Talent Pipeline Planning: A Future-Oriented Approach to Employee Development. Sponsored by NOVEMBER 2016

Transcription

1 Talent Pipeline Planning: A Future-Oriented Approach to Employee Development Sponsored by NOVEMBER 2016

2 Contents Introduction The Survey 3 Succession Planning - Filling a Talent Pipeline 5 The Participants 6 Management of Succession Planning 7 14 Conclusion and Recommendations 20 2

3 Introduction As we survey the current landscape of the overall workforce, we can readily see many influential factors emerging that make building an internal pipeline of talent a strategic necessity. The process we will be talking about is more commonly referred to as succession planning. While that term remains useful, it s a good idea to establish how we define succession planning for the purposes of this report on our survey. Succession planning is a deliberately designed program to fill the organization s talent needs. We believe some crucial characteristics of best practices succession planning, or talent pipeline management, are as follows: In general, the characteristics of best practices succession planning programs that effectively fill a talent pipeline are: Clear objectives organizations with clear, strategic, future oriented goals for their programs can make decisions that will ensure the future needs of the organization can be met. Without such goals, it s impossible to know what skills need to be developed, nor can you make data-based decisions about the candidates to fill future roles. Identify high-potential employees while this may seem to be an obvious element, many organizations do not have access to or generate systematic, reliable and actionable data for identifying employees who possess the potential for future success in more complex roles. 3

4 Provide development experiences nothing teaches and reinforces new skills better than using them. Organizations that offer high-potential employees opportunities to stretch their skills and abilities set up those very employees for much easier transitions into more complex roles. Engage senior leaders no employee development program works very well if the senior leadership isn t fully committed and invested in the effort. Make data-based decisions for all staffing openings objective decision making should be a top priority for succession planning programs. That s one of the reasons we asked the questions about data. It s not a like to have element for great programs. Sound, reliable data is essential to successful talent pipeline planning. During the fall of 2016, we conducted a survey to determine the current state of succession planning in the broader HR community, and to learn more about current thinking around best practices. 4

5 The Survey The following two charts represent the demographics of the survey participants by company size and industry. Participants by Company Size (Employees) Industries 15% 17% 5% 4% 4% 3% 15% 1 TO 99 5% Manufacturing Health Services 100 TO 999 6% Services Other Government 23% 21% 1,000 TO 2,499 2,500 TO 9,999 7% Non-Profit Finance Education Insurance/Real Estate 13% Transportation/Public Utilities 24% 10,000+ 7% 8% Retail Construction Computers/Telecommunications 11% 12% One of the most interesting aspects of the entire survey is the demographic data in these two charts. First, the participants come from a variety of companies by size, and no one size of organization dominates the data. Second, the representation by industry is equally balanced with no single industry vertical comprising more than 15% of the participants. The geographic balance is also excellent: 51% of the participants are US-based, 31% are global organizations, and 13% are North American centric (Canada, United States and Mexico). 5

6 Succession Planning Filling a Talent Pipeline There are many advantages to organizations that utilize best practices in succession planning. Hiring or promoting from within your own organization tends to be far less expensive. The savings are not limited to simple financial elements such as advertising or recruiters, either. You save time finding the right candidates, you reward loyalty, the transition to a new role is easier for the successful candidate and you can assure yourself that you have a great cultural fit. A critical component of effective succession planning programs is that they are future-oriented while the usual challenges we face in employee learning development are about filling present or immediate skills, knowledge and ability gaps. Succession planning is about filling future skill gaps, so the learning and development efforts that accompany succession planning programs must build the skills, knowledge and abilities your high-potential employees will need to be successful in their next roles. The survey results cover three very broad categories in the succession planning process: 1. Participants we asked about BOTH sides of participation. We wanted to learn about who participates from a learning and development perspective, and the processes by which participants are selected. 2. Management this is a very fascinating data set from the survey results. We asked about the strategic management reasons participants engage in succession planning. We also have some interesting data about the actual practices used by our participants. 3. Strategic Planning one of the benchmarks for best-in-breed succession planning programs is the extent to which the programs support the strategic goals of the organization. 6

7 The Participants Filling a future talent pipeline is about finding the right talent to help the organization meet and overcome future challenges. The traditional employee learning and development process is more focused on addressing existing or current skills gaps. To get an understanding about who our participants select or to whom they offer succession planning development, we approached the query in two different questions. First, we wanted to learn at which job role level high-potential candidates are identified. Next, we asked about who is currently involved in succession planning programs by various job roles. In response to both questions, the participants could select as many options as applied to their situation. One of the most striking pieces of data we found is there is no consensus among the participants for the level at which participants are selected. 7

