Transcript Workforce/Succession Planning

Workforce/Succession
Planning
Wayne F. Cascio
EMBA Class of ’08
December 14, 2007
Workforce Planning
An effort to anticipate future business and
environmental demands on an organization,
and to provide qualified people to fulfill that
business and satisfy those demands
Components of the WP System
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A talent inventory to assess current workforce and to analyze
how it is being used
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A workforce forecast to predict future people requirements
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Action plans to enlarge the pool of people qualified to fill the
projected vacancies through such actions as recruitment,
selection, training, placement, transfer, promotion, development,
compensation
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Control and evaluation to provide feedback on the overall
effectiveness of the HR planning system by monitoring the
degree of attainment of the HR objectives
Talent Inventories
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Assess the numbers, skills, and experience of the current
workforce to forecast future workforce needs
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Assessment includes analysis of current employee information:
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Current position information
Previous position in the company
Other significant work experience
Education
Language skills and relevant international experience
Training and development programs attended
Community or industry leadership responsibilities
Current and past performance appraisal data
Disciplinary actions
Awards received
Workforce Forecasts
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Two types of forecasts are used to estimate
labor requirements at some future time period
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The external and internal supply of labor
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The aggregate external and internal demand for
labor
Supply Forecasts – 2006-2012
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U.S. workers age 55-64 will grow 51% to 25 million
Those age 35-44 will shrink by 7%
Half of the nation’s 400,000 electric-utility workers
will be eligible to retire
Half the government’s civilian workforce also will be
eligible to retire
40% of the manufacturing workforce is expected to
retire by 2015
Result: A possible shortage of 5 million skilled
workers between 2010-2012
Assessing Workforce Viability vs. Future
Requirements
Today’s
Workforce
Attract:
External
Develop:
Internal
Supply:
External
Performance:
Internal
Role Design:
Internal
+
+
+
+/-
+/-
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+/-
+/-
Retirement
Turnover
Competition:
External
Technology
Promotion/
Transfer
Required
Workforce
Identify sources of supply and leaks and then determine net
gain or loss and whether net human capital will be adequate
Assessment Model
Critical Skill
Supply
Today
Demand
Today
Demand in
1 yr; 2 yrs; 5
yrs
How long
to develop?
Gaps:
Supply/De
mand
1yr:
2yrs:
5yrs:
< 1 yr
1-2 yrs
2-5 yrs
1yr:
2yrs:
5yrs:
1yr:
2yrs:
5yrs:
< 1 yr
1-2 yrs
2-5 yrs
1yr:
2yrs:
5yrs:
1yr:
2yrs:
5yrs:
< 1 yr
1-2 yrs
2-5 yrs
1yr:
2yrs:
5yrs:
1yr:
2yrs:
5yrs:
< 1 yr
1-2 yrs
2-5 yrs
1yr:
2yrs:
5yrs:
Strategy For
Closing Gaps
Matching Forecast Results to Action
Plans
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Action programs: Helping organizations adapt
to change
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Action programs include six major elements:
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Recruitment
Selection
Performance management
Training and development
Transfer
Career-enhancement activities
What Companies are Doing Now
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Southern Co., Atlanta utility – create a retiree
reservists pool
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Lincoln National, financial services - mentoring,
flexible work arrangements for older workers
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IBM – taps retirees to work on special projects; all
employees post detailed descriptions of their job
experience on the “Blue Pages”
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Home Depot - partnering with AARP to recruit older
workers
Management Succession Planning
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It’s pervasive, integrated with strategic
planning, and widely accepted among firms
that do WP
GE, IBM, and Home Depot are typical
At Home Depot, for example, CEO
participates in reviews of top 130 officers,
takes detailed notes, and scrutinizes every
promotion
Typical Process – GE and IBM
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Responsibility: Line Executives (Division Presidents to CEO)
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Formal presentations to corporate policy committee – Chair, Vice
Chair, President
 Overall assessment of strengths/weaknesses of the unit’s
executive resources
 Present performance + potential of key executives and potential
replacements (photos included)
 Ranking of all incumbents in key positions (present performance
and potential)
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Policy committee provides review, critiques, and, sometimes,
specific career-development actions to be taken
Typical Management Replacement
Chart
A typical chart used for management-succession planning.
Name:
Title:
Months in Position:
Photo
Positive and negative attributes:
+ Global thinker, great coach/mentor, solid technical background
- Still maturing as a leader
Developmental needs:
Needs experience in e-business
Attend company’s senior leadership-development program
Looming Crisis in CEO Succession in
Asia
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2/3 of publicly traded companies in Asia are
controlled by a single shareholder (usually the
founder) vs. 3% in U. S.
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With no succession plan in place, there's no
certainty for investors, business partners, or
employees.
CEO Succession at Quest Diagnostics
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$4.7 billion medicaltesting company
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4 key lessons for other
firms:
Four Key Lessons for CEO
Succession
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Start early - The current CEO started thinking
about succession 5 years before his departure,
giving him plenty of time to groom his successor.
He got the board involved from the start.
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Choose wisely - The current CEO put 200
executives from Quest and a recently acquired
rival through day-long assessment-center
exercises, that is, decision-making assignments,
that allowed him to see their leadership skills in
action.
Succession Lessons (cont.)
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Fix the big stuff - The current CEO worked on
improving the speaking skills of his heir
apparent, making him less of a micromanager,
and speeding up his decision-making.
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Keep at it 24/7 - In addition to daily training
sessions with a coach, and unannounced tests,
the current CEO and his likely successor spoke
every Sunday about the successor's evolving
management style.
CEO Succession and Firm
Performance
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Study of 228 CEO successions
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Successors may be outsiders or insiders
 Insiders: Expected followers or contenders (after
dismissal)
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Must consider other changes w/in top management too
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Sr. executive turnover has a + effect in contender
succession, but a negative effect in outsider succession
CEO Succession and Firm Performance
(cont.)
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Lengthy tenure of prior CEO leads to inertia,
but if too short it leads to disruption that the
firm hasn’t recovered from
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Conclusion: there’s an inverted U-shaped
relationship between departing CEO tenure
and post-succession firm performance
Succession Planning and Small
Business
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Only 30% of family-owned
businesses outlive their
founders
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Often this is due to lack of
planning
Succession Planning and Small Business
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What family-owned businesses are doing:
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25% let kids compete and Board chooses a
successor
35% groom one child from early on to take over
15% let kids compete and choose a successor
w/o 3rd-party input
15% form an “executive committee” of two or
more children
10% let the kids choose their own leader
What If CEO Dies Suddenly?
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Plan ahead to establish a committee to
assume immediate control of the company
while it searches for a permanent successor
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Naming a successor too quickly can anger
employees still coping with the loss of the
boss