Why Bother With Succession Plans?

Succession Planning - Published March 2008
Creating Consistency:
Enterprise-Wide Succession Plans
by Agatha Gilmore


When its CEO left, the Northeast Georgia Health System (NGHS) celebrated his 40 years at the company.

When its COO left, the company celebrated his 27 years at the organization.

When several other 20-plus-year executives left, senior executives at NGHS started to panic.

"We went from a 40-year CEO with a community-minded culture to a growth plan that really just defies the imagination," said Jack Fulbright, vice president of human resources at the NGHS. "It's amazing."

The plight of the NGHS isn't unique. In fact, the scenario might become commonplace during the next few years. With more than 70 million baby boomers eligible to retire and not enough skilled workers to fill the ranks, the U.S. Department of Labor estimates the workforce will be short 10 million employees by 2010.

And according to research from the Aberdeen Group, fewer than half of organizations surveyed for the 2007 report "The Looming Leadership Void: Identifying, Developing, and Retaining Your Top Talent" currently have a succession planning strategy in place, though this number is expected to jump to 75 percent by the end of 2008.

"Succession planning, once reserved for the most senior positions at organizations and considered a component of leadership development, is being viewed more holistically across the organization and its stakeholders," wrote Aberdeen Research Director Kevin Martin.

Further, the concept of a successful succession plan has evolved. Gone are the days of the hush-hush, case-by-case replacement process. Today's market requires organizations to look at succession planning as a visible, integral, enterprise-wide part of their overall business strategies, plot out projected growth and be clear with employees about how they fit into the equation.

The Push to Promote From Within

"One of the reasons succession planning is so key is the way that we work is changing," said Ilene Ringler, principal of Ilene Ringler Associates, a consulting firm based in Phoenix. "So to have the right people ready to move when you need them is more critical than ever before."

This certainly became clear to those at the NGHS, who, without an integrated succession plan, had to wait until longtime employees retired before scrambling to find replacements.

"The organization knew these people were going to retire, and yet we still had to go out and replace the executives that we lost," Fulbright said.

This resulted in external hires of more than 60 percent in top executive jobs. Recruiting talent externally — perhaps one of the most costly and unwieldy side effects of not having an enterprise-wide succession plan — can have a debilitating effect on a company's bottom line.

For example, research done on CEO succession by the Hay Group showed hiring externally can result in shorter employment terms, less stable company culture and morale and compensation-related costs, as organizations often have to bump up pay to attract external hires.

The cost of recruiting new talent also is a factor, regardless of organizational level.

"The financial repercussions — and forget about the downtime of making a bad decision on the placement, in terms of lost business opportunity — just looking at the replacement costs, are significant," said Ron Garonzik, vice president of leadership talent at the Hay Group in New York. "Internal candidates are more likely to succeed because organizations that have figured it out have time to develop the candidates and to address the risks that they pose in relation to critical positions."

To help lessen the extent of external hiring in the future, the NGHS has since begun to implement an enterprise-wide succession planning strategy whereby each employee identifies three potential in-house successors, estimates how long it would take those successors to work into the positions and then helps create specific development plans for them.

"We just can't afford to have the inconsistency and the silos that existed in the past," Fulbright said.

Succession as Business Strategy

The push to promote from within also has helped highlight the fundamental connection between succession planning and key business goals around development and retention.

"Succession planning isn't this stand-alone thing," said Kevin Martin at Aberdeen. "It's something that feeds recruiting, performance management, learning and development."

For this reason, the first step in creating a successful succession plan is to think of it as a fundamental element of a dynamic business strategy. The plan should not only identify potential gaps within the organization, it should explicitly define current and future job roles.

"First and foremost, succession is about ensuring your business has the organizational capability in place to prosper," Garonzik said. "That means looking at the business context and strategy very carefully and understanding in terms of strategic requirements what the operating model needs will be going forward. How is the organization going to run to generate the revenue it requires?"

To fill these well-defined job roles requires a high level of openness and transparency within the organization.

"You have to know how the organization is going to grow and be really clear on what people need to know and need to be able to do to be successful in that future state," Ringler said. "And that's not just hard skills. It's how people like to work, what motivates them. It's, 'Do they want to be a part of the organization's growth?'"

