THE BEST PRACTICE INSTITUTE presents DR WILLIAM ROTHWELL
THE BEST PRACTICE INSTITUTE presents DR. WILLIAM ROTHWELL “Succession Planning in Difficult Times” January 7, 2009 12: 00 p. m. EST
Introduction by LOUIS CARTER President and CEO of Best Practice Institute Louis Carter is founding President and CEO of Best Practice Institute and publisher of Best Practice Publications, LLC. He has authored over eight books on leadership and workforce change. His newest books are Change Champion’s Fieldguide, Best Practices in Leadership Development & Organization Change, and Leading the Global Workforce.
William J. Rothwell, Ph. D. , SPHR is President of Rothwell & Associates, Inc. He is also a Professor of Workplace Learning and Performance on the University Park campus of The Pennsylvania State University. With over 20 years of HR experience in business and government before he arrived at the university, he brings a unique blend of practical and academic knowledge to business problems. Dr. Rothwell has authored, coauthored, edited or co edited 275 books, book chapters, and articles. His work has been translated into many languages. He is author of Rothwell, W. (2005). Effective succession planning: co-author of Ensuring leadership continuity and building talent from within. Career planning and succession management: Developing your organization's talent--for today and tomorrow. Competencybased human resource management. Dr. Rothwell is also author of such related books as Building in-house leadership and management development programs The competency toolkit and The action learning guidebook.
Succession Planning in Difficult Times By William J. Rothwell, Ph. D. , SPHR 4
Part I: Introduction 5
Background The U. S. , and many nations, are undergoing difficult economic times. There is a temptation for managers to cut back on succession planning and talent management efforts. But there is a good chance that, as the stock market gradually improves at some point in the future, burned out baby boomers will cash in. At that point senior managers will turn their eyes to HR and ask for external recruitment to solve talent needs. But, since many companies have also cut back, there will be few well-qualified people to recruit. At that point, talent management and succession will emerge as frontburner issues. Hear some ideas in this session how to avoid this likely predictable pitfall. 6
Purpose of This Webinar To discuss how to sell succession planning and talent management programs to top managers in difficult economic times 7
Objectives Upon completing this session, participants will be able to: • Explain why it is important to maintain a continuous focus on succession planning and talent management even at a time of economic crisis • Offer predictions on what will happen if a focus on succession is not maintained even in difficult times • Examine effective strategies for “making the sale” to top managers to maintain a focus on succession planning and talent management in hard economic times 8
Brief Outline Part I: Part II: Part III: Part IV: Introduction Making the Sale to Top Managers for Succession Or How to Overcome the Familiar Trap of “Succession Planning: No Time for It in Good Times and No Money for It in Bad Times” Predictions for the Future—and Preparing for Them Conclusion 9
The Current Business Climate • • • We all know that the current business climate is the worst in years. Consider: U. S. housing values lost about $2 trillion in 2008 Wall Street and American automakers are in financial trouble Big U. S. banks are nearly bankrupt Consumer confidence in the U. S. reached an all-time low in December 2008 The Dow Jones Industrial Average dropped 36 percent in 2008, the worst record since the drop of 40. 6 percent during the Great Depression of the 1930 s 10
The Current Business Climate • The U. S. economy lost more than 530, 000 jobs in November 2008 alone, the worst month since December 1974, and nearly 2 million people lost their jobs in 2008 • Unemployment in the U. S. stands at 6. 7 percent, the highest level in 15 years • Stock markets globally have plummeted throughout 2008. In the UK, stocks dropped nearly 34 percent throughout 2008; in Germany, 42 percent; in Japan, nearly 44 percent; in India, down nearly 54 percent; in China, down nearly 66 percent; and in Russia, down nearly 67 percent • Worldwide, the problems that afflict the U. S. are playing out elsewhere 11
The Challenge • With all the bad financial news, it is easy to postpone thinking about long-term investments • That is especially true of succession planning and talent management 12
Part II: Making the Sale to Top Managers for Succession Or How to Overcome the Familiar Trap of “Succession Planning: No Time for It in Good Times and No Money for It in Bad Times” 13
Overview of Part II This part focuses on: • Making the sale to top managers on the need to continue succession planning and talent management efforts even when times are tough • Offers several specific strategies to gather data to “make the sale”—and influence decisionmakers 14
Step 1: Compile Workforce Data • Start by conducting a detailed labor analysis of your organization’s entire workforce • Using payroll information, project the estimated retirement eligibility of the entire workforce • Then project the estimated retirement eligibility of workers at different hierarchical levels, different locations, different job codes and different departments • Note areas of highest risk—that is, areas with the highest numbers of expected retirements over rolling 3 year periods • Note units within core businesses, or groups that have the greatest impact on the business’ core competency, that are especially at risk 15
Step 2: Establish Financial Monitoring Systems • Baby boomers are unlikely to retire when their 401 Ks and other invested retirement funds have tanked • However, they may be more likely to do so as their investments improve • Establish ways to monitor the performance of investment funds in which large numbers of your workers are enrolled and establish monitoring systems to alert you when they improve to the point to make cash outs attractive 16
Step 3: Monitor Burn Out Levels • Workers are more likely to want to retire as they feel pressured in a recessionary workplace • Establish ways to monitor burn out levels by conducting regular surveys, focus groups with workers to estimate burn out levels • Ask specific questions to a sample of workers such as “What is the likelihood you will leave the organization as economic conditions improve? ” • Engagement programs become particularly important as economic conditions sour 17
