- 1. WhitepaperSuccession Planning:Rise of the Talent EcosystemA
SumTotal White PaperThe Succession Planning ImperativeOnce reserved
for the upper echelons of senior management, and often viewedFigure
1: Top Talent Challenges erroneously so as replacement planning to
mitigate risk (e.g., a catastrophebefalls company leaders), todays
succession planning is being redefined.The discipline has broadened
in both breadth and scope to become a centralcomponent of strategic
talent management.#1 ChallengeDefined as the process of
identifying, preparing, and tracking high potentialGaps in
leadershipemployees for promotion and advancement, several dynamics
are driving thepipelineevolution of succession planning today: The
recognition that top-notch talent and retaining that talent #3
Challenge Difculty lling keydrives bottom-line financial
performance, customer satisfaction, and employee
positionscompetitive advantage. Researchers such as Accenture,
McKinsey,#4 ChallengeRetentionand Towers Watson have empirically
validated these linkages.problems Global talent shortages due to
retiring baby boomers, shifting workforce demographics, and
globalization. Fifty-three percent of companies are Source: Bersin
& Associates, July 2008 facing significant talent shortages
today1 and this percentage will grow as baby boomers start
retiring. In fact, the U.S. Bureau of Labor Statistics estimates a
shortage of 10 million workers by 2010. Mitigating the risk of
untimely departures of high performers and essential personnel as
labor markets continue their inexorable shift in favor of buyers
(i.e., job seekers). A confluence of market conditions impacting
specific industries. For instance, within healthcare, increasing
demand for services from baby boomers is coinciding with a shortage
of skilled talent (e.g., nurses, technicians). In the public
sector, an aging workforce coupled with competitiveness from the
private sector and an inability to attract younger talent is posing
challenges. And in technology, CEOs are finding it increasingly
difficult to fill key positions as older workers retire.Many
companies are starting to recognize these dynamics (especially
thechallenges). In a 2008 Bersin & Associates study,
three-out-of-five of the toptalent challenges cited by global
survey respondents were related to successionplanning (see Figure
1).www.sumtotalsystems.com1
2. Succession Planning: Rise of the Talent EcosystemYet the same
study paints a more ominous picture. Only 20 percent of
companieshave an enterprise-wide succession planning process, and
fully 53 percent haveno process at all. Indeed, a 2010 SumTotal
study revealed that 59 percent ofHR professionals do not believe
that their personnel are adequately preparedto meet their companies
future growth plans. All of this market data pointsto one
inescapable conclusion: The majority of companies are aware of
thechallenges yet most are completely unprepared to deal with them.
Therefore,new and innovative ways of deploying succession planning
are required. Theseinclude extending succession planning across the
organization and integratingsuccession planning into the broader
talent ecosystem.Extending Succession Planning Across the
OrganizationApplying succession planning beyond senior management
is critical to retaininghigh performers across all levels of the
organization and mitigating the risk ofuntimely departures of key
personnel. Retaining existing employees not only hasthe potential
to minimize the effects of the global talent shortage, it also
providessignificant and tangible cost savings (since replacement
costs range from 100%-150% of the salary for the departing
employee).ALFA provides an ideal example. Based in Mexico and
employing more than50,000 people, ALFA is a diversified global
company consisting of four distinctbusiness units: petrochemicals,
aluminum auto components, refrigerated food,and
telecommunications.A key challenge facing the company was promoting
cross-business unit transfers,thereby minimizing employee attrition
to the competition. ALFA was losinghigh-performing talent because
it was unable to find growth opportunities foremployees within the
organization. Due to the proliferation of different humanresources
(HR) systems at each of its four business units, ALFA suffered
frominconsistency in managing its global HR processes as well as a
lack of visibilityinto key employee information that could be used
to drive succession planning.To address its challenges, ALFA
standardized on a single, integrated talentplatform across its
diverse business units. This platform, provided by SumTotal,became
the centerpiece of ALFAs employee lifecycle, which consists of
planning,hiring, compensation, performance management, learning and
development,succession planning, reporting and analysis, and HR
management. ALFAalso leveraged SumTotals global experience in
developing and implementingstandard HR policies and best practices.
As a result, it is far more common forALFAs employees to jump from
one business unit within the company to another,expanding their
experience and skill sets via promotion and
advancement.www.sumtotalsystems.com 2 3. Succession Planning: Rise
of the Talent EcosystemConnecting Succession Planning into the
BroaderTalent EcosystemSuccession planning is one of several key
processes that enable organizations toembrace a holistic talent
management strategy. At its heart, Talent managementis the
strategic approach to integrating and optimizing talent-related
processesacross the enterprise, including talent acquisition
(recruiting and hiring),performance management, development and
learning, succession planning, 360feedback, compensation and
rewards, and talent profiles. Software technology,a key enabler of
talent management strategy, provides a best practices platformfor
information integration and process optimization. One such example
of thisplatform is the SumTotal Talent Platform (see Figure 3).At
the center of this platform is the talent-based employee system of
record,which includes employee data, talent profiles, job profiles,
and competencies. Allof this information, once made consistent
across the organization, feeds criticalHR business processes,
facilitates the linkages across these processes, andultimately
enables improved business analysis, insight, and decision making.
