Impending Boomer Exodus Puts Spotlight on Succession Planning

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By Genevieve Douglas

Executives are facing a “perfect storm” of challenges with regard to succession planning, a consultant told Bloomberg BNA.

One of the main factors “that is clearly driving this heightened concern” is that many of the baby boomers currently leading organizations are or soon will be eligible for retirement, Karen Greenbaum, president and chief executive officer of the Association of Executive Search and Leadership Consultants, said July 27. “There’s just no getting around the fact that we have that issue,” she added.

In a survey of 850 executives around the globe, AESC found that developing a talent pipeline for future leadership ranked among the top five reasons for building talent strategy, and the second biggest reason among executives in the professional services sector. Currently, companies are struggling to attract the future leaders of their organization, Greenbaum said, and “there’s a gap between the talent organizations have and the talent strategies that businesses are demanding.”

Identifying Future Leaders

Another factor causing the impending leadership crisis was the economic downturn in the mid-2000s, Audrey Murrell, associate dean of the University of Pittsburgh’s College of Business Administration, told Bloomberg BNA July 27. When resources were tight, many organizations abandoned long-term talent management strategies, and some completely outsourced their talent pipeline to third parties, she said.

HR departments now find themselves in a “talent desert” for mid-management and future management employees, and “this is a wake-up call for organizations,” Murrell said. The first thing HR has to do is assess its leadership talent pipeline. More often than not, organizations are really good at recruiting new talent but can be weaker at developing those employees into leaders, Murrell said.

The earlier HR can identify future leaders, the better, because it’s critical to retain such employees and let them know that they’re going to be invested in, she added. By making employer succession planning goals clear, not only will current employees be assured of their future career trajectory, it will also serve as an attractive proposition to management candidates from outside of the organization, Murrell said.

‘Clear and Evidence-Based Approach’

But the plan for developing the next generation of talent has to be clearly defined, Murrell said. Organizations have to have a “clear and evidence-based approach” that identifies specific competencies to build on in the training and development programs. It can’t just be based on an “executive presence” that leaders “will know when they see it,” Murrell warned.

Fuzzy definitions of leadership characteristics can have a negative effect on creating a diverse leadership pipeline, Murrell said, and could even open companies up to allegations of discrimination if employees from diverse backgrounds are passed over for vague reasons.

Long-term succession planning programs that call for sponsorship and mentoring should be developed, Murrell recommended. Only then will HR have “a mechanism for support, succession development, and the identification of talent,” she said.

To contact the reporter on this story: Genevieve Douglas in Washington at gdouglas@bna.com

To contact the editor responsible for this story: Tony Harris at tharris@bna.com

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