Develop Talent in Your Utility

Is your organization prepared for an exodus of retiring employees? If not, it’s imperative to develop a strategic succession plan.

If businesses and organizations acted more like professional sports teams talent management, developing a deep bench of potential future stars would be top of mind. But more often than not, creating a succession plan to fill key positions is treated as an afterthought, lost amid the daily grind of business as usual or an overarching focus on areas such as technology and finances.

In fact, in many mature, slow-growth organizations, succession plans rely more on seniority than a strategic plan to determine what kind of talent is required to meet future objectives.

“The danger is rewarding loyalty and longevity over talent,” says Chris Miller, program director of executive development at the University of North Carolina Kenan-Flagler Business School. “You end up with a guy who stuck it out for 20 years and ‘earned’ the right to be a manager, even if he’ll be a terrible manager.

“That’s where the strategic part of talent management comes in,” he continues. “Organizations need to figure out what they want to become. If they love what they are, they should keep hiring the way they always have. But if not, promoting the guy who’s been with the company for 20 years probably isn’t the best strategy. It all depends on what an organization wants to achieve.”

Many organizations expect to face a wave of job openings in the coming decade as baby boomers retire, yet surveys show that most organizations are ill prepared for this game changer. For instance, only one-third of American employers have identified critical roles in the context of organizational goals. Moreover, less than 10 percent of companies surveyed said talent management was part of an annual business planning process. And only 7 percent actually had established a strategic talent management program.

Other surveys show a compelling case exists for aggressively managing talent. To wit, organizations with talent management programs report a 40 percent lower turnover rate and a 38 percent higher level of employee engagement than those with no program.

“A lot of human resources people get frustrated because they know talent management is important, but they struggle to be strategically relevant in organizations,” Miller says. “Most human resource departments deal with avoiding risks and lawsuits and making sure organizations comply with laws. But avoiding harm is not the same thing as adding value.”

So how do change agents get the ball rolling in the face of organizational inertia? The first step is to create a narrative that will win over executives. In mature organizations, that narrative might point out how the organization will suffer when many key employees retire (i.e., a dramatic loss of institutional knowledge) and that waiting to develop a talent pool will only deepen the misery. “If a large swath of people with technical knowledge are about to leave, talent management can suddenly become strategically important,” Miller points out. In addition, it’s helpful to present specific examples where a shallow bench, so to speak, resulted in failed initiatives or hurt chances for growth.

After an organization realizes the importance of talent management and commits to making changes, a thorough assessment of goals and objectives must follow. In short, organizations must determine if their culture must change and, if so, figure out what that will look like. That, in turn, will determine what kinds of employees and skill sets will be required to shape that new culture.

“If you want to change how you do business, you have to decide what you want the culture to be and systematically assess the positions that create that culture,” Miller explains. “You also must do gap analysis — figure out what you have and what you’ll need for the future, which will reveal any deficiencies.” That makes it possible to hire employees with the skills needed to move forward and lead change, he adds.

“If you want a new culture, you also need to determine what leadership behavior would look like in that culture,” Miller suggests. “A lot of organizations promote command-and-control-style leadership where employees do what managers say, when they say it. That’s not conducive to developing agile, dynamic employees who can think on their feet.” As such, the new culture might do well to encourage a less militaristic approach to management that allows more decision-making capabilities further down the ranks, he says.

Talent management may look different for mature, slow-growth organizations. For example, mentorship might be a good option to minimize brain drain; organizations could consider a transition period where outgoing retirees might work as part-time Yodas, mentoring young Luke Skywalkers, Miller notes. “So much is lost in translation if there’s no succession plan,” he notes. “But the real challenge is getting those Lukes on board in the first place and keeping young people interested.”

The notion of joining a company and waiting 15 years to become a manager and 25 years to become a director is no longer palatable to today’s younger employees. The solution?

“Don’t let people sit in roles for 20 years,” Miller advises. “Move them around, which will allow you to get a better sense if they’re really good employees or just good at doing the same thing over and over. As they learn different roles, the bad employees will get flushed out and you can keep those who are good — and engaged.

“By rotating people early in their careers, they also become better leaders downstream,” he continues. “Otherwise they only learn about the needs of their department or division, and when they get promoted higher, they’re inclined to be more concerned about their former fiefdom.”

The wave of expected retirements could actually provide a good opportunity for human resource departments to advocate strongly for cultural change and a talent management program. Rare, indeed, is the senior executive who, within sight of a career finish line, is willing to embark on a painful extreme makeover of a corporate culture, Miller notes.

But no matter what you decide your organization should look like in the future, a deep bench will make all the difference. So go ahead and start planning ­­— before it’s too late.


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