A variety of forces are working against businesses in today's market. Baby boomers are retiring in massive numbers, skills gaps are pressuring business to upskill current and potential staffers, and a tight talent market is enticing employees to move to greener pastures. These challenges and beyond are making it difficult for enterprises to maintain a management pipeline — a succession plan that readies companies for whatever challenges come their way.
A management pipeline has employees on-deck, ready to jump into a supervisory role for more reasons than to cover for a vacationing manager. A strong management pipeline grooms employees to step in when needed, and be prepared to assume the role permanently when the time comes. For employers, the pipeline assures coverage; for the specific employee, the pipeline is a path to growth and development. For the rank and file, the pipeline assures they'll have the guidance and support they need if their manager isn't available.
More than just training for coverage, management pipelines support a culture of continuous growth and development. Establishing a career framework for the manager-in-training enhances engagement and retention. For an employee who is retiring, it offers an opportunity to share information and processes at a reasonable pace that assures knowledge transfer is effective.
"Most companies don't have succession plans in place, but it's a mistake to think they happen organically. Without a plan and effort they simply don't occur," Michael McGowan, managing director and practice leader, leadership and talent at BPI group, told HR Dive in an interview. While many companies focus on CEO succession plans, these might be of lesser importance than plans for junior and senior officers, where a lack of guidance could directly impact the bottom line. In addition to potential loss of coverage, he added, "staff aren't given the training they need or a career path. For millennials in particular, this can lead to attrition."
Why businesses put it off
One reason businesses may not be investing in their management pipeline is the fear that newly trained employees will take their skill set elsewhere. But the fact is about one-third of millennials are "always looking" for the next opportunity. For businesses that invest in manager training, the difference may be that they find their next opportunity internally, instead.
For this largest workforce group in today's market, if they don't see an opportunity to grow to the next level, they'll be more apt to job hop. According to research by O.C. Tanner, one of the biggest reasons millennials move on is the feeling of being underutilized, stagnant and bored.
Another stumbling block to creating a management pipeline could be your managers themselves. If they're insecure about their job or performance, they may see succession training as a threat to their livelihood. It's important to reinforce that knowledge sharing benefits everyone and doesn't pose a risk to their continued employment. In fact, for managers who may have outgrown their role but aren't ready to leave yet, cross training may open other opportunities within the organization. Internal transfers can be a strong engagement and retention tool.
"Talent mobility is a key part of learning programs for emerging leaders," Brynne Kennedy, CEO of Topia, told HR Dive in an email. It can help them build relationships and networks across the company and learn different cultures, she added: "Talent mobility also helps emerging leaders understand other parts of the business and be empowered to manage and build cross functional relationships."
One of the biggest reasons businesses aren't succession planning, according to McGowan, is that it's time consuming. "Business has to own it," McGowan said. "It's a business process more than an HR process. HR stewards it, but developing leaders to be ready when the time comes to execute is strategic planning." It's necessary to identify high performers and potential candidates and work to get them ready to step in without missing a beat. "Without the commitment and process, performance will suffer while you look to quickly skill up the next manager," he added.
Getting it off the ground
One of the best ways to identify people with potential is through psychometric or formal testing, according to McGowan. Most companies look at performance ratings, but they can be subjective. Psychometric testing or simulation assessments use only objective criteria; they can eliminate any favoritism that might accompany personalized evaluation methods. Testing for high potentials should be a data point to consider, "but shouldn't be the last word," he said. In many cases the data will reveal opportunities to close skills gaps that could take them to the next level.
Identifying people who have shown leadership in projects or teams can be a first step as well, Kennedy suggested. Look for those who have shown "unique initiative to contribute to the company and their teams," as well as employees who "have built strong cross-functional peer relationships and who foster collaboration versus conflict."
Whether it's for succession planning or upskilling, identify knowledge gaps to strengthen the pipeline. Training must be proactive and career-path oriented. Skill evaluations, as McGowan suggested, should happen at least once or twice per year.
Kennedy recommended identifying high potential staff internally and developing training programs and learning paths for emerging managers, as well as creating opportunities for emerging managers to gain experience across the organization — in different offices and locations. She suggested it's helpful to ensure a strong management pipeline by "building networks and a 'warm bench' externally."
External candidates are often hired because companies don't have succession plans. While they may bring in new perspectives and ideas, hiring from outside has drawbacks. In addition to recruitment fees and expenses, the hire will still need training on company culture and processes. Moreover, McGowan suggests, "hiring an external candidate could be demotivating to existing employees." While external candidates might be needed, it's important to continuously recruit and develop talent to retain existing staff and assure the company has a good mix of candidates in the pipeline.
Once you've identified potential leaders, management teams and L&D should work cooperatively to upskill and guide them for next steps in the process. A strong manager pipeline means more than coverage; it demonstrates commitment to continuous learning and growth that benefits all staff.