The words "succession planning" are usually associated with finding the right people to fill the highest-level positions.
But planning for future staffing needs should be done at all levels in the organization, from CEO down to shop floorworker. And it needs to be done in small and medium-sized businesses just as much as it needs to be done in big business.
The 1996 crash in Bosnia of the plane carrying U.S. Secretary Ron Brown and more than 30 executives from major U.S. corporations was a wake-up call to corporate boards, CEOs, and HR vice presidents around the globe. It led many corporations, government agencies, and even non profit enterprises to resuscitate otherwise dormant succession planning programs.
Fewer Middle Managers
But the downsizing craze of the late 1980s and 1990s has taken its toll. Middle managers, more than any other group, saw their ranks dramatically thinned during a continuing parade of cost-saving measures. While those programs looked good to investors and often enhanced earnings for the short term, they also reduced the ranks of middle managers being prepared for promotion to higher levels.
That would not have been a problem if it occurred only in a few organizations, but widespread downsizing depleted the middle-management ranks almost everywhere -- making traditional modes of recruitment such as headhunting less effective than ever before. No longer was it always possible to rely on luring talent away from others when needed desperately -- and usually on short notice.
And, as immigration rules have been tightened in the United States, the old fallback of finding talent from abroad has become more difficult.
Demographic trends point toward leaner times for recruiters and the increasing importance of making investments to grow talent from within. Between 1996 and 2006, the population of people between the ages of 55 and 64 in theUnited States will increase by 54%, while those between 25 and 34 will experience a net decrease of 8.8% over traditional levels before that. Some predict that more than 20% of all senior executives in large corporations will be at risk of retirement in just a few years.
At the same time, record employment levels make worker retention a key cause for concern. With such low unemployment rates, employers who don't invest in the development of their employees as a retention tool will find themselves in deep trouble fast. In this market, employers who can give their workers development for the future will find, based on research, that investments in training or succession planning efforts are actually retention strategies that can preserve existing talent.
What is more, employers are becoming more willing to tell people when they are successors for key positions -- something that only one-fourth of U.S. employers did just a few years ago -- because the hope of future advancement can keep workers from jumping from employer to employer for wage increases ranging from small to very large.
Pools of Candidates
Some companies recognize the value of thorough succession planning. For example, Lockheed Martin identifies pools of candidates for job openings at all levels throughout the organization. With nearly 200,000 employees, the company's succession planning process is continually reviewed at increasingly higher levels, from HR directors top residents of operating companies, and finally by top management.
Taken together, these trends point toward the growing importance of succession planning as a daily activity to be undertaken at all levels. It is not just cause for concern by the CEO. It is, and should be, the concern of any manager who wants to retain, attract, and develop a first-rate staff now and in the future.
William J. Rothwell, Ph.D., is professor of Human Resource Development at Pennsylvania State University and is working on a best-practices study on succession issues sponsored by Linkage Inc., and Developmental Dimensions International (DDI). Rothwell is author of more than 40 books on HR management. Robert K. Prescott, Ph.D., is director of the Management Development Institute (MDI) at Eckerd College in St. Petersburg, Fla. MDI is a network affiliate of the Center for Creative Leadership in Greensboro, N.C.,and focuses on the delivery ofleadership development programs.