Presentation on theme: "Best Practices of Succession Management and Employee Retention"— Presentation transcript:
1Best Practices of Succession Management and Employee Retention The LGMA / GFOA ConferenceJune 2, 2005Lori Maida, MA, CHRP
2What % of your employees will retire in the next 5 years? Questions To Consider...What % of your employees will retire in the next 5 years?Ask for a response by a show of hands. Of those who know, how many will lose 20%? 30%? 40?
3What % of your employees are looking for other employment? Questions To Consider...What % of your employees are looking for other employment?Pause and ask people to hazard a guess.
4% of Employees Looking for Other Employment Conference Board of Canada (2005) reports,58%of Canadian employees are open to move to other organizations
6Session Objectives Briefly explore current trends Understand succession management versus succession planning – and the alignment to employee retentionUnderstand best practice processes and examine a few of the tools and methodologies being usedDiscuss the roadblocks and benefits of implementationExplore how to get started
7Why the Interest in Succession Planning and Employee Retention? Numbers of people retiring and numbers of people entering workforceLoss of organizational memorySkills shortages are acuteRetention of talentFuture of work – different needs for generations of employeesWhat else?
8Trends and Forecasts*By 2008, more people will be leaving the workforce than entering44% of workers aged say they will retire before 6510% of workers aged who leave full time jobs, move into part time within 2 years1/3 of workers aged who leave full time jobs, move back into full time* Statistics Canada research
9Trends and Forecasts*72% of companies predict they’ll have an increasing number of leadership vacancies over the next 3-5 years76% 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)
10Current Economic Issues Workplaces will lose high performers as economy strengthensCurrently, workplaces that understand future skills needed are having difficulty recruitingRecruitment strategies are strengtheningRetention of talent is increasingly becoming a “hot” issue
11The 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?
12The External Challenge The market place for good talent will be competitiveThe good people will be able to pick and choose their working environmentHow do we create an organization in where people want to stick around?
13Who is responsible to ensure you have the people to get the job done?
14Shift from Industrial Age to Information Age The Old WayHR is responsible for people managementWe provide good pay and benefitsRecruiting is like purchasingDevelopment happens in training programsWe treat everyone the sameSource: “War for Talent”
15Shift from Industrial Age to Information Age The New WayAll managers are accountable for strengthening their talent poolsWe shape our workplace, jobs, and strategy to appeal to talented peopleRecruiting is like marketingWe fuel development through stretch jobs, mentoring and coachingWe affirm our people, but invest differently in A, B, and C playersSource: “War for Talent”Check for understanding of A, B and C players.
16Questions To Reflect On If the dam bursts today, what is the impact to your organization?How would you replace the people, knowledge, lost productivity?What to do???
18These are some of the different faces of frustration…
19It’s not just about having the bodies 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.You may not necessarily want to keep every employee in the company. How do you choose who – and what – to focus on?
20Retention: What keeps employees happy? Here’s the “what”.
21Current Retention Trends Towers Perrin (2002) Canadian study59% are open to changing jobs11% actively looking45% passively looking“To retain me, you’ve got to help me advance, keep the good people, and provide competitive pay….”
22Top 15 Retention Drivers Retention Items % 1. Exciting work & challenge48.42.Career Growth, Learning & Development42.63.Working with great people & relationships41.84.Fair pay31.85.Supportive management/great boss25.16.Being recognized, valued & respected23.07.Benefits22.08.Meaningful work, making a difference & contribution17.09.Pride in organization, its mission & product16.510.Great work environment / culture16.011.Flexibility13.612.Autonomy, creativity and a sense of control12.613.Job security & stability10.514.Location10.315.Diverse, changing work assignments7.7Survey conducted by Career Systems International and published in Training & Development magazine, April 2005.7,600 respondents to the surveyInteresting to note that the top 3 replies are the same today as they were at the peak of the tight labor market in 2000Source: Career Systems International, 2005
23Other Research Retention Items 1. Career growth, learning and development2.Exciting work and challenge3.Meaningful work, making a difference and a contribution4.Great people5.Being part of a team6.Good boss7.Recognition for work well done8.Fun on the job9.Autonomy, sense of control over work10.Flexibility – for example, in work hours and dress code11.Fair pay and benefits12.Inspiring leadership13.Pride in organization, its mission and quality of product14.Great work environment15.Location90% of respondent listed at least one of the first 3 items among the top 3 or 4 reasons they stayed.Source: Love ‘Em or Lose ‘Em, 1999
24Understanding the Data Employees are looking for job growth and learning opportunities, or they are looking for a new jobAre 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?