Step 4: Take a Hard Look at Exit Interview Systems and Try to Reinvent Them • Traditional exit interviews, conducted on the last day or during the last week of employment, are notoriously flawed because prone to social desirability bias— people tell you what they think you want them to say • When exit interviews are used, do not do them on the last day—wait 3 weeks after last date of employment, send a survey or secure link, and collect data then • It is best to find out why people stay rather than why people leave—and that can be done by interviews or focus groups 18
Step 5: Make the Effort to Find Out What HR Issues Are Bothering Managers • In tough economic times, managers have plenty of HR problems—that is especially true during tough economic times--and would love to have help solving them • Make the effort to find out what’s on the minds of managers at all levels in terms of HR challenges 19
Step 6: Set Up a Communication Campaign • Using the data compiled from steps 1 -5, set up a communication campaign with managers to reveal what you found out • Be sure to use the data to show the value of maintaining ongoing efforts to recruit, retain and develop talented people during tough times 20
Your Ideas • What challenges have you been facing in maintaining ongoing efforts to recruit, retain and develop talented people in your organizations? • How have you been meeting those challenges? • What strategies are particularly effective? 21
Part III: Predictions for the Future— and Preparing for Them 22
Overview of Part III This part focuses on: • Offering several predictions about the future • Suggesting strategies to cope with those predictions 23
Predictions for the Future • Prediction 1: Economic conditions affect different industries, locations and nations in different ways—and that will play out in different impacts on talent demand • Prediction 2: Many employers will be slow to respond to changes in economic conditions— and that will bode badly for their organizations • Prediction 3: Some employers will become more flexible in how they think about meeting demands for talent 24
Predictions for the Future • Prediction 4: As economic conditions improve, Baby Boomers will “cash in” and will retire • Prediction 5: The quality of management will influence each organization’s status as economic conditions improve • Let’s review these predictions—and then I will ask for your reactions when we finish and for your own predictions 25
Prediction 1 • The prediction 1: Economic conditions affect different industries, locations and nations in different ways—and that will play out in different impacts on talent demand • What it means: Some nations and sectors will recover faster than others, and those recovering faster will be positioned to capture the best talent (and most research on labor markets are North American- and Europeanfocused rather than truly global) • What to do about it: Exert leadership to continually remind management that not all people are equally talented—and that special demands for talent will change over time, even in hard times 26
Prediction 2 • Prediction 2: Many employers will be slow to respond to changes in economic conditions—and that will bode badly for their organizations • What it means: Special talent, such as proven middle managers and certain technical workers (such as engineers, IT and others), will be in demand faster than other and will exert special challenges on their employers as they are lost to turnover, even in a tough economy • What to do about it: Talent management and succession planning programs do not have to be geared to “one size fits all”; rather, they can be spot-focused to address the needs of special groups, such as Hi. Pos and indemand technical workers 27
Predictions for the Future • Prediction 3: Some employers will become more flexible in how they think about meeting demands for talent • What it means: The focus should be on “getting the work done” and not on “replacing people” • What to do about it: Take steps to catalog the special competencies of all workers; catalog inhouse experts; examine best practices in using retirees to meet spot labor demands and to coach less-experienced workers 28
Predictions for the Future • Prediction 4: As economic conditions improve, Baby Boomers will “cash in” and will retire • What it means: Baby boomers are likely to be survivors in downsizings because they have a strong work ethic and have much experience. However, tough economic conditions will lead to much tougher, more frightening work places, and these workers are likely to be subject to burn out as time goes on • What to do about it: Monitor employee attitudes regularly; watch for burn out and evidence of high stress; take steps to address the stress; and explore best practices in retaining experienced workers, realizing that “one size does not fit all” 29
Predictions for the Future • Prediction 5: The quality of management will influence each organization’s status as economic conditions improve • What it means: Total Quality Guru W. Edwards Deming once noted that “management causes most of its own problems”; there is a tendency for managers to take people for granted in tough economic times because it is difficult for them to move; that tendency creates a pent-up demand for turnover as economic conditions improve • What to do about it: Build the employment brand by focusing on better management practices and interpersonal relations so that talented people will be drawn to your organization as economic conditions improve 30
Your Thoughts? • What do you think of the predictions? • What are your own predictions, and what thoughts do you have about averting possible problems with talented people before those problems come up? 31
Part IV: Conclusion 32
Summary of the Webinar’s Purpose and Objectives Recall that the: • Purpose of this webinar was to discuss how to sell succession planning and talent management programs to top managers in difficult economic times • Objectives of the webinar were to: (1) Explain why it is important to maintain a continuous focus on succession planning and talent management even at a time of economic crisis; (2) Offer predictions on what will happen if a focus on succession is not maintained even in difficult times; and (3) Examine effective strategies for “making the sale” to top managers to maintain a focus on succession planning and talent management in hard economic times 33
Final Q & A Do you have any final questions? 34
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