Improve Employee Engagement Through Succession Plans [Report]

94% Of Employers Agree

Even though succession plans form a vital executive tool for managing the talent within an organization’s upcoming pipelines, as well as the future growth of the company, they’re still horrendously complicated endeavors.

Therefore, by taking into account the findings from a Software Advice survey of senior and junior personnel within organizations, this report will aim at shedding light upon the various benefits of well-executed succession plans, primarily the vital metric of employee engagement.

Furthermore, this report will also aim at analyzing avenues through which corporate higher-ups can utilize succession-planning softwares to pinpoint and nurture future leaders with greater efficiency, specifically for personnel positions beyond the C-suite.

Key Findings:

  1. Polling has disclosed that 62% of surveyed employees strongly believe that they would find themselves “significantly more engaged” had their organizations laid succession plans in place – and 94% of employers concurring that succession plans do positively affect employee engagement scores.
  2. Within surveyed employees agreeing upon the vital effects of succession plans on their level of engagement, over 90% were younger employees between the ages of 18 to 34.
  3. 81% of employers have confirmed usage of succession planning softwares, while 79% have even laid such plans in place for mid-level managerial roles.

Introduction

Essentially, the process of laying out succession plans is defined as “the identification of job vacancies that can be expected to occur through retirement or attrition, and the strategic consideration of where and how internal candidates might fill those vacancies.”

Basically, it refers to the leadership responsibility of pinpointing, securing, and nurturing present talented employees for higher executive roles in the future.

Now, let’s study the example of an employee taken on board as a cashier for a national retail chain, in order to better understand well-laid succession plans.

Right from the get-go, employee profiles are constructed for them within the HR software of the organization. As the employees perform their duties and face annual reviews, their professional strengths and weaknesses are acknowledged and reported within the profile.

If the weaknesses are significant or recurrent, and aren’t addressed by the employees themselves in time, training plans are created and enforced to bring them up to scratch on those fronts.

Once those wekanesses are resolved, those employees garner better reviews, and are subsequently added to the talent pool from which the next eligible manager is chosen, as and when a position becomes available.

While the example may make it seem deceptively straightforward, well-prepared succession plans require the display of a dizzying array of skills and processes from the leadership – including constant tracking and reviewing of employee performance, entrenched processes which allow for identification of candidates with high potential, vital training and development while ensuring that potential leadership candidates don’t lose engagement at work, as well as timely preparation and education of required skills to ensure that any ensuing vacant positions already have eligible and talented replacement pools in place.

Furthermore, the organizational infrastructure must be developed in a way as to allow for greater flexibility and agile working, while imparting a sense of empowerment and engagement to most employees.

After all, if the employee isn’t invested in the future of the company, leadership development would hardly matter to someone who doesn’t want it in the first place.

Thus, in order to expand their understanding of the effects of such corporate strategies, Software Advice conducted surveys among sample sets of employers and employees, collecting data on engagement and automated tools along the way.

Industry experts were also approached and consulted in order to unearth concrete links between succession planning and business performance, as well as the efficacy of software resources for conducting this process.

Succession Plans And Employee Engagement – Employers

94% of employers agreed that succession plans serve as great incentive for employees.

Donald Delves, director of executive compensation at Towers Watson, stated that the definite knowledge of a future with the organization “keeps people engaged and motivated, and retains them. It keeps them at the company if they’re looking elsewhere.”

Level of Engagement Resulting From Succession Planning

This finding resonates among the surveyed employee pools, who stated that employment at organization with well-laid succession plans would make them “significantly more engaged” than being employed at a company without one.

This phenomenon was corroborated by Ashish Chauhan, product manager at Halogen Software. He reported that one of the primary reasons behind this occurrence is because it grants the employee the ability to decide and enforce their own future with a business.

As Ashish puts it “The more an employee feels .. they’re manageing their own career, the more engaged and efficient and productive they are in their day-to-day work.”

Succession Plans And Employee Engagement – Younger Employees Between 18 to 34

As you must have surmised by now, succession plans require incremental implementation.

The primary stage of a well-executed plan requires the pinpointing of possible leadership material among the employee pool, and the secondary stage involves the development of this identified potential till it matures.

Thus, mentorship and training must be carried out under the watchful eye of experienced employers so that the identified employees can attain vital leadership skills.

