I like to think about succession planning – it’s fun. Who’s up next? Who’s going to replace Bob when he gets the cushy gig in strategic planning? Can we set up a boxing ring in the lobby and have Dorfman and Squire (not Billy, you 80’s rocker you) slug it out for the treasured “ready now” tag?
I jest because it’s true. Nothing causes more gossip than a formal succession planning initiative running loose in a Division. See them carrying the binder out of the big conference room? That’s the list! I heard my name was on it. What about you?
We’ll talk about whether you tell people they’re included in a succession plan in a week or two. What’s on my mind today is whether you can actually measure the ROI of succession planning. Erik Berggren, senior director of customer results & global research at SuccessFactors, thinks you can and gives some examples here:
“The first step is to make sure there is a sound assessment process loaded with integrity to provide this data. To be able to accomplish this in any scale, organisations are integrating this workforce planning or supply-based succession management process, if you will, with their performance review process. An integrated and fully automated talent management process makes life easy for managers and employees and is the starting point.
A FTSE 500 financial services customer (that we have been recently working with) has been able to improve their internal fill rate from 60 per cent to 75 per cent with an estimated direct financial benefit of $11.5 million on an annual basis, which is a direct cost saving (and is also a conservative estimate). This example aims to highlight that for companies, the stakes are high.
A major retailer was able to find 15 new regional managers when tapping into the talent pool after assessing individual staff members from the store manager level and below, including assistant store managers using the right tools and technologies. The external cost of hiring to fulfill the need for regional managers was well above a million dollars per year. The ‘ready bench’, as it is sometimes called, also put to use, grew by 20% during the first year. For this company, this was key for overall growth, and furthermore provided significant cost avoidance benefits from not having to hire so many managers externally.
Again, there is a direct cost saving attached to this initiative but the real strategic value for this company was that they improved their employee engagement score by 7%. So the ripple effects of these investments are instrumental.”
If you read the article by Berggren, you’ll see it’s nicely done, and I kind of expect SuccessFactors to make a compelling case for Succession Planning. I wish the article gave a little more depth regarding how performance management ties into clearly identifying the best candidates across the enterprise. Common competencies that can be “dragged, dropped and rated” into the rating schemes across multiple jobs?
It would be interesting to understand more, and I’d love to hear more regarding how smaller companies can leverage automated performance management in this way as well.
Until I get that clarity, I’m still thinking about Dorfman and Squire in the ring for the “ready now” tag. I’ll even put the succession planning binder on the ropes of the ring for dramatic effect… Imagine if Jack Welch would have used the boxing ring. Is there any doubt Nardelli pummels Immelt for the crown?