The Challenges of Succession Planning in Turbulent Times

Vikas, Analyze this scenario: The Department of Social Services has lost 25% of its federal funding for the next fiscal year, leaving the budget at a $128,000 deficit. Within the agency, there are 125 full-time employees; the average pay for all employees is $39,000, 75% female and 25% male. In addition, 25% of employees have been with the agency for over 20 years, 20% are near retirement age in three years, and 50% are under the age of 30. Recommend three innovations to implement a succession plan for the agency.

Heather Getha-Taylor

Heather Getha-Taylor is an assistant professor in the Department of Public Administration at the University of Kansas. Her research considers the forces transforming public governance and the associated implications for effectively managing human resources. She is a graduate of the Maxwell School of Citizenship and Public Affairs, Syracuse University.

The transformation of human resource management to a strategic force in public organizations is notable, promising, and a work in progress. A critical component of strategic focus is a commitment to workforce planning. The ability to plan effectively, however, rests on an organization’s ability to forecast trends and act accordingly. According to Pynes, organizational competitiveness depends on the ability to “anticipate, influence, and manage the forces” that have an impact on organizational effectiveness, including succession (p. 32). The key to doing this, says Pynes, is by adopting a strategic planning approach that considers short-term needs and long-term objectives concurrently. By doing so, organizations “are better able to match their human resource requirements with the demands of the external environment and the needs of the organization” (Ibid.). The author reminds us that budgeting and human resources are linked, and this interdependence must be considered throughout the planning process. The current economic recession illustrates this connection prominently.

A shared priority for public organizations at the federal, state, and local levels is excellent performance. As noted in the Winter Commission report of 1993, “the human dimension of public service” should be reflected in personnel decisions that contribute to creating high-performance public organizations. While performance is the ultimate goal, capacity is necessary, and human resources are critical building blocks of capacity. A key challenge for human resource managers then, says Pynes, is to “demonstrate on a continuing basis how HRM activities contribute to the success and effectiveness of the organization” (2009, p. 34). While cost savings achieved via retirements, voluntary separations, and reductions in force (RIF) may seem to indicate improved organizational efficiency, a broader understanding of how these “savings” will impact the remaining members of the workforce and the organization’s long-term performance objectives is in order.

When the term “succession planning” is considered, it is most readily associated with internal vacancies created by retirements and the associated efforts to fill such vacancies with qualified individuals. Retirement eligibility records and employee surveys can help human resource managers effectively anticipate upcoming vacancies and identify/develop the needed competencies to fill the gaps. However, workforce trends that result from external forces, such as budget cuts, introduce unexpected turbulence into the traditional definition and provide an opportunity for reconsideration. “Succession planning,” then, can be broadened in this context to include efforts to restructure work, capture knowledge, and focus on the needs of current employees who are left behind as a result of these unexpected vacancies.

Klingner and Nalbandian (2003) detail the variety of tools available for human resource planning and forecasting but are careful to consider the external forces that ultimately affect the usefulness of those resources. According to the authors, political and economic constraints impede the ability to “make rational and reflective choices” (p. 91). In times of rapidly shifting expectations, severely decreasing resources, and uncertain demands for the future, choices may not be made strategically, but reactively. Stanton (2004) cautions managers against this approach by noting that “numbers-driven downsizing can simply hollow out the wrong parts of an agency and reduce its ability to provide public services, either directly or through third parties” (p. 229). Stanton continues to note the importance of planning prior to cuts “to ensure that a government agency can maintain or increase its service levels while reducing the number of employees needed for certain tasks” (p. 230). However, this requires skills that may be in short supply in many organizations. According to Brown and Brown (2005), the human resource manager is uniquely positioned to guide strategic planning as someone who “leads and supports the activities of the organization as it moves from a vision and mission to goals and objectives, from tasks and responsibilities to outcomes and solutions” (p. 649). In sum, succession planning is an important component of strategic human resource management, which, says Daley, “takes what is and develops ideas of what should be along with plans for how to get there” (2006, p. 164).

