Employee retention today doesn’t rely on one thing. It depends on many factors. As employee retention strategies become more complex, employers in Australia and New Zealand (ANZ) are increasingly looking beyond the traditional drivers of retention, such as pay and benefits.
In Ceridian’s 2022 Pulse of Talent survey of 6,800+ employees from around the globe, 37% of respondents said opportunities for career advancement would convince them to leave their current job for a new role. Another 27% said they would leave for opportunities to learn and develop new skills.
For employers in ANZ, succession planning provides a clear opportunity to fulfil these needs for their workers and boost employee retention while also bringing broader benefits to their organisations.
But it’s an area that isn’t without challenges for employers. Let’s explore the current state of succession planning in ANZ and the pitfalls to avoid in your succession planning strategy.
Ceridian’s 2022 Executive Survey of 2,000 leaders from around the globe, including 307 executives from ANZ, reveals valuable insights about the state of succession planning in the region. On the surface, succession planning appears to be flourishing in organisations today. But when you dig deeper, there is work to be done to ensure that succession plans are effective at employee retention and helping secure the future of businesses.
An incredible 92% of Executive Survey respondents in ANZ report that their organisations use succession planning, higher than the global average of 88%. Eighty-four percent of ANZ respondents – the lowest of the regions surveyed – said their organisations used succession planning pre-pandemic, indicating that the disruptions of the pandemic spurred increased adoption.
While this might seem like a succession planning success story, a deeper dive into the Executive Survey findings tells a different tale – one that makes it difficult for succession planning to support an employee retention strategy.
Rather than relying on their succession plans, 84% of our Executive Survey respondents in ANZ said that their organisations often or always hire external candidates for leadership roles as opposed to promoting from within. This is far higher than the 74% reported globally and the highest among all regions surveyed.
Respondents report that external candidates are hired for leadership roles because of what they bring to the table rather than issues with internal candidates like a lack of managerial skills (16%), interest in leadership roles (15%), or necessary job-related skills (14%). Thirty percent said they hire externally for leadership roles to gain a fresh perspective, and 25% said it gives their organisations a competitive edge.
While hiring external candidates can make strategic sense for some roles, organisations and their employees can benefit from providing advancement opportunities through sound succession planning. These benefits include increasing employee retention and engagement and supporting business continuity.
But employers can only reap these rewards if they avoid a few succession-planning pitfalls first.
Our 2022 Executive Survey paints a picture of organisations that have implemented succession planning as a policy but haven’t taken care to ensure that these plans are impactful. So, they continue to experience problems like lengthy vacancies for key leadership roles. Sixty-five percent of ANZ respondents stated that these roles go unfilled for four months or longer.
While HR will play a central role in succession-planning strategies and initiatives, they can’t be solely responsible for its success. To be effective, succession planning must be a company-wide initiative that is seen as an evolving process rather than words on a page.
In our Executive Survey findings, we see a heavy focus on succession planning for senior leaders versus other types of roles. When asked about which types of roles are included in their succession-planning strategy, 65% of the ANZ executives surveyed said their organisations use succession planning for senior leadership roles. The level of adoption in ANZ drops to 61% for subject matter experts, 60% for critical technical experts, and 50% for people leaders.
Succession plans should be broad and consider the organisation holistically. Providing career paths and talent development for employees throughout the organisation can help reduce turnover among your highest performers, as well as in key subject matter expert and technical roles.
Employers should also take care to avoid considering only one successor per role. That successor could decide to take a different internal position or accept a role at another company, leaving you to start over in the process. Instead, focus on building talent pools for succession.
Just over half (57%) of our Executive Survey respondents in ANZ currently use technology to map talent/identify leaders. But succession planning shouldn’t be a subjective process. It should favour a data-driven approach over intuition.
Organisations should leverage technology to help with succession planning. The right tools can help leaders create coverage plans for key roles to reduce organizational risk and help reduce regrettable turnover. It can help track readiness for promotion and support employees’ ongoing development.
Succession-planning software allows organisations to make more informed decisions about employee career paths based on performance, flight risk, compensation, and other essential data. It also helps keep succession planning top of mind at all times, rather than only when a successor is needed.
By avoiding these pitfalls, organisations can build comprehensive succession plans that can become another effective tool for improving employee retention in a competitive talent market.