The Importance of Succession Planning In Retail [And Ideas On How To Maximize Value]
I have made my feelings about the traditional Performance Appraisal well known – but there is an item that we piggy back onto this process that most retailers use to rank the employees inside a department or an area of responsibility. This process requires a reinvention to make it, not only a important process in your business today, but a tool to support the growth pace in each retail organization. Succession Planning – this incredible tool is invaluable but is consistently underused and undervalued the remainder of the year in most retail organizations.
Succession Planning is critical to the long-term success of the business. It helps, if done correctly, the following things that will impact productivity and business results:
-It identifies potential turnover (either voluntary or involuntary)
-It ensures that the right people are in the right places today
-It identifies developmental opportunities on a broad scale
-It identifies developmental opportunities on an individual/granular level
-It can assess holes in the Company Culture as it relates to Mission/Values
-It identifies the talent available to fill future key roles in the company
-It will assist in the decision and support the right direction to promote internally or source external talent
It is staggering to see the number of retail organizations that do not dedicate the time or focus to the value that thorough succession planning can deliver. According to this study, organizations are missing the critical chance to develop formal profiles for their leadership talent, most decisions are still a “one-off”.
“Leadership skills and expertise are not routinely mapped to critical positions, and current leadership is not benchmarked against a required list of skills. When benchmarking occurs, it tends to be on a “one-off” basis rather than comprehensively and continuously assessed for the entire leadership team”
According to Business News Daily, “Only 46% of businesses have a formal process for developing successor candidates for key positions”.
How completely crazy is this? Especially considering the fact that we know about the huge costs involved when the wrong person is chosen for a key role in a company or when we lose a key player to unexpected turn – not only the financial implications, but the costs to reputation, team morale, company cohesion, employer brand and customer experience are too high to easily be absorbed.
“27% of employers said a bad hire cost them more than $50,000″, according to a 2013 CareerBuilder survey. Yikes!
How succession planning was handled in companies where I have worked has run the gamut from the process being treated like an annoying compliance issue with a follow up phone call of 15 minutes with the Director of HR and the VP of Stores – then it was never discussed, referenced, or mentioned again to being required to fly into Home Office to have a full day dialogue and planning session around the process. Regardless of how it was handled, we spoke about it once and then didn’t speak about it again until the following year. I made sure that I created a succession plan quarterly to identify needs and opportunities in my area of responsibility. There is too much at risk when we don’t use this tool from concept to completion, quarterly, to create formal profiles for critical roles in the company and then frequently assess our talent (and continuously develop them) to see, in the event of turn, who is ready and able to fill those roles.
Did you know: “According to a 2012 study by Matthew Bidwell, an assistant professor at the University of Pennsylvania’s Wharton School, external hires are 61% more likely to be laid off or fired, and 21% more likely than internal hires to leave a job of their own accord.”
As Peter Drucker once said, “culture eats strategy for breakfast.” One of the gigantic benefits of succession planning is that your internal candidates get “it”. They understand what your organization stands for and they, likely, already contribute to that. Frequently, external hires come into a business and try to replicate what has worked for them in the past without understanding what is working and what is needs massaging in your business and how the people inside embrace their existing culture and resent changes to processes that aren’t broken,.
When it comes to Succession Planning, it is a preparatory exercise for the future outlook of the company. It’s a process (which means it’s constantly evolving and needs attention more than once a year) of benchmarking and assessing the skills, behaviors, competencies and experiences that are demanded by your leadership roles, both now and in the future…these things are fluid in business, and focus needs to be consistently on identifying and developing those critical elements.
There are two things that need to be deliberately left out of the succession planning process for it to be 100% objective:
(1) Personal opinions
When you are succession planning you are, for all intents and purposes, mitigating risk for the company. That absolutely needs to be done objectively and in conjunction with the job description for the leadership roles in the company.
According to Realising Potential there are:
7 Vital Elements to Improve Your Succession Planning
1. Get started ASAP
Since most retail organizations are working on performance appraisals at this time of year, it is the best time to partner that process with your initial Succession Planning process.
2. Ask Deeper Questions
When you start asking deeper questions about the role, the company and the growth of the business, the job becomes much easier:
-Who has been successful in the past in this role?
-What kind of team does this person have to manage?
-How will the demands of the role change over time?
-Are we prepared to develop and grow this person?
3. Involve People
Generally, senior level executives and HR make up job descriptions. If you do not have complete or adequate information on the role to create a profile for the ideal candidate you can ask for feedback from direct reports of this role, business partners, etc. to determine a realistic and true list of characteristics, competencies, and capabilities that candidates need to be high-productive.
4. Evaluate Success Criteria
When you have an accurate profile of the criteria which lead to success in these roles, you’ll be able to hire higher caliber people who are naturally suited to the role.
5. Consider Future Growth
Ask the questions: In 5 years’ time when the company has grown and the role has changed? Will this person be able to grow into that? Will they still be able to deliver the same results under different conditions? Do they have the motivation to change with the company?
These are all vital questions for any ‘future-proof’ succession strategy.
