Through my past experiences as a chief data scientist for HR in a Fortune 500 company and a data science consultant, I have gained valuable insights into the succession planning process, which is a crucial component of effective talent management and leadership continuity. These insights are timeless and can be applied to various organizations and industries.
My purpose is to share these insights and learnings with a broader audience. My aim is to provide actionable and practical recommendations for anyone who may be involved in designing or implementing succession planning strategies, or who may be interested in improving their HR and talent management practices.
I believe that sharing these insights and learnings will benefit both individuals and organizations. By understanding the importance of identifying high-potential employees, preparing them for leadership roles, and establishing a smooth leadership transition process, individuals can develop themselves more effectively, and organizations can better manage and develop their human capital, driving success and growth for the organization as a whole.
My goal is to help individuals and organizations achieve their fullest potential through effective succession planning strategies, and to ensure that these practices remain a key focus for organizational success and continuity.
In today's volatile business environment, organizations must prepare for the future by effectively managing their most valuable asset: human capital. Succession planning and talent management are essential for maintaining a robust leadership pipeline, fostering employee engagement, and driving organizational success. Despite their importance, many organizations struggle to implement effective strategies in these areas, often relying on outdated methods and assumptions. This blog post examines the current state of succession planning and talent management through the lens of insights and recommendations from industry-leading consulting firms such as McKinsey & Company, Boston Consulting Group, Mercer, Deloitte, Accenture, and PwC. Drawing from my experience as the chief data scientist for HR at a Fortune 500 company, I will share a data-driven case study that highlights the challenges and opportunities we faced in reviewing our succession planning criteria and talent mobility paths. By exploring innovative approaches to these critical human capital management issues, we aim to provide valuable guidance for organizations looking to optimize their succession planning and talent management strategies in a rapidly evolving business landscape.
In recent years, top-tier consulting organizations, such as McKinsey & Company, Boston Consulting Group, Mercer, Deloitte, Accenture, and PwC, have published articles and reports that focus on succession planning and high potential talent management. This literature review synthesizes and analyzes the key insights and recommendations from these leading consulting firms, offering a comprehensive understanding of the current state of succession planning and talent management.
Some of the notable articles and reports include:
- McKinsey & Company: "Rethinking succession planning" by Brian Elliott and Jay Conger. The authors challenge traditional succession planning methods and propose a new, feedback-driven approach for identifying and nurturing high potential talent.
- Boston Consulting Group (BCG): "Succession planning is more than talent evaluation" by Roberta Fusaro and Katrin Kost. This article underscores the importance of a comprehensive strategy for succession planning and provides insights on how companies can leverage it to enhance organizational performance.
- Mercer: "The future of succession planning" by Mercer. The authors delve into the latest trends and best practices in succession planning, offering recommendations for designing a more effective and engaging process for identifying and developing high potential talent.
- Deloitte: "Revolutionizing succession planning" by Deloitte. This article presents insights on how organizations can establish a more agile and impactful approach to succession planning, promoting employee engagement and productivity.
- Accenture: "Succession planning in the evolving workplace" by Accenture. The authors discuss the challenges and opportunities of succession planning in the rapidly changing world of work, providing recommendations for a more effective and flexible process.
- PwC: "Succession planning in the digital era" by PwC. This article explores the influence of digital technology on succession planning and offers insights on how organizations can utilize data analytics and digital tools to refine their talent management practices.
This literature review contributes to the field by:
- Collating and evaluating the unique insights and perspectives of industry experts, allowing readers to gain a broader understanding of the various approaches and best practices in succession planning and high potential talent management.
- Identifying common themes and trends across the different articles, highlighting the shared goal of helping organizations develop more effective and agile approaches to succession planning that can foster employee engagement and drive organizational performance.
- Providing a balanced and comprehensive overview of the subject, enabling readers to make informed decisions about their own succession planning strategies and talent management practices based on the expert opinions of leading consulting firms.