8 Participant Selection by Level Bottom 2 Levels Bottom 3 Levels (No Executives) Top 2 Levels Top 3 Levels Front Line Supervisor ONLY Front Line Manager ONLY Middle Management/Director ONLY Executive ONLY ALL LEVELS Front Line Supervisor Front Line Manager Middle Management/Director Executive 5% 7% 10% 7% 9% 8% 10% 14% 23% 38% 46% 44% 66% It s clear from the data that employees working at multiple levels of the participant organizations are involved in success planning programs. Middle managers and directors get the most attention of any one job role 66%, and the other three job roles are relatively equal. What is striking is when we look at the data to explore how organizations COMBINE participant selection. Only 14% of our participants include all four levels. But when an organization targets one level for participant selection, 23% of the participants go to their middle management and directors. We cannot conclude that any one criteria is more in use than another, but it is apparent from the data that the selection of candidates is widely varied and likely relates to the unique and specific needs of each organization. 8

9 To get a sense of just how widespread succession planning participation is across our participants, we broadened the choices when we asked about who is actively participating in a program. Succession Planning Now Provided Executive 58% Middle Management 54% High Potential Employees 43% Supervisors 31% All Employees 26% Technical Employees New Supervisors 15% 15% New Employees 10% Within this data set we begin to see a pattern emerge. Only two categories of employees executives and middle management participate in succession planning in 50% or more of the organizations participating in the survey. High-potential employees are the next highest at 43%. No other category came in at even 33% for current participation. The responses to our survey confirm some of the broader macro 9

10 level research and data about training and training investments. The data released in the 2014 Corporate Learning Fact Book by Bersin by Deloitte, showed that 35% of all training spending went to leadership and management development programs. 1 So, the survey results provided by our participants are consistent with broader market data about the current state of executive and managerial training efforts. The other piece of information that struck us as interesting is the percentage of organizations 43% investing in succession planning (long-term development) of HI-PO (high-potential) employees. While we both suspected, and hoped, the survey would tell us our participants are investing in their HI-PO employees, we wanted to learn more about how these employees are identified. We ve already discussed the level at which HI-PO s are identified, but the criteria, methods and approaches to the selection process in the data provides some interesting insights and clues about best practices

11 We asked: What criteria do you use to identify High-Potential candidates? Selection Criteria Potential Performance Metrics 69% 72% Recommendations 57% Readiness 53% Expressed Interest by Employee 48% Competency Assessment 35% Formal Predictive Assessments 14% Other 4% Before we read too much into this data, we must recognize a few important details. Of the seven criteria available on the survey, and participants could select as many as they wanted, only three represent data-driven criteria: performance metrics (69%), competency assessments (35%), and formal predictive assessments (14%). It s possible that the other selection criteria may be data driven in some way or blended with the three data choices. For instance, we did not ask HOW participants measured potential, and it s the most commonly used criteria. Furthermore, potential should be the top selection criteria. 11

12 Our best practices tip is to ensure that all your selection criteria are: systematic, reliable and data driven. Potential IS the key to the future performance of HI-PO employees, so we are very pleased that it is the most frequently cited criteria. However, measuring potential can be tricky and if your process is not data-driven, objective and clear to everyone impacted by these decisions, you may be creating needless confusion or conflict about your succession planning program. We recommend using assessments, particularly validated assessment tools that can effectively predict future success within your organization across a wide range of job roles. We also explored which specific assessment tools our participants use in their selection process. Each of these tools has their benefits and challenges. What s most important as you search for the tools to use in your selection process is that you can make a data-driven connection between the assessments you use and job performance. Assessment Tool Cognitive Assessments 2% Other Emotional Intelligence Assessment Centers Culture or Values Assessments 3% 3% 3% 4% Skills Assessments 6% Behavioral (Harrison, Hogan, Birkman, etc.) 11% Multi-Rater (360) 14% Personality (MBTI, DISC, etc.) 21% None 32% 12

13 This data provides one of the single greatest opportunities for improvement in the quality of selection criteria. Without casting undue aspersions at any of these tools, it s important that you conduct some research into the challenges or problems with each type of assessment. As we said before, you need to make validated, data-driven decisions about participation in your program. We were most disappointed to see emotional intelligence assessments used so infrequently. Data proves that emotional intelligence is the SINGLE best predictor of career success in any role. In his groundbreaking book, Emotional Intelligence: Why it Can Matter More Than IQ, Harvard professor Daniel Goleman lays out some stunning data about what EQ is and why it is a crucial competency for successful professionals. In an excellent article from Forbes, Travis Bradberry makes a compelling case and lays out the data in a very concise manner. 2 According to Bradberry and Goleman, EQ is the single best indicator of career success. Of all the people we ve studied at work, we ve found that 90% of top performers are also high in emotional intelligence. On the flip side, just 20% of bottom performers are high in emotional intelligence. Travis Bradberry, Forbes, June

14 Management of Succession Planning Who manages succession planning among the participating organizations? Responsible for Managing Talent Management Pipeline 18% 2% 61% HR/TALENT MANAGEMENT NO SPECIFIC PERSON 19% MEMBER OF EXECUTIVE STAFF OTHER This is one area around which there appears to be a broadly adopted practice. The HR department or Talent Management team dominates the parties responsible for succession planning among our survey participants. Beyond this area of general agreement, things get murky. For instance, we were curious about exactly how participating employees know what skills or competencies they need to improve. 14

