Succession Planning

Succession Planning

Running head: SUCCESSION PLANNING

Employee Development and Succession Planning Darla Garrett Department of Business and Economic Development Director, Finance Programs Accounting and Administration University of Baltimore

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Employee Development and Succession Planning Succession planning and employee development seem like a common sense business practice. The private sector usually has well developed training programs and has built in procedures for handling succession of leadership through its stockholders and board of directors (Schall, 1997). Yet, the public sector is struggling trying to develop effective succession, workforce, and employee development planning across the country. Federal and state agencies are seeking solutions on how to fill the leadership and knowledge gap as “baby boomers” retire, leaving critical positions such as “finance director, budget manager and other professional finance positions” vacant (Kisner, 2007, p. 63). This paper will define and analyze succession planning and employee development, its importance, and the strategies public agencies across the country are using to develop future personnel, their needs, and the mission of their organizations.

What is succession planning? Rothwell and Poduch (2004) stated that succession planning in the public sector is interpreted to mean executive replacement. Yet, with changes in political leadership, executive succession planning is often difficult. New political leaders tend to appoint their own management or executive team whose ideals and beliefs match closely to theirs. This makes continuity of leadership problematic. However, Schall (1997) argued that succession planning is not about replacement but a strategic approach that links “the vacancy with the organization needs” (p. 7). The strategy behind succession planning is to develop talent from within and to preserve institutional knowledge. Rothwell and Poduch (2004) described succession planning as a way to maintain continuity of operations and to develop contingency plans as leadership changes. They examined two different succession strategies—technical and managerial. Technical succession “looks across the organizational chart” focusing on employees who are critical to the operations of the organizations where as managerial succession the “focus is on the vertical hierarchy of the organization” developing those next in line for leadership roles within the organization (p. 406).

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Identifying employees with the critical technical skills can be challenging as noted by Helton and Jackson (2007). They cited in their article, that Pennsylvania faced many challenges in determining the composition and experience of its employees in part due to the complexity of its personnel system. It is one thing to identify employees with critical technical skills at the agency level, but quite another to implement such for an entire State. There is usually a lack of cooperation among agencies to share information and to share resources. Most state agencies have unique systems to manage information, budgets, and varying personnel options. However, according to Sussman (2006) Mississippi has been successful in utilizing its “Learning Management System,” to address managerial succession through established “learning paths and curricula for department personnel based on their role” (Sussman, p. 41). Nebraska addressed its shortage of qualified Information Technology (IT) workers by developing a training program in partnership with Southeast Community College (Pynes, 2004). The program as described by Pynes was designated to train employees in critical computer skills that the state needed. Clearly, some states are making more progress than others are in developing its employees and identifying the technical skills needed to continue its operations.

The challenges of technical succession as cited by Rothwell and Poduch (2004) is defining and identifying the right information and experience that are needed to keep operations functioning. Experienced employees may feel threatened by technical succession planning and might not be cooperative in sharing knowledge. Some organizations have a “silo” mentality, thus sharing of knowledge is discouraged. Conversely, organizations often fail to include low-level and long-term employees in organizational decision-making changes. While the emphasis on succession planning often speaks to leadership, the technical experts keep the organization running. Public sector agencies can go for quite some time without a leader at the helm.

However, take away critical operations staff and serious problems arise. It is the public administrators who watch over the taxpayer dollars and ensure that the organization programs are operating according to the laws and regulations.

If technical succession focuses on the “what” then managerial succession focuses on the “who” in the managerial planning process (Rothwell and Poduch, 2004). Effective succession planning begins with leaders envisioning what they want to leave behind (Schall, 1997). Schall pointed out that it is the leader’s attitude about departure that will determine if succession is

