Note published on January 23 in El Economista, Capital Humano [Human Capital] Section by Gerardo Hernández.
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There are only two choices when you lose a leader within a company: taking a reactive approach and focusing your efforts on finding an external profile to fill the vacancy or already having a person that is ready to cover the executive position that is vacant.
Nevertheless, we must be aware that the first option is probably not appropriate given the levels of shortage of specialized talent in some economic activities. Additionally, burnout within the workforce can become an element that discourages internal promotion, the PageGroup Firm says. Under any scenario, this makes evident a real need for companies: a talent pool must be available.
“When leadership positions become unexpectedly vacant, attention usually focuses on filling the position as quickly as possible. And even though agility is often praised as the key to resilience, these events highlight the need for a more permanent solution for keeping a steady flow of talent. In this sense, the most solid companies are the ones that prioritize succession planning”, states the Firm in its report Ocho tendencias del mundo ejecutivo 2022 [Eight trends in the executive world, 2022].
Nevertheless, few companies have a talent pool that allows them to have the next person to fill an executive position ready. According to PageGroup, this is due to several factors, but the concentration of resources and investment on hiring instead of on retention, in addition to the resistance of some managers to engage in frank conversation to acknowledge the inevitable stand out among the most important ones: “At some point, even the best employees will need to be replaced.”
As expressed by Blanya Correal, an international consultant and a specialist in labor and organizational transformation, the objective of a talent pool is “to have the next batter ready” and the fact of not having a prepared person can put the very continuity of the business at risk.
“I believe that one of the reasons that prevent companies from having such a clear plan for their talent pipeline is that there is no connection between their talent and their business strategies. Today the size of the organization is measured by the number of people, but this does not show the quality of the talent. Since we don’t measure the impact that talent has in the generation of results, we worry even less about defining what we have to do to ensure that the talent that we have functions”, she explains.
From the perspective of Antonio Sancho y Maldonado, professor in the area of Personnel Management at the IPADE, the lack of importance given to succession plans is linked to various factors, one of them being the size of the companies, particularly in SMEs, where structural and financial capacity is limited. However, in the case of large organizations it is related to a lack of awareness of the relevance of internal talent by upper management .
“When we compare the benefits between the attraction of external or internal talent, the first option clearly has the advantage of bringing in experts, people with skills that complement the organization’s strategy or who can provide a fresh vision. But the benefit of internal development is the creation of identity; one thing that you will never be sure of in external hiring is the degree to which the person will live your ideology and your values, it is a gamble”, he explains.
But in practice, there are many leaders who do not find that much value in the adherence of profiles to the business’s identity and culture. “They seek someone that will solve a problem in the short term and that is more focused on hard skills and many leaders sometimes place the relevance of attitudes and values linked with the company’s culture on a second level”, Antonio Sancho points out.
For Blanya Correal, the current context of challenges being faced by businesses requires breaking paradigms and this means being aware that the second in command isn’t always the ideal person to replace an executive.
“Something that is important to point out is that in agile organizations there is no longer even a second in command, we have tribes or work teams. Today the career plan depends more on the type of skills that people need to possess in order to solve an issue and the one that will replace that person must be someone who has those skills and, occasionally, it is not his second in command and can be anywhere in the organization. The thing is that the army-like promotion mentality is very hard to remove from people’s minds”, she states.
How to build a talent pool?
According to PageGroup, “succession planning begins when you hire high-potential candidates and continue with talent development and nurturing.” In this sense, the Firm recommends upper management to implement a succession plan that starts by identifying the employees that are most likely to reach an executive level and offering them responsibilities and training beyond their current positions.
In order to create a talent pool the specialists at Indeed y Ascendo recommend companies to take the following steps:
- Identify business objectives. Aligning the talent pool with the organization’s goals is key in order to include the ideal candidates.
- Define critical functions. Identify the positions that are essential for fulfilling the mission and achieving business objectives.
- Take a talent inventory. Analyze the skills, experience and attitudes of the people in your company and define potential candidates.
- Establish training mechanisms. Training and mentoring are key for workers to develop the skills required by the organization.
- Measure progress. The evaluation of people who will replace critical positions must be based on objective measurements and criteria.
- Have a retention plan. The succession plan must also involve an effort for developing and retaining talent.
In the experience of Blanya Correal, the first step involves the identification of the existing business challenges and the capability of the talent for responding to them. “This has its origin in the strategy, where the company is headed for. This is on one side of the funnel and knowing what is required: a goalkeeper, a striker, a defense player, is on the other side”, she states.
Once the profiles present in the organization and their alignment with the business plans have been identified, work can be conducted on the succession. “The objective of talent planning must not only be to fill the gap that we have; when you hire someone you must think of how to fill their career path, how to feed the succession pool”, she believes.
For his part, Antonio Sancho y Maldonado explains that one of the mechanisms for creating a talent incubator is the incorporation of students to apprenticeship programs that can even be limited for future leaders. “Some of the biggest challenges is the structural and financial capacity of the company, but another restriction is the vision of the leaders in regard to betting on internal talent”, he emphasizes.
In a context like “the great resignation”, which in Mexico has been a phenomenon limited to the executive world, the specialist believes that talent development and succession plans can be an important resource in the retention of key profiles, although we must not lose sight of flexibility, salaries and the organizational environment.
“Global competition for executive talent is growing ever more fierce, while companies continue to battle employee turnover and burnout. Succession planning is essential for companies to tap into their internal talent pool and avoid the risk and expense of short-term outsourcing,” the PageGroup specialists say.