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Talent Development and Succession Planning.

Is the next generation of leaders ready and waiting to step into the shoes left by their predecessors? Could you find yourself facing the business impact of an empty C-suite or, worse still, bringing on-board under qualified people into leadership roles simply because there is no-one better available?

It’s a fast-paced post-recession marketplace in which companies are not only continuing their bid to survive, but are now actively investing in growth and opportunity. Now more than ever, there is an urgency associated with the retention of top talent and a need to expand talent plans beyond the immediate.

Business organisations must respond fast and effectively to new market demands and developments, calling for the right people in place at the right time. On the flip side of the coin, a highly competitive and increasingly fluid employment market has turned tables on the old principles of loyalty and security in favour of higher salaries and progression. Individuals are moving jobs on average far more than ever before, with businesses seeing retention rates in rapid decline. Research suggests turnover costs are as great as 30 – 150% of annual salary (Hewitt Associates, quoted by Brittain, 2006) with the process of replacement fraught with unforeseen costs and drains on resources. The UK marketplace is now engaged in a war for talent.

Talent development and succession planning in this turbulent climate are a necessity: and yet a worrying number of companies report that it has yet to feature on the management agenda. So if the UK business marketplace is now entering the battle for the best, why are so many lacking the strategy and tactics to ensure they’re equipped for the challenge?

THE “WAR FOR TALENT”

The Scenario

Your highest-performing sales person has been enticed away by the competition by the lure of a higher salary; your Sales Director leaves the business unexpectedly due to illness; your previously high-flying Sales Manager has consistently under-performed in 3 consecutive quarters, so you need to let them go.

Whether one or all scenarios occur simultaneously, the effect of lost leadership or top-level sales personnel is extensive. Is the next generation of leaders ready and waiting to step into the shoes left by their predecessors? Could you find yourself facing the business impact of an empty C-suite or, worse still, bringing on-board under qualified people into leadership roles simply because there is no-one better available?

“GLASS HALF EMPTY”PLANNING: WHY PREPAREFOR THE WORST?

When the only thing that is certain in business is change, it pays to be a pessimist and implement a safety net approach. Promotion and progression, underperformance or moving on to new things and the continual introduction of fresh products or new markets all make for an on-going demand for personnel.

What’s more, research into the employment market suggests a growing number of critical skill shortages are set to threaten the future of the economy.

Those who demonstrate technical ability to meet the fast-evolving advancements in the market are being placed in higher demand; equally, increased globalisation and the fluid nature of international markets is calling for linguistics or culturally attuned individuals with the capacity to work across a multitude of countries. As demand grows, business organisations will find themselves fighting elbow-to-elbow for the best in the market, or batting away competitors seeking to swoop in and poach their top-level staff.

If a leading member of your team were to leave tomorrow, the subsequent hole will result in lost productivity, decreased sales and loss of revenue. If no framework is in place to map out their successor, the time to source, train and develop a replacement can place considerable strain upon existing resources while all along, the business bleeds profit. If leadership presents a constraint to growth, the potentially fatal impact will be felt across the organisation. It pays to be prepared for the worst.

TALENT V SUCCESSION Though often used interchangeably, the concepts of talent management and succession planning are actually different in principle, with elements of both often to be found embedded in business organisations without a full understanding of their meaning or impact.

With a greater focus upon the individual, talent management concerns itself with identifying, managing and developing existing personnel, both now and for the future. Processes for measuring competence and tools to develop the individual needs of employees are designed to progress and retain those who are critical to business success. The underlying assumption is that each individual has potential which must be identified, accessed and developed, in order to retain the best personnel in a highly competitive marketplace.

By comparison, succession planning prioritises the bigger picture, with a bias towards satisfying organisational requirements. Focusing on those key competencies required for sustainable competitive advantage, succession planning will identify which roles are critical to business success and how best to satisfy future requirements, considering both internal and external recruitment initiatives in order to prepare for forthcoming demand.

The core aim of both approaches is to source, retain and nurture those key competencies required for excellence. However, retention in isolation is an obsolete exercise: it is essential to retain the right skills. In order to do this, business organisations must understand what those skills are, and how to identify, benchmark and measure them. A balanced approach that combines development of the right talent and implements succession planning to fill any gaps that appear in the process is paramount.

Talent management and succession must be intrinsically linked with the strategic goals of the board and business as a whole...it really becomes an ‘all or nothing’ equation.

Every business will be positioned at one of 5 levels of competency in talent management. The first step is to identify that standing, before making a business case for implementing a systematic and co-ordinated approach to developing the next generation of business leaders. Then, the business in its entirety must come on-board to embed the initiative.

ALL OR NOTHING

The tie between HR and those at the top level is paramount. HR can design and weave a fully integrated talent management and succession plan, but it will never become operational without investment at leadership level. To achieve that level of co-operation, talent management and succession must be intrinsically linked with the strategic goals of the board and business as a whole. A readiness for change and support across multiple departments in identifying, nurturing and developing talent is the only means to ensure demand is met. In this instance, it really becomes an ‘all or nothing’ equation: development of complex plans is a waste of resources unless all are educated on its value and success.

