Once reserved for the upper echelons of senior management, and often viewed – erroneously so – as replacement planning to mitigate risk, today’s succession planning is being redefined. Download the whitepaper to find out how >>

1. Whitepaper
Succession Planning:
Rise of the Talent Ecosystem
A SumTotal White Paper
The Succession Planning Imperative
Once reserved for the upper echelons of senior management, and often viewed Figure 1: Top Talent Challenges
– erroneously so – as replacement planning to mitigate risk (e.g., a catastrophe
befalls company leaders), today’s succession planning is being redefined.
The discipline has broadened in both breadth and scope to become a central
component of strategic talent management.
#1 Challenge
Defined as the process of identifying, preparing, and tracking high potential Gaps in leadership
employees for promotion and advancement, several dynamics are driving the pipeline
evolution of succession planning today:
■ The recognition that top-notch talent – and retaining that talent – #3 Challenge
Difficulty filling key
drives bottom-line financial performance, customer satisfaction, and employee positions
competitive advantage. Researchers such as Accenture, McKinsey, #4 Challenge
Retention
and Towers Watson have empirically validated these linkages. problems
■ Global talent shortages due to retiring baby boomers, shifting workforce
demographics, and globalization. Fifty-three percent of companies are
Source: Bersin & Associates, July 2008
facing significant talent shortages today1 and this percentage will
grow as baby boomers start retiring. In fact, the U.S. Bureau of Labor
Statistics estimates a shortage of 10 million workers by 2010.
■ Mitigating the risk of untimely departures of high performers and
essential personnel as labor markets continue their inexorable shift in
favor of buyers (i.e., job seekers).
■ A confluence of market conditions impacting specific industries. For
instance, within healthcare, increasing demand for services from baby
boomers is coinciding with a shortage of skilled talent (e.g., nurses,
technicians). In the public sector, an aging workforce coupled with
competitiveness from the private sector and an inability to attract younger
talent is posing challenges. And in technology, CEOs are finding it
increasingly difficult to fill key positions as older workers retire.
Many companies are starting to recognize these dynamics (especially the
challenges). In a 2008 Bersin & Associates study, three-out-of-five of the top
talent challenges cited by global survey respondents were related to succession
planning (see Figure 1).
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2. Succession Planning: Rise of the Talent Ecosystem
Yet the same study paints a more ominous picture. Only 20 percent of companies
have an enterprise-wide succession planning process, and fully 53 percent have
no process at all. Indeed, a 2010 SumTotal study revealed that 59 percent of
HR professionals do not believe that their personnel are adequately prepared
to meet their companies’ future growth plans. All of this market data points
to one inescapable conclusion: The majority of companies are aware of the
challenges yet most are completely unprepared to deal with them. Therefore,
new and innovative ways of deploying succession planning are required. These
include extending succession planning across the organization and integrating
succession planning into the broader talent ecosystem.
Extending Succession Planning Across the Organization
Applying succession planning beyond senior management is critical to retaining
high performers across all levels of the organization and mitigating the risk of
untimely departures of key personnel. Retaining existing employees not only has
the potential to minimize the effects of the global talent shortage, it also provides
significant and tangible cost savings (since replacement costs range from 100%-
150% of the salary for the departing employee).
ALFA provides an ideal example. Based in Mexico and employing more than
50,000 people, ALFA is a diversified global company consisting of four distinct
business units: petrochemicals, aluminum auto components, refrigerated food,
and telecommunications.
A key challenge facing the company was promoting cross-business unit transfers,
thereby minimizing employee attrition to the competition. ALFA was losing
high-performing talent because it was unable to find growth opportunities for
employees within the organization. Due to the proliferation of different human
resources (HR) systems at each of its four business units, ALFA suffered from
inconsistency in managing its global HR processes as well as a lack of visibility
into key employee information that could be used to drive succession planning.
To address its challenges, ALFA standardized on a single, integrated talent
platform across its diverse business units. This platform, provided by SumTotal,
became the centerpiece of ALFA’s employee lifecycle, which consists of planning,
hiring, compensation, performance management, learning and development,
succession planning, reporting and analysis, and HR management. ALFA
also leveraged SumTotal’s global experience in developing and implementing
standard HR policies and best practices. As a result, it is far more common for
ALFA’s employees to jump from one business unit within the company to another,
expanding their experience and skill sets via promotion and advancement.
