22. July 2019
Talent Management and Succession Planning
Against the background of rising employee participation, increasing digitalization and cross-generation cooperation, it is becoming increasingly difficult for companies worldwide to bring business requirements into harmony with employee needs. In a study carried out by the software provider Lumesse (Global HR Trends Survey Report 2015 – Mastering the Storm), 86% of HR managers in the pharmaceutical/health care sector confirmed that this pressure was increasing in their organizations. In addition, it was also shown that what previously applied to labor-intensive sectors and service providers is now the rule for all companies. They are becoming “people businesses” whose success is largely influenced by the abilities and leadership of the employees. Therefore, it will also be all the more important to acquire talent in the future and to be able to gain loyalty long term. 94% of those surveyed are experiencing more urgency in identifying and developing future managers and just 38% are convinced that their organization is currently deploying the right talent and managers in the right places in order to drive business success further forward and secure it in the long term. Moreover, 78% of those surveyed in pharmaceuticals/ health care fear they will lose essential, talented people to the competition or to other sectors. Thus, effective talent management will become a critical success factor and represents a form of risk management to which no company should close its eyes.
Ideally, talent management is applied as an integrated process accompanying strategy. It encompasses all measures to acquire, deploy, retain and develop internal and external talent and maintain contact with former employees in key positions. Alongside careful planning and implementing the corresponding actions, regularly evaluating these measures is of great importance, as is a clear statement by and the commitment of top management: talent management is a matter for the boss!
While classic talent management concentrated on the few “best” employees in the company, i.e., the top performers and those with high potential, newer resource-oriented approaches demand the continual development of all employees in order to make their reserves of expertise usable for the company in the long term as well. The most future-oriented path consists of a combination of highly targeted, intensive support measures for those with high potential and broader development programs open to all employees.
In order to plan suitable development measures and to be able to set the right course as a process designer and manager, it is essential that HR is included early in corporate strategic planning. Due to the fact that in the course of current and upcoming changes, such as those caused by “Industry 4.0”, around two-thirds of those surveyed in the Lumesse investigation said they could not accurately forecast what type of employees and abilities will be needed in the company medium term.
All managers in the company should assume responsibility for its sustainability and gain a common understanding of the talent situation for this purpose. Managers at all levels should be obliged to look for talent in their own employees and act as personal developers for these people. Staff development is a management function and should also be recognized and supported as such. According to a study carried out by the management consultancy Towers Watson (The 2014 Global Talent Management and Rewards Study), only 33% of employers attest effective conduct promoting talent to their managers.
Attention has to be paid to some points when identifying the talent to be developed: for example, a clear differentiation has to be made between ambition and ability. Some employees have high potential but are not particularly ambitious. Others are so ambitious that they produce top performances, however, sometimes, at the cost of their employees and colleagues.
The right mix of specialist knowledge, personality and variety is decisive, especially for the future management team. If the “wrong” candidates are taken into the talent pool and supported, this sends misleading signals to the rest of the staff and can lead to considerable declines in motivation. Furthermore, every selection process inevitably also creates “losers”. The way candidates that are not selected are dealt with has to be well thought through in advance in order to counter collapses in performance and motivation that may lead to employees giving notice through suitable counter-measures taken in good time.
When selecting and shaping development measures, ideally, efforts should be made to link corporate targets with the wishes and targets of the individual. What is optimal is a support that is as broad as possible “on the job” in various functional areas, projects, locations, etc. supplemented by short training courses and workshops. In the process, transparency and regular, serious exchanges with those supported are decisive: every employee should be included in planning their next career steps and also be made responsible for their own further development with their superior as a supporter and HR as an advisor and process manager. It is essential to reward initiative and measures should be followed up with individual feedback. Here, constructive criticism prevents those with talent from “taking off” and viewing their future career as a sure-fire success.
In order to take employees’ different targets and abilities into account, various career path concepts make sense in that, for example, the possibility of a management, specialist or project career path is offered in the company. In order to offer employees and the company, a greater breadth of alternatives, both these concepts, and the corporate culture should provide changing to positions at the same or even lower levels as an adequate option. The Towers Watson investigation shows that only 43% of companies have defined vertical career paths and barely 27% also horizontal career paths in their organizations.
At this point, we would like to go into the issue of succession planning as a special case in talent management. Strategic succession management helps limit the costs of vacancies occurring in important positions, meets the challenges of demographic change, secures knowledge in the company for the long term and retains current employees with well thought out career path planning and creates incentives for potential new employees. Career prospects are a key motivation for candidates to join a company. In turn, a lack of promotion opportunities is one of the main reasons why employees leave.
Successful succession planning is divided into three continually repeating phases:
In the preparatory phase, succession needs are identified and a rough road map is set. For this purpose, the employee competencies needed in future are derived from the corporate strategy and, if necessary, any new positions that have to be created are defined. Existing key positions in the company are identified and foreseeable vacancies in such positions are given time priority, also in coordination with the strategic orientation. Moreover, the number of employees available overall, at the matching level, is set per department and the risk of known top performers and high potential employees leaving the company is assessed. A profile of requirements is drawn up for all positions on which the selection of successor candidates should be oriented.
The implementation phase begins with the selection process for potential successors for defined key positions. This encompasses nominating and assessing the candidates and continues with the further qualification of the selected successor candidates through individual development plans. This also includes special retention measures for talented employees at risk of leaving.
The process ends with the designated successor actually taking over the position and the systematic transfer of knowledge by the previous job holder. This step should be accompanied by supporting measures such as moderated handover meetings or onboarding/coaching for the newcomer. It is essential that concrete career path planning is also continued for the candidates for whom there is no possibility of succeeding a key position in the short to medium term.
All succession planning should be regularly reviewed for consistent orientation on the corporate strategy and adjusted if necessary.