February/March 2009 Newsletter

Risky business - uncertain times call for HR to deliver risk managment solutions

The hot topic in business and HR in 2009 is risk management. The business risk associated not just with losing key talent, but failing to optimise existing talent, is as critical and top of mind at the executive table as operational risk, technology risk, and even financial risk.Our recent survey on succession management practices suggests a growing shift to focus on developing and nurturing internal talent, rather than external talent acquisition. This trend is likely to gain momentum in 2009, with many organisations turning the lens inward to source successors for key roles, in favour of recruiting from the external market.

What is a risk in HR terms?

We are talking about human capital risk: the risk that a business cannot deliver its goals because the right people are not in the right roles and/or are not ready, willing or able to fulfil these roles.The current economic climate only highlights this further. At a time when many organisations will be forced to reduce their overall headcount, remaining employees will need to step up to the mark and drive organisational performance. There are many metrics available to measure workforce productivity and its relationship to balanced scorecard measures. So calculating the return on investment for human capital is not only possible, it is essential. The problem facing many organisations is the lack of sound processes and technologies to make human capital risk management easy, as well as smart tools that allow the effective management of internal succession pools.

Why aren't businesses managing human capital risk?

Most respondents to our survey say they do attempt to manage this risk - they also admit they could be doing much better. Typically they are dealing with relatively subjective processes for the internal identification and management of talent. This is by comparison to much more rigorous external selection processes. For example, it is not unusual for organisations to utilise comprehensive assessment processes for selection in external recruitment: from psychometric assessment to structured behavioural interviews to full blown assessment centres. This rigour is rarely applied internally though, with promotion and advancement decisions often guided by subjective appraisals, limited information and a lot of gut feel.

The other key challenge highlighted by the survey respondents were outdated processes and spreadsheet-driven data sources that are immensely time-intensive and make succession management a laborious chore rather than a dynamic, insightful and value-adding process for building organisational capability. It stands to reason that succession management has found itself in the "too hard basket" as a result.

What is the difference between Succession Management and Succession Planning?

Succession planning is the traditional approach of managing successors for only a handful of positions, usually at the top of the hierarchy. It helped to answer the question "what do we do if John gets hit by a bus?" In this way, succession planning was a crisis management tool useful in the short term to address succession risk in critical roles.

Succession management is the contemporary approach that takes a short, medium and long term view of the capabilities required by people in the business to meet its strategic goals. So whilst critical roles and flight risk are still managed, there is a strong emphasis on individual and organisational capability gaps, the initiatives required to fill them, and the resulting succession pipeline. It allows organisations to measure and manage their organisational  "bench strength" - what is the quality and quantity of players sitting on the bench, ready to take to the field when called upon.

Succession management is a strategic and proactive approach and is not limited to roles at the top. Succession management also empowers managers at all levels to own the process. In this way, succession becomes much more transparent and interactive, rather than a secretive process in the hands of an elite few.

What are the future trends in succession management?

We are making great strides in this space. Sophisticated technologies now enable HR, line managers and senior executives to manage the process of succession in an objective way through web based systems that make information easily accessible and up to date in real time.

Online technologies will replace the paper, spreadsheets and stand alone systems currently used in most businesses. Manual processes will be replaced by dynamic, intelligent web based systems that provide immediate and useful information on which sound succession decisions and plans can be made. Organisations will be able to empower line managers at all levels of the organisation to build their talent pipelines and ensure the business's future capability needs are met.

Further, the organisational development function will be supported with quality metrics and talent management forecasts to ensure the organisation is always on the front foot and in a position of strength.

Probably the most exciting innovation of all is that these systems will all integrate. Data will migrate from HR information systems, to recruitment systems, to performance management systems, to training and development and ultimately succession systems. One point of access to all talent management information.

For more information or to access our 'Succession Planning and Management in Tough Times', please visit http://www.pageuppeople.com/whitepaper1.htm

Social Network Updates

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PageUp People Podcast Series

The latest edition features an interview with Louise Polednik, PageUp People Client Portfolio Manager. Louise discusses recent findings from a PageUp People Performance Management survey and what companies can do to boost their performance management strategy. To listen to this podcast visit: http://www.pageuppeople.com/resource_download.htm

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