Romzek and Ingraham (1994) foreshadowed the challenges facing state and local governments caught in a time of economic turbulence. State and local governments, said the authors, “must find ways to solve new problems in an era of shrinking resources” (p. 325). The authors emphasized the need to cultivate learning organizations that are “flexible enough to predict and provide for new levels of complexity and uncertainty” (Ibid.). This is not accomplished, however, through the loss of organizational capacity. Staff cutbacks and the associated loss of expertise alongside increased demand present an unbalanced picture of capacity. “Regardless of the specific functions and services government retains, it will be imperative that government develop strategies that allow it to keep a skilled, expert, and motivated work force” (Romzek and Ingraham, 1994, p. 326). The future vision of the organization becomes blurred when resources, including human resources, are insufficient to meet expected demand. Thus, the key question considered in this chapter is:What does it mean to practice effective succession planning during times of turbulence?

The example of South Carolina is used here to illustrate key concepts and challenges associated with workforce planning in turbulent times. South Carolina experienced severe implications of the economic downturn (including almost a full quarter cut from its annual budget) yet was distinguished as a leader among states in its workforce planning efforts. In 2008, South Carolina was recognized by the PEW Center’s Grading the States for its excellent human capital planning efforts. The following were the criteria: (1) linking state, department, and employee goals, (2) recognizing and rewarding high performers, (3) regularly encouraging and utilizing employee feedback, and (4) addressing employee performance/behavior weaknesses and terminating for cause in a timely and fair manner. Lessons from this example provide guidance to practitioners and scholars alike who together share a commitment to understanding the best ways to consider the ways in which external forces affect internal capacity and future planning.

SUCCESSION PLANNING IN SOUTH CAROLINA

In South Carolina, human resource management is decentralized to state agencies, but the state’s Office of Human Resources (OHR) partners with the 75 agencies “to create excellence in human resources.” The primary customers of the South Carolina OHR include the state Budget and Control Board, the General Assembly members/staff, agency HR directors/staff, state employees, state agencies, job applicants, and the public at large. The organization’s vision is: “To be recognized by agencies and the South Carolina General Assembly as human resources experts and leaders in applying human resources best practices and innovations to make South Carolina state government an employer of choice.” The organization focuses on creating excellence in five key areas: (1) talent acquisition and development, (2) human capital management, (3) organizational development, (4) alternative dispute resolution, and (5) human resources information technology.

In 2001, South Carolina’s OHR engaged in a statewide workforce scan that indicated that 29 percent of the workforce would be eligible to retire by 2006. Noting this, along with the aging of the workforce (the majority of workers in the 50–54 age bracket) the OHR had cause for concern regarding succession planning. “Considering that a significant number of these employees were in key leadership jobs, agencies were encouraged to develop succession plans and knowledge transfer approaches among other workforce planning strategies” (South Carolina Workforce Plan, 2009). However, the unexpected economic forces that occurred six years after the workforce scan presented unexpected concerns. Fortunately, the careful planning efforts that took place in the years prior meant that the impact was minimized as much as possible.

In 2009, the state of South Carolina employed approximately 71,000 of the nation’s 3.8 million state employees (U.S. Census Bureau, 2009). According to the most recent data available from the South Carolina OHR, the average pay for all employees is $53,358. The average age is 45 years, and the gender composition is 41 percent male and 59 percent female. The average tenure with the state is 11 years. Education, health, and corrections employees comprise approximately 72 percent of the total workforce, with transportation, social, regulatory, executive, conservation, and public safety employees comprising the remaining 28 percent. South Carolina’s state budget for fiscal year (FY) 2007–2008 totaled approximately $6.7 billion. Steeply declining state revenues as a result of the economic downturn propelled the state’s General Assembly to authorize multiple budget reductions, which resulted in an overall budget cut of approximately 22 percent since FY 2007–2008 (OHR, South Carolina Budget and Control Board, 2009a, 2009b).

