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
Ø Briefly explore current trends
Ø Understand succession management
versus succession planning – and the
alignment to employee retention
Ø Understand best practice processes and
examine a few of the tools and
methodologies being used
Ø Discuss the roadblocks and benefits of
implementation
Ø Explore how to get started
Why the Interest in
Succession Planning and

Ø Numbers of people retiring and numbers of

people entering workforce
Ø Loss of organizational memory
Ø Skills shortages are acute
Ø Retention of talent
Ø Future of work – different needs for generations
of employees
Ø What else?
Trends and Forecasts*
Ø By 2008, more people will be leaving the
workforce than entering
Ø 44% of workers aged 45-59 say they will
retire before 65
Ø 10% of workers aged 50-59 who leave full
time jobs, move into part time within 2
years
Ø 1/3 of workers aged 50-59 who leave full
time jobs, move back into full time

* Statistics Canada research

Trends and Forecasts*

Ø 72% of companies predict they’ll have

an increasing number of leadership
vacancies over the next 3-5 years
Ø 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

Ø Workplaces will lose high performers as

economy strengthens
Ø Currently, workplaces that understand
future skills needed are having difficulty
recruiting
ØRecruitment strategies are strengthening
Ø 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
Ø HR is responsible for people management
Ø We provide good pay and benefits
Ø Recruiting is like purchasing
Ø Development happens in training
programs
Ø We treat everyone the same
Source: “War for Talent”
Shift from Industrial Age to
Information Age
The New Way
Ø All managers are accountable for
strengthening their talent pools
Ø We shape our workplace, jobs, and strategy
to appeal to talented people
Ø Recruiting is like marketing
Ø We fuel development through stretch jobs,
mentoring and coaching
Ø 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

Source: Career Systems International, 2005

 Other Research

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 Stay Strive

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

Engagement
 Calculating Employee
Engagement
Scores from the following six questions are used to
calculate the engagement score:

I would, without hesitation, highly recommend this organization Say

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. Stay

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 Strive
required to complete my work.
 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

Ø Often highly political

Ø Little thought given to what kind
of leaders required in the future
Ø Done secretly
Ø Focus on putting names in boxes
(“replacement”)
Ø Few conversations held
 Results of This Approach to
Succession Planning

Ø Strategies become academic and

administrative exercises. Change happens
and rigid plans are not applicable – a
waste of time and money
Ø Little focus spent on the development
of individuals
A Different Way to Think
About Succession Planning
Ø Succession managementis a process of
ensuring there are leaders and talent that
can implement the organizational vision
Ø 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

* The Gallup Organization

Succession Management

Ø Focus on individual development

strategically aligned to future vision
Ø Leadership development can ensure that
the potential identified through succession
process is realized
Ø Result is long-term leadership
sustainability through attraction, retention
and development of talent
Succession Management

Ø A key strategic initiative

Ø Cannot be done in isolation to other
cultural and people oriented initiatives
in the organization
Ø More than just “putting names in
boxes”
Succession Management
Ø Focus on integrating many elements of
organization development
Ø High level steps need to be customized for
each organization
Ø “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
Ø Alignment to vision and strategy
ØBusiness plan for succession initiatives
Ø Succession and leadership aligned to the
vision, critical business issues/skill gaps
Ø Executive commitment
Ø Develop leadership competencies
Ø Develop a succession management
roadmap
Need for a Roadmap
Ø Implementing succession initiatives
impacts culture
Ø 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
Ø An interactive dialogue and discussion to
support the performance and potential of
talent in the organization
Ø A process to look at key talent, open
positions, promotions and leadership
development
Ø Discussion to support shared ownership
of the talent pool and development
opportunities
Talent Review Process
Robust Talent Review (“War for Talent”):
Ø Full day on-site for each division
Ø Discuss quality of incumbents
Ø Review individuals and the talent
strength of each unit, and discuss other
issues such as retention or recruiting
Ø Rigorous, candid and open debate
Talent Review Process

Robust Talent Review, continued:

Ø Drive to a distribution of ratings
Ø Specific action plans written and
followed up for each unit
Ø As important and intense as the budget
process, with real accountability and a
performance focus
Talent Review Roadmap
Questions
Ø How far down in the organization? What
groups?
Ø High potentials or everyone?
Ø Replacement or pool – or both?
Ø Assess on performance and potential
Ø Other assessments required?
Ø Who will assess? Do they have the skills
to assess?
 Pool versus
Replacement
Ø Identifying “bench weakness”
(e.g. managers, technicians)
Ø Assess individuals
Ø Develop as pool – stretch
assignments, leadership
development
Ø Track progress
Folio
5.
Map
0 New in Position/High High Performance and
Potential Potential

