Best Practices of

Succession Management
and Employee Retention
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?
So…what are you planning
to do about it?
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
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?
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

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)
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
 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
 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”
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”
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
Retention Items %
1. Exciting work & challenge 48.4
2. Career Growth, Learning & Development 42.6
3. Working with great people & relationships 41.8
4. Fair pay 31.8
5. Supportive management/great boss 25.1
6. Being recognized, valued & respected 23.0
7. Benefits 22.0
8. Meaningful work, making a difference & contribution 17.0
9. Pride in organization, its mission & product 16.5
10. Great work environment / culture 16.0
11. Flexibility 13.6
12. Autonomy, creativity and a sense of control 12.6
13. Job security & stability 10.5
14. Location 10.3
15. Diverse, changing work assignments 7.7

Source: Career Systems International, 2005

 Other Research
Retention Items
1. Career growth, learning and development
2. Exciting work and challenge
3. Meaningful work, making a difference and a contribution
4. Great people
5. Being part of a team
6. Good boss
7. Recognition for work well done
8. Fun on the job
9. Autonomy, sense of control over work
10. Flexibility – for example, in work hours and dress code
11. Fair pay and benefits
12. Inspiring leadership
13. Pride in organization, its mission and quality of product
14. Great work environment
15. Location

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:

Say
I would, without hesitation, highly recommend this organization
to a friend seeking employment.
Given the opportunity, I tell others great things about working
here. Stay

It would take a lot to get me to leave this organization.

I hardly ever think about leaving this organization to work
somewhere else.
Strive

This organization inspires me to do my best work every day.

 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
 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
 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
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
Elements of an Effective
Succession Management
Process*

1.
3.
Individual Career
Group Discussion
Planning and
and Review
Development

2.
Succession
Planning
Analyses

* The Gallup Organization

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
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”
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)
“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
 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
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)
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
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
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
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?
 Pool versus
Replacement
 Identifying “bench weakness”
(e.g. managers, technicians)
 Assess individuals
 Develop as pool – stretch
assignments, leadership
development
 Track progress
Folio Map
5.
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. 3.6 5.0
High0
Our leadership
J J J J “Talent Pool”

J J
J
Potential

J JJ
J J
J The “bar” is a rating
J
J J J
J J J of 3.6 or above on
potential
J J JJ J
3.6

JJ J J J J J J
J
J
J JJ JJ J Must be at least
competent in each
of the Standards of

J
J J
J J J J JJ 1.0
Leadership

Low High
Performance
Folio Map

 Permits participants to identify

specific developmental actions for
employees
 Assists conversations regarding next
steps
 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
CEO
Reviews plan to monitor corporate future

President/Sr. VP
Review functional plans & Develops Company level plan
Functional Area/Company Managers
Identifies high potentials across area
Drafts succession plan
Manager
Discussion with employee & functional manager re. development/succession

Employee
Create Development Plans & Performs Leadership Assessment
Succession
Manageme
nt

??

Retention
File it away…
Start having conversations!
Great Leaders
Make A
Great Difference
 Leadership Effectiveness
and Turnover
22
20 19
Turnover Percent

18
16
14
14
12
10 9
8
Bottom 10% Middle 80% Top 10%
Leadership Effectiveness
 Leadership Effectiveness
and Retention
90
79
Intention to Stay with

80
70
Company (% )

60 51
50
40
30
19
20
10
0
Bottom 10% Middle 80% Top 10%
Leadership Effectiveness
 Leadership Effectiveness
and Customer Satisfaction
100
82
Ratings of Customer

80
Satisfaction (%)

60 50

40
21
20

0
Bottom 10% Middle 80% Top 10%
Leadership Effectiveness
Making Leadership
Development Work
 Identify, inform and invest heavily in talent
 Use 360s to build on strengths
 Set extremely high expectations for your
leaders – and measure their results
 Make leadership development a long term
process and not an event
 Use the succession process as an
opportunity to develop and measure the
leadership potential
Senior Management Role
 Responsible for succession process
 Approve high potentials, individual
development, leadership development
 Determine success measures, next
steps and time frames
 Determine management
accountability
 Follow-up on actions
Measures
 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
Possible Succession
Measures
 By ___ 90% of development actions complete
 Increase movement of high potentials to other
areas of workplace
 Increase employee engagement/satisfaction
 By year 20xx, increase high potential leaders by
x%
 Over x years, increase high potential retention by
x%
 External measures - attract high potentials
Employee Conversations

What needs to happen

in these conversations?
Individual Development
Planning

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

Identify high potential talent early –

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

Where should we
start?

What will be easy?

What will we stumble

over?
Resources
 “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-
Evans
 Centre for Creative Leadership – www.ccl.org
 Statistics Canada – www.statcan.ca/
 “The Extraordinary Leader” – Zenger &
Folkman