Are you ready for the War for Talent, Part Two?

A 1997 survey by McKinsey and Company coined the term, The War for Talent, forecasting a two-decade demographically fueled net reduction in talent in the workforce due to Baby Boomers (those born between 1946-1964) retiring.

The recent recession caused the War for Talent to slow, as Boomers planning to retire saw their RRSP’s, investments, and pensions take a massive hit. As these investments begin to recover to pre-Sept 2008 levels, it is once again becoming attractive for Boomers (current age in 2011: 47-65 years old) to consider retirement or early retirement.

The challenge for Human Resource VP’s in medium to large organizations is managing the variance between eligibility to retire and the desire to retire. Ranging from 55-65 years old (nicknamed Baby Boomers - Generation Jones), the reality is that it’s very difficult to know when these Boomers want to take retirement. Fueling the unpredictability on the Boomers’ side is the rather larger disincentive to announce retirement plans too early, as many have seen their friends and colleagues announce a pending retirement only to be moved aside from key projects and strategic objectives, leading to the feeling that they’ve been “put out to pasture” when they still have years left before they plan to depart.

So why is an aging workforce retiring causing such a problem for organizations? There are fewer Gen-Xer’s than Boomers and so there is a gap in experience that seemingly requires Gen-Xer’s and HR to plan for — and fast-track — their development. Left to their own devices, these Gen-Xer’s would have the experience they need to take on key leadership roles in 10 to 15 years — far too long to wait considering they will actually need those skills in the next three to seven years. CEOs we work with say that one of the biggest challenges they face in reaching their long-term strategic objectives is having enough talented people ready to take on key leadership roles.

This is where succession planning steps in. Succession planning focuses on fast-tracking the development of high-potential leaders within the organization to replace the senior leaders who are retiring and also to build talent for the future roles that will be added to the organization as it continues to grow.

Here are some key considerations for your succession plan:

Be clear about what success looks like
Develop KSAs (knowledge, skills, and abilities) for each of the senior roles and a set of leadership competencies for each of the levels of leadership within the organization.

Have multiple candidates for all senior roles
Since this is a War for Talent, it’s possible that the “one” candidate you have marked for a role may be attracted out of the organization. It’s also possible that the ideal candidate turns out not to be able or interested in fulfilling the role in a timely fashion. By identifying and developing multiple candidates you reduce your risk.

Provide balanced feedback
By instituting a 360 degree assessment process , leaders can receive feedback from their boss, peers, and direct reports, helping to highlight strengths that can be leveraged, weakness that can be shored-up, and blind spots that they need to be aware of.

Understand the difference between performance and promote-ability
Using a Talent Matrix with performance on one axis and promote-ability on the other , chart your high potentials. You may find that individuals who are stellar performers in their current role would be best left in place versus promoting someone who would suffer in a role requiring a different set of skills and greater responsibility.

There’s no time for on-the-job experience
There can be as much as a 10- to 15-year experience gap between retiring leaders and high potentials. With an average of three to seven years for most Boomers to retire, there isn’t time for on-the-job experience to close the gap. High potential leaders need to have clearly defined roadmaps for their development (special projects, interim roles, secondment, experientially-based leadership development, books) and involvement in a formal leadership development program. This approach will tackle the three major gaps most Gen-Xer’s have in their skill set: company, competitive, and industry knowledge, internal and external relationships, and overall leadership experience.

Engage leaders in the plan
High potential leaders will want to be actively engaged in helping determine their career path. Involve and engagement them in a discussion of the areas you see they need to improve on to be able to take on their next leadership role.

Involve Human Resources
The HR team will be critical in helping shape the tools required to help assess and support high potential leaders throughout the organization. Involve them in discussions around leadership development, performance management, and assessments so they can guide you and your high potential leaders in the direction of key resources and tools.

Succession planning has become a key part of the strategic process of any growing organization today. CEOs know that having the right talented people in place allows them to pursue aggressive growth strategies that competitors may not be able to replicate as they scramble to put the people in place to meet the flow of leaders out of the organization.