Succession Planning for SMEs in IT Industry

Purpose

This thesis is based on an investigation into succession planning in small to medium-size organisations within the Information Technology (IT) industry.

The main area of research is centred on whether these organisations develop employees sufficiently to move into pivotal roles or whether they must continue to rely on external recruitment for senior positions.

An additional question raised by the report is whether operating within the IT industry brings its own peculiarities.

Methodology

A survey, by means of postal questionnaire, was chosen as the means of collection of primary data. This questionnaire was distributed to human resource managers and officers operating within the IT industry.

In addition to this data collection, use was made also of secondary archive survey data.

Findings

The findings of this report quite clearly show that, despite statements to the contrary, true succession planning exists in very few organisations.

Succession planning theory and best practice are ignored to the extent that real top level commitment is hard to find and very little HR participation exists other than at operational level.

Findings show that little has changed over the years in that whatever succession planning exists in organisations, it remain in the authority of senior management, operated by and for them. There is little evidence to show that this has been widened to include more junior levels within organisations.

Notwithstanding the fact that succession planning exists within the senior ranks, there is little evidence to show that it actually works. External recruitment continues to be the norm and retention rates of senior personnel do not show any real benefit.

The specific problems of lack of opportunity and resource, faced by small to medium-sized organisations, are exacerbated within the IT industry, which brings its own issues of employee high expectation and impatience.

Introduction

Succession Planning – What is it?

Definition:

“Succession planning is making sure that the organisation develops and keeps the right people for key jobs. ……….. More successfully, it defines the competencies needed for the future and develops them in everyone who has the capability. This provides a pool of talent from which successors to important jobs can be drawn.”

The Industrial Society (April 1997)[1]

Staff turnover dictates that all organisations have a need to fill employee vacancies; key roles not excluded. Forward-looking organisations look beyond a basic recruitment process and understand the value of a system that identifies high potential in current employees, as well as recognising leadership gaps in the organisation. Having acknowledged these requirements, good organisations put in place a development structure that seeks to answer these needs. This complete process is known as Succession Planning.

Of course, where such a process is part and parcel of everyday life in an organisation, most likely it is not restricted to the hierarchy of the company. An expected consequence of this situation is a culture of ongoing development of employees from top to bottom, leading to a continuous process of succession planning throughout the organisation.

Succession Planning – Why is it important?

The brief that good leadership has a direct affect on organisational performance lies at the heart of the move towards succession planning.

We live today in a fast-moving, high pressured, competitive society, where the slightest advantage may give a company a valuable aggressive edge.

If a company is to grow and expand into new areas and markets, it is important that the organisation is built on a strong foundation. The best and strongest foundation for an organisation is a pool of capable, talented individuals, who have grown with the organisation; absorbing its knowledge and its culture, ready to move up through the company into pivotal leadership roles.

Organisations that do not provide this ‘home grown’ talent, and possibly lose valuable knowledge and expertise along the way, may have to seek replacements from outside; with this course of action runs the risk of recruiting the wrong person.

This latter occurrence could be a disaster, particularly when a wrong choice is made at a senior level. This situation could lead to serious disruption in an organisation and, depending on the importance of the employee concerned, the result could be terminal decline.

Research Aim

“Succession planning is seen as a crucial process by most major employing organisations” (Hirsch 2000, p.ix)[2]

The aim of this research is to establish whether, despite the perceived benefits of succession planning, most small to medium-sized organisations fail to nurture sufficient ‘home-grown’ talent and have to look outside their own organisations to fill key senior positions.

An alternative, but equally worrying situation is the appointment of individuals on the basis of class, length of service, family history, etc., without the developmental support.

This situation certainly exists within the author’s organisation at the present time. There is little, if any, work being done among the senior management team to develop the leadership skills of the successors to the principal roles; although it does appear that in the case of the primary position, the choice has been made! More importantly, this situation continues down throughout the organisation and, in many departments, it is difficult to see which individuals would have the qualities necessary to be able to stem into senior roles if the need arose. This state of affairs creates serious concerns for the direction and future of the organisation. All this exists in an organisation, which claims that a culture of development exists and, if questioned superficially, would be of the opinion that succession planning occurred.

Strategy

The research method chosen was data collection by means of postal questionnaires to be sent out to the HR Officers / Managers in small to medium-sized high tech companies / organisations in the UK and India private sector. Where necessary, the postal questionnaires are to be followed up with telephone reminders and completed via telephone calls or emails.

Literature Review

History of Succession Planning

Historically, succession planning systems were the sole province of the upper echelons of male, class-dominated society. Whether or not this served society well is an arguable point; the fact that it existed in a class-ridden paternalistic age is not up for debate.

