As leaders exit the workforce, companies can prepare for a more secure future through strategic onboarding programs and succession planning of skilled workers.
Over the next five years, half of America's Fortune 500 companies' senior management will retire, according to a 2006 survey by the Economist
(subscription required). At the recent Impact 2008: The Business of Talent conference
, business leaders cited consistent onboarding processes, leadership development and succession as the keys to enduring in this uncertain economy. Despite this knowledge, only about 20 percent of organizations have well-defined strategies in place, says Josh Bersin
, president of conference organizer Bersin & Associates
Companies need to move beyond basic orientation in order to retain talent they can mold into leaders later.
One such strategy companies implement for new hires is onboarding, which is a systematic approach for immersing new employees into a company's culture. New hires are able to move into their new roles and achieve productivity more quickly and employers have found that this also improves retention.
A 2008 study by Aberdeen Group, Inc.
, which surveyed nearly 800 human resources (HR) and line managers globally, had 86 percent of respondents say that new employees make their decision to stay within the first six months on the job. The study found that the risk of flight increases when the new hires feel that the attention they received pre-hire wanes. Not surprisingly, 71 percent of those surveyed claim retention as the reason for pursuing onboarding.
Onboarding program styles vary, but all aim to assist new hires acclimate to their new surroundings, build rapport with colleagues, feel valued and improve the technical and soft skills needed to succeed in their roles. By minimizing the learning curve and sharing performance expectations, employers can reduce the amount of misunderstandings that often lead to frustration and potential departure, suggests Money-zine.com
As the challenge of retaining employees is being addressed, companies can tackle the looming question of succession concurrently. Companies must figure out who will fill the gaps left behind by retiring company leaders. Many are unprepared to handle a CEO's departure.
More than two-thirds of the organizations surveyed by the Institute for Corporate Productivity (i4cp) (via Management-Planning
) would not be able to fill a leadership position. Fewer than half (45 percent) of the respondents have a formal succession plan in place; nor do they conduct regular talent reviews to find employees who would be able to step up to a leadership role.
Jim Thomas, member of i4cp, says it is imperative for companies to be prepared for their leader's departure:
Having the right people prepared to fill key positions is an essential business strategy in this time of fierce competition for talent. The defining moments in a company's ability to stay competitive may rest in the focus it places on filling key positions with assimilated and capable replacements.
For succession planning to be successful, Talent Management
recommends a "bottom-up" process where "managers, technical gurus, sales stars and even key executive assistants all play vital and valuable roles."
HR and company leaders should be continually on the look-out for employees with leadership potential and ensure that those people receive the proper training and development assistance they need in order to transition into leadership roles.
JoAnne McMillan, chief operating officer of consulting firm Assess Systems
, tells Workforce Management
Every organization has different circumstances, but the predominant need is to look deeper into the organization to identify leadership potential early on and to build that leadership capability that will be needed today, as well as in the future.
When it comes to training, companies should teach the skills and competencies needed for the job today and 10 years from now. With all the various training tools, including workshops, mentoring, up-front assessment and competency modeling, what is most needed are programs tailored for the individual, Workforce Management says. This can mean one or a combination of all the training tools available.
Succession planning should not begin when a top exec announces his or her retirement. It should begin five to 10 years before an expected retirement; or better yet, have current leaders continually identifying potential leaders who can be groomed to take over and make transitions even smoother.
Talent Management provides several tips on succeeding at succession. It recommends that companies do the following:
- Narrow the list of possible successors and plan the development needs of the potential candidate;
- Pick a timeline that gives both parties the chance to transfer knowledge and manage relationships, while allowing the potential successor a chance to shadow;
- Have the person leaving share his or her business "war" stories; and
- Give the person taking over a chance to do a "test drive," and discuss with the person leaving what went well, what didn't and suggestions for what to do.
From there, the hand-off should be smooth.
The Battle for Brainpower
The Economist, Oct. 5, 2006
All Aboard: Effective Onboarding Techniques and Strategies
by Kevin Martin and Jayson Saba
Aberdeen Group, January 2008
Top 10 Ways to Succeed at Succession Planning
by Gordon Neufeld
Top Trends in Training and Leadership Development
by Julie Bos
Workforce.com, Nov. 19, 2007
Top Trends in Training and Leadership Development
by Garry Kranz
Workforce Management, June 2008