Organizational Talent Needs

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In the future, decision-makers will not view succession issues as one problem

requiring only one solution. Instead, they will seek a range of strategies to

address future organizational talent needs that will include, but will go beyond,

SP&M programs. In other words, succession problems will be solved

using many possible solutions. The choice of a solution will be made on a caseby-

case basis, but with a strategic view that seeks an integration of approaches.

Think about it for a minute. In how many ways can an organization’s talent

needs be met through approaches other than an SP&M program that is designed

to build in-house bench strength over time? Consider at least fifteen

possible alternative approaches. Each approach should be reviewed at the time

decision-makers plan for succession needs. Decision-makers should begin by

clarifying what talent they require, why their organization has that need, and

how the need might be met.

The first alternative approach to SP&M is to hire from the outside. In fact,

this is probably the most obvious way to meet a talent need other than through

internal promotion or development. It is sometimes chosen before internal

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Exhibit 14-1. A Worksheet to Structure Your Thinking About Predictions for Succession Planning and

Management in the Future

Directions: Use this worksheet to structure your thinking about possible predictions that may influence SP&M programs in

the future. For each prediction listed in Column 1 below, indicate in Column 2 whether you believe that the prediction is

true. Then describe under Column 3 what you believe the prediction means in your organization and under Column 4 how

much impact that prediction will have in your organization. Finally, under Column 5, offer suggestions about what your

organization should do about the prediction. There are no ‘‘right’’ or ‘‘wrong’’ approaches to addressing these predictions.

Instead, use this worksheet to do some brainstorming about predictions affecting SP&M in your organization in the future.

Add paper if necessary.

Column 1

What is the prediction?

Column 2

Do you

believe the

prediction

is true?

Column 3

What does the

prediction

mean in your

organization?

Column 4

How much impact

will that prediction

have in your

organization?

Column 5

What actions should

your organization

take to address the

prediction?

Succession planning and

management will:

Yes

_

No

_

1 Prompt efforts by decisionmakers

to find a flexible range

of strategies to address organizational

talent needs.

□□

2 Lead to integrated retention

policies and procedures that

seek the early identification of

high-potential talent, efforts to

retain that talent, and efforts to

retain older high-potential

workers.

□□

3 Have a global impact. □□

4 Be influenced increasingly by

real-time technological innovations.

□□

5 Become an issue in government

agencies, academic institutions,

and nonprofit organizations in a

way never before seen. Businesses

will not be the only organizations

interested in

succession issues.

□□

6 Lead to increasing organizational

openness about possible

successors.

□□

7 Increasingly seek to integrate

effective succession issues with

career development issues.

□□

8 Be heavily influenced by concerns

about work/family balance

and spirituality issues.

□□

replacements are considered. A key advantage of this approach is that it prevents

inbreeding, since newcomers often bring with them fresh solutions to

old organizational problems. A key disadvantage of this approach is that the

cycle time required to fill a vacancy can be agonizingly long—and there is no

guarantee that someone chosen from outside the organization will successfully

adapt to its unique corporate culture.

A second approach is to reorganize. Take just one example: If the vice

president of human resources retires, dies, or leaves the organization, the CEO

may choose to meet the need by assigning the HR function to another manager.

That is just one example of how to solve a talent need by reorganizing.

The same approach can be used to meet talent needs in other key positions.

Of course, this approach only works if someone qualified is available—and has

sufficient interest, motivation, and ability to assume more responsibility.

A third approach is to outsource the work. If this approach is chosen, the

challenge is to find a suitable outsourcing partner. That cannot always be

done, but it is one option. A disadvantage is that this approach should be used

only with activities not directly related to the organization’s core competence—

the key strategic strength that sets an organization apart from competitors.

It is, after all, unwise to outsource the essence of what makes an

organization competitive, since that path can lead to bankruptcy or to a takeover.

A fourth approach is to insource the work. If this approach is used, decision-

makers seek to find synergy between two functions. Of course, this

assumes that some excess capacity—that is, people or resources—exists somewhere

in the organization. Suppose, for instance, that a vacancy for a key position

exists in one industrial plant. That need could be met by insourcing the

work to another plant operated by the same company. An external partner is

not sought. Instead, the function is performed internally. This approach differs

from reorganization because the insourcing partner does not permanently assume

the duties of the new function but performs them only temporarily.

A fifth approach is to hire, on contract, a temporary replacement for a key

position.. Some firms specialize in supplying temporary help, even for positions

such as CEO, with which temps have not been historically associated.

A sixth approach is to bring in a consultant to help. While similar to using

a temp, this approach differs in that a consultant is usually not on site every

day to perform the work, as temps generally are. The consultant, in short,

performs the work on a project-to-project basis and may even telecommute.

This can reduce costs but may also diminish the impact of the key position on

the organization.