The cuts necessarily resulted in employment consequences for individuals working in the state’s 75 agencies. The South Carolina OHR mobilized immediately to provide guidance and assistance on the available cost-saving options. The OHR held regular advisory meetings and provided virtual resources to address the variety of cost-saving tools available, including furloughs, job sharing, teleworking, position cost sharing between agencies, retraining or reassigning employees, retirement incentive programs, restricted activities such as travel and overtime, hiring freeze, hiring temporary employees, voluntary separation, termination of employees without grievance protections, and RIF. Agencies worked with OHR to identify the best options for their organizations; RIF were minimized by electing other available cost-saving tools. According to OHR, the cost savings for FY 2008–2009 totaled $61,412,722 as a result of agencies’ combined efforts. While the cost savings are remarkable, so too is the relative impact of the RIFs. In 2008, approximately 300 state employees (0.4 percent of total employees) were separated as a result of RIFs. Fourteen were rehired by other state agencies. Table 12.1 presents South Carolina’s cost savings by category.

Table 12.1FY 2008–2009 Cost Savings by Category

Source: South Carolina Office of Human Resources (2009a, 2009b).

Despite the drastic required budget cuts, the state maintained its leadership as one of the nation’s leaders in workforce planning efforts. Its example illustrates the U.S. Office of Personnel’s workforce planning model (2005), which centers on the following focus areas:

1.Strategic direction

2.Workforce analysis

3.Plan development

4.Implementation

5.Evaluation

South Carolina’s agencies, together with the state’s OHR, engaged in efforts that illustrate the steps in the process, which are detailed in the following sections, and address the associated challenges, skills needed, and innovations resulting from this process.

CHALLENGES OF SUCCESSION PLANNING IN TURBULENT TIMES

Interviews with state leaders in the South Carolina OHR identified many challenges associated with effectively balancing the required budget cuts with existing human resource management priorities and activities. The process of succession planning typically involves an extended time frame and includes decisions based on assumptions grounded by multiple data sources. The conditions created by the rapid succession of budget cuts in South Carolina created an environment of urgent change. The OHR acted as a resource and guide for agencies as they worked through the accelerated process of framing (or reframing) future direction, analyzing current and future workforce capacity, developing a plan, implementing that plan, and evaluating the results of the decisions.

To begin, strategic direction and workforce analysis were considered on an individual agency basis and complicated by the expectation of no new hires in the immediate future. To help address this complication, the South Carolina OHR provided workforce planning guidance via their Web site and through regularly scheduled advisory meetings. Information provided included examples of workforce plans, demographic information, retirement trends, and overview of current initiatives and tools for cost savings.

Plan development included input from experienced human resource management professionals as well as agency employees. South Carolina’s OHR requested that all state agencies appoint a “Workforce Planning Champion” to attend educational meetings as the organization’s representative and “promote workforce planning” in their respective agency. While the plans were developed, current performance expectations were not abandoned. Strategic human resource management is often relegated to the back burner due to the pressing need to focus on the functional aspects of human resource management. In this example, the two priorities were balanced.

Implementing the required plan while maintaining some aspects of “business as usual” presented complications. Addressing the cost-saving needs while maintaining meaningful reward and recognition programs was a significant challenge. State employees who went without raises found reward in other ways. Agencies were encouraged to be creative in recognizing achievement during this time of transition. One important component of this effort centered on providing more feedback on employee performance. Especially when workload is redistributed to remaining employees, valuable feedback and job redesign can be helpful tools in providing recognition.

Evaluation is ongoing, and the results of each agency’s efforts will be considered in the years ahead. According to OHR leaders, linking employee and organizational goals will be a priority for the future and can serve as a metric for judging success in answering the question: Are we aligning employee capacity and organizational performance? In addition, considering the ways in which the efforts met the needs of those who were separated as well as the “survivors” of the cost-saving measures serves as a metric for evaluation. The OHR worked to assist those affected by RIFs and also those who remained. The state utilized an online RIF applicant pool to allow individuals to access local resources, including those devoted to resume development and interviewing skills. For those who remain with the organization, “survivor guilt” can be a debilitating force that will affect morale and productivity. Acting with a commitment to open communication can speak to these trends. The National Academy of Public Administration advocated for this emphasis in their 1995 report, which noted the need to attend to the concerns of all affected employees—including survivors–to ensure continued organizational performance.

