Monday, 19 November 2007: Leading ASX-listed HR consulting, outsourcing and recruitment company, Chandler Macleod, today launched the findings of its latest Workplace Barometer research - Succession Planning: Who gets ahead? - conducted nationally among some 300 business leaders.

The research reveals that companies are realising that succession planning is no longer simply a ‘rescue plan’ to manage the exit of CEOs from an organisation. Yet, although 94% of respondents said succession planning was important to their business, as little as 5% of HR budgets were invested in this activity.

Astoundingly, succession planning is still in its infancy, with only 51% of companies currently implementing succession planning programs and 83% having only implemented the programs in the past five years.

Mr David Reynolds, Executive General Manager of Chandler Macleod Consulting, said: “The long-term growth of Australian and global organisations hinges on their ability to ensure that critical roles at every level of their organisation are filled by talented individuals.

“Most people are surprised to know one of the most pivotal roles at Disneyland in the United States is, in fact, the street sweeper, who has the most direct contact with customers. So it’s not necessarily the traditionally ‘important’ roles that make or break a business.

“Companies continue to invest heavily in recruitment and development, yet many aren’t taking the necessary steps to protect and retain that investment through succession planning.

“If a critical employee leaves an organisation due to lack of perceived career progression, that is money, expertise and intellectual property lost. Companies cannot sustain business growth without talented employees filling critical roles,” Mr Reynolds said.

Succession planning, while seen as vital to business, is unstructured and lacks investment

The research revealed that for many organisations, current succession planning efforts are tokenistic or reactive.

Of the 49% of organisations that do not have a succession plan in place, 54% are planning to implement one in the next 12 months. More tellingly, however, 58% of those surveyed did not have a succession plan in place that involved them personally, a surprising finding given the seniority and the role of those surveyed.

Succession planning also appears to be unstructured, with only 7% of respondents claiming theirs was a formal and well-established strategy with clear goals. Mr Reynolds said: “If a succession plan isn’t well structured, the ability to align it with business strategy is limited.”

Succession planning shrouded in mystery and employee communication lacking

The survey found succession planning is still considered a ‘dark art’ in almost half of all organisations surveyed, and often left solely to the discretion of managers and CEOs.

In fact, 66% could not agree with the statement that ‘the processes we use for succession planning are transparent’ while only 38% agreed their processes were ‘completely objective’.

“A succession plan has to be communicated clearly to all employees, particularly to pivotal individuals, as we know that career progression aids retention. Otherwise your talent pool is left open for competitors to fish,” said Mr Reynolds.

With only 24% of organisations surveyed able to claim that they practise ‘clear communication to employees’, it is not surprising that only 32% feel they have the support and buy-in of their staff.

Why is succession planning important to Australian businesses?

The five main reasons why respondents felt succession planning was important were:

• To adequately resource and develop pivotal talent
• To retain employees
• To support long-term growth
• To meet the career development requirements of existing employees
• To counter the increasing difficulty of recruiting employees externally.

“Organisations that develop effective succession planning strategies will be better placed to create market value, increase profitability, satisfy customers and compete successfully, because they will have the talent to handle the market forces of tomorrow,” Mr Reynolds said.

Conversely, the significant impacts of not having a strategic succession plan include:

• Loss of expertise, business knowledge, investments made in training and development
• Loss of competitive advantage
• Loss of business continuity, or damaged client relationships
• Recruiting replacement employees and the time taken for them to be brought up-to-speed.

Who is pivotal to business success?

According to Mr Reynolds, a big part of effective succession planning is identifying those roles, skills and individuals critical to a company’s success.

“The traditionally narrow definition of succession planning focusing on C-level executives is short-sighted and potentially very damaging. Good succession planning requires free thinking, and answers the question ‘Who are the people delighting our clients or customers?’” he said.

Organisations looking to identify those pivotal roles should focus on:

• The key skills and knowledge needed for business growth
• The roles that provide the highest leverage and contribution to organisational success
• The areas of highest risk or vulnerability.

Mr Reynolds said: “For example, at a company like FedEx, whose organisational success hinges on providing the fastest international delivery service, it is the attorney who negotiates the air slots for the planes to land. Without considered thought as to what are the most vital elements of an organisations growth and operational strategy the company’s business plans amount to little.

