Tacit knowledge loss is a very real factor in determining the worth of a business. As the work force ages and skill sets walk out the door with retirement plans in hand, succession planning has become a critical area in talent management. Companies are being forced to seek out ways to make succession planning more effective by leveraging industry best practices. The following will review the steps some firms are taking to develop better talent management programs through succession planning.
Replacement Vs. Succession
The main force behind the need for succession planning is the aging work force. The biggest mistake most senior managers make is confusing replacement planning with succession planning. Replacement planning has an external focus and is not concerned with tacit knowledge loss. Succession planning is a form of replacement planning; however, it is more strategic.
Strategic Replacement Planning
Focus planning efforts on developing people rather than replacing them. Build enough knowledge and depth throughout the organization so that when a need arises you will have in-house candidates. Succession planning encourages managers of all types to identify a broad group of people, not just one specialized silo, to promote to the next level. Establish a succession planning team to map out the current process and make changes where needed. The team should include a senior advocate and report out to senior management on a regular basis.
Determine where you need to start by conducting a risk analysis to estimate the projected departure rate for the work force as an average. This is a good performance indicator for managing progress. Look at the "time to fill" metric to see how long it takes managers to be replaced. Concentrate on bringing transparency and fairness into the selection process. If workers feel as though the hiring process is dubious, they will look for employment elsewhere. Establish a metric for critical turnover to monitor the percentage of high potential workers leaving. Use these metrics to build a scorecard to monitor results. The scorecard should be easy to read and understand with improvements directly related to cost or productivity savings.