Succession management "evolving", but far from best practice

02 February 2009 8:37am

Succession management in Australia is an "evolving field" but has a long way to go to reach best practice, according to PageUp People's Sylvia Vorhauser.

Best practice succession management, she says, is "one of the most powerful ways of human capital risk management. You're able to manage performance risk, retention risk, vacancy risk, readiness risk, transition risk - these are all risks that are associated with having the right people in jobs at the right time.

"Succession management is the most powerful internal tool, because your only other source is to recruit externally, and this is the way you get the best out of people in the business already."

PageUp People's recent survey of more than 100 senior HR practitioners found that just over half (52%) have a formal process in place. Larger employers (>1000 employees) are more likely to have a formalised system.

But processes in Australian organisations are "a bit of a mixed bag", Vorhauser says. "I think the concept of becoming more objective and having good rigorous processes in place is definitely coming into favour, but very few organisations have yet developed them to a state where you could say they were best practice. It's an evolving field."

Best practice elements

For succession management to be considered 'best practice, Vorhauser says, it should encompass organisational talent pools and cascading succession planning throughout the organisation, "as opposed to traditional succession planning which tends to be just looking at critical roles and usually just at the top".

It should also be based around established competencies and objective assessment processes, she says, in contrast to "people's subjective opinions about people that they know in the organisation".

However, the survey found that 34 per cent of employers rely mainly on verbal recommendations for succession management.

Best-practice succession management is also integrated with other HR systems and processes, Vorhauser says. "So, for example, information coming out of the performance management process should be fed straight into a succession planning system, as well as the feedback from training and development initiatives. If someone goes on a leadership development program, for example, that data should be captured so that it can be used in the succession process."

Technology is a driving force behind recent improvements in succession management, Vorhauser says, but only nine per cent of survey respondents integrate their HR systems with their succession management process.

Employers struggled to manage succession in the past, she says, because they didn't have computer-based or online systems. "So it's been a very manual process. Most organisations will tell you that they've either got Word documents or Excel spreadsheets to manage this information, so it makes it difficult - especially if you're a large organisation - to roll out succession management".

Finally, best-practice succession involves the employee in the process, Vorhauser says.

"Traditionally it's been a very closed shop. A small number of people have basically done talent reviews and identified successors and moved those successors through the business, without any input from the employee - the employee may not even have known they were on a succession plan. So best practice is definitely about open communication and proactive development planning of those employees to get them ready to be successors - taking the surprise factor out."

Measuring success

According to the survey, less than half of employers (42%) measure the effectiveness of their succession management process.

An organisation with sophisticated succession management in place should be able to see a direct financial effect on the business, Vorhauser says.

"You would expect [the organisation] to be able to reduce the amount of external hires that they need, so it's got a direct impact on their recruitment costs, because they should be able to tap into the talent they've already got, more accurately and effectively."

As well, the employer should be able to measure the quality of its people and its ability to retain high quality talent, she says.

"Your retention of high-quality talent would be a lot higher because you're actively moving them through the organisation."

Most organisations, she says, aren't making mistakes with succession management, "it's just that they haven't got to the level of sophistication with it that they need to, in order to make it an effective tool for the business".

"They all know it's important... but they haven't been able to put in place good systems to make it 'doable'."

If you have some HR news to share or would like to suggest a topic for an article, click here to email the editor.

Comments closed

An inadequate succession plan could send your business broke
Systemic bias against women at board level: study
Effective talent management: look to the future and hold executives to account

Latest headlines

Advanced search

search for	from date

	to date