No talent management / succession planning strategies or formally developed practices are in place

Small, tactical talent and succession activities can be observed in localised areas of the business

Some co-ordination and integration of talent and succession is in place within particular

areas of the business

Corporate and HR management strategies are aligned with some talent

and succession strategies

Talent and succession

strategy informs and is informed by corporate strategy

5.

4.

3.

2.

1.

(Source: Talent Management: Understanding the dimensions. CIPD (2006))

WHO, WHAT, WHERE, HOW When devising a business succession plan, the task can become overwhelming. Considerations that must form the foundations of the plan are extensive and cover a range of subjects generally outside the comfort zone of management. In this instance, it pays to bring it back to basics and examine the key facts.

WHO do we need?The first step is to identify and define the core competence required within an organisation, looking initially to those already in place before performing a talent audit to pinpoint any skill gaps. What does “talent” look like? What “talent” does the company value? This differs significantly from one organisation to the next; if those tasked with developing or sourcing talent do not hold a comprehension of what it looks like in relation to their business, many may be brought in who lack the necessary skills for long-term success.

WHAT are their skills?If individuals are in place that already perform to a high standard, identification of the skills required for success is an easier task. However, knowing the future direction of the organisation will also call for consideration of those skills that will become necessary as part of long-term business strategy. Planning for global expansion? Language skills may be a must. Adapting the new technological developments in a particular industry? Perhaps specialist Java programming or HTML coding ability is required. By creating a clear competency profile, talent and succession plans can be matched to critical success factors required for business, and injected at the bottom end in order to feature at the top further down the line.

Talent management operates on the principle that each individual has potential that can be nurtured; however, succession planning demands a strategic selection of those particular skills on which to hone efforts. While focus on high-potential employees allows for the channelling of resources on those who demonstrate the greatest promise, alienating those identified as ‘average’ risks decreased morale, high staff turnover or even simply overlooking valuable potential. When considering the skill set of existing and prospective talent, it pays to look beyond the current state of play and evaluate the raw competencies and prospective ability of staff.

WHERE do we get them? Which talent pools can be utilised to satisfy need? At the most simplistic level, organisations have two choices: internal, or external.

The case for internal, home-grown candidates is well documented as the ideal for organisations that consistently see a need for fresh talent or high levels of movement, growth or change. A study undertaken in 2012 (Matthew Bidwell) found that external hires are 61% more likely to be laid off or fired and 21% more likely to leave a position in comparison to their internal equivalents; what’s more, internal candidates who learn the business from the ground up demonstrate a more comprehensive understanding of their product and market, stronger cultural fit and have been organically grown in the image of their organisation.

Malleable blank slates with no pre-existing habits or conceptions from previous employers, they will be developed into experts in their field and represent a far stronger return on investment: an estimated £5.71 for every £1 invested, vs. £3.25 for experienced sales professionals who traditionally cost more, but receive comparatively lower marks in performance reviews. Investment in succession planning ensures a continual influx of candidates at the bottom end of the business who will then grow and progress with the company, stepping up into the ranks of management.

If succession planning is the overall route from entry to C-level, planning for the future end-goal of the business, then talent development is the directions and pit stops along the way to get individuals across that finish line.

When an estimated 38% of UK organisations are expecting to recruit to C-level positions over the coming 12 months and succession planning has yet to become accepted practice, internal progression may not always be an option. Alternatively, some companies may find themselves moving in a

different direction or shifting into different markets: in this instance, fresh blood may be a valuable asset. In either instance, it pays to look to the competency profile and talent definition – the ‘WHO’ – specifications, and match those accordingly.

HOW do we ensure success? Review and management of talent development and succession planning is key to successful implementation. Whenever change occurs at leadership/C-level or there is a shift in corporate strategy, market conditions or company direction, re-evaluation of existing talent development and succession strategy should follow suit. Only then can executives be confident that the battle for top talent is consistently up-to-date and in line with overall company goals.

Likewise, performance assessment, mentoring and tracking of success at ground level is essential. An overarching plan to move person A into position 1 is all

well and good, until person A shows underperformance in a vital skill area required to make the move. At this point additional investment into training, mentoring or support must be made – or the succession plan amended to support the right individual for the future of the business. With such processes in place, unutilised talent hidden within organisations can also be realised and developed, benefitting not only long-term progression strategy, but also improving current performance levels and staff retention.

ARMED FOR VICTORY No business can be entirely future-proof; however, diligence in planning is the greatest tool available to those seeking to source, develop and retain highly-sought talent. If succession planning is the battle strategy, talent development tools such as training, mentoring, assessment and continual evaluation are the weapons of choice. In the war for talent, arming business organisations with both is the only means to ensure continued success.

If succession planning is the overall route from entry to C-level, planning for the future end-goal of the business, then talent development is the directions and pit stops along the way to get individuals across that finish line.

Employees can’t be set on the “path to greatness” and told to get to the end in isolation: continual investment in training, development and up-skilling is paramount. Talent development recognises the changing demands of roles as employees progress within the business, as well as individual areas requiring focus or growth. A structured training programme that answers those requirements can be supplemented by ad-hoc courses and mentoring that respond to need as and when it arises.

GETTING TO THE FINALDESTINATION

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