Is succession planning the secret to employee retention?
In an ultra-competitive labor market, succession planning has the potential to help boost employee retention. But employers first must avoid the succession planning pitfalls revealed by leaders in our 2022 Executive Survey.
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Employee retention today doesn’t rely on one thing. It depends on many factors. As employee retention strategies become more complex, employers are increasingly looking beyond the traditional drivers of retention, such as pay and benefits.
Employers are also bucking tradition with their talent acquisition strategies. In Ceridian’s 2022 Executive Survey of 2,000 leaders around the globe, 95% of respondents said that their organizations are seeking boomerang talent – former employees – to fill job vacancies.
So, how can organizations prevent these employees from leaving in the first place? In our 2022 Pulse of Talent survey of 6,800+ employees from around the world, 37% of respondents said opportunities for career advancement would convince them to leave their current job for a new role. Another 27% said they would leave for opportunities to learn and develop new skills.
Succession planning provides a clear opportunity for employers to fulfil these needs for their workers and boost employee retention while also bringing broader benefits to their organizations.
But it’s an area that isn’t without challenges for employers. Let’s explore the current state of succession planning in organizations today and the pitfalls to avoid in your succession planning strategy.
How are employers using succession planning today?
Our 2022 Executive Survey reveals valuable insights about the current state of succession planning. On the surface, succession planning appears to be flourishing in organizations today. But when you dig deeper, there is work to be done to ensure that succession plans are effective at employee retention and helping secure the future of businesses.
An incredible 88% of Executive Survey respondents report that their organizations use succession planning.
While this might seem like a succession planning success story, a deeper dive into the Executive Survey findings tells a different tale – one that makes it difficult for succession planning to support an employee retention strategy.
Rather than relying on their succession plans, 74% of our Executive Survey respondents said that their organizations often or always hire external candidates for leadership roles as opposed to promoting from within.
Respondents report that external candidates are hired for leadership roles because of what they bring to the table rather than issues with internal candidates like a lack of necessary job-related skills (14%), managerial skills (13%), or interest in leadership roles (11%). Thirty-five percent said they hire externally for leadership roles to gain a fresh perspective, and 27% said it gives their organizations a competitive edge.
Avoid these succession-planning pitfalls
While hiring external candidates can make strategic sense for some roles, organizations and their employees can benefit from providing advancement opportunities through sound succession planning. These benefits include increasing employee retention and engagement and supporting business continuity.
But employers can only reap these rewards if they avoid a few succession-planning pitfalls first.
All policy, no action
Our 2022 Executive Survey paints a picture of organizations that have implemented succession planning as a policy but haven’t taken care to ensure that these plans are impactful. So, they continue to experience problems like lengthy vacancies for key leadership roles. Almost half (43%) of respondents stated that these roles go unfilled for four months or longer.
While HR will play a central role in succession-planning strategies and initiatives, they can’t be solely responsible for its success. To be effective, succession planning must be a company-wide initiative that is seen as an evolving process rather than words on a page.
Focusing only on senior leaders
In our Executive Survey findings, we see a heavy focus on succession planning for senior leaders versus other types of roles. When asked about which types of roles are included in their succession-planning strategy, 73% of the executives surveyed said their organizations use succession planning for senior leadership roles. The level of adoption drops to 62% for critical technical experts, 58% for subject matter experts, and 49% for people leaders.
Succession plans should be broad and consider the organization holistically. Providing career paths and talent development for employees throughout the organization can help reduce turnover among your highest performers, as well as in key subject matter expert and technical roles.
Employers should also take care to avoid considering only one successor per role. That successor could decide to take a different internal position or accept a role at another company, leaving you to start over in the process. Instead, focus on building talent pools for succession.
Not using succession-planning tools
Just over half (52%) of our Executive Survey respondents currently use technology to map talent/identify leaders. But succession planning shouldn’t be a subjective process. It should favor a data-driven approach over intuition.
Organizations should leverage technology to help with succession planning. The right tools can help leaders create coverage plans for key roles to reduce organizational risk and help reduce regrettable turnover. It can help track readiness for promotion and support employees’ ongoing development.
Succession-planning software allows organizations to make more informed decisions about employee career paths based on performance, flight risk, compensation, and other essential data. It also helps keep succession planning top of mind at all times, rather than only when a successor is needed.
By avoiding these pitfalls, organizations can build comprehensive succession plans that can become another effective tool for improving employee retention in a competitive talent market.