Most organizations are unprepared for the loss of employees who hold key roles.

• The departure of employees in key roles results in the loss of valuable knowledge, core business relationships, and profits.
• Pending retirements in key roles create workforce risks and potentially impact business continuity.

Planning and executing on key role transition can take years. CIOs should prepare now to mitigate the risk of loss later.

• The number of organizations which have not engaged in succession planning is 56%; they haven’t identified at-risk key roles, or successors for those roles.
• Analyzing key roles at the incumbent and successor level introduces real-life, individual-focused factors that have a major impact on role-related risk.

• Plan for the transfer of critical knowledge held by key role incumbents.
• Explore alternative work arrangements to ensure sufficient time to prepare successors.
• Define formal transition plans for all employees in at-risk key roles and their successors.

(Source: McLean & Company, 2013; N=120)

A survey done by SHRM and AARP found similar results: 41% of HR professionals said their organizations have done nothing and don’t plan to do anything to prepare for a possible worker shortage as Boomers retire.

To make matters worse, 74% of organizations have no formal process for facilitating knowledge transfer between individuals, so knowledge will be lost.

(Source: McLean & Company, 2013; N=120)

Talent Review

Succession Planning

Knowledge Transfer

Critical Role Identifier

Key Roles Succession Plan

Key Role Profiles

Individual Talent Profiles

Key Role Transition Plans

Inefficiency due to “reinvention of the wheel.” When workers leave and don’t effectively transfer their knowledge, duplication of effort to solve problems and find solutions occurs.

Reduced capacity to innovate. Older workers know what works and what doesn’t, what’s new and what’s not. They can identify the status quo faster to make way for novel thinking.

Loss of competitive advantage. Losing knowledge and/or established client relationships hurts your asset base and stifles growth.

Increased vulnerability. Losing knowledge can impede your organizational ability to identify, understand, and mitigate risks. You’ll have to learn through experience all over again.

Succession planning limits disruption to daily operations and minimizes recruitment costs:

• The average time to fill a vacant role externally in the US is approximately 43 days (Workable). Succession planning can reduce this via a talent pool of ready-now successors.

Effective succession planning is a tool for engaging, developing, and retaining employees:

• Of departing employees, 45% cite lack of opportunities for career advancement as the moderate, major, or primary reason they left (McLean & Company Exit Survey, 2018, N=7,530).

Knowledge is a strategic asset, and succession planning can help retain, grow, and capitalize on it:

• Retaining the experience and expertise of individuals departing from critical roles supports and enhances the quality of innovation (Harvard Business Review, 2008).

Conduct a talent review to identify key roles

Succession planning helps you assess which key roles are most at risk

Utilize methods that make it easy to apply the knowledge in day-to-day practice.

• Business continuity
• The right people, in the right positions, at the right time
• Retention due to employee development & growth

• IT success
• Decreased impact of sudden departures
• Improved performance

1. Identify critical roles
2. Assess talent

1. Identify successor pool
2. Develop successors
3. Select successors

1. Identify critical knowledge
2. Select knowledge transfer methods
3. Document role transition plans

• Documented business priorities
• Identified critical roles including required skills and knowledge that support achievement of business strategy

• Key at-risk roles identified.
• Potential successors for key roles identified.
• Gap assessment between key role incumbents and potential successors.

• Critical knowledge risks identified.
• Appropriate knowledge transfer methods selected.
• Documented knowledge transfer initiatives for key role transition plans.

DIY Toolkit

Guided Implementation

Workshop

Consulting

Diagnostics and consistent frameworks used throughout all four options

Phase 1

Phase 2

Phase 3

Call #3: Review key role criteria. Explain information collection process.

Call #5: Analyze gaps between key roles and successors for key considerations.

Call #7: Review selected transfer methods.

2.1 Identify Successors

2.2 Develop Successors

2.3 Select Successors

3.1 Identify Critical Knowledge

3.2 Select Transfer Methods

3.3 Document Role Transition Plan

Key roles are:

• Held by the most senior people in the organization, who carry the bulk of leadership and decision-making responsibility.
• Highly technical or specialized, and therefore difficult to replace.
• Tied closely to unique or proprietary processes or possess knowledge that cannot be procured externally.
• Critical to the continuation of business and cannot be left vacant without risking business operations.

