HR Execs Give Mixed Grades to Leadership Pipelines

Organizations appear to be all over the map with it comes to implementing coherent leadership programs. Right Management research found that human resources and talent management executives give mixed grades for the quality of their own organizations’ leadership pipelines.

We recently surveyed over 1,200 executives and found that there are gaps in the leadership cadres at most companies in North America. In fact, only 6% of organizations were reported to have future leaders identified for all critical roles. A majority of organizations seem to have ‘some’ critical roles covered, but that’s barely reassuring. What’s really striking is that fewer than one in five has no one slated to take over any key positions. And we’re not talking about small companies.

As executives rated their leadership pipelines, they were also asked if there had been any recent change in their organizations’ approach to succession planning. A majority (57%) said succession planning had become a higher priority in the past year, while 17% said it was made a lower priority. For the rest there was no change in priority. Combining these results suggests that the need for succession planning is becoming more evident, but actual succession management strategies and implementation plans are lagging behind.

There’s a growing recognition that management succession is no luxury. Board members, executives and business leaders are now openly acknowledging that talent management plans –which include succession management – are absolutely essential for sustained performance in today’s organizations, as talent is now seen as one of the only competitive differentiators left.

The world is chaotic and unforeseen events can change a company’s situation overnight, so having a depth of leadership talent as well as a genuine plan for all eventualities are more important than ever. In fact, weak bench strength throughout the company can erode employee engagement and reduce overall performance.

Managing succession insures business continuity as well as retention of high-value talent. Corporate health depends on the effectiveness, depth and breadth of succession management planning.

Loss of Top Performers a Growing Concern

As new opportunities begin to open up in the job market the loss of top performers has emerged as the top concern of across the nation. Right Management research found that as many as 30% of employers cite defection of top talent as their most pressing HR challenge. And a further 30% told us that they lack high-potential leaders in the organization. Twenty-two percent are suffering from low engagement and lagging productivity and 18% have a shortage of talent at all levels.

Loss of top talent is a growing concern for many employers. In fact, it’s now more of an expectation. After all, it’s no secret there’s a lot of pent-up frustration in the workplace and that many, if not most, employees have been floating their resume.

Many employers find themselves faced with a dilemma. Right now they don’t want to do much hiring, but at the same time they think they will lose top people. If these defections play out, that in turn will mean more hiring to fill key gaps. It seems certain that job churn and turnover will notch upward, which may harm growth at many organizations.

HR professionals know that recruiting and securing the right talent for key positions is a demanding process regardless of whether the job market is weak or strong. Top talent is clearly on the move. To secure the best available talent, organizations need to have a clear picture of the competencies required and the success profile for the positions for which they are hiring. Without this clear focus as well as a fast track on-boarding plan, organizations risk losing greater productivity and performance especially from new leaders being hired into the firm.

It’s imperative for organization’s today to have a well-constructed succession planning system for rapid replacement of key roles, and more broadly, a well aligned succession management plan to ensure firm-wide talent progression. Those that don’t are highly exposed to risks of underperformance and further loss of talent that could have been successfully developed for competitive advantage.

Are Competitors Pursuing Your Talent?

This may come as a surprise, but have you considered that many of your competitors are actively pursuing your talent? Right Management research tells us that nearly half of employees (45%) say they were contacted by another company about a possible job offer during the past 12 months. If you aren’t tuned into this reality, it’s time to pay attention.

Sure, there may be some wishful thinking amid the data. But it’s fair to consider these reported job offers as another sign the job market is stirring. For the past couple of years our research has tracked a restless workforce, frustrated by the slow job market, always on the lookout for greener pastures, cruising job sites, putting out feelers and e-mailing resumes. At the same time, what’s become a kind of perpetual job hunt is now matched by organizations which constantly scan the potential talent on tap in the marketplace.

No doubt social networking has accelerated the growing back and forth in the job market. Because of social networking every employee is now more visible. Everyone seems to be linked or recommended, and everyone knows people at many different companies. This is a dynamic that feeds on itself and is reshaping the fundamentals of the job market in ways we may not yet understand.

For their part, employers need to be unquestionably concerned that their people may be targeted by competitors. A revitalized job market will put a lot of intellectual property into play and employers are increasingly uneasy about their ability to retain top talent.
It would benefit employers to have clarity around the particular skills and competencies they need today and in the future. Identify your true real-up-and-comers and have a conversation of consequence with them about their careers. Take pains to align their individual goals so they can deliver on business objectives. Employees actually want to know and need to know how they can contribute to the current and future success of the business.

The Contingency Plan

As business leaders continue to be conservative with investments in talent, utilization of contingent, temporary and flexible workers continues to grow.

As many as 41% of employers have used more independent contractors over the past two years, according to recent survey of 430 senior human resource executives conducted by Right Management.

Nearly all companies are re-examining their talent management practices in order to align their workforce with their business strategy. This has required a behavioral shift that includes the greater flexibility afforded by independent contractors.

Many of the contractors eventually become full-time employees. But just as many workers these days prefer their independence and organizations must accommodate the goals of these people to stay competitive in the marketplace. Flexibility employment practices will help to attract the best and brightest talent available.

Individual employees want flexibility – in how, where and when they work. And employers are adjusting their human resource policies and practices to meet this demand. We also asked survey respondents if their organization had seen an increase in flexible working practices over the past year. Twenty-three percent said “Yes, a lot” and 54% said “Yes, somewhat.” Only 22% said no.

Such HR policies and practices are on the increase. One study reports that as many as 85% of organizations have flexible practices in place for employees. These might be more flexible work hours, telecommuting, or even a greater use of temporary or contingent workers for specific projects or short-term assignments. Companies that create more flexible options for workers typically foster higher levels of engagement and commitment, as well as build their brands in order to attract the best talent available in the market.

Some Employers Find It Hard to Fill Jobs

Despite high unemployment and the sluggish job market, 23% of employers often find it difficult to hard to fill key jobs, according to recent research we conducted with over 700 firms across the U.S. Moreover, another 64% find it hard occasionally.

The findings reflect the challenge organizations always face when it comes to bringing in top talent. HR professionals know that whether it’s a weak or strong job market finding and recruiting certain key people are a demanding process. Moreover, the difficulty varies according to job level, industry, requisite skills among other things.

The survey also found that qualified internal candidates are scarce. Only 3% of respondents said they have an ample leadership pipeline to cover most of their needs. And the majority of 80% relies on a combination of internal talent development and select external hiring. As many as 17% routinely look externally before filling critical roles in the organization.

Virtually no employer feels confident of his or her own management pipeline. Management ranks are very lean, and nobody should be stunned by this reality, not after the organizational streamlining that’s taken place over the past two years. Now companies find themselves not just short-handed, but also fearful of the loss of their top performers. The year ahead holds great promise, but there will also be serious talent management challenges for organizations of all sizes.

Organizations with scarce talent management resources need a different strategy to secure the right talent for key contributors and pivotal leadership positions within the firm. Without this focus, an organization risks losing even more top performers, as these types of positions typically have greater scope and influence over other positions within the firm.

Without a well-constructed succession planning system for rapid replacement of key roles, and more broadly, a well aligned succession management plan to ensure firm-wide talent progression, organizations are highly exposed to risks of underperformance and further loss of talent.