Reducing your staff turnover lowers costs and keeps skilled people in your talent pool and not leaving to work for your competitors. After all, it’s better for staff morale to focus on retention rather than rely on something like a non-compete agreement. It also keeps open the possibility of promoting from within, which offers existing staff a career path rather than simply a chance to develop skills they then take back onto the job market.
This of course leads many employers to the conclusion that succession planning is specific to a few roles. Some positions, especially entry-level or administrative roles, require less comprehensive planning. While most roles require some attention, it can be prudent to focus on specific areas of the business, especially if your time and resources are limited.
When a senior staff member or executive leaves, it’s important to make sure a replacement is ready to step into the role. Having a plan and pre-grooming candidates is not only good business, but it also demonstrates an interest in your employee’s development and shows them a future in the organization.
Some of the key reasons why every business needs a strong succession strategy include:
- Identifying weaknesses and skill gaps
- Maximizing the return on investment in training and development
- Reducing your vulnerability to talent shortages
- Boosting team morale and improves retention
5 succession planning metrics you should focus on
1. Bench strength
The term “bench strength” comes up a lot in succession planning guides. Based on a principle used in basketball, it’s a calculation or record of how strong your “reserve players” are. In this case, it assesses how potentially strong your team is and which of them could step up if a senior player leaves the team. Developing your bench was a priority for leading HR teams in 2019, and remains so today.
Your best tool here is your existing management team. They work with their staff day in and day out and if they don’t have anyone who could step up, it’s time to get training. Analyze your staff's strengths and weaknesses and start preparing a ladder of succession. The time spent today could save weeks of recruitment issues down the line.
2. Employee retention levels
Trained employees heading out the door for avoidable reasons can cost a lot of money, reduces your talent pool and have a serious knock-on effect on team morale, efficiency and the future of your business - especially in business-critical roles.
We’ve all heard of companies who can’t keep their positions filled for very long and there’s usually a reason. Staff leave for many reasons, but a common issue is the feeling they have no future or, more importantly, that their employer doesn’t think they do. Employees who receive training are less likely to leave and there are many approaches that can be tailored to your needs and those of your team.
Demonstrating an interest in your staff’s futures within the company is a great way to reduce turnover. If an employee believes it would be easier to get promoted than to find a senior role elsewhere, they’re less likely to take the risk and change company. Keeping a close eye on your ability to retain employees will give you an indication of how effective your efforts have been in this regard.
3. Time-to-fill and onboarding
Time is a resource no company has in abundance. When recruiting to fill senior roles, it can be a long process and there’s often a considerable gap between one person leaving and a new person arriving to fill the role. This is the ‘time-to-fill’ - the total number of days between when a new hire is initially requested and the official filling of that position.
Taking into account the onboarding process and the time to get them up to speed and this can be months, if not longer. Handover periods are rare and relying on departing staff members to train a new starter is, on occasion, less than ideal. If you rely on hiring from outside rather than internal promotion, time becomes a vital issue - and effective succession planning even more important.
4. Career progression
Whether or not you hire senior candidates from outside or promote from within, there will always be some recruitment necessary. Attracting new staff isn’t just about the salary or the perks - for many people it’s about offering a trackable path. Being able to demonstrate a history of staff progression shows prospective employees that the role you’re offering is the beginning of a journey and not simply a convenient jumping-off point for external progression.
A common way to calculate how well your firm does with this metric is to calculate your Career Path Ratio (CPR). Simply divide the number of promotions by the number of job role changes. This should result in a number between 0 and 1. The higher the better. If you find your firm scores less than .4, it’s time to look at how your training and internal progress plan is going.
5. Diversity benchmarks
There’s never been more diversity in the world than today. With a growing focus on people as individuals and a need to improve inclusivity, the public focus is squarely on diversity in all areas.
The benefits of a diverse team can’t be understated. It’s not only good for your public image, but it can also help your team be more aware, bring new ideas and viewpoints to the table and help you find new markets to explore. The last few years have seen a shift in focus to reduce the pay gap, improve overall diversity and slowly remove preconceptions by levelling the playing field so that everyone has an equal opportunity.
Focusing on these metrics can grow your business and help you make the most of your talent pool. It’s never too early to start planning ahead.