While many organizations have high-potential programs, they often don't delve deeper to find out what the individuals themselves are interested in pursuing, Garonzik said. This depth can be particularly helpful when considering multigenerational workforce preferences.
"What we're really pushing companies to consider is, 'High potential for what, exactly?'" he said.

A consistent succession plan helps employees understand where they fit in the organization, as well as where they might want to grow. It also helps foster a culture of understanding that might assuage the effects of external hiring, Ringler said.

"If the culture is one of full disclosure, which many cultures are not, people know who the higher [potentials] are, so it helps people to know how the organization goes about doing its decision making," Ringler said. "And that helps the hi-pos know, or anybody know, 'How can I be part of the succession planning process?'"

This sense of employee empowerment has become a crucial advantage in today's market. Organizations that offer workers the opportunity to track their own progress will recruit the best talent, Martin said.

"It's no longer a nice to have. It really becomes a need to have," he said. "It becomes this holistic recruiting, developing, retention type of strategy."

It's also at this learning and development stage of succession planning that applying technology can vastly improve results.

"The automation brings consistency, it brings facilitation, it brings the ability to leverage that data into another system," Martin said. "[It] provides so much greater insight; it provides greater access organizationally to talent."

Dynamic Learning and Development

With such a deep-reaching organizational impact, the succession planning process might start as an human resources function, but ultimately would be taken over by department heads as it became fully integrated into the business strategy, said Mike Reingruber, group vice president at Plexus Scientific, a technology consulting company.

Additionally, other aspects of succession planning, such as knowledge capture and information sharing, would become dynamic, applied processes rather than one-time deals.

"[When an employee retires], you've got a very limited time period to extract what you can know from that person," Reingruber said. "[And] it's tough for someone who's now in your footsteps and doing your job to say, 'Let me check the lessons-learned repository and see what's there.' You don't self-prompt to go and look. A lot of the agencies are looking to replace antiquated systems with something a lot more proactive because it's actually applied."

Reingruber pointed to the Air Force as an example. Before engineers begin the design process for airplanes, he said they are prompted to read through closeout packages or after-action reports on similar projects. When they complete their projects, they are encouraged to make submissions into the knowledge database.

"You've kind of got to embed this idea of capturing these knowledge nuggets throughout their lifetime as an employee, so when they do leave, it exists somewhere, it's used proactively and the other folks — regardless of skill set or time within the organization — can access it," Reingruber said.

The use of technology at this point also is incredibly useful, Reingruber said. A lot of companies are experimenting with intelligent agents or digital repository systems. The program pulls up appropriate stored knowledge and processes for an employee who has just entered a new phase of a project. The employee then has the opportunity to review and apply the relevant information.

"Now, for the first time, we've actually got a requirement that's driving everybody to look at [intelligent agents], and we've got the technology to support it," Reingruber said.

Looking Ahead

Ultimately, the benefits of a consistent, enterprise-wide succession plan are vast and varied. Namely, organizations can adapt to the potential talent crisis by doing more with fewer resources.

"It's allowing the folks that are there to work more efficiently," Reingruber said. "As these folks retire, you may find out you can do just as well by having the information available with fewer resources."

Additionally, a company's ability to plan succession can have major effects on marketplace perception, as well as on the bottom line, Ringler said.

"From a customer service perspective, if the organization doesn't have that kind of solid planning in place, the potential loss to business is very large," she said. "Creating strategic partnerships has a lot to do with succession planning, [as does] creating good customer relationships, building your business base. All of those external profit benefits are in many ways based upon the organization's ability to run itself internally."

In the case of the Northeast Georgia Health System, which is set to open several additional centers as well as a whole new hospital in 2008, establishing an enterprise-wide succession planning strategy was a no-brainer.

"The need is recognized," Fulbright said. "This is going to be a significant cost-saving strategy in the long run

Advantages of Software as a Service over ASP

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A Sweet Spot: Competencies and Learning

Published March 2008
Influencing Competency Management
Brian Summerfield


Recent research from the Aberdeen Group showed that best-in-class performers are up to 86 percent more likely than “laggard” companies to know which skills and traits make top performers. This statistic points to a relationship between understanding what core competencies are for the various roles within the workforce and how bringing in those skills and enhancing them contributes to the overall success of the business.