Info-Tech Insight

Losing employees in key roles without adequate preparation for their departure has a direct impact on the bottom line in terms of disrupted productivity, lost knowledge, severed relationships, and missed opportunities.

Identifying key roles is the first step in a range of workforce management activities because it helps establish organizational needs and priorities, as well as focusing planning effort.

A talent review allows you to identify the knowledge and skills you need today and for the long term.

Knowing what you need is the first step in determining what you have and what you need to keep.

• A talent review is an analytic planning process used to ensure a work unit has the right people, in the right place, at the right time, and for the right cost in order to successfully execute its business strategy. It allows organizations to:
• Evaluate workforce demographics, review skills, and conduct position inventories.
• Evaluate business continuity risk from a talent perspective by identifying potential workforce shortages.
• Identify critical positions, critical skills for each position, and percentage of critical workers retiring to assess the potential impact of losing them.
• Look at the effect of loss on new product development, revenues, costs, and business strategic objectives.

Caution

A talent review is a high-level planning process which does not take individual employees into consideration. Succession planning looks at individuals and will be discussed in Phase 2.

A talent review gets you to think in terms of:

• Where your organization wants to be in five years.
• What skills the organization needs to meet business goals between now and then.
• How it can be best positioned for the longer-term future.

Note: Planning against a time frame longer than five years is difficult because uncertainty in the external business environment will have unforeseen effects. Revisit your plan annually and update it, considering changes.

Info-tech insight

Traditionally, succession planning has only addressed top management roles. However, until you look at the evidence, you won’t know if these are indeed high-value roles, and you may be missing other critical roles further down the hierarchy.

Use the Critical Role Identifier to facilitate the identification of critical roles with your leaders.

Key Roles include:

• Strategic Roles: Roles that give the greatest competitive advantage. Often these are roles that involve decision-making responsibility.
• Core Roles: Roles that must provide consistent results to achieve business goals.
• Proprietary Roles: Roles that are tied closely to unique or proprietary internal processes or knowledge that cannot be procured externally. These are often highly technical or specialized.
• Required Roles: Roles that support the department and are required to keep it moving forward day-to-day.
• Influential Roles: Positions filled by employees who are the backbone of the organization, the go-to people who are the corporate culture.

1. What are the roles that have a significant impact on delivering the business strategy?
2. What are the key differentiating roles for our organization?
3. Which roles, if vacant, would leave the organization open to non-compliance with regulatory or legal requirements?
4. Which roles have a direct impact on the customer?
5. Which roles, if vacant, would create system, function, or process failure for the organization?

Case Study

INDUSTRY
Large Provincial Hospital

SOURCE
Payroll Manager

• Key roles may not be what you think they are.
• The Payroll Manager of a large Provincial hospital, with 20-year tenure, announced her retirement.
• Throughout her tenure, this employee took on many tasks outside the scope of her role, including pension calculations/filings and other finance-related tasks that required a high level of specialized knowledge of internal systems.

• Little time or effort was placed on fully understanding what she did day-to-day.
• Furthermore, the search for a replacement was left far too late, which meant that she vacated the role without training a replacement.
• Low level roles can become critical to business continuation if they’re occupied by only one person, creating a “single point of failure” if they become vacant.

• It wasn’t until after she left that it became obvious how much extra work she was doing, which made it nearly impossible to find a replacement.
• Her manager found a replacement to take the payroll duties but had to distribute the other duties to colleagues (who were very unhappy about the extra tasks).
• This role may not seem like a “key role,” but the incumbent turned it into one. Keep tabs on what people are working on to avoid overly nuanced role requirements.

Find out key role incumbents’ career plans

Have career discussions with key role incumbents

• Do not ask employees directly about their retirement plans as this can be misconstrued as age discrimination – let them take the initiative.
• To take the spotlight away from older workers and potential feelings of discrimination, supervisors should be having these discussions with their employees at least annually.
• Having this discussion creates an opportunity for employees to share their retirement plans, if they have any.
• Warning: This is not the time to make promises about the future. For example, alternative work arrangements cannot be guaranteed without further analysis and planning.

