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Workforce/Succession Planning

Workforce/Succession Planning. Wayne F. Cascio EMBA Class of ’08 December 14, 2007. Workforce Planning. An effort to anticipate future business and environmental demands on an organization, and to provide qualified people to fulfill that business and satisfy those demands.

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Workforce/Succession Planning

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  1. Workforce/Succession Planning Wayne F. Cascio EMBA Class of ’08 December 14, 2007

  2. Workforce Planning An effort to anticipate future business and environmental demands on an organization, and to provide qualified people to fulfill that business and satisfy those demands

  3. Components of the WP System • A talent inventory to assess current workforce and to analyze how it is being used • A workforce forecast to predict future people requirements • Action plans to enlarge the pool of people qualified to fill the projected vacancies through such actions as recruitment, selection, training, placement, transfer, promotion, development, compensation • Control and evaluation to provide feedback on the overall effectiveness of the HR planning system by monitoring the degree of attainment of the HR objectives

  4. Talent Inventories • Assess the numbers, skills, and experience of the current workforce to forecast future workforce needs • Assessment includes analysis of current employee information: • Current position information • Previous position in the company • Other significant work experience • Education • Language skills and relevant international experience • Training and development programs attended • Community or industry leadership responsibilities • Current and past performance appraisal data • Disciplinary actions • Awards received

  5. Workforce Forecasts • Two types of forecasts are used to estimate labor requirements at some future time period • The external and internal supply of labor • The aggregate external and internal demand for labor

  6. Supply Forecasts – 2006-2012 • U.S. workers age 55-64 will grow 51% to 25 million • Those age 35-44 will shrink by 7% • Half of the nation’s 400,000 electric-utility workers will be eligible to retire • Half the government’s civilian workforce also will be eligible to retire • 40% of the manufacturing workforce is expected to retire by 2015 • Result: A possible shortage of 5 million skilled workers between 2010-2012

  7. Assessing Workforce Viability vs. Future Requirements Attract: External Develop: Internal Supply: External Performance: Internal Role Design: Internal Required Workforce Today’s Workforce + + + +/- +/- - - - +/- +/- Retirement Turnover Competition: External Technology Promotion/ Transfer Identify sources of supply and leaks and then determine net gain or loss and whether net human capital will be adequate

  8. Assessment Model

  9. Matching Forecast Results to Action Plans • Action programs: Helping organizations adapt to change • Action programs include six major elements: • Recruitment • Selection • Performance management • Training and development • Transfer • Career-enhancement activities

  10. What Companies are Doing Now • Southern Co., Atlanta utility – create a retiree reservists pool • Lincoln National, financial services - mentoring, flexible work arrangements for older workers • IBM – taps retirees to work on special projects; all employees post detailed descriptions of their job experience on the “Blue Pages” • Home Depot - partnering with AARP to recruit older workers

  11. Management Succession Planning • It’s pervasive, integrated with strategic planning, and widely accepted among firms that do WP • GE, IBM, and Home Depot are typical • At Home Depot, for example, CEO participates in reviews of top 130 officers, takes detailed notes, and scrutinizes every promotion

  12. Typical Process – GE and IBM • Responsibility: Line Executives (Division Presidents to CEO) • Formal presentations to corporate policy committee – Chair, Vice Chair, President • Overall assessment of strengths/weaknesses of the unit’s executive resources • Present performance + potential of key executives and potential replacements (photos included) • Ranking of all incumbents in key positions (present performance and potential) • Policy committee provides review, critiques, and, sometimes, specific career-development actions to be taken

  13. Typical Management Replacement Chart A typical chart used for management-succession planning. Name: Title: Months in Position: Photo Positive and negative attributes: + Global thinker, great coach/mentor, solid technical background - Still maturing as a leader Developmental needs: Needs experience in e-business Attend company’s senior leadership-development program

  14. Looming Crisis in CEO Succession in Asia • 2/3 of publicly traded companies in Asia are controlled by a single shareholder (usually the founder) vs. 3% in U. S. • With no succession plan in place, there's no certainty for investors, business partners, or employees.

  15. CEO Succession at Quest Diagnostics • $4.7 billion medical-testing company • 4 key lessons for other firms:

  16. Four Key Lessons for CEO Succession • Start early - The current CEO started thinking about succession 5 years before his departure, giving him plenty of time to groom his successor. He got the board involved from the start. • Choose wisely - The current CEO put 200 executives from Quest and a recently acquired rival through day-long assessment-center exercises, that is, decision-making assignments, that allowed him to see their leadership skills in action.

  17. Succession Lessons (cont.) • Fix the big stuff - The current CEO worked on improving the speaking skills of his heir apparent, making him less of a micromanager, and speeding up his decision-making. • Keep at it 24/7 - In addition to daily training sessions with a coach, and unannounced tests, the current CEO and his likely successor spoke every Sunday about the successor's evolving management style.

  18. CEO Succession and Firm Performance • Study of 228 CEO successions • Successors may be outsiders or insiders • Insiders: Expected followers or contenders (after dismissal) • Must consider other changes w/in top management too • Sr. executive turnover has a + effect in contender succession, but a negative effect in outsider succession

  19. CEO Succession and Firm Performance (cont.) • Lengthy tenure of prior CEO leads to inertia, but if too short it leads to disruption that the firm hasn’t recovered from • Conclusion: there’s an inverted U-shaped relationship between departing CEO tenure and post-succession firm performance

  20. Succession Planning and Small Business • Only 30% of family-owned businesses outlive their founders • Often this is due to lack of planning

  21. Succession Planning and Small Business • What family-owned businesses are doing: • 25% let kids compete and Board chooses a successor • 35% groom one child from early on to take over • 15% let kids compete and choose a successor w/o 3rd-party input • 15% form an “executive committee” of two or more children • 10% let the kids choose their own leader

  22. What If CEO Dies Suddenly? • Plan ahead to establish a committee to assume immediate control of the company while it searches for a permanent successor • Naming a successor too quickly can anger employees still coping with the loss of the boss

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