SKILLS FOR MANAGING THROUGH TURBULENCE

Lawler et al. (2006) provide some promising evidence to suggest that HR managers are occupying a more strategic role in organizations to align human resource practices with the vision for the future of the organization, but work remains: “HR can and should be more of a strategic partner” (p. 107). The authors contend that in order for this to happen, new skills are necessary. This case illustrates that prescription as well. In order to effectively navigate the workforce planning cycle, the lessons from South Carolina suggest that public personnel managers should develop and practice a set of skills that may not have been emphasized previously.

1.Human resource managers should develop both their critical thinking skills and their creative thinking skills to envision and anticipate multiple, unexpected scenarios that may not have been considered previously. Part of this skill building relies on an attention to external trends that affect internal organizational function.

2.A continued attention to developing metrics that illustrate the contributions of people to organizational performance is a necessity. The Return on Investment (ROI) of human capital remains intuitively obvious to most managers, but data to support this position will further the strategic position of human resources. Technology offers promise in advancing this goal.

3.The example of South Carolina illustrates the importance of excellent communication skills to effectively convey organizational needs, environmental constraints, and associated plans to balance concerns of employees at all levels. Part of this mastery centers on utilizing new technologies as appropriate to reach all members of the workforce. South Carolina’s OHR utilized a variety of social media tools, including Facebook and Twitter, to communicate with employees and the public.

4.Finally, the South Carolina example illustrates that human resource managers must carefully consider the practical, emotional, and legal implications of all available workforce planning tools. The OHR provided agencies with regular updates on important legal issues associated with RIF and other cost-saving measures. Also, the state effectively balanced the need for cost savings along with a commitment to considering the morale of the workforce by addressing “Survivor Syndrome” in state agencies.

INNOVATIONS AS A RESULT OF SUCCESSION PLANNING IN TURBULENT TIMES

As noted by Sandler and Hudson (1998), public organizations, and those who work within them, must operate with the understanding that change is a way of life. Specifically, the authors contend that change, including budgetary changes, can serve as a force to revitalize organizations. “Government agencies—and all organizations—must operate on the principle that change is not a win–lose proposition but an opportunity to express individuality and creativity that will aid the organization in accomplishing its mission most effectively” (p. 32).

As noted previously, the State of South Carolina is notable in its efforts to respond to the needs of those left behind as a result of cuts and RIF. The state OHR led an effort to address “Survivor Syndrome” across state agencies. This syndrome is characterized as the feelings of overwork, frustration, and even guilt for those individuals who are left when their colleagues retire, resign, or are cut from the organization. Resources provided through the OHR are expected to continue in order to respond appropriately to “surviving” employee needs.

Further, the budget cuts and associated adjusted workforce plans propelled South Carolina to invest even more in efforts to modernize workforce planning information systems to help make informed decisions for the future. In this case, technology advances that span the OHR programmatic areas serve as aids to identify the best ways to address both short-term and long-term needs and goals.

Finally, the cost-savings efforts that were necessitated by state budget cuts highlighted the need to prioritize knowledge transfer in the years ahead. The South Carolina OHR is currently working with agencies to help identify appropriate techniques to capture and transfer knowledge (including job shadowing, open forums, knowledge inventories, learning games, lessons learned debriefing, mentoring, and structured training). The plan rests on a careful consideration of current knowledge, future needs, and the most appropriate transfer methods. To be truly effective, knowledge transfer programs must be linked to succession plans and must also be considered important enough to elicit full participation of key employees. Only then will organizations be able to recruit where needed, retain critical skills, and develop employees to meet agency needs.

Conclusion

South Carolina’s state workforce planning efforts were noted as exemplary even amid environmental turbulence, and the state’s OHR has no plans to reverse course. The OHR plans to continue to prioritize workforce planning in the years ahead. In addition to focusing on important functional areas as recruitment, compensation, training, and information technology, the OHR will work with state agencies to collect data, identify and disseminate best practices, help agencies develop workforce plans, and consider ways to minimize turnover (Office of Human Resources Strategic Plan, 2009a). As noted by OHR Director Samuel Wilkins, doing more with less “is the new normal” and illustrates the interdependence of government departments, including the department of revenue. This requires improved communication and collaboration to address the current and future challenges of public management.