1. Book a meeting with employees and ask them to prepare for a career development discussion.
2. Ask direct questions about motivation, lifestyle preferences, and passions.
3. Spend the time to understand your employees’ goals and their development needs.

1. Gather information about approximate exit dates (non-binding).
2. Find out their opinions about how they would like to transition out of their role, including any alternative work arrangements they would like to pursue.

• Where do you see yourself in five years?
• What role would you see yourself in after this one?
• What gets you excited about coming to work?
• Describe your greatest strengths. How would you like to use those strengths in the future?
• What is standing in the way of your career goals?

Work collaboratively with the management team and HR business partners for names of potential successors.

The management team includes:

• The incumbent’s direct supervisor.
• Managers from the department in which the key role exists.
• Leaders of teams with which potential successors have worked.
• The key role incumbent (assuming it’s appropriate to do so).

Use management roundtable discussions to identify and analyze each potential successor.

• Participants should come equipped with names of potential successors and be prepared to provide a rationale for their recommendation.
• Provide all participants with the key role job description in advance of the meeting, including responsibilities and required knowledge and skills.

Don’t confuse successors with high potentials!

• Identifying high potential employees involves recognizing those employees who consistently outperform their peers, progress more quickly than their peers, and live the company culture. They are usually striving for leadership roles.
• While you also want your successors to exemplify these qualities of excellence, succession planning is specifically about identifying the employees who currently possess (or soon will possess) the skills and knowledge required to take over a key role.
• Remember: Key roles are not limited to leadership roles, so cast a wider net when identifying succession candidates.

• Managers or skip-level leaders nominate potential successors within or outside their team.

• Limit bias by requiring management nominations to be based on specific evidence of performance and potential.

• Consider employees who are in an existing high-potential program.

• Determine whether the HiPo program sufficiently assesses for critical role requirements. Successors must possess the skills and knowledge required for specific critical roles. Expand assessment beyond just HiPo.

• Employees are informed about succession planning and asked to indicate their interest in critical roles.

• Train managers to support the program and to handle difficult conversations (e.g. employee submitted self-nomination and was unsuccessful).

• All employees across a division, geography, function, or leadership level are invited for assessment.

• While less common, this approach is appropriate for highly inclusive cultures. Be prepared to invest significantly more time and resources.

Widen the net

Match transparency

Select the appropriate talent assessment methods

Identify all talent assessment types used in your organization and examine their ability to inform decision-making for critical role assignments. Select multiple sources to ensure a robust talent assessment approach:

A sound talent assessment methodology will involve both quantitative and qualitative components. Multiple data inputs and perspectives will help ensure relevant information is prioritized and suitable candidates aren’t overlooked.

However, beware that too many inputs may slow down the process and frustrate managers.

Beware of biases in talent assessments. A common tendency is for people to recommend successors who are exactly like them or who they like personally, not necessarily the best person for the job. HR must (diplomatically) challenge leaders to use evidence-based assessments.

Good Successor Information Sources

• 360-Degree Feedback – (breadth and accuracy)
• HR-led Interviews – (objectivity and confirmation)
• Talent Review Meetings – (leadership input)
• Stretch Assignments – (challenge comfort zones)
• Competency-Based Aptitude Tests – (objective data)
• Job Simulations – (real-life testing)
• Recent Performance Evaluations – (predictor of future performance)

Role Profile

Use both in conjunction during:

• Talent assessment
• Successor identification
• Successor development
• Successor selection

Individual Talent Profile

A talent profile provides information about a person. In addition to responding to role profile criteria, it provides information on an employee’s past experiences and performance, career aspirations, and future potential.

1.1 Identify Critical Roles

1.2 Assess Talent

3.1 Identify Critical Knowledge

3.2 Select Transfer Methods

3.3 Document Role Transition Plan

Succession planning is an organizational process for identifying and developing talent internally to fill key business roles. It allows organizations to:

• Understand the career plans of employees to allow organizations to plan more accurately.
• Identify suitable successors for key roles and assess their readiness.
• Mitigate risks to long-term business continuity and growth.
• Avoid external replacement costs including headhunting and recruitment, HR administration, and productivity loss.
• Retain internal tacit knowledge.
• Increase engagement and retention; keeping talented people reinforces career path opportunities and builds team culture.

