Amidst the increasingly competitive business environment of today, the maxim that “organisations exist to persist” is indeed serious business.
To survive in this competitive environment, organisations have to prepare themselves not only to withstand any eventualities, but also to emerge triumphant vis-a-vis the competition.
Besides offering exemplary products and services, how well companies manage their talent pool is one of the critical factors that will decide the fate of how well they will fare at the end of the day.
Given the onslaught of changes underway, how important is talent management and succession planning to the survival of companies, and how well are Malaysian companies faring in managing their talent responsibilities?
Stressing the importance of talent management and leadership development to competitive organisations, Accenture Malaysia country managing director Goh Aik Meng says having well thought out talent, leadership and culture initiatives which are aligned with real business needs, still remains a key challenge for Malaysian companies.
“It is necessary to have a focused leadership development programme, which is linked to business growth imperatives and the use of analytics to determine talent needs, that is integrated with the succession planning process,” Goh says.
He stresses that succession planning is a critical people management practice that enables organisations to translate the realisation of business benefits as it requires dynamic and effective leaders.
“Businesses that actively manage their talent pipeline and grow their existing talent are more likely to become high performing businesses. This process will ensure that the organisations are systematically identifying and preparing high-potential candidates for key positions,” he shares with myStarjob.com.
Goh says succession planning initiatives should be part of a broader management development effort and must be integrated with other human resources initiatives. This allows better decisions to be made and will be able to identify internal potential successors based on their skills and competencies.
Concurring with Goh, Dr Jens Ballendowitsch of international consulting firm Aon Hewitt says given the prevailing shortage of talents, the importance of talent management and succession planning, especially among Malaysian companies, is becoming more critical.
Ballendowitsch, who is Aon Hewitt’s practice leader talent for Malaysia, says as the economy continues to grow, employers should explore methods besides the tried and tested practices because they would be facing growing challenges to attract and retain critical talent to expand their businesses.
“Attraction, engagement and retention of high performers and high potentials are strongly driven by career, as well as learning and development opportunities. Mentoring, coaching and regular exposure to senior leadership are important aspects a company can provide to these high-in-demand employee group,” Ballendowitsch says.
Talent management can be either a discipline as big as the human resources function itself, or a small bunch of initiatives aimed at people and organisation development.
Ballendowitsch says to attract and retain key talent and to drive high performance, companies need to establish a robust and attractive talent management system – an initiative that Malaysian organisations are increasingly embarking on.
“A talent management system goes hand-in-hand with succession planning. Once the talents are defined and managed, those outstanding talents should enter a succession planning programme. This is a logical step because the objective of talent management must be to identify future senior leaders who possess the right skills and competencies and exhibit the right behaviours that ensure the future success of the company,” Ballendowitsch elaborates.
Giving the thumbs up for talent management and succession planning, Aon Hewitt senior client partner, South-East Asia Na Boon Chong says it is part of good corporate governance practice for boards to manage CEO and key officers’ succession plans.
Na says the increasing pressure for talent management and succession planning is driven by the confluence of a number of factors:
1 Demographic shift – Maturing of the senior management rank (baby boomers and grey tops) and lower employment participation rate due to declining birth rate;
2 Economic growth rate and an ever-changing skill and knowledge requirement;
3 Expectation on corporate boards to broaden their oversight by including people risks such as management succession and capability development.
“A traditional replacement planning approach, such as three candidates for each management position on the organisational chart, is not practical anymore due to the frequent need to restructure. An approach aiming to increase the bench strength to meet future needs should be taken,” Na says.
He says an example of a good talent management structure is one that is segmented by the types of talent, such as entry level recruits (young leaders), high potential pool (emerging leaders), and potential successors to the top (senior leaders).
Various approaches, investments and oversights are provided to each segment in order to ensure a continuous flow of talent pipeline.
BRIDGING THE GAP
Aon Hewitt’s Leadership practice leader, Yong Kit San, says research by Top Companies for Leaders found that successful companies do several things better in building and sustaining a strong leadership pipeline.
They build a strong and identifiable leadership brand that will set clear expectations, attract talent to join the company, and excite them to aspire to lead.
Other practices include giving importance to continued talent assessment, customised development opportunities for identified talents, development processes that take top talents “outside” of their comfort zones, and promoting diversity of thought among the top leadership team.
Given the importance of talent management and succession planning, a gnawing question is whether organisations should groom their own people or cast their net far and wide to source for outside talent.
According to Ballendowitsch, if a talent management programme is in place, it is advisable for organisations to groom their own people to become future leaders.
“Without being able to tell a success story to their current and future talent in the form of actual talents who climbed the ranks and made it into the C-suites, talent management and success planning will be only perceived as lip service, which might impact the employer brand in the long run,” he explains.
Yong says while it is good to groom internal talents, there should be conscious and focused efforts to ensure diversity of backgrounds and experiences at the top team.
“It sends a clear message, especially among public listed companies, about the sustainability of the organisation, when there is a clear internal succession plan in place for the top executive. So diversity (in terms of in-company versus external executives) can be built in one or two levels below the top executive to ensure diversity,” he says.
Na says research has shown that the market is generally more favourable to an external CEO coming in to take over if the company requires a significantly new strategy and direction for its business.
However, if the expectation is that the company should stay the course and only make incremental changes, an internal CEO successor would be preferred.
Whatever the strategy opted for, what matters ultimately will be the organisation’s ability to stay relevant and persist on for the long-haul.
“It is necessary to have a focused eadership development programme ,which is linked to business growth imperatives and the use of analytics to determine talent needs, that is integrated with the succession planning process .”
– Goh Aik Meng, Country managing director; Accenture Malaysia
“Attraction, engagement and retention of high performers and high potentials are strongly driven by career, as well as learning and development opportunities . Mentoring , coaching and regular exposure to senior leadership are important aspects a company can provide to these high in-demand employee group .”
– Dr Jens Ballendowitsch, Practice leader talent ; AON Hewitt Malaysia
“A traditional replacement planning approach, such as three candidates for each management position on the organisation chart, is not practical anymore due to the frequent need to restructure. An approach aiming to increase the bench strength to meet future needs should be taken.”
– Na Boon Chong Senior client partner; AON Hewitt South-East Asia
“Without being able to tell a success story to their current and future talent in the form of actual talents who climbed the ran s and made it into the C-suite , talent management and success planning will be only perceived as lip service, which might impact the employer brand in the long run .”
– Yong Kit San, Practice leader leadership; AON Hewitt Malaysia
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