Today’s labour shortage is a challenge for many organizations. As CBC News reports, 55% of small and medium-sized companies in Canada can’t find enough qualified workers, and it’s slowing post-pandemic recovery.
As savvy business owners attempt to navigate this shortage by adjusting salaries and benefits, building their employer brand, and ramping up job postings, another key piece of the puzzle is to look internally. Succession planning takes a more strategic approach to building a robust talent pipeline. It can work for any organization, no matter their size, but we know that 75% of small companies don’t have a succession plan in place. Here’s what you need to know to build a succession plan into your business strategy.
Canada’s Labour Shortage
A study released by the Business Development Bank of Canada (BDC), reports:
- 64% of Canadian entrepreneurs say their growth is limited by the labour shortage.
- 61% say they and their workforce are putting in longer hours as a result.
- 44% have delayed or simply cannot deliver orders to clients.
From manufacturing to hospitality, customer service to supply chain, accounting to engineering, Canadian businesses are struggling to find the people they need.
The issue is a complicated one. The report suggests that COVID-19 didn’t cause the labour shortage, but instead exacerbated a problem that was already in the making. With 16% of Canadians over the age of 65, we’re going to see a high percentage of retirement in the next five years. This level of experience will take some time to replace.
What is Succession Planning?
CIO calls it, “A key talent strategy for business.” Succession planning is designed to identify high performers within your organization, build on their strengths and career aspirations, and create a talent pipeline of people who can step into key roles should a need arise.
Succession planning is a deliberate and future-oriented process of planning and finding the right people for the right roles. It means thinking beyond the short-term role of each worker and developing growth opportunities within the organization. It can help you keep the talent you already have and move them into key vacancies.
Benefits of Succession Planning
When done well, succession planning can help alleviate the pressure of the labour shortage Canadian businesses are experiencing. It also:
- Saves money – it costs more to hire externally than to promote from within.
- Saves time – decreases your time-to-hire, saves onboarding time because staff promoted from within already know your organization, and you already know that they fit your culture.
- Improves employee retention by offering a career path to high performers.
- Facilitates organizational knowledge transfer and retention from one generation to the next.
- Helps your organization stay more prepared for the future.
- Increases employee performance by identifying and addressing skills gaps.
How to Create a Succession Plan
Your succession plan should be evolving and flexible. It could be as simple as a document or spreadsheet that you adapt as your talent pipeline changes, or you can use a human resource information system (HRIS) to help streamline the process.
This process is different for every company, but some general best practices include:
- Begin with strategic planning. Where is your business going? What is your five-year plan, and what key roles will be added to achieve this plan?
- State an overall goal. For example, ‘ensure the seamless transition of key positions without harming company productivity or morale.’ This will guide your planning and may help get buy-in if needed from executives.
- Develop a list of anticipated openings in the short and long-term due to retirement, maternity leaves, resignations, restructuring, or other factors.
- Identify the most important roles in the company that would need to be filled quickly to avoid harm to the organization in the event of a departure.
- Proactively define the responsibilities and skills needed to do each job, including technical skills as well as personality and soft skills. You’ll have a head start if you already have robust job descriptions in place for your team.
- Evaluate the strengths, capabilities and goals of your current staff and create and execute an ongoing training plan to groom them for future roles.
- Build in metrics for evaluating the effectiveness of your succession planning.
Retention is Key
Your top performers can only move into new roles with your organization if they stay with your organization.
The great news is the act of succession planning itself often has a positive impact on retention. If you develop a strong company culture that promotes hiring from within, ambitious employees will be motivated to improve their skills, thus increasing engagement. A study shows that 76% of employees say that professional development opportunities positively impact engagement and retention.
Other ways to improve retention:
- Be competitive and creative with compensation and benefits.
- Ensure you are hiring employees whose personality and workstyle fit with your organization. Our Workstyle and Performance Profile is a great tool to help you make the right hires.
- Regular stay interviews can help you understand why your long-term employees stick around, what might cause them to leave, and if there are any aspects of your corporate culture that need to be addressed.
Using the Workstyle and Performance Profile in Succession Planning
Getting to know the strengths and the gaps of your employees is critical to building your best team. Our Workstyle and Performance Profile (WPP) is instrumental to how The Headhunters finds the right new hires for our clients—but it can also assist with your succession planning. The WPP can help identify leadership potential within your team and personality ‘fit’ for future roles within the organization.
Sourcing New Talent
Once you’ve looked internally, you could still have vacancies to address: You may have moved an existing employee into a more senior role, and now need to backfill their previous role. Or you may have discovered gaps in your internal pipeline; roles that no one within your current team is qualified to fill.
Now it’s time to look outside your organization for new talent. This starts at the same place as your succession plan by asking: What are the long-term goals of our company? You can build your talent pipeline strategies from this baseline.
Hiring tactics can include:
- Social sourcing: Incorporate social media to help build your employer brand and proactively find better talent.
- Referrals: If your company doesn’t have a referral program in place, you are missing out on some of the best “known talent” that come directly from your valued employees.
- Networking: Since most hiring these days is from who you know and not candidates that actively apply, building networks is critical for your talent acquisition team.
- Recruiting databases: Having an actively updated talent database is literally the best way to keep track of your efforts.
- Proactive candidate relationships: In the same way you build your business each day, you need to actively fill your talent funnel. Establishing contact and building relationships will eventually lead to the talent pipeline you’re seeking.
We Can Help You Find Top Talent
We know that finding the best talent is not an easy task—it requires time and expertise that many busy HR professionals and business owners do not have. At The Headhunters, this is what our team does every single day for our clients.
With specialized Recruitment Consultants and a dedicated Talent Sourcing Team, we have access to a pool of top candidates and can headhunt passive talent for those hard-to-fill roles.
Connect with our team today for strategic hiring and succession planning advice, or to learn more about our Workstyle and Performance Profile.