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effective. Several states have designed some creative programs to identify and train potential leaders. Phoenix, for instance developed its airport staff through a leadership program called “Building Bench Strength” (Sussman, 2006, p. 39). As part of the program, employees are exposed to an overview of the airport facility and its operations and are cross-trained by seasoned leaders. In a case study about Pennsylvania’s Department of Transportation (Penn Dot), a workforce analysis suggested a high level of employees were retiring (Rothwell and Poduch, 2004). Penn Dot implemented a plan to identify critical knowledge to maintain current operations through a process called “Position Analysis Workbook” that emphasized training and uncovering areas that needed improvement (Rothwell and Poduch). Seldon, Ingraham, and Jacobson (2001) suggested that to make managerial succession more effective states needed to delegate authority to “give managerial control over personnel decisions” (p.600). The state of Nevada’s Department of Energy, for example had its own training standards for employees who might fill leadership roles and the agency had autonomy to fill those positions (Kim, 2003).

Decentralization however, does not allow for one strategic vision if each agency is doing its own planning without a coordinated effort. A more holistic approach statewide seems to be a better approach to succession planning and employee development so resources can be utilized more effectively.

Since 9/11 there has been a shift in how government agencies view training (Sussman, 2006). According to Ibarra (2007), the public sector has often focused on more tangible resources like “equipment, finance, geography and the like” but overlooked intangible assets like employee knowledge ( p. 25). Succession, workforce planning, and employee development requires public agencies to act more cooperatively and strategically with its employees.

Cooperation and sharing of information is hindered by the public sector’s bureaucratic personnel practices. Strict job classification and narrowly written job descriptions prohibit the sharing of employee resources across the agency. In addition, management is often reluctant to share personnel resources because of the perception it may create within other divisions of the agency that there is a lack of work, otherwise why would they have the capacity to share resources.

Management is fearful personal may be eliminated or permanently pulled to other areas of the agency. Consequently, this is happening at the Department of Business and Economic Development (DBED). Moreover, management in the public sector is rewarded more for their

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success in day-to-day management rather than their attempts at future planning (Schall, 1997).

Thus, management tends to focus on the immediate needs of executive management or political influences. This type of culture within the public sector hampers creative management solutions.

The public sector needs to continue to shift the focus to planning and more coordination if it is serious about maintaining continuity of operations. Succession planning requires communication and an organizational culture that fosters sharing of knowledge (Rothwell & Pocuh, 2004).

Regardless of whether the organization is doing technical or managerial succession planning, knowledge transfer is a critical component of succession planning and employee development. Helton and Jackson (2007) suggested several strategies for sharing knowledge within the organization such as “documenting core business practices, corporate storytelling, job shadowing, mentoring, best practices, lessons learned, and job rotation” (p.34). North Carolina and Arizona have centralized training among health care professionals using training modules for basic training resulting in lower training costs and instant results as to the employee’s knowledge (Sussman, 2006). Undoubtedly, some states are progressively better when it comes to knowledge transfer of important organizational processes. Unfortunately, as noted by Sussman, every state seems to have its own method of sharing knowledge, developing succession planning and developing its employees but most lack any real program evaluation to demonstrate effectiveness. As a result, the public sector is failing when it comes to understanding its workforce needs and performing comprehensive analysis of its programs. Hopefully, as the public and government officials demand more data driven results more thought will be invested in utilizing the public workforce more effectively. Analyzing workforce trends and demographics is a critical component to understanding where the greatest need is so that effective succession planning and employment development can take place.

Succession planning and workforce planning are usually discussed together but are different and have distinct objectives. Workforce planning is broader in scope and covers an organization or State government’s entire workforce (Helton & Jackson, 2007). Before succession planning and employment development can begin, workforce needs have to be identified. For example, Pennsylvania used its workforce plan to identify future job openings and created a succession-planning model to maintain and develop qualified individuals (Helton & Jackson, 2007). Their “Grow Your Own Nurse” training program was a result of a nursing

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shortage. The program was instrumental in building a pipeline of qualified nurses (Helton & Jackson, p. 341). Training, according to Pynes, (2004) has to be an important component to succession planning so that employees have the required skills and knowledge. However, Ibarra (2007) argued in his article that an organization cannot simply train their way of out of real succession planning. He claimed that organizations do not often take the time to measure the effectiveness or outcomes of their training programs. More emphasis should be placed on building “soft skills such as judgment and effective use of resources” (p. 27). In support of that argument, Kim (2003) reported: “the International Personnel Management Association report stated that the focus should be on establishing core competencies encouraging self determination, developing career planning, using technology for career development, recommending a strong career development program, taking a comprehensive and organization-wide view of career development, focusing on people—finding a champion and promoting realistic expectations” (p. 535).