Caution:

Succession planning ultimately must drill down to individual people – namely, the incumbent and potential successors.

This is because individual human beings possess a unique knowledge and skill set, along with their own personal aspirations and life circumstances.

The risks associated with a key role are theoretical. When people are introduced into the equation, the “real life” risk of loss for that key role can change dramatically.

Succession Planning

Transparency

• Use your target transparency level to:
  • Determine the degree of employees’ participation in self-assessment.
  • Guide organization-wide and targeted messaging about succession planning (see Step 3).

Timing

• Ensure program-level communication has occurred before asking employees about their interests in critical roles, in order to garner more trust and engagement.
• Decide at what point along the succession planning process (if at all) that employee’s career interests will be collected and incorporated.

Manager accountability and resources

• Identify resources needed for managers to conduct targeted career conversations with employees (e.g. training, communication guides, key messaging).
• If program communication is to be implemented organization-wide, approach accordingly.

Obtaining employee interest ensures process efficiency because:

• Time isn’t wasted focusing on candidates who aren’t interested.
• The assessment group is narrowed down through self-selection.

Level-set expectations with employees:

• Communicate that they will be considered for assessment and talent review discussions.
• Ensure they understand that everyone assessed will not necessarily be identified or selected as a successor.

Conduct a risk assessment

Identify key role incumbents who may leave before you’re ready.

		Understand the impact that employee age has on key role risk. Keep the following in mind when filling out the Individual Risk Assessment of the Key Roles Succession Planning Tool. See the next slide for more details on this.
High Risk		Anyone 60 years of age or older, or anyone who has indicated they will be retiring within five years.
Moderate Risk		Employees in their early 50s are still many years away from retirement but have enough years remaining in their career to make a significant move to a new role outside of your organization. Furthermore, they have specialized skills making them more attractive to external organizations.
		Employees in their late 50s are likely more than five years away from retirement but are also less likely than younger employees to leave your organization for another role elsewhere. This is because of increasing personal risk in making such a move, and persistent employer unwillingness to hire older employees.
Low Risk		Technically, when it comes to succession planning for key roles held by employees over the age of 50, no one should be considered “low risk for departure.”

Compile a report that breaks down employees into age-based demographic groups.

Flag those over the age of 50 – they’re in the “retirement zone” and could decide to leave at any time.

Check to see which key role incumbents fall into the “over 50” age demographic. You’ll want to shortlist these people for an individual risk assessment.

Update this report twice a year to keep it current.

1. Decide if employees will be told. Be as transparent as possible. This will provide several benefits to your organization (e.g. higher engagement, retention) while managing potential risks (e.g. perception that the process is unfair, reducing motivation to perform).
2. Decide who will tell them. Decide based on the culture of your organization; are official communications usually conveyed through the direct manager, HR, senior leaders, or steering committee?

3. Determine how you will tell them.

   Suggested messaging to non-successors:

   • Not being identified as a successor does not mean that an employee is not valued by the organization, nor does it indicate the employee will be let go. It simply means that the organization needs a backup plan to manage risk.
   • Employees can still develop toward a critical role they are interested in, and the organization will continue to evaluate whether they can be a potential successor.
   • It is the employee’s responsibility to own their development and communicate to their manager any interest they have in critical roles.

   Suggested messaging to successors:

   • Being identified as a successor is an investment in employee development – not a guaranteed promotion.
   • Successor status may change based on changes to the critical role itself, or if performance is not on par with expectations.
   • The organization strives to be as fair and objective as possible through evidence-based assessments of performance and potential.

Case Study

Failing to have a career aspiration discussion with a potential successor leaves a sales director in a bind.

INDUSTRY
Professional Services

SOURCE
Confidential

• A senior sales director in a medium-sized private company knew there would be a key management opportunity opening up in six months. He had one candidate in mind: a key contributor from the sales floor.
• The sales manager assumed that the sales representative would want the management position and began planning the candidate’s required training in order to get him ready.

• Three months before the position opened up, the manager finally approached the representative about the opportunity, telling the representative that he was an excellent candidate for the role.
• However, the sales representative was not interested in managing people. He wanted to come in, do a really great day’s worth of work, and then go home and be done. He already loved what he did.

