of our talent2. Succession planning peer efforts3. Tying succession planning programs to long-term strategies4. Where do we start?5. Effective program approaches6. Resources and tools7. Discussion and questions

2

Presenter

Presentation Notes

About Baker Tilly

Baker Tilly overview

3

Baker Tilly offers an independent perspective to evaluating and implementing efficient business processes, financial analysis, and managing risk

80 year history of focusing on client needs and providing outstanding service

Baker Tilly and ParenteBeard merged in October, 2014 to form the 12th largest accounting and advisory firm in the United states

Energy and Utilities Group serves nearly 400 utilities nationwide

About your speaker

Russ Hissom, CPA, CIA, CISA, PartnerOver 30 years of industry experience in

> Providing enterprise risk advisory and internal audit services> Succession planning program implementation> Business process and controls reviews> Enterprise risk management programs> Financial audits> Scorecard and metrics reporting> Operational reviews and internal audit> Risk assessment > Financial training for utilities.

4

1. State of our talent

5

Presenter

Presentation Notes

State of the utility union

> Under pressure from regulators, ratepayers and environmentalists

> Markets and pricing are changing

> Technological changes, orders and choices

> Cybersecurity impacts

> Compliance

> Oh, and our workforce is aging and needs an orderly transition

6

Presenter

Presentation Notes

Outright assault on critically needed service – want it, want it on demand, reliable, don’t want to pay for it and want to tell you how to produce it

Utility employment statistics

Utility industry employment

7

Cost of replacing a skilled worker $150,000 - $200,000

Utility industry unemployment rate

Average hourly earningsBureau of Labor Statistics

Presenter

Presentation Notes

Points to a robust industry and one with high cost to worker replacement US average hourly rate $25

Utility employment age distribution

8

0%

5%

10%

15%

20%

25%

30%

35%

24 34 44 54 64 65 +Percentage 5% 19% 21% 32% 20% 4%

Utility Industry Age Distribution

Presenter

Presentation Notes

Average age is 47 Energy Workforce Development stat - Average utility worker within next 10 years These are not new stats – industry has known for some time Doesn’t only impact energy workers, pipeline and gas crews – upper management, managers – all across board Along with consolidation and downsizing find ourselves in a situation Programs out there, this talk is about taking stock and specific ways to evaluate talent for succession planning

Electric and gas hiring needs

9

Needs

Construction

Operators

Line workers

Renewable energy specific

knowledge

Renewable energy

programs

Engineers: Competitive market for

skills

Presenter

Presentation Notes

Competition for electrical engineers is increasing as advances in industries such as microelectronics, computers, and communications divert student interest from more traditional fields such as the energy industry. More generous pay offered to electrical engineers in other areas will make it even more difficult for electric utilities to compete �for engineers.

Knowledge capital needed

Demand for intellectual capital:

10

Presenter

Presentation Notes

Knowledge capital and thought leadership is across the spectrum

2015 Population estimates

11

2. Succession planning peer efforts

12

Presenter

Presentation Notes

What is succession planning?

Succession planning is the process of identifying high-potential employees, evaluating and honing their skills and abilities, and preparing them for advancement into positions which are key to the success of business operations.

Succession planning involves:> Understanding the organization's long-term goals

and objectives

> Identifying the high-potential candidates and their respective developmental needs

> Determining workforce trends and predictions

13

Presenter

Presentation Notes

Define high-potential candidates Not just hiring and hoping for leaders in various areas to step up and replace

Purpose of workforce and succession planning

Create a culture of attracting, developing and retainingtop-notch talent by:

Identifying top talent – recognizing leadership talent based upon consistent assessments and competencies.

Developing and retaining top talent – ensuring growth plans are in place to retain and advance internal talent, which will in turn increase employee engagement.

Building internal strength – renewing a focus on creating an internal talent pipeline, filling open positions quickly and ensuring appropriate career growth.

14

Presenter

Presentation Notes

This is organizationally ingrained All managers at all level sb trained on these techniques Succession planning sb part of annual goals of all management levels – an integral part of strategic planning Visible and vocal

Sample industry programs

15

Presenter

Presentation Notes

Sempra major program for succession planning – senior management team

Sample industry programs

16

Presenter

Presentation Notes

Basin – coop – gas/electric - ND Competition from Bakken oil fields – recently lessened, but still issues that raised pay across the region Here looked outside to develop a program using consultant

17

3. Tying succession planning programs to long-term strategies

Presenter

Presentation Notes

Succession and workforce planning program approach

Strategy formalization that addresses:

18

Strategic goals

Succession planning

Recruitment

Compensation and rewards structure

Performance measures and assessments

Knowledge retention and

transfer

KPMG/Rigzone survey

Presenter

Presentation Notes

A program must address these areas to be wholistically tuned into your org Strategic goals Performance measures Succession planning needs Knowledge transfer Recruiting Compensation and rewards Notice comp is last

Talent Life Cycle

Plan

Acquire

Engage

Develop

Deploy

Lead

Retain

Evaluate

19

Cost per day when operating without a key player: $7,000

Cost of a poor hire: $150k - $250k

Rate of efficiency at which most businesses operate because of poor engagement levels: 30%

Average time for a new manager to become productive: 6 months

Value of top performers: 2 to 3 times the performance of average employees

Cost of losing a talented employee: $250 -$500k

Number of employees the average manager’s actions directly affect :12

Percentage of a company’s employees who are well suited for their roles: 20%

Source: “Strategic Workforce Planning.” Human Capital Institute, Version 3.2, 2012

Presenter

Presentation Notes

Describe each box Notes below To have the workforce needed to execute the organization’s strategy. To avoid extended and costly vacancies in key positions and assure the stability of business operations. To obtain the highest and best use of limited resources. To provide meaningful developmental opportunities for both the organization and its employees as it targets key leadership positions at varying levels. To help develop a diverse workforce by enabling decision makers to look at the future make-up of the organization as a whole. To cultivate a workforce that has the required skills, and is motivated and adaptable. Those roles that are vital for achieving strategic goals. Roughly 10% to 15% of roles in an organization are strategic. Future success is compromised if these roles are not filled with extremely capable people.

Succession and workforce planning program outline

Strategic goals

> Key is attracting and retaining talent not only for leadership but also all areas of utility operations, both financial and operational

> Organizational change may be needed along the way based on the ability to fill key positions or mold successors

20

Presenter

Presentation Notes

Review the utility’s current staffing levels Interview key personnel to understand services provided by the utility and staff providing those services Gather staffing level data from both investor-owned and public utilities that provide similar services Compare and evaluate the utility’s staffing levels with gathered benchmarking data

21

4. Where do we start?

Presenter

Presentation Notes

Understanding your utility’s needs

22

Aging population

Employee retention

Operations are already lean

Geographical challenges

Pool of candidates is small

Presenter

Presentation Notes

Overview of your current operations and situation Each point

Workforce planning

> Represents the opportunity to proactively identify and plan for staffing, training and knowledge transfer

> Predictive studies on critical organizational needs

> Creates time to adjust programs, training and recruitment

> Replacing loss of institutional knowledge

> On the job training for new workers and apprentices for knowledge transfer

24

Presenter

Presentation Notes

Start w/ workforce planning You’ll want to know what are the competency needs and identify those who are going to take you there You’ll want a formal program to do this points

Utility competency model

25SOURCE: Center for Energy Workforce Development, “Energy Industry Competency Model: Generation, Transmission and Distribution”, p. 2.

Presenter

Presentation Notes

Center for Energy Workforce Development – Energy Industry Competency Model 1 – Personal characteristics – character skills 2 – Academic competencies – credentials – management, IT, engineering, science? 3 – Workplace competencies – ethics, teamwork, problem solving 4 – Industry technical comp – specifics in the industry – safety, industry issues, environment, continuous improvement 5 – Industry technical – Gas T&D, pipeline maint, Nuclear gen, non-nuke, T&D, 6 – Occupation specific – lineworker, pipeline construction worker, util mangement, plant operator

26

5. Effective program approaches

Presenter

Presentation Notes

Successful succession planning program characteristics

Tied to organizational goals

27

Competencies are proven

Training is tailored

Use the PDSA (Plan-Do-Study-Act) approach

Roles are well-defined

Skills are readily assessed

Support from the top

Presenter

Presentation Notes

Overall successful programs share these characteristics

Succession and workforce planning annual process

28

Presenter

Presentation Notes

Process map of timing of succession program

Succession and workforce planning program outline – take stock

Succession planning

> Evaluate and consolidate current succession planning initiatives

> Identify “critical positions” that should be considered for succession planning

> What are current leadership development initiatives?

