Top leadership succession strategies to prepare your plant's next-gen talent

Monday December 03, 2018
Written by Michele Markey
December 3, 2018 – Baby boomers have left a footprint on every industry since they joined the workforce five decades ago. In leadership roles, they have set the organization’s vision, established the company’s culture and built the business’s reputation.

Each day, more than 10,000 baby boomers turn 65 years old, and this trend will continue until 2029, according to Pew Research. As boomers reach retirement age, younger leaders who step into their positions will be challenged to maintain the quality of the brand, products or services.

Retirement isn’t the only reason why companies lose leaders. Although many CEOs plan to leave, there are those who exit the company due to an emergency or illness, a merger or acquisition, board dismissal or resignation.

Between 10 to 15 per cent of corporations across all industries appoint a new CEO each year. In the industrial manufacturing environment in the United States and Canada, that number is even higher at 15.5 per cent, according to PWC’s Strategy& group and its Strategy+Business magazine. In the 2016 version of its annual study on CEOs, governance and success, Strategy+Business reported that 2.1 per cent of CEOs in the United States and Canada were forced out of their positions (one per cent of CEOs in industrial manufacturing), and 3.4 per cent left due to a merger/acquisition (3.1 per cent of CEOs in industrial manufacturing).

With a strong succession plan and a talent pipeline in place, the organization can avoid gaps in leadership, reduce costs associated with finding a replacement and nullify any lost confidence in the company by employees, shareholders and the market.

What is succession planning?
Succession planning focuses on identifying the knowledge, skills and abilities that will be needed to perform certain functions. The plan prepares individuals to perform these functions in the future. Considerations must be made for:
  • Identifying skills gaps and training needs
  • Retaining institutional knowledge
  • Boosting morale and retention by investing in employees
  • Replacing unique or highly specialized competencies
Any organization can plan for leadership succession based on company vision and goals. The goals of the business will drive the skills and attitudes that are critical for those in key positions.

While many organizations believe they have a succession plan in place, it is often confused with replacement planning. This typically identifies one or two current company leaders who are available to replace someone on short notice or during an emergency. The replacement is often a temporary measure. It doesn’t account for a long-term, continual solution like succession planning.

By establishing a robust leadership succession plan, businesses can bolster their employees’ abilities to move into these roles. Companies that develop their up-and-coming leaders benefit from:
  • Improved retention of talented employees.
  • Reduced costs in external searches and faster decisions made to fill key positions.
  • Engaged employees who are encouraged by their career progress and new skills. 
A positive corporate culture that encourages outside talent to seek employment with your company.

Start with a plan
Build a business case by determining the needs of the company and how to address these needs with talent. Key company leaders may have their own ideas for succession plans. Start with them sending their plans informally, either through email or in conversation. If they are having trouble articulating their plans, ask questions that help generate ideas.
  • What is your talent strategy, and how does it support the business?
  • What would you do if the CEO quit next week?
  • What are the roles that need to be actively managed, and what are your plans for them?
  • Who among your current employees do you identify as having potential for growth?
  • What are the top three things you need to manage risk, as it relates to personnel?
Talented people are a major component of a company’s future success. Start by identifying top talent at different levels: company contributors, middle management and leaders. Each position at these levels can be viewed as potential leaders, whether it is moving contributors to management, middle management to executive positions, or VPs and executives to the C-suite.

Assess these people for key competencies, like team building and communication. How do they inspire and persuade employees? How do they communicate to generate buy-in? Can they build a support team with complementary skills, yet different perspectives, to generate healthy discussions and avoid groupthink?

Develop top talent
Once talent has been identified, drive their growth with experiences and training. Create new positions, roles and assignments that expose them to high potentials; assign a second-in-command role that allows upcoming leaders to take over key responsibilities; and have them fill in for a senior leader for short periods.

Staff projects with development in mind (what can be learned from projects, and who would perform best?). Performance reviews, mentoring programs, experience paths, rewards and incentive programs can track progress.

Relevant and engaging learning and development is driving today workforce, and a formal training program also should be included to develop your future leaders. Popular delivery methods are:
  • Continuous learning, which makes materials and content accessible through many formats, including technology and interaction with peers and in-house mentors, and puts a value on learning as much as productivity in the workplace
  • Employee-driven learning, which empowers employees to define their own continuous path of training based on intrinsic motivators like autonomy, mastery and curiosity and extrinsic motivators like badges and rewards
  • Personalized learning, which an individual identifies to fill skills gaps, exciting them and keeping them engaged
Regardless of how it is delivered, training must be conceptual and experiential, customized to the needs of the learner, designed to help embrace and lead through change, supportive of the shared goals of a multigenerational workforce, and finally accessible, meaningful and relevant.

Understand your future leaders
Today, there are as many as five generations working at one company, with millennials making up the largest demographic in the workforce. Generation Z is close behind. Because this younger workforce will be tomorrow’s leaders, it’s important to understand what’s important to them.

First, the workforce must be agile, empowered and engaged at any level of the company. Agile employees are flexible enough to jump from project to project while still being confident and enthusiastic. Empowered employees are self-directed, they have the authority to make decisions and respond to challenges, and they are respected and rewarded for their innovative solutions. Engaged employees care about the outcome and are committed to the organization.

Second, modern employees want a work culture that aligns with their personal values, a path to expanding responsibilities and increased compensation, and a chance to show their creativity.

Third, employees want learning and development as part of the overall work experience. Note that many companies have not made employee experience a priority, and they have not assigned responsibility to a senior leader to make learning and development part of the package.

To engage employees, leadership must obtain the resources to integrate performance management, goal setting, diversity and inclusion, wellness, workplace design and leadership development into the total employee experience.

It’s up to you to make sure you have the right people going down the path toward continued organizational success. Without a succession plan and development of your future leaders, they may be ill prepared to navigate the business into the future.

Michele Markey is the vice-president of training operations for SkillPath, a professional training and development provider. 

This article originally appeared in the November/December 2018 issue of
Manufacturing AUTOMATION.

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