25Understanding the Data – Link to Recruitment Attraction is part of retention, so this information also informs recruitment practicesEmployees will be attracted to organizations that have well-developed mentoring programs, career development initiatives, and job enrichment opportunities
26Link to Employee Engagement Research shows positive correlation of engagement scores with:Employee attraction and retentionEngagement scores also have a positive correlation with:Customer satisfactionRevenue growth and shareholder returnsEmployee productivityEmployee attendanceHewitt and other organizations have conducted numerous studies over the last ten years to assess this relationship between engagement and business results and have found the following:There is a significant link between employee engagement, customer loyalty, and profitabilityEngaged employees are twice as likely to be advocates of the company,its products, and servicesEngaged employees are more likely to stay with the company.
27Have an intense desire to be a member of the organization. What is Engagement?SayStayStriveSpeak 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.We hear a lot these days about engagement. There is a proven correlation between engagement and retention.One way of measuring engagement is through a survey developed and administered by Hewitt Associates for Report on Business magazine.At a high level here is how engagement is defined.Simply stated - if you are engaged youSpeak positively…Have an intense desire to stay…Exert extra effort for our success…Engagement
28Calculating 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:SayIf a high percentage of employees are positive on these six statements, this will feel like a great place to work.StayStrive
29What keeps employees happy – and keeps them with an organization – is influenced by all interactions they have within the organization. Retention, therefore, is part of the larger organizational system.
30Succession Planning: Helping you understand who to focus on Now we’re going to move into the “who”. How do you know who to focus on? Who are the people who most influence organizational success? Who are the people who have the skills – or POTENTIAL TO DEVELOP THE SKILLS – that you’ll need next year, or 2 or 3 years from now? A succession planning or succession management process can help you to answer these questions.
31Quick 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?Ask for a show of hands.
32The Traditional Approach to Succession Planning Often highly politicalLittle thought given to what kind of leaders required in the futureDone secretlyFocus on putting names in boxes (“replacement”)Few conversations heldSuccession planning helps to identify top talent within your organization.With this approach, forms were often completed, put in a binder and placed on a shelf.
33Results 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 moneyLittle focus spent on the development of individuals
34A Different Way to Think About Succession Planning Succession management is a process of ensuring there are leaders and talent that can implement the organizational visionIt requires the systematic identification of those individuals who have the potential to turn the vision of the organization into reality
35Elements of an Effective Succession Management Process* * The Gallup Organization
36Succession Management Focus on individual development strategically aligned to future visionLeadership development can ensure that the potential identified through succession process is realizedResult is long-term leadership sustainability through attraction, retention and development of talent
37Succession Management A key strategic initiativeCannot be done in isolation to other cultural and people oriented initiatives in the organizationMore than just “putting names in boxes”
38Succession Management Focus on integrating many elements of organization developmentHigh level steps need to be customized for each organization“Leadership Pool” approach is gaining in popularity (identifying all potential employees vs. positional replacements)
39“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”)
40Challenge is not the model – it’s what goes on in the organization during implementation. Bumps up against other elements – culture, performance, having conversations, and, changeORG. TALENT REVIEW – assess both current performance and leadership potential. Key here is ability to have meaningful conversationsNOTE: some organizations start with replacement SP and move to SM (integration of LD) later…but there still needs to be assessment on current performance and future Leadership. Some try pilots in one department the first year, or key levels only. Need to determine
41Vision and Competencies Alignment to vision and strategyBusiness plan for succession initiativesSuccession and leadership aligned to the vision, critical business issues/skill gapsExecutive commitmentDevelop leadership competenciesDevelop a succession management roadmap
42Need 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)
43Talent Review ProcessAn interactive dialogue and discussion to support the performance and potential of talent in the organizationA process to look at key talent, open positions, promotions and leadership developmentDiscussion to support shared ownership of the talent pool and development opportunities
44Talent Review Process Robust Talent Review (“War for Talent”): Full day on-site for each divisionDiscuss quality of incumbentsReview individuals and the talent strength of each unit, and discuss other issues such as retention or recruitingRigorous, candid and open debate
45Talent Review Process Robust Talent Review, continued: Drive to a distribution of ratingsSpecific action plans written and followed up for each unitAs important and intense as the budget process, with real accountability and a performance focus
46Talent Review Roadmap Questions How far down in the organization? What groups?High potentials or everyone?Replacement or pool – or both?Assess on performance and potentialOther assessments required?Who will assess? Do they have the skills to assess?
