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Dear Workforce How, And Why, Should We Consider Career-Succession Planning

Career and succession planning sends a message to employees that they are important and that there are opportunities to grow with your company. Also, lowering turnover even as little as 1 percent to 2 percent should help any program pay for itself.
September 30, 2001
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Related Topics: Workforce Planning, Dear Workforce
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Dear Workforce:

Given the low retention rate, how feasible is it for our 10,000-employee software company to initiate career planning and succession planning? How should it be initiated?

-- Planning for growth, HR, software/systems, Hyderabad, India.

A Dear Planning:

The question raised is a good one, and presents somewhat of a chicken-egg dilemma: Does low retention mitigate the need to develop a career and succession planning process, or does low retention result from the absence of such a process?

The easy answer
It's hard to make a case against an effective career and succession planning process -- most organizations never would say that they don't want their people to progress and develop. A successful program typically might include the following elements:

  • Job-based competencies.
  • Managerial competencies.
  • Performance management process and tools.
  • Career progression guidelines.
  • Skill and interest inventory.
  • Identification of high-potential employees.
  • Pay-for-performance program.
  • Succession plans.

The key to this type of program is to develop, communicate and implement a set of tangible performance criteria that directly relate to your core business strategy, your culture and values, and your operational objectives. Once employees understand what is expected of them, and how these expectations link to and drive business performance, they are more able to adapt their behaviors to those expectations. Of course, supplementing these criteria with a commensurate compensation program reinforces the objectives.

Once employees understand, buy into, and align their performance with these expectations, you will be able to objectively identify those individuals who consistently perform at levels that exceed expectations. This, in turn, leads to the development of career and succession planning guidelines.

Turnover
Many organizations -- particularly high-tech companies -- currently face significant turnover. Many of these organizations believe that the majority of this turnover is driven by the opportunity for greater compensation at another company. In some cases this may be true. However, research indicates that employee commitment is primarily driven by other factors, including:

  • Job design -- Do I get to work on the newest and most interesting technology?

  • Job challenge -- Am I continuing to learn new skills?

  • Growth opportunity -- Will I be able to progress at this company?

  • Organizational culture -- Is this a "good" place to work? Do I enjoy the environment, management, and my co-workers?

So, while it would be naive to dismiss compensation as a factor in high turnover, the above list indicates that other factors have an even greater influence on the decision.

What to do?
Studies also have shown that the cost of turnover is significant, particularly with "knowledge workers." In fact, some estimates place that cost for a software engineer at 150 percent of annual total compensation. So, limiting turnover should be a priority for any organization.

Many organizations talk about how "people are their greatest asset." However, few actually make decisions that demonstrate that credo. Therefore, those organizations that invest in their people can differentiate themselves from their competitors and companies in other industries. Developing and implementing a career and succession planning process sends a clear message to employees that they are important, that the company wants them to be around for the future, and that there are opportunities to grow and succeed. And, if turnover is reduced even 1 percent to 2 percent as a result of this effort, the program should pay for itself.

SOURCE: Mitch Stern, Deloitte & Touche, human capital group, Los Angeles, Calif., May 11, 2001.

LEARN MORE: View an "Example of a Basic Succession Planning Chart"

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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 The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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