Lack of succession management plans could mean a looming "leadership gap" Author: Nicola Taylor Originally written for the Human Capital Review. Workforce and succession management are essential to ensure the continued success of any organisation. A recent global survey of HR professionals conducted by CPP Inc. revealed trends in organisations' unpreparedness to meet future leadership demands. The survey focused on organisations' current workforce and succession management challenges and practices, and expectations and preparations for workforce and succession management over the next 10 years. HR professionals from 636 organisations in North America, Asia-Pacific, Europe, Brazil and South Africa participated in this study. The South African leg of this research study was supported by Jopie van Rooyen & Partners SA (JvR), a local psychometric test provider, and their sister company, JvR Consulting Psychologists (JvR-C), which provides a broad range of applied psychology services. The online survey was sent out to a number of organisations from November 2007 to January 2008, and 46 HR professionals responded from South Africa. The results showed that 63% of South Africans believed that the number of employees in their company is likely to increase over the next 10 years and nearly a quarter predicted that the number of employees is likely to remain the same. These findings were similar to the overall group, showing an interesting trend of optimism in employment rates worldwide. It may be that this opinion could have changed over the last six months, but taking a long-term view, it is also possible that many organisations will still experience growth over the next 10 years...
This picture can be put into context if we consider that 45% of South African HR professionals expected the number of people retiring over the next 10 years to increase compared to 47% who believed that the number of people retiring is going to remain the same. In North America, a massive 71% believed that the number of people retiring would increase due to the outflow of Baby Boomers from the workforce. When asked about the impact that increasing numbers of retirees would have on leadership development plans, only 13% of South African respondents felt it would have a very serious impact, while 40% said it was not at all serious. So there appears to be little concern regarding whether opportunities for leadership are being created, but what is being done to fill those positions? When looking at the availability of human resources to fill these positions, less than 5% of South African HR professionals indicated difficulty in filling unskilled labour positions. This is contrasted with the 61% who felt that it is very or somewhat difficult to fill skilled labour positions, and that this is likely to get progressively more difficult over the next decade. Other gaps in the employment market appeared to be in the finance, legal, and information technology fields. In fact, 72% of respondents felt that a very serious challenge to leadership development was the shortage of available skilled or educated workers. They identified the likely outcomes of this challenge to be employee burnout and unprepared people assuming higher level positions due to a lack of available talent. The dilemma that emerged from the survey is that, while South African HR professionals expected employment rates to increase and a consistent gap to be created by retiring employees, they reported having more difficulty hiring, developing, and retaining leaders than any other country, and expected it to become progressively more difficult to do so over the next 10 years. In addition, less than 30% of South Africans said that their organisation had formal leadership succession plans or executive coaching programmes. These organisations also appeared least prepared to fill the leadership gap in terms of having formal leadership development programmes. It seems that South African companies are line with international trends in terms of defining the competencies required of leaders and having processes that identify people with leadership potential, but are ill-prepared for developing that potential to be realised. What was remarkable was that despite the obvious gaps identified in terms of talent management and succession planning, 38% of South African respondents felt that their organisation is very well prepared to develop leaders over the next 10 years! In response to the overall results of the survey, Jeff Hayes, CEO of CPP, Inc. remarked that, "If businesses continue to ignore the oncoming leadership gap, they may see devastating consequences. As it becomes increasingly difficult to obtain and retain top performers with strong leadership experience, organisations may find their greatest asset - their workforce - in jeopardy." So what should you be doing to fill the leadership gap? There are a number of very valuable resources available for planning and managing effective talent management and succession planning processes, but organisations need to make it a strategic priority if the system is going to work effectively. Robert Fulmer and Jay Conger (Growing Your Company's Leaders, 2004) provide a couple of best practice guidelines for effective succession management systems. If your organisation already has such a programme in place, it may be worthwhile checking that these elements are present. If not, it is probably very much worth your while to look at implementing one! Characteristics of good succession management systems:
- The system should be uncomplicated and easy to use, with easy access for candidates.
- The best systems tend to focus on development, rather than replacement, so they provide development opportunities and track the progress of the candidates.
- It is vital that top management is involved, in order to champion the process.
- Good succession management systems are effective at spotting gaps in talent and identifying positions that are critical to the success of the organisation, where individuals who fill those positions receive regular and intensive attention.
- They need to incorporate checkpoints to make sure that the right people are in the right jobs at the right time.
- Feedback loops should allow the system to undergo changes where needed and incorporate new elements where research identifies ideal solutions
The incorporation of a succession management system into the company's strategic management framework is the cornerstone of implementing a successful programme. This puts into place the elements necessary for top management to sponsor the programme, and the respective owners of the system in different business units to manage deliverables and outcomes. The system must include effective procedures to identify and select talented individuals, as well as link these to the necessary positions, managers, and those individuals who will be assessing them. Tracking of progress is vital, as is the implementation of a way to measure the effectiveness of the overall system. The massive task assigned to HR departments is to design and implement this type of programme in such a way that all stakeholders are rewarded when the system works effectively. It is very easy to take a pessimistic view on human resource management in these troubling times, but to ensure your organisation's long term sustainability, you need to remain optimistic. This does not mean that we should adopt a "Pollyanna" outlook, and ignore the realities at hand, but rather implement well-developed HR systems that will create a return on investment in the form of a healthy, thriving, and productive workforce, with strong, capable leaders in the future.