29

Presenter

Presentation Notes

GAP analysis of available resources and skills Nine box Define priorities Develop success measures Lower attrition rate? Reduction in days needed to fill positions Develop ongoing formal plan to monitor, evaluate, and improve

Succession and workforce planning program outline – take stock

> Recruitment- Identify options available- Review industry wide efforts - Evaluate current efforts focused on

employee retention- Use data from one-on-one interviews

and focus groups- What’s the use of internal talent vs.

outside recruiting

30

Formalize strategy to address workforce challenges

Presenter

Presentation Notes

Take stock – recruiting Use exit interviews to aid in recruiting

Succession and workforce planning program outline – gather data

Key data for review> Staffing levels by departments> Vacancy reporting> Overtime> Productivity> Tenure> Age> FTE over 60> Turnover> Attrition rate> Training offered and taken> Staff certifications

31

Presenter

Presentation Notes

Gather data for review

Succession and workforce planning program outline - benchmark

Benchmark staff levels against other peer utilities

> Interviews> Surveys> http://www.cewd.org

Gather information on key operating characteristics and peer utilities – Compare to peers by bandwidth

> Generation employees> Employment levels per distribution miles> Employment per customer> Key operating metrics

32

Presenter

Presentation Notes

Measure – use metrics

http://www.cewd.org/

Succession and workforce planning program outline – Statistical analysis

33

Business Area Average Age Average Years of

Service Admin & General 48.67 15.98

Customer Services 45.34 11.98 Meter Reading 41.54 12.80 Generation 47.04 12.23 T&D 50.17 13.27 Engineering 44.41 15.74 PSCC 47.54 11.51 Overall Average 45.41 8.44


34

0

10

20

30

40

50

60

70

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

Fully

Elig

ible

With

Pen

alty

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

10 Year Retirement Eligibility

Administration

Operations


35


36


37

Using the personal competency framework, what are the top areas of deficiency for today?

Answer Options Response Percent

Response Count

Interpersonal Skills 48.1% 26 Integrity 24.1% 13 Professionalism 22.2% 12 Motivation 38.9% 21 Dependability/reliability 33.3% 18 Self Development 61.1% 33 Flexibility & Adaptability 42.6% 23 Ability to Learn 22.2% 12

answered question 54


38

Using the technical competency framework, what are the top areas of deficiency for today?

Answer Options Response Percent

Response Count

Safety Awareness 19.6% 10 Industry Principles and Concepts 54.9% 28 Environmental Laws and Regulations 49.0% 25 Quality Control/Continuous Improvement 70.6% 36 Troubleshooting 29.4% 15

answered question 51

Succession and workforce planning program outline – measure performance

Performance measurement and assessment

> Evaluate the current performance measurement system> Is the current process is in alignment with the workforce

environment?> Administer two surveys, one to supervisors and one to

evaluated employees to assess satisfaction with the process and whether or not it is perceived to assist with employee development

39

Presenter

Presentation Notes

Measure performance The views can be different, design the most effective program on paper, yet delivery can define perceptions

Succession and workforce planning program outline – tally gaps

Gap analysis – examples> Anticipated retirements> Skills deficiencies (smart grid)> Lack of continuing education for

engineers> Quality and quantity of internal

education and training> Staffing shortages> Candidate shortages> Technology gaps> Skills and training needed by

managers to coach, mentor, identify competencies and mange performance

40

Presenter

Presentation Notes

A key step is the gap analysis – current state vs identified strategies The missing pieces of the puzzle

Succession and workforce planning program outline – plan knowledge transfer

Knowledge retention and transfer> Establish a knowledge retention program> Includes an inventory of the people,

processes and technologies supporting the “deposit” of this information into a formal “knowledge repository.”

> Identify and document current training options

> Evaluate whether or not these options satisfy the competency needs of the organization

> Use an employee survey regarding satisfaction with training and development

41

Presenter

Presentation Notes

With the tally o t gaps need to plan for knowledge transfer programs Knowledge repository – not only P&P but knowledge encyclopedia – tapping resource knowledge while it’s available

Succession and workforce planning program outline – plan rewards

Rewards structure> What are the current

compensation levels and strategies used to incentivize employees?

> Is there flexibility (ie. not contract restrictions)

> Can merit pay and bonuses be used to help in achieving utility/departmental goals to aid in maintaining a high level of morale, motivation and productivity among employees?

42

Presenter

Presentation Notes

In the end tying compensation into the analysis Not first, but should follow

43

6. Resources and tools

Presenter

Presentation Notes

Management competencies

Identify knowledge structure for the following areas:

44

Personal Effectiveness

Workplace

Academic Competencies

Presenter

Presentation Notes

Think back to the competency model – 6 steps What are the strengths of each indiv? Can’t necessarily find clones of successful current team members

Identify key employees for development

> Selection is based on available internal candidates. There will be some available candidates who are ready, while there will be some who will not meet the demands of critical positions.

> In some cases there will be no identifiable candidate for succession at all.

