Succession Planning: The Life Cycle of an Employee
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1 Succession Planning: The Life Cycle of an Employee Alec Baray Peer Reviewed by Christina R. Kalel Edited by Dr. Brandy A. Brown and Romi C. Wittman Project originally submitted to Dr. Brown s Topics of Organizational Leadership (TOP) Lab
2 Abstract Veridian Consumer Services* provides consumers with prescription savings solutions, useful tools and decision support to close the gaps in prescription coverage for the insured, uninsured, and under-insured and their families. This project is Phase One in a study of Veridian s internal processes and talent management system. The evaluation seeks to gauge Veridian leadership s knowledge of the talent management life cycle; specifically, knowledge transfer and succession planning. Study results have shown that 83 percent of Veridian Directors and Executives feel the talent management practices at the company are effective. However, executive responses also show clear areas of improvement that are needed in order for the organization to adopt an effective succession planning process. Since this study only looked at one piece of the talent management life cycle, it has some limitations. With that in mind, a conceptual framework is presented for the talent management practices, as well as a process for creating a succession plan for key leadership positions at Veridian. *In order to maintain confidentiality, the name of the corporation has been changed to the pseudonym Veridian Consumer Services. PAGE 2
3 Introduction Veridian senior leadership requested this study to provide an analysis of the talent management lifecycle of an employee. The report also offers recommendations for, and point out the limitations of, succession planning. Given that 75 percent of Veridian executives and directors have been with the company for at least 10 years, succession planning is a concern. The long tenure of employees is a positive endorsement of the corporate culture and has contributed to the overall success the company over the past 20 years. However, many leaders have concerns that, if there are any departures from director-level positions, the company might be at risk. This report examines - via the field of Industrial-Organizational Psychology - the need for succession planning at the end of the talent management life cycle. It also describes the data acquired from a needs assessment, which highlights Veridian s risk areas. Targeted approaches that identify and prepare employees for advancement into key leadership positions through succession planning are also examined. Key Terms: Knowledge - knowledge is a human, highly personal asset and represents the pooled expertise and efforts of networks and alliances (Smith, 2001) Tacit knowledge - this is generally defined as a type of knowledge that can be articulated in formal language, including grammatical statements, mathematical expressions, specifications, manuals, and so forth. (6) Tacit knowledge is technical or cognitive and is made up of mental models, values, beliefs, perceptions, insights and assumptions. Technical tacit knowledge is demonstrated when people master a specific body of knowledge or use skills like those gradually developed by master craftsmen (Smith, 2001) Explicit knowledge - is technical or academic data or information that is described in formal language, like manuals, mathematical expressions, copyright and patents (Smith, 2001) Knowledge transmission - corresponds to the process implemented to preserve, make good use of, and ensure the sharing of the experience and knowledge acquired individually and collectively in an organization (Cloutier, Ledoux, & Fournier, 2012) Experiential knowledge - are skills permanently developed having to deal with concrete work situations, a process that varies in length depending on occupation, and continues until all facets of the work have been mastered (Cloutier, Ledoux, & Fournier, 2012) Knowledge creating companies - knowledge-creating concepts begins life as data. Transformation data to information to knowledge to wisdom helps shape effective strategies to manage knowledge and create new markets to serve customers (Smith, 2001) Knowledge management - knowledge management, a bottom-up, ongoing process, finds value and use for raw information, which is shared across organizational boundaries (Smith, 2001) Talent management - is a unique function that integrates all of the activities and responsibilities associated with the management of the talent lifecycle regardless of geography from attracting and acquiring talent to developing and retaining it. A key measure of success is the ROI (Schiemann, 2014) PAGE 3
4 Background: Relevant Literature It s argued that developed countries rely on technology more than physical labor; thus, we have developed and shaped our environment into a knowledge economy. A knowledge economy is made up of production and services based on knowledge-intensive activities that contribute to an accelerated pace of technical and scientific advance, as well as rapid obsolescence (Powell & Snellman, 2004). Knowledge economies rely primarily on the intellectual capabilities of individuals and, in doing so, two types of knowledge are developed: tacit and explicit. Understanding these types of knowledge helps distinguish the modern methods of knowledge transfer and succession planning. Many state that knowledge management is a process that pulls from tacit knowledge and ultimately becomes explicit knowledge. Some current theories of knowledge management postulate a cycle of knowledge creation, refinement and implementation. This cycle hinges on the transformation of tacit, or practical, into explicit, or discursive, knowledge. The key to understanding the generation and sharing of knowledge is the role of text as both knowledge representation (product) and the means by which communities sustain organization (process). Because it s characterized by diverse local practices and the increasing salience of professional work, the modern organization is a complex mosaic of situated knowledge grounded in process (Heaton & Taylor, 2002). With the long tenure of employees at Veridian, obtaining both tacit and explicit knowledge continues to be a challenge. Building a process to collect the knowledge is one challenge of the organization. Tenure diversity can be very effective if the organization has developed a well-designed knowledge management process. Tenure diversity is positively related to individual creativity, individual explicit knowledge and knowledge sharing (Gilson, Lim, Luciano, & Choi, 2013). The sharing of explicit knowledge is key to ensure there is no drop off of knowledge with both new and tenured employees. As an organization continues to evaluate their knowledge transfer process, the proper technical infrastructure must be in place to support it. This begins from the top down. The vast experiential knowledge and diverse skills developed by workers to cope with the numerous situations encountered in the course of their work constitute part of the intangible assets vital to the sustainability of expertise - if not to the survival of the organization itself (Cloutier & Fournier, 2012). Preserving both tacit and explicit knowledge must be done in a fashion where systems support the flow of information; if systems are too antiquated, this data cannot be shared. The talent management lifecycle encompasses all the activities an employee touches: from the recruitment process to the exit interview conducted by human resources. Training is a vital component of the activities that need to be established in this process. PAGE 4
