)
When asked about the effectiveness of their succession planning efforts, 28 per cent of the organisations in India either have no succession planning process in place or had a process that is not at all effective, while 39 per cent believe that it is 'somewhat effective', according to a study done by KPMG. Only 7 per cent of the organisations feel that their succession planning process is 'extremely effective'.
In the report titled 'Time for a more holistic approach to talent risk', respondents ranked the risk of 'insufficient pipeline of future leaders and lack of depth of internal candidates for critical roles' as their top two critical risks. In India, 150 organisations (human resource leaders, business managers and CXOs) across 16 industries responded to the survey. Of the respondents who indicated that their succession planning efforts were very/extremely effective, 70 per cent were successfully filling more than 50 per cent of their critical roles with internal candidates.
When looking at the effectiveness of succession planning based on the size of the organisation, it was seen that companies with under 3,000 employees had the most problems with their succession planning process. Nearly 30 per cent of them either didn't have a succession planning process or believed their succession planning efforts were ineffective. On the other hand, 28 per cent of the organisations with over 10,000 employees believe their succession planning processes are very/ extremely effective. (TOP RISKS BY INDUSTRY)
Organisations with less than 3,000 employees felt that their capacity and capability risks were high and that they were the least effective at mitigating those risks. These smaller organisations were found struggling with compliance and connection risks. By contrast, mid-sized organisations (between 3,000 and 10,000 employees) felt they were less effective at mitigating cost issues. but were not any more concerned about cost-related risks than small and large organisations.
Large organisations stated they were the most effective at mitigating capacity, capability and cost risks. In addition, large organisations also felt that connection risks (those relating to employee engagement) were greater than any other talent risks. Across organisations, 'non-compliant talent management processes and difficulty in transferring talent due to international mobility policies were identified as the least managed talent risks.
Narrowing it down
Some key findings also indicate an acute lack of attention to talent costs. Indian talent managers are relatively unconcerned about the sufficiency of the talent budget and the sustainability of the cost of retaining top talent whereas at an international level, organisations consider it to be one of their top 10 talent risks. About 48 per cent of the organisations in India were found not tracking the 'total cost of the workforce', or were using this metric only in a limited scope.
Additionally, there is a visible disconnect among HR, business and frontline business managers about their perception of talent risk. While business leaders are most concerned about talent capacity to meet business goals, HR leaders are concerned about capability talent within the organisation and frontline managers are concerned about top talent becoming disengaged.
The perception and mitigation of talent risk was found to be different across seven industries, including business/consulting services, consumer goods and retail, diversified industrials (aerospace, defence conglomerates and automotive), financial services, infrastructure and government services, life sciences (pharmaceutical, biotechnology and healthcare); and technology, media and telecommunications.
Consumer goods was the only industry to identify a lack of diversity in the workforce as a key concern area. In the financial services industry, business leaders' inability to engage critical talent was a top concern, whereas the diversified industries showed less concern about the risk of retaining top talent as compared to other industries.
When asked how much time senior leadership teams spent formally reviewing talent each year, 66 per cent of respondents stated two or more days per year and 12 per cent stated that they lacked a formal talent review process. It was also found that 52 per cent of respondents said that their organisations either had no talent review processes in place, or that their leaders take no action or lose momentum once talent reviews have been concluded. On the other hand, 44 per cent of the organisations have talent review processes where leaders stay actively involved through the year.
The hiccups
Talent management is a key C-suite's priority at a global level with organisations competing for top talent on an unprecedented scale. Notwith-standing the increased importance to talent issues, several organisations still take a myopic view of managing their talent which tends to hinder their competitiveness and agility. "It is somewhat startling to see that organisations adopt a narrow, limited approach to talent management. While relevant, the apparent obsession with capacity and capability-related talent risks has led business leaders and human resource professionals to pay less heed to cost, compliance and connection-related talent risks," says Nishchae Suri, head of people & change, KPMG India.
On succession planning hurdles in particular, Suri points out that the current decade is perceived to be the 'decade of retirement', so succession planning would ideally have been at the forefront of talent management. Succession planning in India needs more clarity in terms of defining growth and profitability for it to be taken more seriously. Also, the communication to potential candidates is the first hurdle - an area of concern, since it is a tentative exercise in most organisations. "Messaging to potential candidates with conviction is more important than the outcome," says Suri. "The intention should be made clear from the beginning."
Another hurdle is the lack of know-how and awareness across the organisation. The talent management framework needs to allow for succession planning to be taken seriously, with the onus on the board of directors and the management committee to ensure the organisation's future preparedness.