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3. Succession Planning: Rise of the Talent Ecosystem
Connecting Succession Planning into the Broader
Talent Ecosystem
Succession planning is one of several key processes that enable organizations to
embrace a holistic talent management strategy. At its heart, Talent management
is the strategic approach to integrating and optimizing talent-related processes
across the enterprise, including talent acquisition (recruiting and hiring),
performance management, development and learning, succession planning, 360
feedback, compensation and rewards, and talent profiles. Software technology,
a key enabler of talent management strategy, provides a best practices platform
for information integration and process optimization. One such example of this
platform is the SumTotal Talent Platform (see Figure 3).
At the center of this platform is the talent-based employee system of record,
which includes employee data, talent profiles, job profiles, and competencies. All
of this information, once made consistent across the organization, feeds critical
HR business processes, facilitates the linkages across these processes, and
ultimately enables improved business analysis, insight, and decision making.
Figure 3: SumTotal Complete Talent Management
The role of succession planning within the broader talent ecosystem is unique
because it is dependent upon inputs from several other core HR processes.
Whereas an annual performance appraisal process can be executed in a
relatively self-contained fashion (assuming it has access to core employee data),
the same is not true for succession planning. To illustrate the point, consider how
HR practitioners have traditionally built succession plans.
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4. Succession Planning: Rise of the Talent Ecosystem
Conventionally, HR practitioners will spend weeks or months manually scouring
different parts of the organization for information needed to build lists of nominees
for specific job families or positions. The information required to generate the
lists may include self assessments, past performance appraisals (often paper-
based), and 360 feedback. After a lengthy period of information gathering and
aggregation followed by manual analysis (e.g., nine-box, gap analysis), HR
prints the results, collates hundreds of pages of paper into three-ring binders,
and presents its recommendations to senior management. This time-consuming,
inefficient process is still common practice today (recall that only 20 percent of
companies have an enterprise-wide succession planning process in place).
Yet by centralizing talent processes and information – in the above scenario,
performance management, 360 feedback, and succession planning – onto a
single, integrated talent management platform, the time to develop succession
plans can easily be reduced from weeks or months to mere hours. The
benefits can be significant: reduce HR costs, reallocate HR resources from
tactical activities to more strategic endeavors, and mitigate the risk of untimely
departures of essential personnel.
Additionally, a natively-integrated talent management platform promotes the
linkage of learning and development planning with succession planning. By
bridging the processes, nominees who are not ready for advancement can
be assigned detailed development plans that guide them to improve the
competencies required for new job positions. Learning paths and even specific
courses can be established for employees to facilitate their career growth. By
providing learning opportunities and development plans to employees, HR can
take a more active role in promoting employee retention.
Finally, a single talent management platform facilitates enterprise-wide HR
reporting and analysis, since all of the relevant talent data resides within a single
data structure. Reporting and analysis are key to an organization’s success in
managing employee resources and implementing HR strategies that support
corporate objectives and initiatives.
Figure 4 (next page) pulls all of these processes together and highlights the
central role succession planning plays within the broader talent ecosystem. In
the manual, paper-based world of conventional HR – and also in siloed HR
technology deployments which are equally prevalent – this level of integration
and its inherent benefits are not possible.
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5. Succession Planning: Rise of the Talent Ecosystem
Figure 4: Succession Planning Within The Broader Talent Ecosystem
Conclusion
Succession planning is not a silo. Companies of all sizes and in all industries must
reevaluate how succession planning fits within their enterprises. In order to take
advantage of new opportunities, avoid the looming talent crisis, and mitigate the
risk of untimely departures, companies must extend succession planning across
their organizations and fully integrate succession planning into their broader talent
ecosystems. This can best be achieved by leveraging a single talent management
platform coupled with a strong focus on process and strategy.
Endnotes
1“High-ImpactTalent Management: Trends, Best Practices, and Industry Solutions,”
Bersin & Associates, May 2007
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6. Succession Planning: Rise of the Talent Ecosystem
Authored By
Steve Bonadio, Director of Product Marketing, SumTotal Systems, Inc.
For more information, contact cfaust@sumtotalsystems.com.
About SumTotal
SumTotal Systems, Inc. is the global leader in complete talent management
software that enables organizations to more effectively drive business strategy.
Recognized by industry analysts as the most comprehensive talent management
solution, SumTotal provides full employee lifecycle management, including a core
system of record, from a single provider for improved business intelligence. The
company offers customers of all sizes and in all industries the most flexibility and
choice with multiple purchase, configuration, and deployment options. With more
than 1,800 customers and 25 million users worldwide, we have increased the
performance of the world’s largest organizations.
For more information, or to request a demonstration, please call +1-866-766-6825
(US / Canada), +1 352 264 2800 (international) or visit www.sumtotalsystems.com
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