Don’t Trust Your Workforce Future to Your Gut
“A majority of our executive team is retiring within two years. Unfortunately, we don’t have a formalized succession plan in place to backfill the roles”, he said. I asked my client to repeat what he just to make sure I had heard correctly.
I could hear the “crunching” of numbers in my head as I considered the incredibly high cost hit his organization could potentially experience. On average the cost to backfill an executive is 200-300% of the executive’s salary and for individuals making $60,000, the Society for Human Resources relates that cost to be approximately $30-40,000.
And there are other associated costs to the business overall. Consider the loss of important skills and institutional knowledge, loss of productivity, potential customer dissatisfaction, disoriented teams, increased operational errors, and overall cultural impact.
In the current VUCA working world (volatile, uncertain, complex and ambiguous), businesses cannot afford to leave talent decisions to their guts. Nor can they blindly trust that the qualified person will magically appear when they start their search.
Staying competitive in today’s marketplace requires you to have the right people in the right people in the right roles at the right time doing the right things. This is the solid cost benefit of having formal succession planning process embedded in your business operations.
Succession plans are not only for the C-suite or for planning for retirement. Too many organizations have recently felt the significant pain of unexpected departures of key players from their business which in turn introduces hiring expenses and training costs that were unplanned. They represent a key business strategy to identifying and fostering future leaders in your organization.
And they are not just for large companies. In fact, small to mid-size businesses, or those with less than 3000 employees, leave themselves open to more vulnerability and opportunity to experience costly disruption because of the smaller talent pool they have to draw on.
Here are three key things to keep in mind as you begin to put your plans in place:
- Good plans are not a “once and done”: a succession plan is only as good as your regular visits to refresh it. Integrating it into your annual Human Resources processes will embed it within your culture and become of a part of your ongoing people development mindset.
- Some critical high performers should stay in their current role: Surprised? Its true that some of your most valuable employees are best served and happiest when they continue to do what they love in the role they are currently in. And your business may need them to stay right where they are. Find alternative ways to develop these folks such as having them lead a high stakes initiative. Upward mobility in the company isn’t always the best solution.
- Don’t trust your gut: Effective succession plans are built on doing the due diligence to clearly outline the requisite skills for each role, identifying two or three people that could potentially backfill the role and then proactively developing them to move into that role in the future. Sometimes your gut may be right, but do you really want to take that chance?
So, what happened with my client? We worked with them to develop a solid succession planning process that included skill identification for each executive role, conducting 360 degree feedback discussions and alignment conversations. They now have a newly formed and robust executive team in place that is actively creating their future together. It turns out the timing was fortunate as during the process, an organization restructure was required and because of the planning activities they had implemented, they were able to quickly identify the right people to take on the newly established roles.
About Transformation Strategies
Founded by Tricia Steege in 2001, Transformation Strategies is a trusted coaching and consulting firm that assists its clients to realize their desired futures by partnering with them to create comprehensive change strategies and develop their leaders to accomplish real results. We specialize in shifting whole systems at one time by helping our clients think the way the whole system thinks.
