The Best Practices in Talent Management Succession Planning

The Best Practices in Talent Management & Succession Planning Alan Lindsay President / CEO PLS Consulting, Inc. Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 The Schedule At A Glance Setting The Stages - Session Objectives 8:45 • • • Demonstrate Forecasted Demographics To 2012 Review The Impact on The US And Globally Discuss The Impact And Potential Changes In HR’s Approach to Work Force Management Best Practices in Succession Planning – Session Objectives 9:15 • • • Review The Results Of A Nation Study In Best Practices Look Into Key Characteristics In Sustainable Programs Review Key Practices That Support Successful Programs Measuring the Return On Investment – Session Objectives 9:40 • • • Why Measure ROI from Succession Planning What to Measure if Talent Measurement The ROI Model for Succession Planning and Talent Management Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 2 Facilitator Introduction Alan C. Lindsay • Founder, President and CEO of PLS Consulting, Inc. • Background includes 20 years of experience as the Director of Employee Development at PacifiCorp • Founded PLS Consulting in 1985 and has worked with companies throughout the U.S., Canada, and Australia, meeting their leadership development objectives • National conference presenter in Training & Development and Human Resource Management Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 3 PLS Consulting The Organizational Performance Company • 20 Years of Human Capital Management • Utility, Manufacturing, Government, Financial Services • Strengthening the Systems that Link People to the Business Strategy – – – – – – – Human Asset Strategies Organizational Assessments Job Analysis Performance Management Employee Development and Training Succession Planning and Leadership Development Organizational Change Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 4 PLS Clients (Examples) Utility Arizona Public Service Manufacturing ABB C-E Services, Inc. Government Bureau of Land Management City of Modesto The Bonneville Power Administration Amoco City Public Service Con Edison Duke Solutions Boehringer Ingelheim Cadillac Motor Car Co. Caterpillar, Inc. Comptroller of the Currency Municipality of Anchorage El Paso Electric El Paso Natural Gas Kansas City Power & Light MEAG Power Dow Chemical Intel Corporation Lanoga Corporation Insurance & Investment Dunn & Bradstreet Jefferson Insurance Group Levi Strauss & Co. McDonnel Douglass Helicopter Nestles PACCAR Inc. MidAmerican Energy Niagara Mohawk Power Co. Ohio Edison Metropolitan Life Insurance Co. Medical HealthNet ONCOR TXU Salt River Project Procter & Gamble Wacker Siltronic WILSOART International Kaiser Permanente Merk-Medco Olympic Health Management Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 5 Population Trends Source: Poulos, S., & Nightingale, D. The Aging Baby Boom: Implications for and Training Programs. Washington: The Urban Institute. http://www.urban.org/aging/abb/agingbaby.html Prepared under contract for the U.S. government. Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 6 The Baby Boom: 1946-1964 Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 7 Percent of Population Age 60+: 2000 Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 8 Percent of Population Age 60+: 2025 Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 9 The Workforce Imperative Source: http://www.microsoft.com/issues/essays/2003/04-09aging.asp Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 10 Why This Issue Is Important Key Workforce And HR Trends: What Do They Mean? • Beginning in 2001, one out of every six workers was age 55 or over • 45% of today’s workforce is between the ages of 40 and 57 • The average annual employee turnover in 2004 was 19.2% • 30-40% of CEO’s hired from outside the organization are fired • By 2010 there will be 5.6 million more jobs than workers to fill them • 1 of every 5 senior executives in the Fortune 500 is eligible to retire now Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 11 A Growing Shortage: U.S. Labor Force vs. Labor Demand Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 12 Best Practices in Succession Planning and Talent Management Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 The Difference Between Talent Management and Succession Planning/Succession Management The Difference Between Talent Management and Succession Planning/Succession Management – Succession planning/management focuses on developing internal talent to meet future organizational requirements – Talent management focuses on integrating efforts to attract, develop and retain the best people Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 14 Succession Planning vs. Talent Management The Cascading Process Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 15 The Best-Practice Study How does succession planning and talent management most impact the bottom-line? – – – – Ensures Qualified Supply of Talent More Effective Leadership Improved Productivity Transfer of Knowledge to replacement workers – Increased Retention – Links workforce plans to strategic direction Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 16 The Research Approach Phase I: Background Research Phase II: Research Design Phase III: Data Collection Phase IV: Data Analysis and Report Generation Phase V: Shared Learnings • • • • A two year study 87 companies 1200 executives Crossing 22 business environments Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 17 Major Findings Centralized Focus #1 One group in the organization is dedicated to succession planning and management, leadership development, and performance management This is a best practice because. . . . . For succession planning and management to be successful, someone or some group must take responsibility for following through Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 18 Major Findings Carefully Links to Career Planning #2 Integrates career goals and development (traditionally a bottom-up practice because driven by the individual) with succession planning (traditionally a top-down practice because driven by the organization) This is a best practice because. . . . Without career planning, a succession planning and management program misses talented people aspiring to develop and grow to specific roles Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 19 Major Findings Increase the Speed of Development #3 Accelerated development is a noticeable—and important— term. Targeting people and individualizing development creates pools of talent faster This is a best practice because. . . . Organizations can no longer leisurely assess and groom talent over years of painstaking effort. Large numbers of workers at all levels are qualifying to leave their organizations with insufficient numbers of qualified replacements. The experience drain will be astonishing! Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 20 Major Findings Linking Development To Strategic Direction #4 Companies use sophisticated development processes geared to build the competencies linked to future success This is a best practice because. . . . Some means must be available to identify and narrow developmental gaps, and measure readiness. The Right people, right place, right time and with the right competencies! Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 21 An Integrated Services Model The Foundation Vision 2016 Focused Individual Development 360s Skills/Attribute s Feedback and Coaching Career Goals Diversity Business Strategies Competencies Development Planning Development Priorities Mentoring Performance Development Partnership Leadership Development Mobility Global Leadership Exec Program Succession Planning Executive Selection Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 22 Major Findings Include Values in People Development #5 Companies use values as a way to bring together equivalent standards across many national cultures and across merged organizations. Values become the hingepin to Leadership development and corporate performance. (The right people) This is a best practice because . . . . it emphasizes the importance of values as a unifying strategy Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 23 Major Findings Drive the Program With Senior Management #6 The company has benefited from the strong, active participation of a senior management team willing to devote time to doing training at the company's corporate university This is a best practice because. . . . Companies can also develop an exemplary approach to competency models, which distinguish among people leaders, process leaders, and business leaders that make other components of the succession planning and management effort relatively easy to explain and measure Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 24 Major Findings Build the Business Case #8 The case shows the value of making the business case, which means showing the link between the succession planning and management program and company strategy That is a best practice because. . . . Companies can make the most compelling case for aligning the succession program to company plans and clarifying the manager's role in worker development, readiness and availability Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 25 Major Findings MRR’s Connection w/ Aligning Employees Toward Business Goals Business Strategy/ Business Plan MRR: Capabilities Review Succession Planning Individual Development Plans Training and Development Opportunities Individual Goal/ Performance Planning Performance Review Platform of Senior Executive Competencies Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 26 Major Findings Incorporate Gap Assessments #9 Companies conduct a gap a (risk) assessment of the senior management group and uses individualized selfassessments that are completed first by individuals and then reviewed by their immediate supervisors These practices are exemplary because. . . Risk assessments make the business case in a compelling way and the individualized self-assessments encourage individual self-reflection and responsibility for development Leadership competencies, Functional competencies, Personality profiles, Intellectual profiles, Emotional Intelligence, etc. Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 27 Major Findings Major Findings: What are the Top 10 Trends? 1. Identify high-potential talent early and devise strategies to retain that talent 2. Encourage the rapid and successful socialization of high-potential new hires into the corporate culture to avoid turnover 3. Use succession planning and management to foster diversity and excellence Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 28 Major Findings Major Findings: What are the Top 10 Trends? 4. Use succession planning and management programs to encourage employee retention 5. Integrate executive recruitment from outside with development from inside, using common competencies and values 6. Apply mentoring programs to encourage realtime coaching and development Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 29 Major Findings Major Findings: What are the Top 10 Trends? 7. Manage assignments and rotations to build talent and not just let them happen on their own or without their developmental implications subject to management oversight 8. Link executive rewards, in part, to the cultivation of talent 9. Track talent and monitor its development over time 10.Use technology to manage documentation Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 30 The Difference Between Talent Management and Succession Planning/Succession Management Remember the Difference Between Talent Management and Succession Planning/Succession Management – Succession planning/management focuses on developing internal talent to meet future organizational requirements – Talent management focuses on integrating efforts to attract, develop and retain the best people Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 31 Seven Factors That Indicate a Top-Tier Leadership Organization • Factor 1: Senior executives are truly committed to development • Factor 2: The organization provides incentives and/or recognition