48Pool versus Replacement Identifying “bench weakness” (e.g. managers, technicians)Assess individualsDevelop as pool – stretch assignments, leadership developmentTrack progress
49Folio Map 5.0 3.6 Potential 2.6 3.6 5.0 Performance New in Position/High PotentialHigh Performance and Potential3.6Competent/ CapableHigh Performance/ High ProfessionalPotential2.6Needs ImprovementOutplacement3.65.0Performance
50Identifying High Potentials 1.03.65.0HighJOur leadership “Talent Pool”The “bar” is a ratingof 3.6 or above onpotentialMust be at leastcompetent in eachof the Standards ofLeadershipJJJJJJJJJJJJJJJJPotentialJJJJ3.6JJJJJJJJ&J exampleJJJJJJJJJJJJJJJJJJJJJJ1.0LowHighPerformance
51Folio MapPermits participants to identify specific developmental actions for employeesAssists conversations regarding next stepsShows progress from year to year
52Critical 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 definitionsEnsure replacements for these positions/people
56Start having conversations! Talk to those people you’ve identified as having potential. Are they happy? What do they need? Think about the lists of employee retention items and ask questions about those items.Make sure they know how valued they are! Data from exit interviews consistently reveals that employees who leave organizations did not know how valued they were. Often, they had no idea they were viewed as being in succession for a more responsible role.This is where investing in developing leaders at all levels in the organization can really help. Managers need help having these types of conversations. They need to develop coaching and mentoring skills to ensure successful development of their team.
58Leadership Effectiveness and Turnover Research reported in the book, The Extraordinary Leader, by Zenger and Folkman (2002). Conclusive evidence that good leaders produce good results for their organizations. In fact, good leaders are more effective than bad leaders in almost every dimension, including improving productivity, employee retention, enhancing customer service, and creating high levels of employee commitment.These next few slides show the impact of the best and worst leaders on achieving bottom-line results. On the “X” axis we have leadership effectiveness shown in percentiles.
60Leadership Effectiveness and Customer Satisfaction
61Making Leadership Development Work Identify, inform and invest heavily in talentUse 360s to build on strengthsSet extremely high expectations for your leaders – and measure their resultsMake leadership development a long term process and not an eventUse the succession process as an opportunity to develop and measure the leadership potential
62Senior Management Role Responsible for succession processApprove high potentials, individual development, leadership developmentDetermine success measures, next steps and time framesDetermine management accountabilityFollow-up on actions
63Measures Define up front what you want to achieve in the broader scope Then…once succession data gathered, define specific measures, timing and accountability. Measure regularly.Track development of talent, and their progress, regularly over the long term. Assign accountability to managers for progress, assign mentors, reward
64Possible Succession Measures By ___ 90% of development actions completeIncrease movement of high potentials to other areas of workplaceIncrease employee engagement/satisfactionBy year 20xx, increase high potential leaders by x%Over x years, increase high potential retention by x%External measures - attract high potentialsSpecific measures can include:Decrease turnover of high potentialsIncrease movement of high potentials to other areas of companyDecrease spending on ? TrainingLeadership development ROIDecrease recruitment costsDevelop lower performers to higher level – or – terminate low performers by….Measure productivityChange reward systems to attract and retain high performers -Broad scope measuresBy ? Year increase high potential leaders by __Over ? Years, increase high potential retention by __Leadership skills in management group will increase…Decrease turnoverKnown as best company – attract high potentials
65Employee Conversations What needs to happen in these conversations?No promises, honest, frequent
66Individual Development Planning ActionsGoals and measuresFollow-up, follow-up, follow-up
67More Best Practices (Hewitt) Senior management lead the chargeManiacal focus on the best talentHigh potentials are carefully identifiedCompensation is highly differentiatedAssignments drive high potentials’ growthTracking progress is critical
68Challenges Time Buy-in Lose sight of big picture – administrative nightmareEmployee/manager conversationsCultural biasesResource issues that arise
69Results of Implementing Succession Management A high-performance culture that continuously attracts and retains the right peopleStrong leaders who can develop othersMentors that can provide a legacyA culture of openness and focus
70Results of Implementing Succession Management No “unspoken agenda” concerning individuals’ aspirations and potentialInvestor confidence – Hay (1988) and McKinsey (1999) studies link effective SM to increased ROI and annual return to shareholders
71Keys to Success Top management must buy-in and be active participants Link succession efforts to needs and strategic objectives of the businessMinimize paperwork and bureaucracyMake succession and leadership development a constant preoccupation
72Keys to SuccessIdentify high potential talent early – devise strategies to retain that talentRecognize that effective succession management is not fastSpend time to evaluate results and provide feedback to stakeholders
73Keys to SuccessEnsure leaders have an opportunity to apply the skills they are learningEnsure everyone is, and can be, responsible for their own developmentEnsure effective role modeling of leadership excellenceMeasure behaviour change
74What will we stumble over? DiscussionWhere should we start?What will be easy?What will we stumble over?
75Resources “War for Talent” – McKinsey & Co. “Leadership Pipeline” – Ram Charan“Grow Your Own Leaders” – W. Byham“Effective Succession Planning” – W. Rothwell“Love ‘Em or Lose ‘Em” – Kaye & Jordan-EvansCentre for Creative Leadership –Statistics Canada –“The Extraordinary Leader” – Zenger & Folkman