should you tell high potentials they’re high potentials...

best practicesShould you tell high potentials they’re high potentials?BEST PRACTICES FOR EFFECTIVE SUCCESSION PLANNING

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Best Practices | Should you tell high potentials they’re high potentials? Best practices for effective succession planning

When Susan handed in her resignation, it shocked her manager. As one of the top-

performing employees in her department at the regional hospital where she worked,

she was on the fast track for a promotion. Now, not only would the manager have

a position to fill, but they also wouldn’t have anyone with Susan’s deep knowledge

to take on the promotion they had planned for her. Like many high potentials,

Susan was never told that she was on the fast track or that she was one of the

organization’s most valued employees.

Whether to tell high potentials they’re high potentials has been an age-old debate in HR. According to a 2012 survey by

the American Management Association, succession planning is the most guarded of all HR policies and procedures, with

only 1 in 9 respondents saying their company’s succession policies were very transparent. 1 Clearly, the default in most

organizations is to be less than forthcoming about succession.

The cost of that lack of transparency is significant. When it

comes to retention, for instance, 33 percent of informally

identified high-potential employees (HIPOs) actively seek other

employment, while only 14 percent of formally identified HIPOs

do so. 2 A transparent succession plan clearly increases retention

of HIPOs. Employees also want career-pathing, citing it

consistently as a top priority.

In this paper, we will cover some of the key things to keep in mind

as you evaluate your succession planning transparency options.

1 http://talentmgt.com/articles/view/shh-succession-planning-underway 2 http://www.ccl.org/leadership/pdf/research/highPotentialTalent.pdf

According to the American Management Association, only 1 in 9 respondents say their company’s succession policies are very transparent.

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Making the case: A compelling vision of the future is central to employee engagement

One of the first things you’ll want to consider as you open up your succession planning process is the impact it will have on

employee engagement. Employee engagement has become a C-level dashboard metric. It’s no wonder why: High levels of

engagement lead to a 65 percent decrease in turnover, a 21 percent increase in productivity, and 22 percent higher profitability. 3

A more transparent process can lead to a natural increase in employee engagement, but it’s important to understand why.

A view of the future is the critical link between succession and engagement — it’s all about having a shared vision. That vision

needs to include where the organization is going and be compelling and specific to each employee. Absent conversations about

the future, organizations leave a void that zaps engagement, not only negatively affecting current productivity and performance,

but also retention.

Going back to our earlier example, what if Susan’s manager at the hospital regularly engaged her in conversations about her

future goals and current performance? The manager might have picked up on warning signs that Susan was considering

leaving, allowing the manager — or even HR — to act before it was too late. With Susan in the dark about her value to the

organization and her manager’s planned new role for her, it’s easy to see why she looked elsewhere. She became disengaged

when it wasn’t clear what her value was to the organization. Succession planning has the best chance of engaging employees

when employers share as much information with them as possible.

Most important, to sustain long-term engagement, employers should show employees that they are valued members of

the organization. It’s one thing to tell employees; it’s another to act on it. Consider regular, targeted career development

opportunities, as well as stretch assignments or cross-departmental work, and supplement that with financial rewards, awards,

and other forms of recognition to sustain high engagement levels.

Losing a high-potential employee because you failed to engage them and sustain their engagement is a lost opportunity.

Not only is it bad for the present and future states of your organization, it can cost time and money, and, worst of all, hurt

company performance.

What to do about younger generations?Younger generations — and millennials in particular — are transforming and pushing the limits of traditional employee development programs. Millennials crave feedback on their work, with many asking for more regular reviews and casual discussions about their performance and development. So it should come as no surprise that they want rapid career advancement and exposure to new opportunities.

This may feel like a burden to the organization and a play to one particular group of employees, but there are advantages to doing more frequent performance reviews and offering continuous feedback. Increasing your organization’s agility in succession planning and employee development can make it more responsive to internal changes or external market opportunities.

3 http://www.gallup.com/strategicconsulting/161459/engagement-work-effect-performance-continues-tough-economic-times.aspx

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How much information do you share?

Understandably, most organizations get nervous when it comes to sharing information about succession plans. What if Susan

uses that knowledge to take advantage of her high-potential status and stops pushing her performance to the limits instead of

becoming even more engaged? What if she uses it to go into the job market in search of a better role outside of the organization?

What if the organization’s plans change and Susan’s skills aren’t as highly valued as they once were? Although these are all

possibilities, following these simple principles will help prevent them from becoming realities.

• Determinehowmuchinformationyou’rewillingtoshare.

