Obstacles to Succession Planning

By Gary Perman  |  Posted 08-13-2008

Why Companies Don`t Train IT Workers

Are you preparing your people for the next steps in their careers? Probably not.
The number-one reason IT pros say they want to leave their current company is because they see no effort being made by management to advance their career. Companies lure top IT talent with the promise of training for career advancement; once there, those IT workers are often disappointed when it becomes obvious that there is no such plan. Talented employees stagnate, morale declines, and with it production and innovation falter. It doesn't take long for a discouraged employee to begin looking for another job. 

Succession management refers to the identification and development of potential successors in a company. The key to succession management is creating a match between the company's future needs and the aspirations of individual employees. And remember: employee training is only a part of succession management and in and of itself is not succession management.

A well-developed succession management process boosts retention rates of superior employees because they recognize their company is investing in their career. When you continue to challenge and reward talented employees, you eliminate their need to seek opportunities elsewhere.

Developing leadership talent--a long-term investment of time and resources--is something many companies ignore. Why? That's based on misconceptions and misinformation about succession management. When companies allow themselves to be pressured by the demands for immediate returns on investments from stockholders, investors and short sighted executives, costs increase dramatically due to high turnover, which results in recruitment costs, re-training, production and innovation delays, and time required for cultural acclimation of new employees.

A succession system succeeds by having more than one good person available for key positions; real success requires choices between two or more qualified people. In order to have choices, a supervisor needs to identify who is ready now and what it will take to make others ready when you need them. This seems like common sense. So why aren't all companies buying into succession management?

Obstacles to Succession Planning

Obstacles to Succession Planning

PermanTech conducted an Internet survey among CIOs, IT leaders, and technology executives in July 2008. The results reflected responses often expressed by employees PermanTech consults. Common characteristics of companies that do not practice succession management include:

• Lack of vision at the top.
• Fear of replacement - a lack of trust within management, fearing they would be replaced if they trained a successor.
• No desire of company leaders to make any changes. 'It has worked this way for twenty years, why change anything?'
• Succession management is time consuming and requires financial resources and proactive planning.
• An emphasis on short-term thinking, including executive focus on company revenue and profits.
• The common misperception that the employee--especially in IT--is "disposable."
• The perception that smaller companies are product-centered rather than people-centered, thus less time and resources are invested and available for succession management.

Erika McDaneld, human resources manager at QL2, a software as a service (SaaS) firm in Seattle, echoes an overwhelming sentiment common of smaller companies: "It's a lack of executive support due to the fact that we're still a small company under 100 employees, as well as the perceived costs. Not only money, but the time involved in succession planning. It's not considered to be an added value at this point."

Nick Murphy, IT director at EthicsPoint, a software development company in Portland, Oregon, believes succession management fails due to misplaced attitudes and fallacious beliefs of management. Murphy thinks that there are two kinds of managers that contribute to the problem: those intimidated by people they perceive as smart (or smarter than them), and thus a threat to their own job, and those that have no clout within their company.

For the intimidated managers, Murphy asks, "When have you ever heard of someone getting fired because they hired someone too great? I try to find people who I perceive as being able to fill in my shoes if anything were to happen to me."

Then there are the managers with no organizational influence. Some companies don't value IT, and therefore don't see the value in training IT workers. And if the manager lacks sufficient clout, there's little hope for putting a successful plan in place.  "If the company is not willing to accept IT, as critical to their business, you will never have succession management," Murphy says.

Risks of Not Training IT Workers

Risks of Not Training IT Workers

If succession management is not implemented, especially in many small to mid-sized companies, what do companies have to lose?

Death of a company leader or the CEO/founder decides to depart the company. PermanTech recently interviewed a Denver-based IT manager who had been with the same high-tech manufacturer for the past 11 years. The president of the company decided to step down last year--giving six months notice--to pursue other interests. During those six months, no successors were chosen. He left anyway, leaving a gap of knowledge and no leadership in place. Then three of the firm's five vice presidents decided to leave the company at the same time to pursue other interests. Eventually, a new executive team was recruited, bringing with them new philosophies, new cultures, and a new environment foreign to the remaining leadership. This IT manager is no longer happy in the new culture and is actively looking for a new position--as are other remaining staffers.
Lack of vision at the top executive level. This covers a gamut of misconceptions, fables and misnomers such as:
- "If every employee is trained to advance, companies would run out of the little guys..." 
- "Professional development is the responsibility of the employee, not the company..."
- "We are now turning into an economy of free agents so if you are not branding yourself and managing your own career, it's easy to get left behind..."
- "It's not my job--that's the job of the HR department."
When executives rely on such misconceptions, rather than reality, they leave themselves open to serious jeopardy.

The fear of replacement. Executives and managers who fear that training subordinates will produce competitors within the company demonstrates a basic insecurity in themselves and their company. Yet a corporate culture that does not encourage succession management means those potential competitors will eventually leave the company for competitive endeavors.

"Many executives and managers live in fear these days that they are one e-mail away from being replaced," says Gary Feather, vice president for consumer systems and technology at Sharp Laboratories of America. "They want the perception to exist that what they know and who they know is their security blanket that they must be retained, even in very hard times. They focus on getting ahead and holding their ground at all costs. If a replacement is identified, trained, qualified and certified, then how can they feel safe?"

Company short-sightedness. Many companies labor under short-sighted attitudes, finding comfort in the day-to-day stability of their IT operations to the point where they delay initiating succession programs. "Mid-level people in IT watch for leadership, strength, and guidance from our executives. When we don't find it, we leave," says Noah Murphy, senior systems engineer at U.S. Digital. "Not caring for the needs of mid-level IT is short sighted." Murphy says he's worked for several IT leaders with a short-sighted perspective throughout his career, and has seen many IT pros come and go as a result. 

"IT operates from two perspectives of corporate executives: a driver perspective and a support perspective," says Arthur Langer, director of the technology management master's program at Columbia University in New York. "Most senior executives view IT as a support role to the company rather than a driver. If you have a supporter mentality, you are more reactive, governed more by reactivity versus a long-term planning perspective. Succession management is a strategic behavior."

If succession planning is a low priority, Langer says, executives will take the support view of IT. If it's a high priority, they'll have the driver perspective, which has the added bonus of less turnover challenges.

Changing employment climate. Skilled talent is becoming more difficult to find. Many executives believe that employees, especially in IT, are disposable and can be replaced at a moment's notice. This is the furthest thing from the truth: according to the U.S. Department of Labor--and assuming only half their numbers are correct, which is unlikely--the skilled employment gap will continue to widen, creating ever-growing stress on companies to recruit talent and implement succession management strategies to retain the top talent they have. As Baby Boomers retire, creating further gaps in skilled talent, succession management will become even more critical as employers discover finding and recruiting talent is becoming increasingly challenging and costly. Expect the future to bring longer periods for search and recruitment as well as increased costs in talent acquisition, not to mention lost revenues from delays in innovation, production and down time. The fact is that as soon as an employee discovers that a company lacks a succession management plan, they believe their chances to advance in their career are left to a minimum, and they will leave and try to advance somewhere else.

If companies are to be successful in their growth and profitability, even as a small or mid-sized company, succession management will need to become a top priority among the company's board of directors and top leadership.

Gary Perman is a certified recruiting professional and owner PermanTech, which specializes in recruiting technology executives, managers and engineers. He also hosts a technology employment blog.