“Companies must think strategically and laterally to anticipate the type of people and skill sets they’ll need in five or ten years time. There’s no point developing a great team for the future based on the needs of today or yesterday.”

Mr Reynolds’ advice for implementing strategic succession planning processes:

• Develop a structured ongoing process for identifying, recruiting, attracting, assessing and developing employees with critical skills and those with potential
• Ensure succession planning has the total support of the CEO and executive team
• Ensure senior executives are responsible and accountable for identifying and developing talent, as part of their KPIs
• Ensure talent are aware they have been identified, provide tailored career development plans and involve them in regular conversations about their career
• Measure, track and rate the success of succession planning processes.

Industry insights

Chandler Macleod’s research reveals new insights into the state of succession planning among different industries and sectors.

Mr Reynolds said the mining and resources, construction, finance and insurance, and manufacturing industries were leading the way with the most formal and well-established succession planning strategies. This was not surprising, given these industries had been hardest hit by the skills shortage.

Industries lacking in their execution of succession planning included professional services, utilities, hospitality, telecommunications, transport and logistics, health and education.

Human Resources needs to play strategic role

Mr Reynolds said HR professionals had a duty to guide their executive team through succession planning and ensure clear communication with employees.

“There’s also an opportunity for HR professionals to add real value to their organisation through succession planning, which will in turn drive a more strategic investment in remuneration and rewards, learning and development, and recruitment and assessment,” he said.

“Importantly, if they take succession planning from a traditionally narrow, one-size-fits-all approach to one aligned to their business’ long-term strategy, they will create meaningful roles for themselves.”

For further information on the report and to view David Reynolds’ full presentation of the research findings, go to www.workplacebarometer.com.au

ENDS

About Chandler Macleod Consulting

Chandler Macleod Consulting is the human resource consulting and training division of Chandler Macleod Limited. The division employs more than 80 staff throughout Australia and New Zealand and is Australia’s largest employer of organisational psychologists. The Consulting division offers the following services:

• HR Consulting including succession planning, leadership development, competency profiling, performance management and coaching
• Learning and Development including online learning solutions
• Psychometric Assessment
• Recruitment Process Outsourcing
• Career Management, Outplacement and Internal Mobility
• Remuneration Consulting
• Organisational Diagnostics

About Chandler Macleod

Chandler Macleod is one of Australasia's largest and most diverse HR outsourcing and recruitment companies. Chandler Macleod focuses on the provision of outstanding assessment, selection, recruitment and retention solutions across the blue-collar, office support, health, graduate, technical, IT, professional and executive sectors. Additionally, the company offers comprehensive consulting services encompassing HR Consulting; online solutions; outplacement; psychometric testing; development and vocational assessment and training; and recruitment process outsourcing.

The company’s brand portfolio includes Chandler Macleod, Recruitment Solutions, Ready Workforce, Forstaff Aviation, Diversiti, Entec and JML Australia.

About David Reynolds, Executive General Manager Chandler Macleod Consulting

David Reynolds is Executive General Manager of Chandler Macleod Consulting and joined Chandler Macleod in 2005, after an extensive career in the chartered accounting, human resource consulting and management consulting professions as a senior executive and partner.

In his current role, David is responsible for the wide range of Chandler Macleod Consulting services including career transition management and outplacement, training and development, rewards consulting, change management, coaching and mentoring, performance management and strategic planning.

David has assisted a number of organisations in the recruitment of executives including, CEO‘s, Directors and General Managers. David has worked with a number of executive teams in organisations assisting in leadership development and cultural change projects.

About Workplace Barometer

Each year Chandler Macleod conducts research into pertinent human resources issues to identify the key trends and challenges faced by HR departments across corporate Australia. Findings from this research are then published in the Workplace Barometer Report, which acts as a reference point for HR Professionals to benchmark their performance and strategies against their counterparts across all industry sectors.

For further information, please contact:

Lauren White or Roger Christie

Sefiani Communications Group

Ph: (02) 8920 0700

Email: lwhite@sefiani.com.au or rchristie@sefiani.com.au