6. Focus On Identifying & Developing Internal Talent
Senior managers need to evaluate the workforce and the company to make sure that they nurture a wide range of talents, competencies, behaviors and support development and self-directed learning. Internal candidates…
-They know your business and your culture already
-They’ve worked within the culture and the values
-They have learned to navigate within the culture and the politics
-They have a relationship with management teams
7. Hire Externally For Fit
When you hire externally for succession, it’s wise to include key criteria in your job-profile that encompasses:
According to Halogen Software, here are Proven Tools For Developing Your Organizations Talent Pipeline:
STEP 1. Talent Bench Review
Which is another word for the formalized succession planning process. Halogen software recommends assess three key categories:
(a) Performance level – WHAT the employee does and HOW they do it
Rate each employee relative to the following criteria:
1) Weak performer
2) Solid performer
3) Strong performer
(b) Ultimate potential level – The job level the individual is capable of attaining, provided continued performance and development (under best possible conditions), Consider raw ability, motivation to succeed, and commitment to group or organization.
1) Current role only or possible bad fit
2) Good fit at current level, lateral move, or upward 1 level
3) Upward mobility more than 1 level
(c) Readiness – Consider the individual’s learning needs and potential when making this judgment
1) Needs greater than 12 months to develop to next move
2) Should develop in current role for more than 12 months before next move
3) Can take next development step within next 12 months
STEP 2: The 9-Box Grid
This is one of the most commonly used tools in succession planning and employee development. The 9-box grid, which plots employee performance against potential, is a valuable talent review tool for managers across all levels. Working collaboratively, managers arrange every employee into one of nine types across a vertical and horizontal axis, based on three levels of performance and three of potential. Some organizations will vary the lower axis and, for example, use performance, culture, and engagement rather than performance as the axis.
The benefits of using a 9-box grid talent review include:
-Allows for easy assessment of leaders on two key dimensions: performance and potential
-Provides a catalyst for robust dialog among senior leaders
-Encourages multiple perspectives for a much more accurate assessment (team vs. single opinion)
-Creates a shared sense of ownership for an organization’s talent pool
-Diagnoses development needs and eases the transition to development planning
STEP 3: Talent Pool-Based Succession Planning
Determine where each individual should be positioned on the performance vs. potential grid, you can start creating talent pools (or buckets). Then you can start the development process. You must also identify key competencies required for superior performance and success [position profile/job description] in each area, so you can create a list of learning activities that can help to develop each competency.
The group at Halogen Software recently published a great infographic on 12 steps to a better succession plan infographic. It’s full of great information as well and worth checking out.
Finally, the other day I read an amazing article from Brad Wolff, Managing Director for JumpVine, who shared his detailed steps to creating a high-value process for Succession Planning. You can read the article on TLNT. but here are the points:
-Assess your current and future needs based on organizational goals and objectives;
-Write up accurate and clear job descriptions for your key positions [hiring profiles];
-Document the specific tasks involved to carry out the duties of the above job descriptions;
-Perform an inventory of your current workforce;
-Identify individuals whom you believe have the potential to fill key positions and communicate with them to gauge interest level;
-For individuals selected for succession, identify gaps in skills and experience;
-Identify key positions in which there are no current employees whom you believe have the potential to fill them;
-Develop an onboarding plan for what happens after a successor is named.
Mr. Wolff also points out the benefits of implementing and communicating a smart succession planning program in your organization:
1)The ability to retain top performers who may otherwise leave due to lack of perceived opportunity to advance within the organization.
2) An enhanced reputation in the job market as an employer who invests in its employees and prefers to hire from within. This is a major recruiting advantage in a job market that is highly competitive in hiring top talent
3) A means of ensuring the sustained success of the organization in a constantly changing world where key people may be gone at any time. “Bench Strength” can be critical to the success and survival of any organization.
According to WilsonHCG, there are two myths about succession planning: “The first is that succession planning is only applicable to senior executives — the C-suite and perhaps one level below that. This is not true. Succession planning is a consideration for all business-impacting roles in the organization, including those in middle management. It might not require as much attention further down the organizational pyramid, but you still must pay attention. The second myth is that succession candidates must come from within your company: This is the concept of training employees to rise through the ranks. While this is sometimes true, you must also consider external candidates to ensure you’re pulling from the best pool of talent”
As I have mentioned in the past, in my most recent organization we transitioned to “stay interviews”. We provide our team members, of all levels, with frequent, real-time feedback, and we conduct a two day succession planning workshop once a year and quarterly succession planning sessions. After all, succession planning is the process of creating a roadmap for your retail organization that supports and delivers smooth, sustainable growth. As mentioned earlier, in order for this to be a high-value process there are some components that need to be in place – regardless of the process/program/template you choose to use to – these are:
- Coordination and Collaboration (pull of your resources together to create the most complete picture of the roles that are crucial to the company’s success)
- Creating ideal profiles for critical roles (including behaviors, competencies)
- Frequent review and reinvention of the roles based on the fluid nature of retail
- Commitment from those involved for this process to be 100% objective
Succession Planning is key to protecting the business. It’s key to ensuring that we are providing clear career growth paths to our employees. It will help us recognize and reward our top performers with opportunity and and investment in their future – this process helps employees to see we care about them. But it is an investment in the organization’s future as well that will help drive employee happiness, employer branding, productivity, growth, and revenue and ensure consistency in an organization’s ability to do so.