3. Competent/ High Performance/ High

Potent
6 Professional
Capable
ial 2.
Needs
6 Improvement

Outplacem
ent
0 3. 5.
6
Performan 0
ce
 Identifying High
Potentials
1. 3. 5.
H 0 6 0 Our leadership
J
igh
J J J “Talent Pool”

J J
J JJ J J
J J
The “bar” is a rating
Potenti

J
J
of 3.6 or above on
J J J
J J
potential

J J JJ J
3.

J
J JJ JJ J Must be at least
al

6
competent in each
JJ J J J J J J of the Standards of

J JJ J J J J JJ
Leadership

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Lo H 0
w Performan igh
ce
Folio Map

Ø Permits participants to identify

specific developmental actions for
employees
Ø Assists conversations regarding next
steps
Ø 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
Succession
Manageme
nt

??
Retention
File it away…
Start having conversations!
Great Leaders
Make A
Great Difference
Leadership Effectiveness
and Turnover
Leadership Effectiveness
and Retention
 Leadership Effectiveness
and Customer Satisfaction
Making Leadership
Development Work
Ø Identify, inform and invest heavily in talent
Ø Use 360s to build on strengths
Ø Set extremely high expectations for your
leaders – and measure their results
Ø Make leadership development a long term
process and not an event
Ø Use the succession process as an
opportunity to develop and measure the
leadership potential
Senior Management Role
Ø Responsible for succession process
Ø Approve high potentials, individual
development, leadership development
Ø Determine success measures, next
steps and time frames
Ø Determine management
accountability
Ø Follow-up on actions
Measures
Ø Define up front what you want to
achieve in the broader scope
Ø Then…once succession data gathered,
define specific measures, timing and
accountability. Measure regularly.
Ø Track development of talent, and their
progress, regularly over the long term.
Assign accountability to managers for
progress, assign mentors, reward
Possible Succession
Measures
Ø By ___ 90% of development actions complete
Ø Increase movement of high potentials to other
areas of workplace
Ø Increase employee engagement/satisfaction
Ø By year 20xx, increase high potential leaders by
x%
Ø Over x years, increase high potential retention by
x%
Ø External measures - attract high potentials
Employee Conversations

What needs to happen

in these conversations?
Individual Development
Planning

Ø Actions
Ø Goals and measures
Ø Follow-up, follow-up, follow-up
 More Best Practices
(Hewitt)
Ø Senior management lead the charge
Ø Maniacal focus on the best talent
ØHigh potentials are carefully identified
ØCompensation is highly differentiated
ØAssignments drive high potentials’ growth
ØTracking progress is critical
Challenges
Ø Time
Ø Buy-in
Ø Lose sight of big picture –
administrative nightmare
Ø Employee/manager conversations
Ø Cultural biases
Ø Resource issues that arise
 Results of
Implementing
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
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
Ø Top management must buy-in and be
active participants
Ø Link succession efforts to needs and
strategic objectives of the business
Ø Minimize paperwork and bureaucracy
Ø Make succession and leadership
development a constant preoccupation
Keys to Success

Ø Identify high potential talent early –

devise strategies to retain that talent
Ø Recognize that effective succession
management is not fast
Ø Spend time to evaluate results and
provide feedback to stakeholders
Keys to Success
Ø Ensure leaders have an opportunity to
apply the skills they are learning
Ø Ensure everyone is, and can be,
responsible for their own development
Ø Ensure effective role modeling of
leadership excellence
Ø Measure behaviour change
Discussion

Where should we
start?

What will be easy?

What will we stumble

Resources
Ø “War for Talent” – McKinsey & Co.
Ø “Leadership Pipeline” – Ram Charan
Ø “Grow Your Own Leaders” – W. Byham
Ø “Effective Succession Planning” – W. Rothwell
Ø “Love ‘Em or Lose ‘Em” – Kaye & Jordan-
Evans
Ø Centre for Creative Leadership – www.ccl.org
Ø Statistics Canada – www.statcan.ca/
Ø “The Extraordinary Leader” – Zenger &
Folkman
 Web:
www.exceptionalleadership.com
E-Mail:
info@exceptionalleadership.com
Telephone: 604-899-4192