45

Resources and tools

> 9 Box Grid

> Individual Talent Profile

> Action Plan

46

Presenter

Presentation Notes

GE McKinsey 9 box The nine-box matrix offers a systematic approach for the decentralized corporation to determine where best to invest its cash. Rather than rely on each business unit's projections of its future prospects, the company can judge a unit by two factors that will determine whether it's going to do well in the future: the attractiveness of the relevant industry and the unit’s competitive strength within that industry. Placement of business units within the matrix provides an analytic map for managing them. With units above the diagonal, a company may pursue strategies of investment and growth; those along the diagonal may be candidates for selective investment; those below the diagonal might be best sold, liquidated, or run purely for cash. Sorting units into these three categories is an essential starting point for the analysis, but judgment is required to weigh the trade-offs involved. For example, a strong unit in a weak industry is in a very different situation than a weak unit in a highly attractive industry.

Resources and tools - 9 Box

What it is:

> A chart to identify an employee’s performance and potential. Provides visual overview of staff capabilities.

How it is used:

> Assists with the identification of staff who are prospective candidates for promotion.

Effort needed to complete/frequency:

> Initial review can be time-consuming – subsequently minimal. Complete once every 6 months.

47

Resources and tools - 9 Box Talent Code

48

Talent Code Definition Description P Promotable > Excellent performer

> Track record of performance rating of 4 or 5 > High-potential individual > Has taken on more responsibility > Ready now for the next level position

ET Emerging Talent > Excellent performer > Typically a performance rating of 3 or 4 > Shows growth potential > Can take on more responsibility > Promotable within 6-24 months or lateral movement in less than 12 months

KC Key Contributor > Consistent performer and well placed > Typically a performance rating of 3 > Could be difficult to replace > Not considered promotable at this time

IR Improvement Required

> Inconsistent performer > Typically headed to a performance rating of 2 > May lack knowledge, skills, abilities and/or motivation in one or more areas > Could become a concern if performance expectations continue to be raised > Not promotable > Performance improvement plan in place

AR Action Required > Capability insufficient for current role > Typically a performance rating of 1 or 2 > Need organizational intervention (outplace or redeploy) > Timeline for action/outcome is required

NH New Hire > Too new to rate / too early to assess

Presenter

Presentation Notes

A common method used to chart the available candidates and their readiness level to succeed is a 9-box grid. The 9-box grid helps management to visualize the available successors along with the strengths/weaknesses in the plan

Resources and tools - 9 Box Framework

49

Presenter

Presentation Notes

Walk thru

Individual Talent Profile

What it is: > A tool that provides a summary of an employee’s background,

competencies, and performance.

How it is used:> Helps identify strengths and weaknesses so that a development

plan can be created to assist with developing staff talent.


> Moderate/once a year

50

Presenter

Presentation Notes

Liken this to regular evaluation program, annual goal setting Not as robust as 9 box, but still gives direction

Action Plan

What it is:

> A plan that lists detailed actionable items and due dates of tasks that are to be completed so that an employee’s competencies are improved.

How it is used:

> Helps set goals and timelines for when staff should be exposed to new opportunities or training.


> Moderate/ every 6 months.

51

Presenter

Presentation Notes

Feeds from individual talent profile or 9 box THIS IS THE PLAN!

Individual Talent Profile

52

> Identify employees available for succession into their positions

> Develop a profile of candidates

> Cross-departmental leadership/key decision makers must be involved

- History of performance reviews and accomplishments

- Years of relevant experience

- Education and credentials

Presenter

Presentation Notes

The incumbents in key positions identify employees available for succession into their positions. Profile of candidates are developed: A history of performance reviews and accomplishments, including years of relevant experience, education and credentials are compiled for profiles. Cross-departmental leadership/key decision makers must be involved in the plan throughout the process to represent their selections and discuss concerns with one another. Identifiable gaps need to be temporarily or permanently closed in the event of an emergency replacement of a candidate in another department.

Employment strategies

53

Strategies

Improve Organizational communication and workforce

connection

Embrace generational differences

Collaborate on resource

development

Use technology

Presenter

Presentation Notes

Summary Implement t strategies in retention and hiring A visible program can lead to satisfaction and morale boost in current environment Circles

Utility industry career benefits

> Communicate the positives

> Competitive pay

> Job satisfaction

> Advancement

> Security

54

Presenter

Presentation Notes

Our industry has a lot to sell Career opps Low unemployment Good pay Security Technology will continue to be key in future

Contact Info

55

Russ Hissom, Partner608 240 2361 [email protected]

Jim Nowoswiat, Partner215 599 2582 [email protected]

mailto:[email protected]

mailto:[email protected]

7. Discussion and questions

56

establishing a sustainable succession planning program · program outline – take stock....

Documents