15 Who Tells Employee What Skills to Develop Executive Coach Other Learning Management System (LMS) 2% 2% 4% Internal Coach 10% HR/Talent Management 19% Self-Directed 27% Direct Manager 36% If the objective of effective succession planning is to build a pipeline of future talent, we must wonder why 27%, over one-quarter, of the participating companies leave the subjects for development up to the employee. At the same time, 63% of the participants said their employees do not understand how to move up, sideways, and around in our organization to build their skills, careers and long-term employment with us. Which begs the question; Why would so many participants leave the developmental direction of their programs to the very employees who do not understand what it takes to advance within the organization? 15

16 The other troubling part of this data is that direct managers perform this crucial role in over one-third (36%) of the participating organizations. A significant majority of our participants, 55%, said their managers lack the performance management and coaching skills needed to develop talent. The combined effect of these data points indicates that organizations may recognize the need for and value of succession planning, yet these same organizations are not proactively managing the day-to-day process itself. One of the characteristics of effective succession planning programs is clarity. It s important for the stakeholders and participants to: Know who can or should participate Understand participants will need development experience as they learn new skills Have engaged leadership supporting the program in highly visible and material ways Understand the data-driven criteria that will be used to promote employees and select employees for participation. These characteristics are nearly impossible to fully realize when succession planning programs are not transparent. So, when we asked participants how transparent their organization is about how employees are identified as high-potential : 46% said they are selectively transparent ; 41% said not at all ; and only 12% said extremely open. While there might be some concern about how to handle employees who want to participate or believe they ve been improperly passed over for participation, it s still important to keep the criteria systematic, reliable and data-driven. When your selection criteria meet this test, conversations with those employees shifts from any perception of unfair treatment to coaching opportunities informing those same employees about what is expected of them to grow, move forward and achieve true career success within your organization. 16

17 Strategic Perspective on Succession Planning You need future talent ready to address future challenges. Top class succession planning programs are in tune with the future needs of your organization and provide the development opportunities and content your high-potential employees require. We asked our participants two questions to gauge the maturity level of their strategic approach to succession planning. The charts below illustrate the responses. Building and maintaining an active, effective internal talent pipeline is something we: Maturity Level of Succession Planning Have as a high priority but haven t started yet 27% Have done well for several years 25% Are soon to roll out (have been working on it recently) SHOULD set as a high priority but haven t gotten enough buy-in yet 19% 18% Self-Directed 12% 17

18 What are your top priorities in your internal talent pipeline development? Strategic Reasons for Internal Talent Pipeline Development Integration of Talent Management Technical Talent Development Replacing Retirees Career Planning 28% 32% 33% 33% Knowledge Transfer Engagement & Retention Succession Planning 50% 53% 57% Leadership Talent Development 78% The data on these charts helps clarify the dichotomy that we ve found in the survey responses. The participants make clear strategic connections between talent pipeline management and organizational requirements. However, most of the participating organizations are not engaged in best practices, i.e. transparency. The explanation is in the maturity data. Only 25% of the participants replied that they have been engaged in talent pipeline management for some time. It s impossible to implement best practices if the organization hasn t adopted the process. 18

19 Organizations, however, appear to be demanding results from whatever efforts are in place: 52% of the participants told us they plan to fill talent gaps through internal hiring, and only 42% plan to fill those gaps by hiring externally. And another extremely encouraging bit of data are the development activities participating organizations are currently using. Development Activities Special Projects 66% Cross-Functional Assignments 61% Shadow Assignments 42% Attend University Classes 32% Learning Library 25% Benchmarking Other Companies Other 9% 4% The reason we find this specific data so encouraging is that the responses indicate a true understanding of employee learning. The emerging research in the areas of the cognitive sciences and human learning tells us that we all learn best when we are given opportunities to apply new knowledge or skills as soon as possible after learning. To understand the science of human learning a little better, conduct a web search for the term forgetting curve, and read Make it Stick: The Science of Successful Learning, by Brown, Roediger and McDaniel. 19

20 Conclusion and Recommendations The survey provides a terrific insight into the current state of talent pipeline management efforts. There are many positive data points, and there are data points that reveal some challenges ahead. Building an effective internal talent pipeline development program should become a strategic imperative for nearly every organization. The benefits are substantial. The talent you develop internally is less expensive to source, recruit and hire. You can help instill a strong sense of loyalty in employees who matriculate through an effective program. We are seeing indications in employee engagement and retention research that opportunities for professional development are extremely important, especially to Millennial employees. The time to reach full productivity in new roles is much shorter for people who already understand your organization. And if you ve offered promoted employees special projects in the area to which they are promoted later, you make that ramp up even shorter. There is no question about the promoted employee s cultural fit. You know them, and they know you. 20