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Best Practices of Succession Management and Employee Retention

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?.

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Best Practices of Succession Management and Employee Retention

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  1. Best Practices of Succession Management and Employee Retention The LGMA / GFOA Conference June 2, 2005 Lori Maida, MA, CHRP

  2. Questions To Consider... What % of your employees will retire in the next 5 years?

  3. Questions To Consider... What % of your employees are looking for other employment?

  4. % of Employees Looking for Other Employment Conference Board of Canada (2005) reports, 58% of Canadian employees are open to move to other organizations

  5. So…what are you planning to do about it?

  6. 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

  7. 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?

  8. 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

  9. 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)

  10. 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

  11. 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?

  12. 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?

  13. Who is responsible to ensure you have the peopleto get the job done?

  14. 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”

  15. 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”

  16. 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?

  17. One Approach…

  18. It’s not just about havingthe bodies.It’s about the right bodies doing the right things.Creating an organization of which people want to be a part.

  19. Retention:What keeps employees happy?

  20. 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….”

  21. Top 15 Retention Drivers Source: Career Systems International, 2005

  22. Other Research Source: Love ‘Em or Lose ‘Em, 1999

  23. 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?

  24. 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

  25. 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

  26. What is Engagement? Say Stay Strive Speak positively about the organization to co-workers, potential employees and customers. Have an intense desire to be a member of the organization. Exert extra effort & are dedicated to doing the very best job possible to contribute to the organization’s business success. Engagement

  27. Calculating Employee Engagement • I would, without hesitation, highly recommend this organization to a friend seeking employment. • Given the opportunity, I tell others great things about working here. • It would take a lot to get me to leave this organization. • I hardly ever think about leaving this organization to work somewhere else. • 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. Scores from the following six questions are used to calculate the engagement score: Say Stay Strive

  28. Succession Planning:Helping you understand who to focus on

  29. 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?

  30. 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

  31. 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

  32. 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

  33. Elements of an Effective Succession Management Process* * The Gallup Organization

  34. 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

  35. 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”

  36. 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)

  37. “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”)

  38. 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

  39. 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)

  40. 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

  41. 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

  42. 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

  43. 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?

  44. Pool versus Replacement • Identifying “bench weakness” (e.g. managers, technicians) • Assess individuals • Develop as pool – stretch assignments, leadership development • Track progress

  45. Folio Map 5.0 New in Position/High Potential High Performance and Potential 3.6 Competent/ Capable High Performance/ High Professional Potential 2.6 Needs Improvement Outplacement 0 3.6 5.0 Performance

  46. Identifying High Potentials 1.0 3.6 5.0 High Our leadership “Talent Pool” The “bar” is a rating of 3.6 or above on potential Must be at least competent in each of the Standards of Leadership J J J J J J J J J J J J J J J J J Potential J J J J 3.6 J J J J J J J J J J J J J J J J J J J J J J J J J J J J J 1.0 Low High Performance

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