Each of these views speaks to the individual organization but does not address how individual states should coordinate succession and employee development efforts across agencies. With the exception of Pennsylvania who seems to be the model for coordinating its workforce needs, most states do not seem to have statewide succession, workforce, or employee development plans.

Human resources and workforce planning play a critical role in effective succession planning. Selden, Ingraham and Jacobson, (2001) found that states are shifting their human resources model from a controlled bureaucratic process to a service oriented efficiency process.

They noted however, that there is no observable evidence as of yet to “operationalization of the shift in the mission” (p. 602). Many states have performed studies on their workforce but few have developed comprehensive succession plans. According to Pynes (2004), management often times does not understand the complexity of integration between human resources with organizational strategy. More often than not in a time of fiscal crisis, training and employee development programs are the first items cut (Sussman, 2006). Consequently, succession planning and employee development are the activities that could save the state’s money in the long term by reducing the time it takes to find qualified workers, lowering the costs of training,

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shortening training periods, increasing efficiencies through documented work processes, and decreasing employee turnover.

Maryland’s last legislative audit in 2004 noted that the “state had not engaged in formal workforce planning to address workforce needs” (Department of Legislative Services Audit p.1).

To date there has been no policy guidance. However, Maryland did develop a guide for succession and employment development plan for its school system in 2006. The guide defines the importance of leadership succession and outlines the “how to” implement a plan in the school system (Maryland State Department of Education, 2006). At DBED, the agency has developed contingency plans if operations are shut down temporarily due to a power outage or a local disaster but nothing in regards to leadership development or continuity of operations due to employee retirement or turnover. Small steps had been taken within the organization to document procedures, begin cross training of employees and job shadowing. However, budget cuts have limited employee’s pursuit of both internal and outside training. For example, DBED has not participated in the State’s college tuition reimbursement plan for several years. Managers who would want to pursue a graduate level degree to increase their knowledge and skills have to pay for the education themselves. Consequently, they often leave the agency after obtaining their degree. The private sector encourages employee development and education. They have written contracts for employees who utilize tuition reimbursement programs, which require paying back educational expenses if they leave the organization within a certain amount of time after receiving a degree. This process results in holding on to the organizations employees because both the organization and the employee have something vested. State governments tend to be reactive instead of proactive when it comes to workforce planning and employee development.

Seldon, Ingraham and Jacobson (2001), confirmed that states have done very little in the area of workforce planning. Without comprehensive workforce planning effective succession planning and employment development cannot take place. Succession planning requires a strong commitment by management and for “human resource management departments to expand their scope of activities beyond traditional human resource management tasks” (Pynes, 2004, p. 394).

Part of the problem is that human resources management lacks the capabilities and the skills needed to develop a strategic approach to workforce and succession planning (Pynes, 2004). Kansas addressed the issue by training human resources on how to be strategic planners

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(Pynes, 2004). Personnel processes varied across states between centralized, decentralized, and a mix of (Seldon, Ingraham & Jacobson, 2001). Obviously, given the mix of both centralized and decentralized, personnel system practices were not efficient and lacked consistencies. Pynes (2004) noted one problem with decentralization of personnel practices was the lack of information to evaluate the effectiveness of human resource management practices. She stated that management does not understand the complexity of integration between human resources with organizational strategies. This is especially true in the public sector where there is a lack of interdepartmental cooperation and continuous change in political leadership.

