Planning for Succession
For many organizations, succession planning ranks high among corporate priorities—and it should. Millions of baby boomers (born between 1946 and 1964) will leave the workforce by 2020. Known for their corporate loyalty and strong work ethic, the boomers will be succeeded by Generations X and Y.
As a result, some of today’s corporate policies and practices need to be revised to reflect both the different values of these younger generations and changes in the marketplace. Organizations, therefore, must create protocols to identify tomorrow’s managers, as well as to develop the requisite knowledge and skills for them to lead.
Once mislabeled “slackers,” Gen Xers (born between 1965 and 1980) are actually quite career-oriented. They simply prefer a good deal of independence and exhibit more entrepreneurialism than did previous generations. Meanwhile, Gen Y employees (those born between 1981 and 1994) have witnessed how corporate America has treated their parents: not very well. That experience, coupled with technology advances, helped foster
Gen Y’s need for constant feedback and a flexible work situation.
It’s no surprise, then, that the torch-passing that will soon take place in the corporate world will raise questions and pose challenges for many organizations. How will this generational shift be handled? How will a smaller Gen X talent pool fill the gaps of the previous generation?
How will organizations retain and keep motivated, talented individuals amid the generational shift in values? And what leadership skills will Generations X and Y need in order to work with a more virtual and global workforce?
Managing these challenges will require a systematic talent-retention, succession-planning process. It must be designed to ensure a continued high quality of organizational performance by developing employees at all levels, while paying particular attention to identifying and training high-potential candidates.
Here are some points to consider when planning for your company’s future:
Recognize Key Competencies
Tomorrow’s effective managers will require different abilities than those of their predecessors. The competencies—knowledge, skills, talents and sensitivities—that are critical to achieving strategic goals now and in the future should be a blend of traditional corporate values and the ability to change. While leadership choices should reflect overall vision and mission, it also is important to be aware of how technology, political factors, and generational and cultural differences will impact an organization’s future.
Identifying the right combination of core values, skills and leadership attributes that transcend obstacles and drive success is the first step. Retention and succession planning is a mindset that starts at the top. Beginning with the CEO—and with the guidance of human resources professionals—identifying high-potential candidates and implementing a plan to retain them should be the responsibility of all managers.
Organizations gain a great deal by developing exceptional performers and keeping them. According to Marshall Goldsmith, executive coach and author of Partnering: The New Face of Leadership and What Got You Here Won’t Get You There: “The marginal gain for helping a highly successful person move from the top 5 percent to the top 1 percent may be greater to the organization than the gain from helping the average performer move from the top 50 percent to the top 20 percent.”
Leadership traits that are valuable today will not necessarily create an effective leader in the future. While core values may remain the same, the people skills required for managing newer generations of workers will change.
Today’s managers might not always be the best judge of who is promotable and who will be an effective manager in the years to come. This makes 360-degree feedback—confidential performance reviews by direct reports, peers and managers—critical when identifying high-potential candidates, because it provides a well-rounded assessment of a candidate’s performance at, and from, all levels.
When building a high-potential candidate pool, look for employees who excel in 360-degree reviews, are interested in career advancement and possess the leadership attributes that are important to the organization. While some candidates do extremely well in their current positions, if they don’t demonstrate an ability to motivate and inspire peers, they may not make effective future leaders.
Develop and Retain
An organization’s core assets are employees’ intellectual capital, skills and talents, and commitment. Cultivating employees’ talents, developing their professional abilities and preparing them for greater responsibilities are among the most important and challenging organizational goals.
To address the needs of high-potential Gen X candidates and up-and-coming Gen Y leaders, firms must pay close attention to mentoring and career-path programs. Employees who believe they are growing and developing professionally, learning new skills and gaining experience are more productive, have higher morale, and are more loyal than employees at organizations that don’t emphasize talent development and knowledge management.
Performance-feedback policies and lifestyle benefits are also increasingly important to younger generations, many of whom seek greater work-life balance. Gen X employees work an average of three hours more per week than did employees of the same age in 1977. But this generation wants the flexibility to set their own schedules and not be chained to a desk from 9 to 5.
Planning for the Future
Effective succession planning and talent retention nurtures those employees responsible for the organization’s future vision, strategy and success. It assures a sequence of qualified, promotable people as the boomers move on.
Over the next few years, organizations face record-high retirement rates. The number of Fortune 500 executives eligible for retirement will grow exponentially by 2010. This—coupled with a smaller, younger talent pool and evolving management requirements—will make it extremely challenging for organizations to retain and develop the best people.
It should be a companywide priority to develop strategic talent retention and succession plans that reflect and support the mission of your organization, its culture and values; the goals of its employees; and the skills needed to bridge the gap between current competencies and future organizational expectations. Enterprises that commit to these processes will have a significant advantage over their competitors.
Dr. William Moskal is a principal with IRI, a human performance consulting practice based in Detroit.