In addition, practitioners must learn to balance proactive planning with flexibility. Strategic planning, including succession planning, requires a systems approach that considers the variety of forces that impact organizational planning. As noted by the South Carolina Office of Human Resources (2002), “workforce planning is not an exact science.” Although the SC OHR recommends a process that relies on data collection and analysis from multiple sources, the organization is careful to note that projections and predictions are not always accurate. For researchers, considering the ways in which public organizations plan for the future holds potential for studies that consider the most appropriate tools and metrics for decision making. The guidance resulting from such studies will serve as an invaluable resource for public organizations at all levels and their leaders.

The implications of the economic downturn were evident in the nation’s rising foreclosure rate, shocking unemployment numbers, and also in public employment decisions. Considering the complex interplay that exists between public budgets and workforce planning is a necessity. Noting this, public personnel managers must be proactive but also adaptable. They must consider the needs of both the organization and the individual. They must follow and anticipate internal and external forces that affect the workforce, and ultimately, the ability of public organizations to deliver high-quality public services.

Delivering excellent public service is a priority of public organizations but is only a motto when resources, including human resources, are unable to meet demand. Public personnel managers must work together with their colleagues to balance capacity and demand, while the former is in decline and the latter is climbing. This impossible task is the requirement and challenge of succession planning in turbulent times. In the words of Dwight Waldo, who in 1969 was also considering the impact of turbulent times on public organizations: “In the present time of turbulence, we in public administration will be hard put indeed to make prudent decisions about the proper balance between or combination of stability and change. This will be true not only because of confusion and disagreement about the direction and rate of change, but because we know too little of the effects of our actions—or inactions” (p. 275).

References

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Daley, D. M. 2006. “Strategic Human Resource Management.” In N. M. Riccucci, ed. Public Personnel Management: Current Concerns, Future Challenges, 4th ed. New York: Longman.

Klingner, D. E., and J. Nalbandian. 2003. Public Personnel Management: Contexts and Strategies, 5th ed. Upper Saddle River: Prentice Hall.

Lawler, E. E., III, J. W. Boudreau, and S. A. Mohrman. 2006. Achieving Strategic Excellence: An Assessment of Human Resource Organizations. Stanford, CA: Stanford Business Books.

National Academy of Public Administration. 1995. Effective Downsizing: A Compendium of Lessons Learned for Government Operations. Washington, D.C.: National Academy of Public Administration.

Office of Human Resources (OHR), South Carolina Budget and Control Board. 2009a. OHR’s 3-Year Strategic Plan (FY 2009–2012).

Office of Human Resources (OHR), South Carolina Budget and Control Board. 2009b. South Carolina Workforce Plan 2009.

Pynes, J. E. 2009. Human Resources Management for Public and Nonprofit Organizations: A Strategic Approach, 3rd ed. San Francisco, CA: Jossey-Bass.

Romzek, B. S., and P. W. Ingraham. 1994. “Conclusion: The Challenges Facing American Public Service.” In P. W. Ingraham and B. S. Romzek, eds.New Paradigms for Government: Issues for the Changing Public Service. San Francisco, CA: Jossey-Bass.

Sandler, M. W., and D. A. Hudson. 1998. Beyond the Bottom Line: How to Do More with Less in Nonprofit and Public Organizations. New York: Oxford.

Stanton, T. H. 2004. “Program Design and the Quest for Smaller and More Efficient Government.” In T. H. Stanton and B. Ginsberg, eds. Making Government Manageable: Executive Organization and Management in the Twenty-First Century. Baltimore, MD: Johns Hopkins.

U.S. Census Bureau. 2009. South Carolina State Government Employment Data. Annual Survey of State and Local Government Employment and Payroll. http://www.census.gov/govs/apes/ (accessed June 21, 2010).

U.S. Office of Personnel Management. 2005. OPM’s Workforce Planning Model. http://www.opm.gov/hcaaf_resource_center/assets/Sa_tool4.pdf (accessed June 21, 2010).

Waldo, D. 1969. “Some Thoughts on Alternatives, Dilemmas, and Paradoxes in a Time of Turbulence.” In D. Waldo, ed. Public Administration in a Time of Turbulence. Scranton, PA: Chandler.

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