Changes in leadership and downsizing present another challenge to the public sector when it comes to succession planning. Schall (1997) asserted that effective organizational processes should not discontinue due to transitions in leadership. Kim (2003) suggested linking assessments to succession planning to assist in identifying potential leaders within the organization. Schall asserted that by establishing support beyond political leadership for programs and by identifying the key supporters to fight for agencies programs they were less likely to be discontinued. Nationally recognized programs are more likely to survive and not be affected by a change in leadership. However, even nationally recognized programs, when closely examined often fail the effectiveness and efficiency test. For example, Governor Glendening’s Smart Growth program was criticized recently as a failure because it lacks real enforcement against urban sprawl. Development continues in areas without suitable infrastructure to support the growth. This relates back to what Sussman (2006) stated about real program evaluation not taking place in public agencies. Had Glendening’s program been evaluated the first year it was in place maybe changes to the program would have happened to make the program more effective.

Instead the program has continued but under a cloud of ineffectiveness. Succession planning includes legacy programs as well as continuity of the workforce. Nevertheless, with the lack of any real succession planning, evaluation of programs seems to be a moot point.

There is a common thread that all public agencies are facing and that is a qualified worker shortage. Rothwell and Poduch (2004) reported, “perhaps as much as half of the federal, state, county, and city government workforce may be nearing retirement" (p. 408). According to Maryland’s 2005 Workforce Planning report conducted by the Office of Legislative Audits, DBED’s employees’ average age is “45.9 with average years of service of 9.5” (p. 36).

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Furthermore, “23.0% of DBED’s employees are eligible to retire in 2009 and 38.0% are eligible to retire in June of 2014” (p. 39). DBED has no current plan in place to address this potential workforce shortage but has hired back retirees in the past. Texas addressed its shortage of experienced Information Technology (IT) professionals by rehiring its retired employees to deal with its shortage, while Iowa outsourced its IT services (Pynes, 2004). Both states according to Pynes increased their pay for IT positions to be more in line with the private sector. Outsourcing of services is one of the strategies that many states are using to fill the worker gap. Rothwell and Poduch (2004) however, do not support outsourcing as a solution. They noted that outsourcing is not effective ensuring the public are getting value for the money that is spent and that someone with institutional knowledge must be present to watch over the process. For example, DBED outsources one of its finance programs to an outside contractor but has a Program Director on staff that understands the history of the program and assists in ensuring that the contractor manages the program appropriately. However, this particular contractor has significant political influence and uses it to gain additional funding and to create processes that are more advantageous to the contractor’s organization. The contractor's employees are not subject to furlough days and have continued to receive cost of living increases. Maryland state employees have not received any increases and have to take furlough days. In effect, it is possible for the agency to lose control over its own programs to an outsourced contractor due to political influences and favorable contract negotiations. There may be times however, when outsourcing is appropriate and cost effective, but agencies should be cautious and examine how outsourcing may affect the organization and its employees.

Outsourcing may be a temporary solution to succession and workforce planning but it is not the desired or the best outcome for public agencies. While succession and workforce planning is a lot of work for an organization, it should be a priority. The benefits of succession planning far outweigh the problems that will arise by not doing any planning. Succession planning is used to increase female and minority participation, enhancing visibility among diverse employment population (Kim, 2003). In DBED’s division of finance, management is grooming successors for its administrative group by training staff on critical administrative processes, sharing information on Departmental policy issues, and giving staff the autonomy to make decisions involving administrative processes. Key accounting and administrative

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procedures had been documented and cross-training and other internal training of staff is strongly encouraged. As a result, finance staff are sought out to participate in special projects and recruited to work in other areas of DBED. Employee development builds morale within the organization and if done correctly, it will improve the skill level of its workers. If succession and workforce planning is completed in a coordinated and well thought out manner, states could increase their pool of applicants, be able to match skills to the program needs, and identify potential leaders from within the organization.

Succession, workforce planning, and employee development takes a great deal of discipline. It requires management, human resources, and employees to work together in a strategic manner to identify critical operational and leadership needs. Management must examine its operations from top to bottom reviewing all of its processes, procedures, leaders, and employee functions. Once a careful examination of the organization has been completed a written analysis should be developed to identify operational and leadership gaps. All employees need to be a part of the process ensuring that all operational issues are addressed. After a thorough analysis, management needs to prepare a plan on how and who will fill the gaps and identify a timeline to evaluate the effectiveness of its plan. Consequently, management also needs to be prepared for the realization that staffing levels in certain areas of the organization may be bloated and tough choices will need to be made and employees may need to be eliminated or reassigned.