Obviously, having the right competencies in the right part of the enterprise is critical for aligning its personnel to its goals. Equally obvious is the fact that corporate learning can help ensure employees have the specific skills and knowledge they need to succeed in a particular role from both an individual and organizational perspective. But chief learning officers should be doing more than just developing training in reaction to a perceived need for this or that competency. To make themselves and their function more strategic, they should be deeply involved in the competency conversation from the outset.

This likely isn’t a profound revelation for learning executives, most of whom have been aware of how employee development relates to competency management for some time now. However, many of them probably aren’t where they need to be in terms of influencing this other aspect of talent. For the good of their organizations, this must change.

Effecting this change is not terribly complicated, either. Recognizing that learning and competency management share the same “people” rubric with many other related functions, learning leaders should involve themselves in other associated aspects of talent. These include:

1. Hiring: By creating hiring profiles with detailed and standardized competencies for various positions, organizations can bring on employees who will be more likely to hit the ground running. CLOs might want to participate in the creation and maintenance of hiring profile programs or simply voice support for them. In any event, these will make efforts around onboarding easier from the perspective of the learning department.

2. Technical infrastructure: CLOs should make sure their learning management system can track employee competencies somehow. There are essentially two ways to do this: Get a comprehensive LMS that includes some sort of application around competencies or attach the LMS to a separate but connected competency management system. This decision probably will rest largely on the resources and proficiency of the organization’s IT department.

3. Performance management: Once learning executives have some technical means of aligning competencies to learning, they can assess employees to make sure the knowledge actually has been absorbed and retained. It’s even better if there’s a feedback loop in place that can show employee performance well after the fact to make sure learning programs are having the right impact. For example, if several workers are evaluated as competent in certain areas but don’t achieve the desired job performance, learning professionals can revisit their programs to see if something is wrong with the content or delivery, the competency baseline needs to be raised or they need to teach altogether new skills.

4. Succession planning: Learning programs shouldn’t only familiarize employees with the competencies they need to know for their current jobs. They also should identify high potentials (via assessment methodologies) and eventually instruct them on the competencies they need to know for higher-level positions within a logical career progression. This will help prepare a talent pipeline for key positions within the enterprise, ones the organization might otherwise have trouble filling.
Brian Summerfield is a managing editor for Chief Learning Officer magazine.

Let's be strategic and integrate our systems

published February 2008
Integrating Talent Management Systems Strategically by Leighanne Levensaler


With the increased emphasis on talent management, companies are looking to integrate at least some of these systems, while adding solutions for other processes, such as workforce planning, succession planning, recruiting and competency management. In response to the interest, software vendors of all types are scrambling to pull supporting modules into integrated suites.

When it comes to HR-related systems, most companies have a tapestry — or crazy quilt — of systems that have been built, bought and implemented over many years. HR technology infrastructures can include payroll, HRMSs, LMSs, applicant tracking, compensation and benefits, and performance management systems — all of which have different levels of maturity and are commonly owned by different parts of an organization.

Talent managers involved in setting their company's integrated talent management systems strategy have many good reasons not to leap into purchasing decisions. The market offers many options, with different strengths, maturity and levels of integration. Purchases should fit the company's IT architecture with an acceptable range for risk tolerance. How the organization governs talent management also comes into play.

There are major considerations involved in developing this critical system strategy. If skipped, absence of these important and often soul-searching steps will lead to confusion with the wide variety of systems, architectures, delivery models and approaches available.

Start With Business Problems

The first step is to identify business problems the organization wants to solve with an integrated talent management system. Problems typically fall into one of three hierarchical categories:

1. Automation. By implementing these systems, the organization will reduce the cost of errors, save time, reduce paper and better meet compliance requirements.
2. Process improvement. The company's goal is to better implement existing processes and perhaps even improve them because the software will facilitate a more integrated and complete, data-rich approach to a given process.
3. Business and talent breakthroughs: These systems will empower the organization to execute new tasks.