This is particularly important as, in the words of Delves, “[Employers can] clearly identify what skills [employees] need to develop and what experiences they need to have to be ready to move to the next step or level in their career.”

Therefore, the development of potential becomes a vital constituent in succession plans.

As found through the efforts of previous Software Advice research, roughly 57% of employees within younger age brackets stated outright that professional development training at their place of work would significantly affect their career path and choice to pursue their goals within their present company.

This brought on an interesting question – does employee age affect the degree of positivity regarding the effects of succession plans on workplace engagement?

And surprisingly, or maybe not, the answer was clear – it plays a significant role.

After dissecting the compiled employee data on the criterion of age, it was revealed that success plans have far greater impact on employees in younger age brackets.

Furthermore, more than 90% of employees within the ages of 18 to 34 stated that their engagement levels would definitely improve when working for an organization with clearly laid out succession plans.

Employees by Age: Impact of Succession Planning on Engagement

Since this age bracket is primarily composed of members of the “Gen Y’ or “millenial” generation, which is set to account for 75% of the professional workforce by 2025, it would be advisable for employers to ensure that these workers are loyally committed to the future of the company right now, so that the organization may enjoy stability and development from their talents in the future.

Succession Plans For Mid-Management

As pointed out by Mark Brandau, vice president of product solutions at SuccessFactors, succession plans were created by companies in the past solely for the senior-most executive leadership roles as “a little bit of assurance in larger companies and public markets.”

Succession plans fulfilled the purpose of assuring investors that the organization’s net worth would be safe-guarded if changes in leadership occurred.

However, those circumstances have changed in today’s times, with “a significant trend … to take succession planning and career development planning much further down in the organization, and across the board,” according to Brandau.

Thus, the implementation of succession plans has also been applied to lower-level positions across organizations, in the last “three to five years”.

This trend has been corroborated with recent findings that 79% of surveyed employers have enforced succession plans for managerial positions as well, alongwith 56% additionally implementing similar safeguards for assistant managerial roles.

Chauhan, in his support of this policy direction change, used the same example of the national retail chain to denote that such organizations usually “suffer a lot when they lose an area manager, or when they lose even a store manager.”

Moving along the same instance, such events may necessitate another area manager to fill the gap during the search for an adequate replacement, due to which managerial lines are dangerously stretched out.

Chauhan continues that it’s to avoid circumstances like these that organizations “have to have a strong succession plan, because that’s where they lose a lot of efficiency.”

Positions Targeted With Succession Planning
Positions Targeted With Succession Planning

If the national retail chain did have a well-executed succession plan in place, then the cashier we described earlier may be able to serve as an adequate replacement, after accruing positive reviews, and save the company significant amounts of lost time and effort.

This little example also serves to highlight exactly why succession planning policies aren’t necessarily best served when laid in place for positions purely based on seniority, but also their pivotal nature within the organization.

Especially since most pivotal positions which may severely hamper the workflow and efficiency of the organization are usually found towards the mid-bottom rungs of the corporate ladder, rather than those at the top.

SMBs Form 40% Of Organizations With Succession Plans

The next question tackled within this report dealt with investigating the veracity of Brandau’s suggestion that SMBs are regularly laying succession plans in place.

And this was supported by the survey data. In fact, more than 40% of surveyed organizations held fewer than 250 employees, while 16% employed between 251 and 500 people.

Business Size, by Number of Employees
Business Size, by Number of Employees

Furthermore, Chauhan went on to confirm from experience that organizations which invest in succession-planning software are often those undergoing phases of growth and development.

To quote him, such companies often decide upon this investment into the software because it’s no longer possible to “tackle [career development] individual by individual.

This could be as many as 100 to 250 employees. I think of that as the line where it becomes extremely critical for organizations to start thinking about succession.”

Delves further chimes in that “It doesn’t matter how big or small your company is. There’s a need for [succession plans].”

Succession Planning Software Used By 81% Of Organizations

And this forms the key that allows SMBs with limited resources to initiate succession planning for all levels of the organization.

“The software is pretty important,” as Delves puts it. ”It makes [succession planning] systematic and organized. It makes it easy to summarize … and present [plans], and keep the data consistent from one year to the next.”