Within public agencies, personnel identification numbers or “PINS� are held on to and traded like a hot commodity. Even when management knows they do not need extra personnel or that they have too many staff with little to do, they will continue to hire and seek personnel for their open PINS. This is very discouraging and justifying the public complaints about bloated state government because in reality it is. Until the public sector really embraces the concept of efficiency and lean processes, it will be difficult to do effective succession planning. Private sector organizations understand these concepts very well. The public continues to rely on government services and has an expectation that public agencies will meet any future demands.

However, as seen during 9/11 and Katrina, there is a lack of coordination with respect to communication, insufficient training and experience of employees, poor to little planning and lack of sufficient funding to support the resources needed to address public concerns. States

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should view workforce and succession planning as a top priority and directly related to the security of the state. Maryland has taken small steps with its disaster planning but needs to take it to the next level and include overall comprehensive planning for each agency. Succession planning and employment development is more than just understanding operational issues, successes and failures, it is about a shift in the way organizations view what they do, how they do it, and who does it. The next step in this process would be to evaluate existing programs for effectiveness and then share that information across agencies and with other states. It is promising what some other states have attempted to do in succession planning but as the literature suggested without any evaluation there is no effective measure to observe what they have implemented is really working. Only in time can judgment be passed.

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References Department of Legislative Services Maryland General Assembly (2005). State workforce planning performance audit report, 1-46. Retrieved October 8, 2009, from http://www.ola.state.md.us/top_pgs/Publications/pubs_performance_2005 Helton, K. & Jackson, R. (2007). Navigating pennsylvania’s dynamic workforce: Succession planning in a complex environment. Public Personnel Management, 36(4), 335-347.

Retrieved October 8, 2009, from ABI/INFORM Global. (Document ID: 1426327141).

Ibarra, P. (2007). The myths of realities of succession planning. Public Management, 89(1), 24-27. Retrieved October 8, 2009, from ABI/INFORM Global. (Document ID: 1191267191).

Kim, S. (2003). Linking employee assessments to succession planning. Public Personnel Management, 32(4), 533-547.

Kisner, R. A. (2007). Using the balanced scorecard to achieve career success. Government Finance Review, 23(6), 63-67. Retrieved October 8, 2009, from ProQuest database.

Maryland State Department of Education (2006). Leadership succession planning guide for Maryland schools. 1-52. Retrieved October 8, 2009, from http://www.marylandpublic schools.org Pynes, J.E. (2004). The implementation of workforce and succession planning in the public sector. Public Personnel Management, 33(4), 389-404, Retrieved October 8, 2009 from ABI/INFORM Global.(Document ID: 793059261).

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Rein, L. (2009, November 2). Study calls Md. smart growth a flop: Open land still disappearing.

The Washington Post. Retrieved November 2, 2009, from http://wwwlwashingtonpost. com/wp-dyn/content/article/2009/11/01/AR2009110102470 Rothwell, W. J., & Poduch, S. (2004). Introducing technical (not managerial) succession planning. Public Personnel Management, 33(4), 405-419. Retrieved October 8, 2009, from ADI/INFORM Global. (Document ID: 793059311).

Schall, E. (1997). Public-sector succession: A strategic approach to sustaining innovation.

Public Administration Review. 57(1). 4-10. Retrieved October 8, 2009, from ABI/INFORM Global. (Document ID: 11038082).

Seldon S.C., Ingraham, P.W. & Jacobson W. (2001). Human resource practices in state government: Findings from a national survey. Public Administrative Review, 61(6), 598-607.

Sussman, D. (2006). Public sector training. T+D, 60(7), 29-41. Retrieved October 8, 2009, from http://search.ebscohost.comproxy-ub.researchport.umb.edu.

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