- Fostering further discussion and research in the field by pointing out areas of agreement and potential gaps in the existing literature, encouraging the development of new strategies and practices to address evolving organizational challenges and opportunities in succession planning and talent management.
By presenting a cohesive and thorough analysis of the current literature, this literature review offers valuable insights to practitioners, academics, and other stakeholders interested in understanding and improving succession planning and high potential talent management practices. The current article adds to this body of literature by offering a HR data science practitioner review of the existing state of succession planning and talent management.
In my role as the Chief Data Scientist for HR at a Fortune 500 company, I was responsible for conducting performance assessments and talent reviews of our team members. Performance assessments evaluate an employee's performance against predefined goals and expectations, while talent reviews assess their potential for growth and development within the organization. These processes are vital for managing and developing human capital in alignment with the organization's goals and objectives.
During the talent review process, the CHRO requested that my team and I review the succession planning criteria and the talent mobility path. Our company had traditionally utilized a method called Current Estimated Potential (CEP) to identify talent with the potential to advance into C-suite roles. The CEP model was designed as a long-term talent development and succession planning tool for key leadership positions, as well as a career management tool for nurturing and developing talent.
The primary objective of the CEP model was to ensure that the right talent was available for the right position at the right time. The CEP model had its roots in a time when top leadership roles were better suited for generalists who possessed the desired leadership traits, embodied the company's values, and showed signs of potential for high-ranking positions. This approach aimed to minimize operational risks by having a pipeline of generalists ready to step up in the event of unforeseen circumstances, such as a catastrophe, mass exodus of top management, or high attrition among middle management. However, the model's underlying assumptions appeared outdated, as modern leadership roles often demand more specific skill sets and expertise, even at the highest levels.
The secondary goal of the CEP model was to retain identified talents by offering them opportunities for growth and promotion. This approach aimed to save resources by reducing the costs associated with hiring and onboarding new employees. However, the company faced a leadership bench shortage, as identified talents often left for faster career progression elsewhere. This issue raised concerns about the company's ability to maintain smooth operations and presented potential reputational risks related to slow career progress.
Given these challenges, the CHRO tasked the Head of Talent Management and my team to review the CEP model. To do this effectively, we needed to understand the model's characteristics and evaluate its annual talent review process, which involved considering factors such as job grade, age, and time spent in the current job grade for each employee.
To effectively review the CEP model, it was necessary for us to examine its key characteristics. The model is a typical annual talent review, in which employees who have been with the company for at least one year are automatically included in the evaluation process. The communication of this review process can either be disclosed or kept confidential, depending on the organization's preference.
The progression of each employee through the ranks depends on a combination of factors, such as job grade, age, and tenure in their current position. By understanding these components, we were better equipped to identify potential areas for improvement and make informed recommendations for updating the CEP model to better align with our organization's needs and the modern talent landscape.
To advance our understanding of the CEP model and address the urgent need for a review, we established a learning agenda centered around key questions:
- Are high potential talents progressing according to the model as expected?
- Will these talents reach their full potential within their expected age brackets?
- What will their expected retirement age be once they achieve their expected potential?
To answer these questions, we adopted a data-driven approach, leveraging company records from systems like SAP, Workday, or SuccessFactors. We extracted, cleaned, and engineered the data to address our questions using tools such as STATA, Python, AWS S3, AWS RDS, and AWS Redshift.
Our approach involved data engineering, cleaning, and visualization to review the time and tenure of selected talents, comparing cohort by cohort against the computed values based on the CEP model.
Key findings included:
- High potential talents took 10-40% longer to reach their expected rank and job grade compared to the CEP model's predictions, translating to 2-8 additional years. This supported the dominant reason for high potential employees leaving the company.
- Among high potential talents who achieved their full potential according to the CEP model, their actual age upon reaching those job grades was higher than expected. This encouraged younger high potentials to consider leaving the company.
- High potential talents needed to spend a significant amount of time at the company to reach their highest possible rank. However, external job market comparisons showed that other companies offered shorter paths to leadership roles, by almost 50%.
