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Succession Planning Is More Than a Game Of Chance

August 27, 2000
Related Topics: Workforce Planning, Featured Article
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In today's volatile recruiting market, most HR professionals can barely catch their breath in between filling immediate positions. How can they focus serious time and attention on long-range plans involving their superstars?

Succession planning, HR-terminology for "key position replacement strategies," combines a number of human resource tools to map out corporate change and improve the chances of moving in the right direction when vacancies occur.

A process once reserved for the top echelon of business owners and managers in large companies, succession or transition planning is as relevant now for small and mid-size employers and even family-run businesses.

Our economy is one dominated by specialization. The more we depend on the expertise and knowledge of key players in our organizations, the more important it is to forecast changes. Whether these are owners and senior managers, or technical, business development, human resource and even scientific positions, if the position is both critical to the core function of the business and difficult to replace, it should be included in the company's succession planning.

HR professionals often feel like they are pulling up the next chance card when they are hit with vacancies due to expansion, resignation, termination, retirement, contract completion, advancement, medical leave, mergers and acquisitions, and a host of other reasons.

Succession planning focuses on the known or more predictable future changes and draws on a number of traditional HR planning tools to evaluate the best strategies to address these. Environmental scanning, forecasting, and replacement charts may all come into play.

Just Like Monopoly

Ironically, the same tool used in game theory to predict the probability of landing on Boardwalk or Park Place in Monopoly is used in most popular HR succession planning software. The Markov Matrix is a mathematical chain probability analysis (also called a vacancy chain or transition matrix) which has a wide range of applications.

In HR, a Markov Matrix factors a company's specific history of attrition, length of service, waiting times for advancement, rates of internal promotion and other factors which assist in forecasting vacancies and analyzing the probability of various strategies associated with filling these positions.

Whether simplified or sophisticated tools are used, the most important first step is to make sure the HR Director (or equivalent position) is in the information loop as soon as possible. As vacancies become known or as they are anticipated, internal candidates will need to be evaluated for possible advancement. The HR Director can maintain the necessary level of confidentiality while exploring candidate possibilities in an objective and discreet manner.

Development of position descriptions for key personnel is an important task in the planning process, and although most companies have job descriptions for staff, they frequently lack documentation on top-level and specialist professionals. Even small family businesses will benefit by having these emergency game plans in place.

Proponents of 360º Performance Reviews, with bottom-up or peer level feedback, will find this process provides information which can be used to assess leadership and management potential of individuals being considered for advancement.

Should an internal candidate be selected, this will likely cause a domino-effect leading to further position vacancies and these are also embraced in the planning process. Replacement charts are helpful to gain an overview of filled and vacant positions, reporting streams, and possible advancement scenarios. This can be done with creative use of basic and inexpensive charting software (often preloaded in most computers). More advanced products include links from charts to HRIS data systems and resumes, as well as the ability to run "what if" queries.

Fresh Information Needed

Companies which encourage staff and managers to keep resumes updated, and which have a process in place for collecting information, will not be caught off-guard when assessment of internal candidates becomes time critical.

All employees who wish to be considered for advancement should be counseled on the importance of keeping fresh information on file regarding job-specific training, relevant education, work or community achievements, assessment results, languages, special areas of expertise, and anything else that would improve the company's ability to build upon the strength of its workforce.

If no internal candidate is acceptable, a search strategy will need to be determined. The higher the level of position and the more confidential the search, the longer the lead time. Outsourcing should be considered, particularly if activity is highly confidential. Commissioned searches for high-level professionals may run between 15 - 20% of starting salary and retained searches as much as 40%. Sources used for hiring can also be visually demonstrated on a Replacement Chart .

Succession planning assumes that key positions will or may become vacant. It combines all helpful sources of information to document key employee functions, target in-house candidates for promotion, mine the relevant HRIS data, ignite management training or mentor programs, and conduct appropriate level searches to improve the chances of a smooth transition.

It's not a sure bet, but it beats picking-up the next chance card and just rolling the dice.

For more information, read further articles, or request information from succession planning software vendors and organizational development software vendors.

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