for managers who develop talent • Factor 3: Individuals are hired for their compatibility with the organization • Factor 4: A culture of meritocracy exists in the organization Source: Corporate leadership council. (2002). High impact succession management: From succession planning to strategic executive talent management. Retrieved from www.executiveboard.com Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 32 Seven Factors That Indicate a Top-Tier Leadership Organization • Factor 5: ―Rising stars‖ are given projects that give them broad visibility and exposure • Factor 6: Successors are selected for their leadership ability • Factor 7: The succession management system focuses on skills scarce in the labor market and emphasizes ―fit with position‖ compared to general development Source: Corporate leadership council. (2002). High impact succession management: From succession planning to strategic executive talent management. Retrieved from www.executiveboard.com Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 33 Resources Online Resources • • • • • • • • • SHRM 2006 Succession Planning Survey Report SHRM 2006 Talent Management Survey Report Building Engineering & Science Talent Center for Creative Leadership Corporate Leadership Council Human Capital Institute International Labour Organization Institute for Workplace Studies Milken Institute Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 34 Measuring the Value Of Talent Management Programs Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 The Value Of Talent Management Remember The Objective • Succession Planning and Talent Management’s Contribution: Succession or Replacement Your Role: • Measure Performance of the System Against the Plan Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 36 The Hierarchy of Metrics LEVEL FOUR: VALUE CONTRIBUTION Measures the economic contribution (Value) associated with the changes. Allows initiatives to be compared to alternative uses of funds. Also allows for comparisons to standard investment ―hurdle-rates.‖ LEVEL THREE: COMPARATIVE ANALYSIS Measures the difference () between the way things were and the way things are now. Note this requires establishing benchmark data prior to the start of a project or initiative. LEVEL TWO: GOAL ACCOMPLISHMENT Measures the results achieved against the intended objectives, either Qualitative or Quantitative. Did we hit the goal? LEVEL ONE: SATISFACTION Typically identifies how people feel about the contribution of what was done. Did it help them or make things easier? Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 37 What Is A Business Case? A Business Case is: • A tool that supports planning and decision making. It Answers the Questions: • Should we do this (or do something else)? • What are the potential consequences (financial and business)? • What are the quantified costs and benefits? • How do we stay on course? Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 38 What Is A Business Case? Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 39 The Business Case The Business Case Answers: What All-in Costs are Anticipated? (People, Money, Time, Hardware/Software) Why is the Process Needed? When Will the Solutions be Implemented? Business Case How Will it Solve Issues or Opportunities? What are the Defined Benefits? What is the Recommended Solution ? Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 40 Resources Online Resources • • • • • Saratoga Institute The Conference Board The Institute of Executive Development The Performance Institute World Economic Forum Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 41 Other Resources • • • • AberdeenGroup Inc./Human Capital Institute. (2005). Retaining talent: Retention and succession in the corporate workforce. Boston: Author. Cohn, J. M., Khurana, R., & Reeves, L. (2005, October). Growing talent as if your business depended on it. Harvard Business Review, 83, 10, 62-70. Collison, J. (2005, June). 2005 future of the U.S. labor pool survey report. Alexandria, VA: Society for Human Resource Management. Corporate Leadership Council. (2004). Driving performance and retention through employee engagement. Retrieved January 27, 2006, from www.executiveboard.com • Corporate Leadership Council. (2003). High-impact succession management: From succession planning to strategic executive talent management. Retrieved January 27, 2006, from www.executiveboard.com Dell, D., & Hickey, J. (2002). Sustaining the talent quest. New York: The Conference Board. • • • • Fegley, S. (2006, January). 2006 talent management survey report. Alexandria, VA: Society for Human Resource Management. Morton, L. (2004, January). Integrated and integrative talent management: A strategic HR framework. New York: The Conference Board. Morton, L. (2005). Talent management value imperatives: Strategies for execution. New York: The Conference Board. Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 42 Other Resources • • Throop, M. (2005). Fueling the talent engine: Finding and keeping high performers, a case study of Yahoo! Inc. Alexandria, VA: SHRM Foundation. Towers Perrin. (2003). Working today: Understanding what drives employee engagement. Retrieved February 14, 2006, from www.towersperrin.com • Tucker, E., Kao, T., & Verma, N. (2005). Next-generation talent management: Insights on how workforce trends are changing the face of talent management. Retrieved January 26, 2006, from www.hewitt.com Tucker, E., Kao, T., & Verma, N. (2005). Next-generation talent management: Insights on how workforce trends are changing the face of talent management. Retrieved January 26, 2006, from www.hewitt.com Walker, J. W., & LaRocco, J. M. (2002). Perspectives: Talent pools: The best and the rest. HR. Human Resource Planning, 25, 3, 12-15. Watson Wyatt. (2005). Maximizing the return on your human capital investment: The 2005 human capital index report. Retrieved March 6, 2006, from www.watsonwyatt.com • • • Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 43 Readiness Assessment Northwest Public Power Association l 9817 NE 54th Street, Ste. 200 l Vancouver, WA 98662-6064 44