Focus on Talent Processes First

Recent research shows the greatest business results come not from HR systems, but the underlying processes. In fact, Bersin & Associates has identified the Top 22 processes (out of 62 studied) that drive highest levels of business impact. These include coaching; development-based performance management; the use of strategic competencies in recruiting, performance management and leadership development; implementation of skills and competency-based workforce planning; and creating personnel and organizational goals that align with current and strategic business goals.

These processes are not dependent on software solutions. Most are more dependent on company culture, business and organizational maturity. If the investment in talent management systems is to drive dramatic business impact (and positive change), examine and prioritize talent management processes first.

Once the talent manager determines which processes are most important to business success and how they should be prioritized, he or she will be better prepared to evaluate the available options and set expectations for future investments.

When examining current processes, also consider "breakthrough processes." Up to now, most of these processes have not been practical to achieve. But now, new, integrated technology options put them in reach. These include:

* Integrated performance and learning.
* Integrated performance management and
succession planning.
* Pay for performance.
* Integrated recruiting and performance
management.
* Career planning.

Why You Can Love An Integrated Talent Management System...

You need a Great Services & Support Team

Get a vendor where each person, each department is devoted to providing the highest level of service. Service and support for customers is the highest priority to ensure continuous subscription renewals and helps to ensure subscription renewals.

On-demand, Software as a Service (SaaS)

There is no hardware, software, middleware, databases, or business intelligence tools to buy, install, maintain, and upgrade. The multi-tenancy model means that customers securely share one physical instance of software without ever seeing each other’s data.

Seamless No Pain Upgrades

With traditional on-premise applications, many customers often fall drastically behind the latest technology & feature releases. With SaaS, all software updates and upgrades are seamless delivered each month to all customers at one time.

Best Available Technology

Make sure your product is built on a next-generation architecture (using .NET 2.0 and AJAX) that enables the deliver of services faster – deliver implementations & integrations through the use of Web services - so they can easily interact with other applications

Systems Integration

Get a solution built to transparently integrate with your existing solutions (ERP, HRMS, ATS, and Financials) whether they are on-premise or on-demand. Make sure services have been designed at the core to support and utilize today’s standard for integration – web services

Configurable Not Customizable

Get a system’ designed so that workflow, forms and processes can be configured to meet the needs of your individual group, business unit, department, or country – or simply, by organizational unit

Global Reach and Scale

Have a multi-tenant architecture that is maintained by a Tier 1 hosting facility with redundancy and failover capabilities, making the best use of content acceleration technology to move the most frequent content out to the edges of the Internet to service global locations. Having access to multiple languages (with more coming) and global date and currency formats allows for a decentralized and extensible environment.

Flexibility In Approach

Whether you are a centralized or decentralized organization, or a hybrid, your system should allow for total flexibility in establishing how you use it. Each organizational unit should be allowed to fully decentralize capabilities to configure their process, workflow and forms. Centralized control can be managed through the use of role-based permission groups. These tools provide the flexibility needed to manage organizations with 10's of thousands of users.

Usability & EngagementA single user-friendly interface should be as easy and intuitive to navigate as today’s consumer web sites. Having a unique roles-based user experience for executives, managers, employees, and administrators will allow for a single integrated portal, building engagement and adoption, no matter how few or how many modules have been rolled out

A Single Point of Ownership

Make sure you have a single point of contact, one vendor who designed it, built it, and supports it.

How Does AJAX help our web experience?

A reprint

As Web applications become more sophisticated, users can easily develop Web pages, create a blog, and upload their audios and videos easily. Today web users are becoming the news by reporting current events faster then the professional news media and with more insight. AJAX software implementations make interacting with the web interfaces faster, and can allow for widget type mini-applications to live within HTML hypertext pages comfortably. We’re entering a golden age period of friendly user interface with unbelievable innovation, as web 2.0 developpers are finally able to build web applications as good or better then the PC-based desktop applications of yesterday. This shows that the developper community is embracing open, standards-based solutions and Ajax software.

