Riding the Age Wave Towards Succession Planning

An age wave of massive proportions is swamping our national economy, causing a seismic shift in the age distribution of the general population and specifically, the labor force. If you own a business, are in the ranks of management for a company or even work for a government agency, you are about to experience tremendous upheaval in the ability to identify and recruit, or bring up through the ranks, new leadership for your workforce.

An overwhelming void of talent is on the horizon. One fifth of America’s large, established companies will be losing 40 percent of their top level talent in the next five years as senior executives retire. Over the next 15 years, there will be a 15 percent decline in the number of people ages 35 to 44, leaving fewer people available for top management positions. This phenomenon is driven by the following three demographic realities that no organization can ignore:

The disproportionate size of the baby boom generation.

The increasing longevity of our lifespan.

Reduced national birth rates.

The baby boomer generation has re-shaped American life and fueled much of the country’s productivity for the last several decades. How companies manage this mass exodus of skills will affect their future. Few organizations are prepared to compete in finding their next generation of employees and adapt to the inevitable transformation of the workforce. The failure of many companies to designate or groom successors exposes a weakness in their strategic thinking. The concept of succession planning has become an important part of organizations’ strategic planning, but not in all companies.

Too often, many think of succession planning as a strategy applied only to family owned companies or large conglomerates, but it even affects the government. According to the Bureau of Labor Statistics, 50 percent of federal employees and 70 percent of federal senior managers will be eligible to retire by 2010. The Government Accountability office estimated in 2003 that by 2007, 55 percent of Senior Executive Service employees will retire or leave office. Dick Morton, executive director of the American Management Association’s Federal Learning Institute, calls the federal government’s inevitable succession problem “the big gorilla” because of how the federal government affects so many people.

In fact, succession planning should be a part of every organization’s strategy and their vision for the future. Succession planning is a process where an organization recruits and develops employees to fill each key role within the organization. Through the succession process companies identify, retain and develop top tier performers thus creating a succession of leadership within the organization. Through succession development companies recruit superior employees and also develop benchmarks to assist in targeting the best fit for a new hire and for each position. The goal is to identify and develop core leadership within an organization and establish a path of leadership that flows seamlessly through the organizational structure.

The succession process of developing employees and leadership requires mentoring, coaching, team building, training, and job rotation to replace key leadership from within the organization. It requires an understanding of the developmental and communication needs of employees, as well as modeling, teaching and developing leadership skills.

It is important to ensure that all key employees understand their roles and career paths within their organizations and that senior executives periodically review their top leadership and those in the next lower level to determine several backups for each senior position. This process is essential because of the years it often takes to groom effective senior managers.

The real key in succession management is to create a match between an organization’s future needs and the aspirations of individuals within the organization. The most important tool for keeping talented individuals on board is providing opportunities for growth. If the identified top performers within an organization feel that there are no opportunities to develop their talents or challenge themselves, then departure is likely.

Effective succession development is a journey, not a destination. There must be flexibility and adaptation based on feedback from all levels. Succession leadership also must adapt to changing technology and be willing to learn from the experiences of other organizations.

How can you swim rather than sink in the age wave?

Make succession planning part of your overall business strategy and planning.

Rely on your Human Resource experts to guide you to the tools and processes of succession planning, but allow the front line managers to implement deliverables and staffing needs.

Identify a continuous stream of talent that focuses on future leaders.

Use outside firms who can help implement succession planning and utilize assessment tools for benchmarking and leadership development.

Implement individualized developmental plans for each employee that include coaching and leadership development.

Monitor the succession planning process and build in the use of assessment tools that measure change.

The age wave within our society is bringing sweeping change in how businesses recruit and retain their talent. Current corporate leadership is about to roll out with the tide leaving behind an absence of talent, knowledge and leadership in both the private and public sectors. Failure to groom the next generation of managers and top leaders will likely find companies caught in an undertow of knowledge loss, talent gaps and lost productivity. The wave is coming. Are you prepared to surf it with success?

Charlie Cummins, MS, LPC is a partner with Ron Young International Inc, a firm specializing in succession planning. Please contact Charlie for inquiries and more information.