Support through your toughest HR challenges: A network of 285,000 HR professionals.
Shawn Premer shows how doing the right thing for employees leads to positive business results.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
Tools for succession management get more sophisticated.
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
It was easier to manage succession planning when there was a rising workforce population to choose from. But that is no longer the case.
Meeting the new challenges of succession planning requires going much deeper in the workforce and, instead of just spotting high producers, identifying employees with high potential and guiding them along the path to achieving their full promise.
“The biggest thing that is going on is a movement away from traditional succession planning, which was focused on the top executives of the company,” says James Holincheck, a research vice president at Gartner Inc. in Chicago. “Today, instead of focusing on the top 25 or 50 employees, companies are pushing it further down in the organization and using it more as a development tool as opposed to a disaster recovery tool.”
While companies have often used technology to identify star performers who may be able to back up top executives, many are now using it to look at succession planning at other levels of the organization as well. This deeper look requires a much higher degree of technical sophistication to accommodate the larger number of employees at more levels in the organization.
Building a Process
If all a company needs to do is track who is going to replace a few senior executives, a simple spreadsheet or database may be all that is needed. With larger organizations, that is not adequate.
“The size of the company clearly affects what software they should select,” says William J. Rothwell, professor of workforce education and development at Pennsylvania State University and author of several books on succession planning, including Career Planning and Succession Management: Developing Your Organization’s Talent—for Today and Tomorrow (Harvard Business School Press, 2005).
“Smaller employers of up to 400 people can get by with PC-based systems, but when we start getting bigger than that we need to start thinking about more-complex systems,” he adds.
For Lauren Choate, assistant vice president of training and organizational development at Great-West Life & Annuity Insurance Co. in Greenwood Village, Colo., a bare-bones system wouldn’t do. The company has more than 6,000 employees, 850 of them managers. When she came to Great-West, the company lacked a formal succession planning process.
“We were looking at our staff complement and realizing we will have a number of key executives that will be retiring soon,” she says. “There were key jobs that we didn’t have backups for, and we had not done a good job of grooming the next group of executives.”
It was clear to her that the company needed to bolster its succession planning process, but she also knew from experience that managers tend to view talent review or succession planning as extra work. So, when she started working on implementing a formal succession planning process, she was looking for technologies that would reduce the managers’ workload and cut through any resistance.
“I don’t want them to hate the process because of the forms,” says Choate. “I used automation to make it easier for the manager and to make it easily repeatable for next year by having the information in the database.”
Great-West had already been using Revexion Talent Management System (now called “I-TMS”) from Denver-based WisdomNet Inc. for performance management. Because the software also comes with a succession planning module, it was simply a matter of activating those features, rather than buying new software, and doing the necessary customization, integration and configuration.
The WisdomNet software pulls data from the SAP database, and employees update their own information, including their biography, education, certification and previous job experience. Managers then assess them on their leadership competencies, their potential and their future jobs, and identify who can serve as backups for the employees. Finally, managers write a development plan for each employee. They also identify retention risks and devise contingency plans if there is a risk with a high negative impact on the company.
“The technology side is not where the work is when it comes to succession planning; the real work is the process, the people and the goal,” Choate says. “Then you have to translate that into the system requirements.”
After completing the evaluation process, managers run various reports and take them to the annual talent review meetings. They share some of the reports with other managers and use others for themselves.
“I tried to keep the process more conversational than form-driven,” Choate says. “So we used the system as a repository and a way to frame managers’ thinking, but not as a sole source of managers’ information.”
The system was piloted last year with 300 managers, and she is planning on expanding it to the full 850 managers, probably this year. Even those expected to resist the system say the process was worthwhile and it led to thoughtful dialogue about the staff. As a result, some employees were encouraged to leave, but many more were identified as having future jobs. She says it is essential for success to use systems that are intuitive and easy to use.
“When managers spend their time on talent review, it shouldn’t be about the computers and forms and data, but about their thinking process and the assessment process,” she says. “The system ought to be transparent and easy to use so it is viewed as a tool, not a hindrance.”
You Dont Know (Manny, Moe or) Jack
An additional benefit of automating the succession planning process is that it broadly exposes information that previously might have been available to only a few people.
“The bigger the organization, the harder it is for the company’s managers to know all your best people,” says Rothwell. “You have to find a way to see down the chain of command beyond your immediate acquaintances.”
Choate says at Great-West, the software allowed the CFO to become familiar with those under him whom he didn’t work with on a regular basis.