Ajax, abreviation for Asynchronous JavaScript and XML, is the web 2.0 development software of choice for creating interactive web applications. It makes web pages feel more responsive by exchanging smaller amounts of data with the server in the background. This way the entire web page does not have to be reloaded each time the user makes change. Their ease of use makes it simpler for users to compose blogs and assemble mashups. Because mashups average data and services from public domain websites and free web applications, they’re simple to implement and hey are built with a minimal amount of code. Their obvious business benefit is that they can be quickly implemented at very little development cost and the will improve your user satisfaction. The richer user-experience afforded by Ajax software application has given birth to web 2.0 websites that act as PC- desktop applications, such as word processing or spreadsheet. The next step in this web 2.0 evolution will transform Ajax applications into new communications tools like the iPhone or iPod Touch connecting users to each other through web server channels. The key to this transformation lies with Ajax Push, a technique that gives the server the ability to update any part of any page at any time during the user experience.

Technospeak: I have tried to figure out ASP vs SaaS, well here it is

Software-as-a-Service (SaaS)

Broadly speaking, SaaS application maturity can be expressed using a model with four distinct levels. Each level is distinguished from the previous one by the addition of one of the three attributes listed above.

Level I: Ad Hoc/Custom (this is a typical ASP hosted model)

The first level of maturity is similar to the traditional application service provider (ASP) model of software delivery, dating back to the 1990s. At this level, each customer has its own customized version of the hosted application, and runs its own instance of the application on the host's servers. Architecturally, software at this maturity level is very similar to traditionally-sold line-of-business software, in that different clients within an organization connect to a single instance running on the server, but that instance is wholly independent of any other instances or processes that the host is running on behalf of its other customers.

Typically, traditional client–server applications can be moved to a SaaS model at the first level of maturity, with relatively little development effort, and without re-architecting the entire system from the ground up. Although this level offers few of the benefits of a fully mature SaaS solution, it does allow vendors to reduce costs by consolidating server hardware and administration.

Level II: Configurable (this is a typical on demand model)

At the second level of maturity, the vendor hosts a separate instance of the application for each customer (or tenant). Whereas in the first level each instance is individually customized for the tenant, at this level, all instances use the same code implementation, and the vendor meets customers' needs by providing detailed configuration options that allow the customer to change how the application looks and behaves to its users. Despite being identical to one another at the code level, each instance remains wholly isolated from all the others.

Moving to a single code base for all of a vendor's customers greatly reduces a SaaS application's service requirements, because any changes made to the code base can be easily provided to all of the vendor's customers at once, thereby eliminating the need to upgrade or slipstream individual customized instances. However, repositioning a traditional application as SaaS at the second maturity level can require significantly more re-architecting than at the first level, if the application has been designed for individual customization rather than configuration metadata.

Similarly to the first maturity level, the second level requires that the vendor provide sufficient hardware and storage to support a potentially large number of application instances running concurrently.

Level III: Configurable, Multi-Tenant Architecture (this is the 1st generation SaaS model)

At the third level of maturity, the vendor runs a single instance that serves every customer, with configurable metadata providing a unique user experience and feature set for each one. Authorization and security policies ensure that each customer's data is kept separate from that of other customers; and, from the end user's perspective, there is no indication that the application instance is being shared among multiple tenants.

This approach eliminates the need to provide server space for as many instances as the vendor has customers, allowing for much more efficient use of computing resources than the second level, which translates directly to lower costs. A significant disadvantage of this approach is that the scalability of the application is limited. Unless partitioning is used to manage database performance, the application can be scaled only by moving it to a more powerful server (scaling up), until diminishing returns make it impossible to add more power cost-effectively.

Level IV: Scalable, Configurable, Multi-Tenant Architecture (this is a highly scalable, mature SaaS model)

At the fourth and final level of maturity, the vendor hosts multiple customers on a load-balanced farm of identical instances, with each customer's data kept separate, and with configurable metadata providing a unique user experience and feature set for each customer. A SaaS system is scalable to an arbitrarily large number of customers, because the number of servers and instances on the back end can be increased or decreased as necessary to match demand, without requiring additional re-architecting of the application, and changes or fixes can be rolled out to thousands of tenants as easily as a single tenant.

Authors:

Frederick Chong and Gianpaolo Carraro
Microsoft Corporation

read it here at:

http://msdn2.microsoft.com/en-us/architecture/aa479069.aspx

April 2006