Based on these findings and our attrition analysis, we identified the need to improve the CEP model to expedite high potential talents' leadership trajectories. Our recommendations included:
- Redefining high potential to expand the talent pool, reducing the thinning effects on the leadership bench strength and addressing attrition concerns.
- Identifying more career opportunities for upward mobility, exploring cross-company movement within the corporate group and enabling high potential talents to achieve their C-suite dreams more quickly.
- Developing a global human capital inventory to track and monitor high potential talents for succession planning and learning, leveraging coaches, career development resources, and matching emerging leadership roles to retain and develop in-house talent.
Review on the entire work:
The Current Estimated Potential (CEP) model is a crucial tool for identifying and developing potential leaders within an organization. Its purpose is to assess the status of the current talent pool, support career planning and talent development, ensure a common basis for measurement across the organization, and identify potential leaders. However, it is important to note that the CEP model is not intended to guarantee or limit individual career advancement or success, be the sole factor in promotion or selection decisions, or remain constant throughout an individual's career.
One of the challenges faced during the review of the CEP model was obtaining buy-in from all stakeholders. While the chief people officer recognized the value of the proposed changes and agreed with the recommendations, other stakeholders were hesitant to adopt a new model. They had received promotions based on the current CEP model and saw no need to change it. In response to this challenge, a cost-benefit analysis of the existing CEP model against the proposed new model was proposed. However, the chief people officer felt that this analysis might delay the buy-in process, and instead took the lead in getting buy-in from other stakeholders.
Overall, the review of the CEP model highlighted the need to continuously reassess and update talent management practices to ensure they remain relevant and effective in meeting the organization's goals. By embracing a data-driven approach and soliciting input from key stakeholders, organizations can develop talent management practices that are aligned with their objectives and support the growth and development of their employees.
While the implementation of the recommended changes to the CEP model was yet to be realized during my tenure, we did conduct a basic business impact forecast on the potential outcome of the proposed succession planning review. The analysis suggested that the company could generate a minimum of $5 million per year by utilizing the new model to retain identified high-potential employees for each year they choose to stay with the company. As a result, this project generated a positive ROI for the HR data science team.
Given the substantial cost savings in recruiting and onboarding new talent, the proposed changes to the CEP model have the potential to significantly impact the company's bottom line. By expanding the definition of high potential and identifying more career opportunities for upward mobility, the company can retain and develop a more diverse pool of talent, reducing the risks of a leadership bench depletion. Additionally, by creating a global human capital inventory to track and monitor existing talents for succession planning, the company can attract and retain high-potential employees, further reducing the need for costly external recruitment.
While some stakeholders may be hesitant to change the current CEP model, it is clear that the proposed new model has the potential to improve the talent management process and positively impact the company's financial performance. It is essential for leaders to recognize the importance of aligning their talent management strategies with business objectives and to continuously evaluate and improve their processes to maintain a competitive edge in the market.
It is important to note that the quantified numbers have been masked to protect the identity of the company. However, the findings and recommendations are based on rigorous analysis and research and can be applied to other companies facing similar recruitment challenges.
Elliott, B., & Conger, J. (2016). Reinventing performance management. McKinsey & Company. https://www.mckinsey.com/business-functions/organization/our-insights/reinventing-performance-management
Fusaro, R., & Kost, K. (2018). Performance management is not performance evaluation. Boston Consulting Group. https://www.bcg.com/en-mena/publications/2018/performance-management-not-evaluation.aspx
Mercer. (n.d.). The future of performance management. https://www.mercer.com/our-thinking/career/the-future-of-performance-management.html
Deloitte. (n.d.). Reimagining performance management. https://www2.deloitte.com/us/en/pages/human-capital/articles/performance-management-21st-century.html
Accenture. (2019). Performance management in the new world of work. https://www.accenture.com/us-en/insights/human-capital/performance-management
PwC. (2019). Performance management in the digital age. https://www.pwc.com/gx/en/services/people-organisation/publications/performance-management-digital-age.html