5 Key Findings An online survey created using Qualtrics was used to gather data. The survey was created over a threeweek period and reviewed by Dr. Brandy Brown, assistant professor and program director of Organizational Leadership at the University of Arizona South. Once the test group completed the survey, both the survey and the findings were reviewed to ensure data was being recorded as designed. A final survey was sent to members of Veridian leadership and the participants were given 10 days for completion. A total of eight questions were created. Below are some key findings from the survey: How strong and effective do you feel Talent Management Practices are? Min Value Max Value Average Value Standard Deviation Responses In our current talent management process, what do you feel is the biggest weakness? Key themes identified in the short answers were the following: Focus on training Build bench strength Finding the right candidates Which of the following positions could cause damage to the company in the event of a departure (check all that apply)? Note: Damage in this context primarily means loss of knowledge which then leads to negative outcomes. All 8 respondents selected Directors as an option. Special Coding Language Developers and Marketing Communication Specialist were selected 4 times. In the next year, how much damage (indirect and direct) do you think is likely to result from the following: All 8 respondents felt that if a Director was to leave it would cause more damage (85%) than an Executive s departure (44%). Do you have a successor for your position? Only 1 out of the 8 respondents stated they had a successor for their position. PAGE 5
6 Limitations There are a series of limitations associated with this report: First, the survey was only sent to the directors and executives within the organization. This sample size of 10 is small in comparison to other studies. Another limitation was that no observational data was used. Unfortunately, because of the time limitations and the inability to get on executive schedules during the 10 day period, this type of data was not obtained. And, finally, this is only the first step of many in providing expert guidance and recommendations to this organization for effective succession planning. PAGE 6
7 Recommendations There are many organizations that do not have a true talent management process built within each of their divisions. Veridian has taken the first steps by identifying what the current perception is of its own talent management life cycle. Based on the findings and the research presented here, there seems to be a disconnect between reality and perception at Veridian. As a beginning attempt to develop a talent management life cycle, three areas of focus were identified. According to personal interviews, the recruiting and interview process should include a more stringent screening process of all candidates. Knowing how important every employee is within the organization, divisions must spend more time in the training of each employee. An all-encompassing training manual should be developed and must include key information from all divisions. By implementing these steps, Veridian provides the ability for both explicit and tacit knowledge to be shared amongst employees. Data from the survey also suggests that directors are perceived as an influential and knowledgeable group of workers; with a departure at this level, the company could be at risk. Without a succession plan in place for key positions, should a director leave the company the following could occur: Knowledge loss Negative morale impacts More turnover at the leadership level A succession plan would prepare current employees for advancement into key positions, meaning the company could quickly recover from a loss at the director level. There is a systematic approach for doing this that includes a variety of business management programs (See Appendix B). The following succession planning steps are recommended: Step 1 Identify key positions requiring succession planning Specialized Skill Positions Key Leadership Positions Stand-Alone Positions Step 2 Define position requirements Use Existing Job Analysis Benchmark Competency Models Step 3 Design leadership development program Assign a mentor or coach Rotations and stretch assignments Cohort projects Step 4 Identify high potential employees to develop Use a 9-box grid (See Appendix A) Step 5 Prepare for transitions Ensure continuity of operations during a planned or unplanned transition Step 6 Select a Successor Accurately select a candidate that best fits the position from your pool of candidates (Camburn and Falcone 2015) PAGE 7
8 Conclusion This project indicates the importance of improving processes, human resources policies, and management practices (including a succession plan for key leadership positions) to create an ongoing knowledge transfer of explicit and tacit knowledge within the current workforce. Veridian s efforts should result in a employee-base where tacit and explicit knowledge is shared through interactive sessions, training and a comprehensive knowledge database. References Cloutier, E., Ledoux, É., & Fournier, P. (2012). Knowledge transmission in light of recent transformations in the workplace. Relations Industrielles, 67(2), Camburn, M. & Falcone, M. (2015, September 9). Demystifying success[i-o]n planning [Webinar]. Retrieved from Gilson, L. L., Lim, H. S., Luciano, M. M., & Choi, J. N. (2013). Unpacking the cross-level effects of tenure diversity, explicit knowledge, and knowledge sharing on individual creativity. Journal of Occupational and Organizational Psychology, 86(2), doi: /joop.1201 Heaton, L., & Taylor, J. R. (2002). Knowledge management and professional work. Management Communication Quarterly : McQ, 16(2), Powell, W. W., & Snellman, K. (2004). The knowledge economy. Annual Review of Sociology, 30(1), doi: /annurev.soc Ribeiro, R. (2013;2012;). Tacit knowledge management. Phenomenology and the Cognitive Sciences, 12(2), doi: /s Schiemann, W. (2014). From talent management to talent optimization. Journal of World Business, 49(2), doi: /j.jwb Smith, E. A. (2001). The role of tacit and explicit knowledge in the workplace. Journal of Knowledge Management, 5(4), PAGE 8
9 Appendix A PAGE 9
10 Appendix B PAGE 10
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