Only organizations can decide what they are willing to tell

employees as part of their succession plan. Being consistent

across the organization about how much you’re willing to share

and when is critical to developing an effective plan.

• Realizethatflexibilityhasbecomemoreimportant,notless.

Plans change, and organizations need the ability to make those

changes without breaking their word to employees. To retain that

flexibility, talk about career-growth potential as an opportunity

rather than a certainty.

• Illuminateapathforwardforemployees.Instead of the

promise of a job, succession planning should focus on areas

of growth that can accelerate employees’ development and

readiness for one or even multiple roles.

• Findoutwhatemployeeswant.If you’ve done your homework,

you should already know this, but aligning the employee’s and

organization’s goals can ensure that the employee is building

the skills to be successful in their career while helping the

organization, too.

• Focuslessonthecareerladder.Very few of your employees’

career journeys take a strictly vertical approach. Look at

opportunities to develop skills that will allow them to take advantage

of a range of roles — including lateral moves, stretch assignments,

and rotations — instead of concentrating on a single track.

Overall, an organization’s ultimate goal should be to share enough

information to retain employees and make sure they continue to

develop, while giving the organization the flexibility to move forward

effectively. It isn’t an easy balancing act, but giving employees the

information they need to grow and realize their potential can be one

of the best ways to improve your succession program.

How far in advance should you plan employee development?When it comes to employee skill development, it’s problematic to look at it from only a short-term view. But how far in advance should you be looking?

AccordingtoaSHRMsurvey:

• 84percentoforganizationsconsidered skills that would be needed one year in advance.

• 76percentoforganizationsconsidered skills that would be needed two years in advance.

• 62percentoforganizationsconsidered skills that would be needed three years in advance.

The percentage drops to under half for projecting four (47 percent) and five (44 percent) years in advance, and plummets to 14 percent when the time frame is six years out. Given the long time frame some skills take to develop, starting early is advantageous.

http://www.shrm.org/about/foundation/research/documents/developing%20lead%20talent-%20final.pdf

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Communicating assessment criteria

The most difficult part of a transparent succession plan can be communicating exactly how you evaluate employees for future

opportunities. Although some organizations may be inclined to skip this portion of the exercise, showing how decisions are

made can help reinforce the commitment to communicating what it takes to succeed and can increase the level of fairness and

awareness of how employees are evaluated.

Going back to our example with Susan, imagine if she had been given clear

guidance on what it would take to move up in the organization, along with clear

criteria on how she would be evaluated. She could’ve seen that there was a

path forward in the organization and that she didn’t have to look externally for

career advancement. As with all of the suggestions we’ve outlined, information

not only helps organizations make better decisions, it helps employees as well.

The first step is ensuring that your employees know how they’re being

evaluated, which can help set boundaries and increase objectivity, as well as

encourage employees to be active participants in their own development. It

also allows employees to know where they’re on track and where they may

need to adjust as early as possible.

For employees who exhibit great potential, you need to not only tell them

they’re valued but also show them. Consider a compensation adjustment,

perk, or another incentive in lieu of an immediate promotion. It’s also the best

time to make it clear that being a high-potential employee isn’t a permanent

state but one that is contingent on performance.

For those who are not categorized as high potentials, having a transparent and

fair process for evaluating employees for succession opportunities can help

ease an uncomfortable situation for employees and managers alike — and

increase engagement. It provides an opportunity for a person to improve, with

clear performance evaluation and decision-making transparency.

Organizations can improve the engagement of both high potentials and those striving for high-potential status by making it as

clear as possible how an employee can become a key member of the succession plan. If you aren’t clear about the criteria — or if

you are unwilling to show high potentials that they are truly important to your organization — you could risk lowering engagement.

Even worse, you could lose your highest-potential employees.

How often should we use succession planning to fill our roles?When a position opens up, many organizations want to look internally first, but it isn’t always possible. How often should you expect to make a hire based on your succession planning efforts? According to HCI, if your organization hires less than 50 percent through your succession plan, you should look at improving the effectiveness of your succession planning efforts.

http://www.hci.org/blog/transparency-succession-planning

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Conclusion

Transparent succession planning and career development can feel complicated, but they don’t have to be. With these

considerations in place, you’ll be able to make informed decisions about the transparency of your succession and development

plans and ensure that the talent you’re growing in your organization is the talent you’ll keep.

With SuccessFactors, an SAP company, you can support your organization as it strives to be more transparent with its

succession planning efforts. As the global leader in HR technology, we can get your organization where it needs to go.

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