• The sales representative turned down the offer point blank, leaving the manager with less than three months to find and groom a new internal successor.
• The manager failed on several fronts. First, he did not ask the employee about his career aspirations. Second, he did not groom a pool of potential successors for the role, affording no protection in the event that the primary candidate couldn’t or wouldn’t assume the role.

1

2

• Specialized technical knowledge
• Specialized research and development processes
• Unique design capabilities/methods/models
• Special formulas/algorithms/techniques
• Proprietary production processes
• Decision-making criteria
• Innovative sales methods
• Knowledge about key customers
• Relationships with key stakeholders
• Company history and values

Explicit knowledge is easily explained and codified, such as facts and procedures. Knowledge transfer methods tend to be more formal and one-way. For example:

• Formal documentation of processes and best practices
• Self-published knowledgebase
• Formal training sessions

Tacit knowledge accumulates over years of experience and is hard to articulate. Knowledge transfer methods are often informal and interactive. For example:

• Mentoring and job shadowing
• Multigenerational work teams
• Networks and communities

• Talent review meeting:
  • Conduct a talent review meeting with functional leaders to discuss key open positions and select the right successors. Ascertain successor interest prior to the meeting, if not obtained already.
  • If multiple successors are ready now, use both role and talent profiles to arrive at a final decision.
  • If only one successor is ready now, outline steps for their promotion process. Which leaders should be involved for final approval? What is TA’s role?
• Talent acquisition (TA) process:
  • Align with TA to implement a formal recruitment process to select the right successor (open application and interview process to talent pool).
  • Decide if a talent review meeting is required afterwards to agree on the final successor or if the interview panel will make the final decision.

Work together with Talent Acquisition (TA) to outline special treatment of critical role vacancies. Ensure TA is aware of succession plan(s).

Explicitly determine the level of preference for internal successors versus external hires to your TA team to ensure alignment. This will create an environment where promotion from within is customary.

1.1 Identify Critical Roles

1.2 Assess Talent

2.1 Identify Successors

2.2 Develop Successors

2.3 Select Successors

• Maintain or improve speed and productivity by ensuring the right people have the right skills to do their jobs well.
• Increase agility because knowledge is more evenly distributed amongst employees. Multiple people can perform a given task and no one person becomes a bottleneck.
• Capture and sustain knowledge; creating a knowledge database provides all employees access to the information, now and in the future.

• Senior level successions.
• External hires.
• Senior expatriate transfers.
• Developmental stretch assignments.
• Internal cross-divisional transfers and promotions.
• High organizational dependency on unique expert knowledge.
• Critical function/project/team transitions.
• Large scale reorganizations and mergers & acquisitions.

Mitigate Key IT Employee Knowledge Loss

Knowledge transfer works best when the following techniques are applied

• Use multiple methods and media to transfer the knowledge.
• Ensure a two-way interaction between the knowledge source and recipient.
• Support knowledge transfer with active mentoring.
• Transfer knowledge at the point of need; that is, when it’s immediately useful.
• Offer experience-oriented training to reinforce knowledge absorption.
• Use a knowledge management system to permanently capture knowledge shared.

Dwyer & Dwyer say that providing “insights to a particular person (or people) needing knowledge at the time of the requirement” is the difference between knowledge transfer that sticks and knowledge that is forgotten.

There are two basic types of knowledge:

Explicit knowledge: Easily explained and codified, e.g. facts and procedures.

Tacit knowledge: Accumulates over years of experience and is hard to verbalize.

• You should already have a good idea of what knowledge and skills are valued from the worksheets completed earlier.
• Focus on identifying the knowledge, skills, and relationships essential to the specific incumbent in a key role and what it is he or she does to perform that key role well.

Role Transition Plan Template

1. Identify key knowledge areas. These include:
   • Specialized technical knowledge and research and development process.
   • Unique design capabilities/methods/models.
   • Special formulas/algorithms/techniques.
   • Proprietary production processes.
   • Decision-making criteria.
   • Innovative sales methods.
   • Knowledge about key customers.
   • Relationships with key stakeholders.
   • Company history and values.
2. Ask questions of both sources and receivers of knowledge to help determine the best knowledge transfer methods to use.
   • What is the nature of the knowledge? Explicit or tacit?
   • Why is it important to transfer?
   • How will the knowledge be used?
   • What knowledge is critical for success?
   • How will the users find and access it?
   • How will it be maintained and remain relevant and usable?
   • What are the existing knowledge pathways or networks connecting sources to recipients?