Figure 3: SumTotal Complete Talent ManagementThe role of succession
planning within the broader talent ecosystem is uniquebecause it is
dependent upon inputs from several other core HR processes.Whereas
an annual performance appraisal process can be executed in
arelatively self-contained fashion (assuming it has access to core
employee data),the same is not true for succession planning. To
illustrate the point, consider howHR practitioners have
traditionally built succession plans.www.sumtotalsystems.com 3 4.
Succession Planning: Rise of the Talent EcosystemConventionally, HR
practitioners will spend weeks or months manually scouringdifferent
parts of the organization for information needed to build lists of
nomineesfor specific job families or positions. The information
required to generate thelists may include self assessments, past
performance appraisals (often paper-based), and 360 feedback. After
a lengthy period of information gathering andaggregation followed
by manual analysis (e.g., nine-box, gap analysis), HRprints the
results, collates hundreds of pages of paper into three-ring
binders,and presents its recommendations to senior management. This
time-consuming,inefficient process is still common practice today
(recall that only 20 percent ofcompanies have an enterprise-wide
succession planning process in place).Yet by centralizing talent
processes and information in the above scenario,performance
management, 360 feedback, and succession planning onto asingle,
integrated talent management platform, the time to develop
successionplans can easily be reduced from weeks or months to mere
hours. Thebenefits can be significant: reduce HR costs, reallocate
HR resources fromtactical activities to more strategic endeavors,
and mitigate the risk of untimelydepartures of essential
personnel.Additionally, a natively-integrated talent management
platform promotes thelinkage of learning and development planning
with succession planning. Bybridging the processes, nominees who
are not ready for advancement canbe assigned detailed development
plans that guide them to improve thecompetencies required for new
job positions. Learning paths and even specificcourses can be
established for employees to facilitate their career growth.
Byproviding learning opportunities and development plans to
employees, HR cantake a more active role in promoting employee
retention.Finally, a single talent management platform facilitates
enterprise-wide HRreporting and analysis, since all of the relevant
talent data resides within a singledata structure. Reporting and
analysis are key to an organizations success inmanaging employee
resources and implementing HR strategies that supportcorporate
objectives and initiatives.Figure 4 (next page) pulls all of these
processes together and highlights thecentral role succession
planning plays within the broader talent ecosystem. Inthe manual,
paper-based world of conventional HR and also in siloed
HRtechnology deployments which are equally prevalent this level of
integrationand its inherent benefits are not
possible.www.sumtotalsystems.com 4 5. Succession Planning: Rise of
the Talent EcosystemFigure 4: Succession Planning Within The
Broader Talent EcosystemConclusionSuccession planning is not a
silo. Companies of all sizes and in all industries mustreevaluate
how succession planning fits within their enterprises. In order to
takeadvantage of new opportunities, avoid the looming talent
crisis, and mitigate therisk of untimely departures, companies must
extend succession planning acrosstheir organizations and fully
integrate succession planning into their broader talentecosystems.
This can best be achieved by leveraging a single talent
managementplatform coupled with a strong focus on process and
strategy.Endnotes1High-ImpactTalent Management: Trends, Best
Practices, and Industry Solutions,Bersin & Associates, May
2007www.sumtotalsystems.com 5 6. Succession Planning: Rise of the
Talent Ecosystem Authored By Steve Bonadio, Director of Product
Marketing, SumTotal Systems, Inc. For more information, contact
[email protected]. About SumTotal SumTotal Systems, Inc.
is the global leader in complete talent management software that
enables organizations to more effectively drive business strategy.
Recognized by industry analysts as the most comprehensive talent
management solution, SumTotal provides full employee lifecycle
management, including a core system of record, from a single
provider for improved business intelligence. The company offers
customers of all sizes and in all industries the most flexibility
and choice with multiple purchase, configuration, and deployment
options. With more than 1,800 customers and 25 million users
worldwide, we have increased the performance of the worlds largest
organizations. For more information, or to request a demonstration,
please call +1-866-766-6825 (US / Canada), +1 352 264 2800
(international) or visit www.sumtotalsystems.comCorporate
Headquarters EMEAAPACSumTotal Systems, UK SumTotal Systems,
UKSumTotal Systems India Pvt. Ltd. 2010 SumTotal Systems, Inc. All
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