Tools Used for Succession Planning
Tools Used for Succession Planning

Chauhan and Jim Bowley, vice president at PeopleFluent, both agree – with the latter stating that “putting aside potential budget considerations that smaller organizations may [have], it’s almost more critical for small and midsize businesses to have this type of software deployed – particularly those in high-growth industries where one leader … can make a tremendous difference.”

The opinions of both of these experienced professionals is corroborated by the data on SMBs in the survey sample.

As per the findings, 81% of organizations utilize either commercially purchased or internally developed software to initiate and enforce succession plans.

Software Boosts Efficiency In Assessments And Communication

This report also aims at highlighting the exact manner in which such tools can improve tracking of employee information as well as the collation and distribution of assessments to relevant channels.

As we discussed earlier, proper execution of success plans requires the implementation of a two-stage process.

The first of these, tracking employee assessments to identify potential leadership material, deals with immense stores of data.

Between accumulated report compilations, project paperwork, completed training programs and deliverables, as well as feedback received from peers and senior personnel, the sheer amount of compiled information is staggering.

However, as noted by Chauhan, software tools make it far easier to analyze employee data to garner insights on leadership potential.

Thus, virtual tools allow employers to review the assessment data in a centralized format, and aids them in coming up “with a decision on whether an employee is ready to move up, whether they are ready to be put into a succession path or [whether there is] a risk [of losing] this employee.” as Chauhan points out.

In this fashion, pre-determined talent pools can be cultivated from among employees, with each pool eligible for certain leadership positions – whether said role may be for the HR manager or the Chief Information Officer (CIO).

PeopleFluent directory of potential future leaders
PeopleFluent directory of potential future leaders

Brandau also comments on the streamlining of the overwhelming task of communication over succession plans, when software tools replace older manual methods which were in use.

Since reports on the various stages of the implementation of success plans are to be analyzed from different positions on the organizational ladder, with multiple copies to be collated and studied, the compilation of updated feedback of an employee’s performance from various sources – whether HR, senior personnel, or their peers – can often become irksome and convoluted as a manual task.

As he goes on to explain “[the process] becomes very complicated. I think one of the big advantages is that [software] really simplifies the approach.”

Example of interactive assessments in SuccessFactors’ succession-planning module
Example of interactive assessments in SuccessFactors’ succession-planning module

In fact, with advancements in cloud technology, all employee data stored within a succession-planning software is now stored within singular locations, with changes to employee profiles being updated throughout in real time.

Furthermore, this also allows senior executives  and employers to access the employee information by logging into secure web portals over the internet.

In recent times, alterations made within such softwares have even made it far easier for managers to create interactive slideshows for presentations to senior executives – enabled through a single click on the employee’s name, which would then showcase their individual performance history within the organization.

Conclusions

The implementation of a succession plan is “simply a best practice”, according to Brandau.

“Across the board, it helps reduce organizational risk and helps assure growth in the business.”

It also forms a vital part of the organization’s talent management strategy, and its approach can significantly alter the efficacy with which any company develops and nurtures its employees to secure future growth.

As proven by data, and supported by experts, well-laid succession plans induce positive employee engagement by empowering the workers and handing them set metrics for future success.

Furthermore, the nurturing of identified employees within the talent pool allows organizations to upgrade the skillsets of their workforce, thus creating multiple invaluable assets that would help the companies to expand and prosper.

However, being a complex process with significant data requirements, the use of softwares allows companies to initiate centralized information tracking and analysis methods.

These virtual tools help increase efficiency in the process, while streamlining reviewing and decision-making procedures regarding succession plans.

Methodology

Two online surveys were conducted in order to compile the data presented in this report.

Out of these, the first survey was a questionnaire with three queries which garnered 387 responses from randomly chosen professionals in the United States.

The second survey contained 13 questions, and accrued 180 responses from randomly chosen people worldwide.

The sample screening was filtered so as to only include respondents who held management positions at their current place of employment. Lastly, Software Advice performed and funded this research independently.

Indicated results are in keeping with the findings from the survey sample, and are not necessarily representative of the global population as a whole. While credited sources and referenced products in this article may or may not represent client vendors of Software Advice, their status as vendors was never used as a criterion or basis for selection. The commentary presented by experts is representative of the views of the individual, and does not necessarily represent the view of any organization affiliated with said personnel. Chart values are rounded to the nearest whole number. 

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