A seventh approach is to transfer someone from another part of the organization,

temporarily or permanently, to meet a succession need. Of course, it is

usually assumed that an individual who is transferred meets at least the basic

entry-level requirements for the job. Internal transfers, however, have the disadvantage

of touching off a domino effect (sometimes called a musical chairs

effect), in which the movement of one person can prompt movements by many

others.

An eighth approach is to acquire another organization that possesses the

needed talent. In the past, mergers, acquisitions, purchases, and takeovers

were sought to realize savings from economies of scale, a desire for higher

executive salaries resulting from correlations between senior executive pay

and organizational size, and the pursuit of improved integration with such key

groups as suppliers, distributors, and even competitors. In the future, however,

CEOs will regard mergers, acquisitions, purchases, and takeovers as one

means to address talent shortages.5 (That is an issue treated at greater length

below.) Organizations with well-known core competencies will become acquisition

targets for other firms that are cash rich but are experiencing talent

shortages. Instead of struggling to fill one vacancy at a time, organizations will

look for other firms to absorb outright to achieve a massive infusion of new

talent.

The ninth approach is to reduce or eliminate the work completely. In other

words, the work performed by an otherwise critically important function or

position could be reduced or eliminated to solve a succession problem. As one

way to do that, the CEO can choose to spin off or sell the business or function.

A tenth approach is to delegate the work up to a high potential in the

organization. This is, of course, a form of reorganization. But instead of giving

responsibility to another manager when the organization experiences a loss of

talent, the work is absorbed by the immediate organizational superior.

An eleventh approach is to delegate the work down. As with the tenth

approach, it is a form of reorganization. The work of a high-potential employee

is absorbed by one or more of his or her subordinates, without promotion. A

variation of this approach is to form a team and delegate the work to that

group.

A twelfth approach is to form a strategic alliance with another organization

to meet succession needs. This usually means arranging a short-term partnership.

While strategic alliances have often been formed in product manufacturing,

they could also be formed to meet succession needs. However, this

approach is potentially useful on a short-term basis only, since few organizations

want to lose high-potential talent forever.

A thirteenth approach is to trade needed talent, temporarily or permanently,

with other organizations. Similar to a strategic alliance, this approach

tends to be even shorter term. Some organizations provide ‘‘loaned executives,’’

for instance, to build the competencies of their high potentials. However,

few organizations want to lose their high potentials for an extended time.

A fourteenth approach is to recruit globally rather than domestically, targeting

individuals with needed talent outside the United States. Multinational

corporations especially may be able to trade talent from one part of the world

to another and thereby treat succession issues as moves on a global chessboard.

A fifteenth approach is to hire back managers or other talent. As the U.S.

population ages, this approach is already being used by many organizations,

such as is the case of Deloitte’s Senior Leaders Program, launched to preserve

the knowledge and experience of its talent after the traditional retirement

age.6

Use the worksheet in Exhibit 14-2 to structure your thinking about ways to

meet succession needs based on the approaches described above. Whenever

a talent need arises in your organization, use the worksheet to contemplate

possibilities for meeting that need. Also use the worksheet to integrate the

strategies so that your organization is not dependent on only one strategy.

Prediction 2: Decision-Makers Will Seek Integrated Retention Policies and Procedures

Employers in the United States may face a growing problem in finding and

keeping talent. As this book goes to press, employment levels are at record

lows. While that means that talent is plentiful at the moment, employers can

no longer safely assume that the future will be like the present. It is likely

they will be competing with many other employers, and this competition is

especially intense for high-potential workers with proven track records.

To address this problem, employers should formulate and implement policies

and procedures to identify the high-potential talent earlier and to retain

that talent longer. Employers will thus need to take such steps as these:

Develop early tracking systems to find new hires having special promise.

That can be done with potential assessments performed within the first

few months of employment.

Track the reasons for ‘‘quits’’ generally and the reasons for the departure

of high-potential talent specifically. That may require revamped exit

interviews to capture information about why people (and especially

high potentials) leave, where they go, and what they believe could have

prompted them to stay. Exit interview systems beg to be reinvented.

Use attitude surveys on a continuing basis to predict turnover and measure

job satisfaction. That can be done simply by asking workers on a

survey whether they plan to quit within the next year and then supplying

questions to uncover chief sources of dissatisfaction. The results

can be cross-tabulated, and provide useful information for improving

retention and making accurate predictions of turnover.

Track voluntary turnover and critical turnover by department and examine

increases in each department for trends or patterns. Then act to

address problems in these hot spots.

Provide incentives for people to remain with the organization. (Do not

assume that all incentives are financial.) Find out what people need to

encourage them to remain with the employer.

By taking these and similar actions, employers can devise an integrated retention

strategy to reduce turnover and thereby improve retention.

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Exhibit 14-2. A Worksheet to Structure Your Thinking About Alternative Approaches to Meeting Succession