Wednesday, April 22, 2009

Include Employees in Leadership Transition Conversations

"Uncertainty" is a common word these days, used to describe everything from the economy to the future for America's businesses and workers. Having a succession plan for key management positions is one of the most valuable HR initiatives a company can leverage. During uncertain times, it's imperative for businesses to make sure employees have as much job certainty as possible, but succession planning often is neglected for more immediate concerns.

Just as the country had two and a half months to transition into Barack Obama's administration after eight years of Bush leadership, companies benefit greatly from a planned transition between incoming and outgoing top-level management.

But it's not always that easy. Generally, there are three kinds of transition:

1. An internal candidate's successful transition. This is only possible when a company knows the executive is leaving and has identified a likely successor. It eliminates surprise and enables a smooth, transition with the least amount of distraction and lost productivity.

2. An executive leaves unexpectedly. This is a good opportunity for companies to promote from within, but the news can lead to power jockeying and interpersonal struggles.

3. A company brings in an external candidate. When companies go outside for a new leader, they are implicitly saying to current employees: "You're not good enough to lead," or "Whatever you have been doing in the past, it is not what we need you to do in the future."

Planning is the lynchpin to ensure organizational stability during a change of power. For example, Hilton Hotel Corp. identified succession planning as a top company priority and emphasized this by creating a separate, dedicated succession planning department within the company's corporate structure. Hilton is able to identify different competencies for the most critical management positions company-wide, while highlighting employees with the appropriate competencies who are on track to succeed in different divisions. The company can identify successors for every executive position and ensure minimal confusion and uncertainty in the midst of change.

People likely do not fear change as much as they fear uncertainty. Uncertainty over leadership creates anxiety which leads to decreased productivity and increased turnover. Further, the more uncertain people are about the potential actions of a new leader, the more they may view that person as a threat.

Further, when there is change at top, employees naturally wonder what's next. Defining roles in advance of succession can set employees' expectations and allow them see where they fit into the organizational picture. Transparency and communication before, during and after transition reduce uncertainty and keep performance high.

The fewer surprises a company has, the better it is for employees and the organization as a whole. Creating a robust and active succession plan not only safeguards against surprise, it can contribute to higher productivity and employee satisfaction. Successful succession plans are the byproduct of a smart performance and talent management program that gives companies a clear window into its workforce's skills, strengths, competencies and goals.

Strategic succession plans engage employees at all levels in a dialogue about their company and the future of its workforce. They also empower executives to build the company's bench strength, improve individual employees' career development plans and save time and money.

Nothing communicates the employee's value in a company more than programs that actively seek to develop and advance careers within the organization. The key to succession planning is not to go into the process blind. Using the right tools, including a performance and talent management system, companies can plan for most contingencies in C-level exits. All they need is a little planning.

[About the Author: Steven T. Hunt, Ph.D., SPHR, is the chief scientist at Kronos Inc., a company that empowers organizations to effectively manage their workforce.]

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