“He didn’t know managers three or four levels down in the organization,” says Choate. “This was a way for him to know who he’s got.”
Sheer numbers of employees is one barrier to visibility, but another is physical distance. The Pep Boys–Manny, Moe & Jack, a $2.2 billion Philadelphia-based auto parts and service firm with 600 locations in 36 states, needed a system that could track all 20,000 of its employees. While the company maintains an online catalog of replacement parts, its replacement personnel inventory system was much lower tech.
“We had books and binders and all sorts of stuff,” says Liviu Dedes, director of training and organizational development. “It was very cumbersome, and the process occurred in silos in different divisions so we had a very narrow vision of the process.”
The problems created by the lack of centralized visibility came to a head when Pep Boys changed its field management structure, doubling the number of directors in the field from 42 to 84.
“It was a very painful process since we had a lack of leadership in the pipeline,” Dedes says. “When we looked to the inside, we saw we had a very shallow internal pool, and that triggered a robust recruitment initiative.”
It also triggered a search for a way to gain visibility into talent on a companywide basis. With a company as widely dispersed as Pep Boys, the only way to go is a web-based solution.
“When there are only a few employees accessing it, you don’t need a web-based solution, but when you start pushing it out to executives and managers, web-based technologies are a better fit,” says Holincheck.
Pep Boys’ first attempt at an open, automated process consisted of an application developed in-house. It was low cost and worked well in the initial trial but failed when the company put it out in the field for stress testing. So, the company started looking for a commercial product that would bring together its disparate employee data systems.
“We had data everywhere: Succession planning was in one database, performance management in another, 360-degree in another, compensation somewhere else,” Dedes explains. “We couldn’t run analytics against it or have a good vision when it came to making business decisions.”
Pep Boys selected San Mateo, Calif.-based SuccessFactors Inc.’s Workforce Performance Management Suite. Because it is delivered on an application service provider basis, no software or servers had to be set up, and the implementation was completed in 45 days. Pep Boys uses the system for all 20,000 employees, but, unlike Great-West, employees don’t update their own information. That is left to the 1,500 managers currently granted access to the software. Once managers complete the evaluation process, the system automatically populates a nine-box grid showing performance vs. potential for each employee and creates an organization chart.
“It shows you at a glance your entire organization, the performance level of every individual, what their risk of loss is, what their impact of loss is, whether they have a successor and what the time frame is for that successor,” says Dedes. After that, the managers meet to discuss the talent and follow that up with career discussions with each employee.
Discovering talent beyond a single business unit was the main driver behind the decision for distributor United Stationers Inc. in Des Plaines, Ill., to go high-tech with succession planning.
George Sanders, SPHR, vice president for compensation, benefits and development for business products, says business units had a good idea of who the high-potential employees and successors were in their own functional areas, but they didn’t have a way to share that data across departments.
“The most obvious effect [of not having a high-tech solution] is we weren’t necessarily tapping the best people for functional or cross-functional opportunities,” Sanders says. “The other is we weren’t able to see at a glance where we didn’t have successors, or where we didn’t have the talent to replace critical positions in the short or long term.”
To rectify this, he installed Cornerstone Succession Planning from Cornerstone OnDemand Inc. in Santa Monica, Calif., to bring together data on the company’s 400 top executives.
“The results are pretty dramatic,” says Sanders. “Rather than having multiple approaches to succession planning and high-potential identification, we now have one methodology, one process, one tool.”
An Analytical View
Automating the succession planning process produces several advantages for organizations. While it is hard to quantify the value of succession planning, there are some metrics available.
“A key business driver is the ‘time to fill’ metric—how long it takes to fill a position,” says Rothwell. “The more senior the position and the longer it takes to fill, we start to lose productivity, not just from that individual, but from the whole division, which will be less productive while waiting for the new boss.”
Pep Boys is using reduced turnover as its return on investment (ROI) measurement. “We have done some analysis of the cost of turnover,” says Dedes. “We are already reaching some of the ROI figures for self-funding by reducing the cost of turnover.”
Whatever particular leadership development problem a company is seeking to address, a high-quality succession process is likely to be an integral part of the solution.
“The real problem is how we get work done in the future with retirements and changing immigration issues,” says Rothwell. “Businesses that fail to implement succession planning will lose the talent wars.”
Drew Robb is a Los Angeles-based freelance writer who specializes in technology, engineering and business.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Top Trends Impacting Workplace Learning in 2018
SHRM Member Discounts Program
SHRM’s HR Vendor Directory contains over 3,200 companies