SUCCESSION PLANNING Mark L. Butler 1
What is Succession Planning? 2
Definition Succession planning is a process for identifying and developing leaders or staff who can replace vacant leaders or staff positions. Allows for internal development and recruitment of employees to fill key positions within an organization. Through the succession planning process, you recruit superior employees, develop their knowledge, skills and abilities, and prepare them for advancement or promotion into new and more challenging roles. Can be used to identify organization s strengths and weaknesses. 3
Why is this Important??? Succession planning is important to the future health of your organization It is a tool to identify future leaders Increases employee loyalty and leads to higher retention Provides framework to align comprable leadership Past and current knowledge of the system for an easier future project transition Establishes the TONE AT THE TOP regardless of position (individual ownership) 4
General Facts Shifting workforce demographics baby boomers are transitioning out of workforce creating a vacuum of knowledge Number of people retiring is higher than number of people entering workforce in our industry Internal culture preservation Stabilize organization s morale Early vulnerability assessment To find the right employee, it is time consuming and expensive for an external search There is downtime between void of position, filling position and proficiency in that position. 5
HFI s Models of Succession Planning There are many ways to implement succession planning. Here are three general models: HOPE NOMINAL ROBUST 6
HOPE MODEL Hope is a reactive model that relies on hoping things will turn out for the best, only dealing with succession issues when the need arises. Benefits Little to no investment Limitations Reactive approach Increases uncertainty High risk 7
NOMINAL MODEL Nominal is a proactive model that involves nominating one or two potential internal candidates to key roles to step in at a short notice. Benefits Proactive approach Low investment Reduces uncertainty Limitations Disappoints those not selected for promotion Relies on limited knowledge of candidate capability or potential Risks overlooking top talent or unrealized potential within the organization 8
ROBUST MODEL Robust is the most proactive model involving conducting comprehensive internal and external candidate searches and recruitment. It provides training and development for potential successors to key roles and prepares them in advance so they are able to step in on a short notice. Benefits Proactive approach Reduces uncertainty Provides strategic overview of talents/strengths Advances employee development Increases performance, engagement, and motivation Results in capital successions, ready to assume greater roles and responsibilities along the way Limitations High internal investment 9
HFI s Models of Succession Planning Poor succession planning relies primary upon the HOPE model. You want to have at least a NOMINAL model - advancing to a ROBUST model. The most proactive model, ROBUST, involves conducting comprehensive internal and external candidate searches and recruitment. It provides training and development for potential successors to key roles and prepares them in advance so they are able to step in at short notice. All organizations, no matter their size, needs succession planning. While it is less likely that you will have potential successors for every role, you can minimally cross-train a potential candidate or staff member. 10
Steps for Succession Planning 1. Prepare current job descriptions for each staff member. 2. Identify and evaluate the critical staff positions within your organization. 3. Make sure all critical jobs can be performed by more than one staff member. 4. Offer retention programs. 5. Have open discussions with current staff, management and the Board. 6. Develop a plan of action. 7. Review the succession plan annually or as needed. 11
STEP 1 Prepare current job descriptions for each staff member. Written daily tasks and job description for all staff and management Staff opinion Management opinion Current needs and minimal required skill set for each position Minimum competency Desired competency Gaps in competency 12
STEP 2 Identify and evaluate the critical staff positions within your Utility. Organizational chart Identify current staff that can advance to higher position. Access minimal license, knowledge and cost of replacement. Consider internal talent that can be coached, nurtured and trained to become prepared for progression. Can successor manage people, possess skill set and personality for job? Does successor share organization s values? Critical job assessment is advantageous for both employer and employee. 13
STEP 3 Make sure all critical jobs can be performed by more than one staff member. Identify candidates that want to advance Cross training / on-the-job shadowing Developing skills and knowledge is a priority Objectively access job criteria what do we want Conduct a stress test and simulation There is no such thing as a ready-now candidate 14
STEP 4 Offer retention programs Efficiency efforts are rewarded Not just time on the job but quality on the job Benefit programs based on performance Not all deserve bonuses or raises Set amount in the beginning enticement per quarter on annualized basis Instant reward by having lunch, a party, special incentive check, extra time off, etc. Retention programs should make employees feel needed and valued. Remember recognition goes a long way! 15
STEP 5 Have discussions with current staff, management and the Board. Make discussions IMPORTANT Mentor program Always make employees feel valued Keep scheduled meeting times Don t expect follow through when you don t follow through Employee self-evaluation and manager evaluation Keep Board involved and informed 16
STEP 6 Develop a plan of action. Ensure your plan is using the organization s strengths and improving weaknesses Clear, concise map for staff and management decisions Participation on every level buy-in Welcome open structured feedback Make it happen no matter what Succession plan should be written, reviewed and evaluated. 17
STEP 7 Review the succession plan annually or as needed. This is a living, breathing document to be refreshed as necessary for changes Schedule meetings to discuss with key employees. Keep Board involved in discussions Tone at the Top Employees and Management need to be held accountable. 18
Budgeting Related to Succession Planning Succession planning and budgeting go hand in hand. As more staff retire additional staff will be needed. By planning for new staff positions, the transition should go smoothly. There may be double salaries and benefits during the training process. 19
Budgeting Considerations Some of the costs to budget for include: Salaries Benefits cost Insurance Training Certifications Workforce Age Assessment Merit System 20
What Do You Think? Ms. Jane Incharge knows the importance of a succession plan. She has a written policy in place that includes much information. She doesn t want the employee to feel threatened or that they will be replaced, so she doesn t discuss it with them. Instead she holds secret meetings with the Board to discuss. Is this acceptable? 21
What Do You Think? Mr. Jack G. Manager has been with ABC Utility for over 30 years. He knows all the customers and all the employees. Most of the staff of twelve have been with the Utility for at least 20 years and they know what to do. It s a well oiled machine! Does the Utility still need to have a succession plan in place? 22
What Do You Think? The bookkeeper, Molly Numbers, is out on vacation. She processed payroll in advance so everyone could be paid on time. While she is away, the Manager realizes that a new employee was not paid. Unfortunately, the Manager nor anyone else knows how to process payroll. There are no instructions that can be found. Is this a problem? 23
Summary Succession planning is critical to the future of your Utility. The sooner you start planning, the better. By requiring strong written job descriptions and written day to day duties of all staff members, you will know your vulnerable spots. Discuss the plan with the Board, managers and employees. It is important to get everyone s input. Recognize talent and cross train for various job tasks. Ensure that salaries and benefits are competitive to attract and retain appropriate talent. By providing rewards and recognition to employees, they are more likely to demonstrate loyalty to the Utility. A true succession plan starts the day an employee is hired. Always remember succession planning is an ongoing trip with a vacation at the end! 24
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Contact Information Please contact with any questions or comments. I will be happy to assist in any way I can. Mark L. Butler marklbutler@taud.org 615-557-5780 26
Reference The three models of succession planning were extracted from HFI at http://www.hfi.com/services/succession-planning. Please contact Charlie Atkinson at 781-862-5253 for additional information on the planning models. 27