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8/16/2005
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Why Promote From Outside When The Talent Is Inside?

Succession-planning software can help employers figure out who to promote and develop.

When an employer needs to replace a key leader who's left the company, whether it's a CEO or a middle manager, oftentimes the hunt for a replacement candidate relies on the gut instincts and memories of other managers and executives to offer suggestions for possible successors from within the company.

Viable candidates within the company are sometimes overlooked because they're not as visible or because they lack some key skills that could have been developed along the way. That can prompt a company to search externally for a successor, even though solid talent might've been cultivated and promoted from within.

Talent development is top of mind for many business leaders. A recent study by consulting firm Accenture revealed that attracting and keeping skilled talent, improving workforce performance, and developing employees into capable leaders were among the top 10 business issues cited by the 425 senior executives in North America, Europe, and Asia who participated in the survey.

Some companies are turning to software tools to help improve, automate, and formalize their succession-planning processes. Succession-planning software can help companies map out their talent needs, especially as they contemplate strategies for adapting to changing market conditions and competition, and also anticipate shortages in talent as retirement-age baby boomers begin to leave the workplace.

United Stationers Inc., a $4 billion distributor of office products, deployed succession-planning software from Cornerstone OnDemand Inc. three years ago to manage and automate the succession planning for its top-level executive team.

Since then, United Stationers has deployed the software for succession planning of all VPs and nine grade levels of managers, says George Sanders, VP of compensation, benefits, and development. Right now, the system is used for succession planning, as well as skills assessment and development for about 400 executives and managers in the company.

In addition, a few groups within the company are interested in "bringing the system deeper" to use the software for succession planning for personnel in their various organizations, Sanders says.

United Stationers doesn't use the Cornerstone OnDemand software as a performance-appraisal system linked to pay or incentives. Rather, the succession-planning system involves annual competency assessments to help the company identify individuals' strengths, background and experience, and key accomplishments. Based on competency scores, the software helps guide and identify areas where individuals need to further develop their skills to prepare them for future promotions and leadership positions within the company, Sanders says.

Typically, a manager assesses an individual on 12 key competencies. Those competencies include four areas: strategic thinking, leading associates, results orientation, and interpersonal effectiveness. Each of those four competencies is broken down into three specific areas. For instance, within strategic thinking, an individual would be assessed on business and industry awareness, identifying business opportunities, and formulating vision. Skills assessed include those based on "observational behaviors," Sanders says. That might include a manager rating an individual's presentation skills.

Generally, the higher up an individual is in the United Stationers organization, the higher the score should be for each competency, Sanders says. So, for example, when it comes to competency in formulating vision, an individual in a senior-executive position should generally score higher than an individual in a director-level job.

However, identifying directors with the highest scores in formulating vision (as well as other competencies) can help the company determine the best potential candidates to promote into senior-executive roles now or in the future.

United Stationers' competency assessments are also "calibrated" through feedback from other managers in a group, to ensure that managers are all "on the same page" in how they assess each individual, Sanders says. After individuals are assessed, the data is used to generate reports to assist in succession-planning charts and maps. The data also helps the company identify areas within the company where solid succession plans or candidates are lacking, he says.

"Sometimes you might have instincts about how well a company is prepared for the future," yet once analyzed, the data provides more solid evidence of talent areas that need to be better developed, Sanders says.

The secure, hosted, Web-based Cornerstone OnDemand system helps United Stationers identify key candidates for immediate successions, as well as identify the sorts of skills and competency development that's needed to prepare individuals for promotions and expanded roles within one to three years, as well as further in the future, Sanders says.

At United Stationers, the succession-planning system has also helped identify candidates for cross-functional promotions. So, for instance, when there's an open position in one part of the company, the system can help identify a solid candidate who might be working in another part of the organization. "The old culture at a lot of businesses is that when you talk about 'sharing resources,' people don't want to share, they think of it as 'stealing talent,' " Sanders says. "This puts a professional face on it."

By the end of the year, United Stationers' human-resources management organization will present trend data to the company's senior managers to show how well the succession-planning system is doing, Sanders says. That includes data about internal versus external talent searches and promotions that have occurred through the help of the succession-planning system.

The initial results indicate that internal promotions and hiring have increased because of the system, Sanders says. Overall, the system has also helped with workforce morale. "This system is great for individuals," he says. "Individuals know the collective organization is working to help them succeed."

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