WHITE PAPER

Succession Planning:
Rise of the Talent Ecosystem
A Softscape White Paper
September 2008

The Succession Planning Imperative

Once reserved for the upper echelons of senior management, and often viewed – erroneously
so – as replacement planning to mitigate risk (e.g., a catastrophe befalls company leaders), today’s
succession planning is being redefined. The discipline has broadened in both breadth and scope to
become a central component of strategic human capital management (HCM).
Defined as the process of identifying, preparing, and tracking high potential employees for promotion
and advancement, several dynamics are driving the evolution of succession planning today:
• The recognition that top-notch talent – and retaining that talent – drives bottom-line financial
performance, customer satisfaction, and competitive advantage. Researchers such as
Accenture, McKinsey, Towers Perrin, and Watson Wyatt have empirically validated these linkages.
• Global talent shortages due to retiring baby boomers, shifting workforce demographics,
and globalization. Fifty-three percent of companies are facing significant talent shortages
today1 and this percentage will grow as baby boomers start retiring. In fact, the U.S.
Bureau of Labor Statistics estimates a shortage of 10 million workers by 2010.
• Mitigating the risk of untimely departures of high performers and essential personnel as
labor markets continue their inexorable shift in favor of buyers (i.e., job seekers).
• A confluence of market conditions impacting specific industries. For instance, within
healthcare, increasing demand for services from baby boomers is coinciding with a
shortage of skilled talent (e.g., nurses, technicians). In the public sector, an aging
workforce coupled with competitiveness from the private sector and an inability to attract
younger talent is posing challenges. And in technology, CEOs are finding it increasingly
difficult to fill key positions as older workers retire.

Figure 1: Top Talent Challenges for 2008

#1 Challenge
Gaps in leadership
pipeline

#3 Challenge
Difficulty filling key
employee positions
#4 Challenge
Retention
problems

Source: Bersin & Associates, July 2008

1
“High-Impact Talent Management: Trends, Best Practices, and Industry Solutions,” Bersin & Associates, May 2007

“When we were evaluating
the different options that
we had for implementing a
platform to run across all of
our different business units,
Softscape was the only one
that actually had all of the
modules we needed in one
integrated solution.”
Verónica Elizondo,
Manager of Human
Capital Projects,
ALFA
2 “Improving Employee Engagement to Drive Business Performance,” Softscape, Inc., May 2008
Many companies are starting to recognize these dynamics (especially the challenges). In a 2008
Bersin & Associates study, three-out-of-five of the top talent challenges cited by global survey
respondents were related to succession planning (see Figure 1 on previous page). Further,
succession planning was ranked second (behind leadership development) by respondents when
asked which core talent process needed the most improvement.2
Yet the same study paints a more ominous picture. Only 20 percent of companies have an
enterprise-wide succession planning process, and fully 53 percent have no process at all. Indeed,
a 2008 Softscape study revealed that an unprecedented 94 percent of HR professionals do not
believe that their personnel are adequately prepared to meet their companies’ future growth
plans, up significantly from the previous two years (see Figure 2).3
All of this market data points to one inescapable conclusion: The majority of companies are aware of
the challenges yet most are completely unprepared to deal with them. Therefore, new and innovative
ways of deploying succession planning are required. These include extending succession planning
across the organization and integrating succession planning into the broader talent ecosystem.
Extending Succession Planning Across the Organization
Figure 2: Personnel Not Applying succession planning beyond senior management
Adequately Prepared is critical to retaining high performers across all levels of the
organization and mitigating the risk of untimely departures
of key personnel. By providing career advancement
opportunities to high performers, companies actively
impact employee engagement, and therefore, employee
retention.4 Retaining existing employees not only has the
potential to minimize the effects of the global talent shortage,
it also provides significant and tangible cost savings (since
replacement costs range from 100%-150% of the salary for
the departing employee).
ALFA provides an ideal example. Based in Mexico and
employing more than 50,000 people, ALFA is a diversified
global company consisting of four distinct business units:
petrochemicals, aluminum auto components, refrigerated
Source: Softscape, Inc., 2008
food, and telecommunications.
A key challenge facing the company was promoting cross-business unit transfers, thereby
minimizing employee attrition to the competition. ALFA was losing high-performing talent
because it was unable to find growth opportunities for employees within the organization.
Due to the proliferation of different human resources (HR) systems at each of its four business
units, ALFA suffered from inconsistency in managing its global HR processes as well as a lack of
visibility into key employee information that could be used to drive succession planning.
To address its challenges, ALFA standardized on a single, integrated human capital platform
across its diverse business units. This platform, provided by Softscape, became the centerpiece
of ALFA’s employee lifecycle, which consists of planning, hiring, compensation, performance
management, learning and development, succession planning, reporting and analysis, and
HR management. ALFA also leveraged Softscape’s global experience in developing and
implementing standard HR policies and best practices. As a result, it is far more common for
ALFA’s employees to jump from one business unit within the company to another, expanding
their experience and skill sets via promotion and advancement.
2
”2008 Talent Management Factbook,” Bersin & Associates, June 2008
3
“State of the Global Talent Nation,” Softscape, Inc., January 2008
4
Integrating Succession Planning into the Broader Talent Ecosystem
Succession planning is one of several key processes that enable organizations to
embrace a holistic human capital management (HCM) strategy. At its heart, HCM is
the strategic approach to integrating and optimizing talent-related processes across
the enterprise, including talent acquisition (recruiting and hiring), performance
management, development and learning, succession planning, 360 feedback,
compensation and rewards, and talent profiles. HCM technology, a key enabler of HCM
strategy, provides a best practices platform for information integration and process
optimization. One such example of this platform is Softscape Apex® (see Figure 3).