(Source: McLean & Company, 2013; N=121)

A basic willingness for a role incumbent to share with a successor is the most powerful item in your tacit knowledge transfer toolkit.

Formal documentation is critical for explicit knowledge sharing, yet only 40% of organizations use it.

Rewarding and recognizing employees for doing knowledge transfer well is underutilized yet has emerged as an important reinforcing component of any effective knowledge transfer program.
Don’t forget it!

Alternative work arrangements are critical tools that employers can use to achieve a mutually beneficial solution that mitigates the risk of loss associated with key roles.

Alternative work arrangements not only support employees who want to keep working, but they allow the business to retain employees that are needed in key roles.

In a survey from The Conference Board, one out of four older workers indicated that they continue to work because their company provided them with needed flexibility.

And, nearly half said that more flexibility would make them less likely to retire. (Source: Ivey Business Journal)

Flexible work options are the most used form of alternative work arrangement

(Source: McLean & Company, N=44)

Alternative Work Arrangement

Description

Ideal Use

Caveats

Alternative Work Arrangement

Description

Ideal Use

Caveats

If the knowledge and skills of older employees aren’t valued, then:

• Alternative arrangements will be seen as wasteful accommodation of a low-value employee.
• Time won’t be allowed to manage the transition properly and make appropriate changes.
• Other employees may resent any workload spillover.

Make sure alternative work arrangements can be done right and are supported – they’re often solutions that come with additional work. Determine the effects and make appropriate adjustments.

• Review processes, particularly hand-off and approval points, to ensure tasks will still be handled seamlessly.
• Assess organizational policies to ensure no violations are occurring or to rework policies (where possible) to accommodate alternative work arrangements.
• Speak to affected employees to answer questions, identify obstacles, gain support, redefine their job descriptions if required, and make appropriate compensation adjustments. Always provide appropriate training when skills requirements are expanded.

DairyNZ leverages alternative work arrangements

INDUSTRY
Agricultural research

SOURCE
Rose Macfarlane, General Manager Human Resources, DairyNZ

• DairyNZ employs many people in specialized science research roles. Some very senior employees are international experts in their field.
• Several experts have reached or are nearing retirement age. These pending retirements have come as no surprise.
• However, due to the industry’s lack of development investment in the past, there is a 20–30-year experience gap in the organization for some key roles.

• One principal scientist gave over two years’ notice. His replacement – an external candidate – had been identified in advance and was hired once retirement notice was given.
• The incumbent’s role was amended. He worked alongside his successor for 18 months in a controlled hand-over process.

• The result was ideal in that the advance notice allowed full knowledge transfer to take place.

• Anne T. Roberts is an experienced organization development professional and executive business coach who works with leaders and their organizations to help them create, articulate and implement their change agenda. Her extensive experience in change management, organizational design, meeting design and facilitation, communication and leadership alignment has helped leaders tap into their creativity, drive and energy. Her ability to work with and coach people at the leadership level on a wide range of topics has them face their own organizational stories.

• Amanda is responsible for researching people- and leadership-focused trends, developing thought models, and providing resources, tools, and processes to build and drive the success of leaders in a disruptive world.
• Her expertise in leadership development, organizational change management, and performance and talent management comes from her experience in various industries spanning pharmaceutical, retail insurance, and financial services. She takes a practical, experiential approach to people and leadership development that is grounded in adult learning methodologies and leadership theory. She is passionate about identifying and developing potential talent, as well as ensuring the success of leaders as they transition into more senior roles.

• Transfer IT knowledge before it’s gone.
• Effective knowledge transfer mitigates risks from employees leaving the organization and is a key asset driving innovation and customer service.

• There is a growing gap between the competencies organizations have been focused on developing, and what is needed in the future.
• Employees have been left to drive their own development, with little direction or support and without the alignment of development to organizational needs.