Figure 3: Integrated HCM Platform

Source: Softscape, Inc., 2008

At the center of this platform is the talent-based employee system of record, which
includes employee data, talent profiles, job profiles, and competencies. All of this
information, once made consistent across the organization, feeds critical HR business
processes, facilitates the linkages across these processes, and ultimately enables
improved business analysis, insight, and decision making.
The role of succession planning within the broader talent ecosystem is unique because
it is dependent upon inputs from several other core HCM processes. Whereas an annual
performance appraisal process can be executed in a relatively self-contained fashion
(assuming it has access to core employee data), the same is not true for succession
planning. To illustrate the point, consider how HR practitioners have traditionally built
succession plans.
Conventionally, HR practitioners will spend weeks or months manually scouring
different parts of the organization for information needed to build lists of nominees
for specific job families or positions. The information required to generate the lists may
include self assessments, past performance appraisals (often paper-based), and 360
feedback. After a lengthy period of information gathering and aggregation followed by
manual analysis (e.g., nine-box, gap analysis), HR prints the results, collates hundreds
of pages of paper into three-ring binders, and presents its recommendations to senior
management. This time-consuming, inefficient process is still common practice today
(recall that only 20 percent of companies have an enterprise-wide succession planning
process in place).

3
 Yet by centralizing talent processes and information – in the above scenario, performance
management, 360 feedback, and succession planning – onto a single, integrated HCM platform,
the time to develop succession plans can easily be reduced from weeks or months to mere
hours. The benefits can be significant: reduce HR costs, reallocate HR resources from tactical
activities to more strategic endeavors, and mitigate the risk of untimely departures of essential
personnel.
Additionally, an integrated HCM platform promotes the linkage of learning and development
planning with succession planning. By bridging the processes, nominees who are not ready
for advancement can be assigned detailed development plans that guide them to improve the
competencies required for new job positions. Learning paths and even specific courses can be
established for employees to facilitate their career growth. By providing learning opportunities and
development plans to employees, HR can take a more active role in promoting employee retention.
Finally, integrated HCM facilitates enterprise-wide HR reporting and analysis, since all of the
relevant talent data resides within a single data structure. Reporting and analysis are key to an
organization’s success in managing employee resources and implementing HR strategies that
support corporate objectives and initiatives.
Figure 4 pulls all of these processes together and highlights the central role succession planning
plays within the broader talent ecosystem. In the manual, paper-based world of conventional
HR – and also in siloed HR technology deployments which are equally prevalent – this level of
integration and its inherent benefits are not possible.

Figure 4: Succession Planning Within The Broader Talent Ecosystem

4
Conclusion
Succession planning is not a silo. Companies of all sizes and in all industries must
reevaluate how succession planning fits within their enterprises. In order to take advantage
of new opportunities, avoid the looming talent crisis, and mitigate the risk of untimely
departures, companies must extend succession planning across their organizations and
fully integrate succession planning into their broader talent ecosystems. This can best be
achieved by leveraging a single, integrated HCM platform coupled with a strong focus on
process and strategy.

Authored By
Steve Bonadio, Senior Director of Product Marketing, Softscape, Inc.
For more information, contact sbonadio@softscape.com.

About Softscape
Softscape is the global leader in integrated people management software that enables
organizations to more effectively drive their business performance.
Recognized by industry analysts as the most comprehensive strategic human capital
management (HCM) solution, Softscape provides complete employee lifecycle
management, including a core system of record, in a single, integrated platform for
improved business intelligence.
The company offers customers of all sizes and in all industries the most flexibility and
choice with multiple purchase, configuration, and deployment options. For more than a
decade, Softscape has helped millions of workers across 156 countries be more successful
at their jobs while contributing to bottom-line results.
Softscape’s customers represent Fortune 500/Global 2000, mid-market, and government
organizations, including Procter & Gamble, Barclays, AstraZeneca, Seagate, ALFA, GKN,
Edcon, LandAmerica, and the U.S. Department of Homeland Security.
Softscape is based in Massachusetts with offices in London, Sydney, New York City,
Chicago, San Francisco, Hartford, Washington, D.C., Bangkok, Hong Kong, and
Johannesburg.

www.softscape.com

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