The traditional model of succession planning, as identified in The Industrial Society (1997), is for the Board of identify, secretly, a list of two or three potential successors for the senior roles. According to Holbech, no more than two or three per cent of the workforce were deemed to have management or executive potential (Holbech, 2003)[3]. There are considerable, well-documented, drawbacks associated with this process – for example, management may continue to choose ‘clones’ of themselves, perpetuating a culture with a reluctance to change. Without fresh blood, bringing new ideas, organisations may begin to stagnate. The disadvantages brought about by this traditional model may be distilled down to two arguments; the organisation risks losing exceptional talent (with the associated consequences) and employees miss out on development and fail to fulfil their potential.

Chris Watkin of Hay Group maintains that “the roots of talent management can be found in the outsourcing of the pervious decade.” (Carrington 2004)[4] The reduction of graduate recruitment schemes in the early 1990s meant organisations often did not have the right employees in place to move into the senior positions. This situation was fine for a while but, long-term, it proved to be very expensive and not to successful. (2004, p.26)

Watkin also says that the recruitment slow-down that had occurred over the past couple of years has highlighted further the need for organisations to make more of their current employee talent. (ibid p.26)

Certainly, within the author’s industry (IT), the lack of available talent during this period has been a serious (and costly) concern. Definitely, it is cheaper to develop current employees than to buy-in expensive candidates with great potential but little knowledge of the Company’s products and specific technologies. The CIPD (2004, p.1)[5] support this view by suggesting that maybe it was better to develop loyal employees who understood the organisation and its culture.

According to Rothwell (2001, p.5)[6], one of the first writers to appreciate the need to plan was Henri Fayol (1916), whose fourteen points of management indicate that management has a responsibility to ensure the “stability of tenure of personnel.” Fayol also said that if the need were ignored, key positions would end up being filled by ill prepared people.

The world is now a much different place than in Fayol’s time but the basic tenets of his thinking remain. According to the Corporate Leadership Council (CLC)[7], from 2000 to 2002, many organisations struggled in the difficult economic climate.

Despite this, a number of companies continued to excel, sometimes surpassing their earnings expectations. The CLC believe that the reason for this was the quality of their senior executives; they were successful in creating a steady supply of talent at a time when others were failing to keep up. The CLC go on to say that this differentiation may hold the key to organisational success. (2004)[8]

The situation prevailing within corporate management today, not surprisingly, puts Board management succession in the limelight. According to Carey and Ogden in Berger & Berger, directors, as guardians of the interests of shareholders, naturally are concerned with the ongoing health and success of the corporate enterprise. Capable leadership is vital to this objective, which means that succession must be considered first and foremost and fundamentally a responsibility of the board. (2004 p.243)

Despite this, the CLC found that only 20% of responding HR executives were satisfied with their top-management succession processes. Ram Charan thinks that this is simply inexcusable and goes on to say that a board that has been in place for six or seven years but does not have a pool of qualified candidates and a robust succession process is a failure. (2005, p.74)[9]

Build Talent throughout the Organisation

If an organisation is to be in a position to provide a continuous pool of talented employees from which the leaders of tomorrow must be chosen, it is important that the succession management process is not restricted to the senior level. There is a need to identify and coach potential throughout the organisation.

Sisson and Storey thinks that training and development were the building blocks of a ‘learning organisation’ and, according to many, the real key to developing competitive advantage. (2000, p.147)[10]

According to Carey and Ogden, the familiar view of succession is around changing leadership at the top, “one CEO[11] moves out of the corner office and other moves in”. In reality, this is only a fraction of the whole organisational development picture. The most vital features of the leadership-development process take place beneath the top level, often not visible to people outside the organisation. (ibid, p.247)

Obviously, a long-term goal of an organisation may be to extend the succession planning/ management process down through the organisational layers. Hirsch talk about devolved succession planning where local or functional managers are pro-active with regard to the development of successors for roles within their control. This may be extended in a more deliberate way with a result that although the corporate centre considers only the top levels, the bulk of the organisation follows suit. (2000, p.12)[12]

A former Vice-President at General Electric commented,

“The act of creating a mentality of development within a company makes for more effective operations, even before the change takes place. People function better in a developmental mode.” (ibid, p.248)

Conger and Fulmer were of the opinion that succession planning and leadership development ought to be two sides of the same coin. They went on to ask that, if this were the case, why do many companies handle them as if they were completely separate issue? (2003, p.76)[13]

Identifying possible successors, without the structured leadership development in place may lead to failure for the selected candidate and disaster for the organisation.

More and more organisations, including very successful High Street retailers such as Tesco and Asda in UK and Pantaloon, K Raheja Group in India have a policy of promoting from within. According to Zneimer in Human Resources Magazine, Asda grooms its brightest talent for the time when they will step into the shoes of those currently sitting on the board or in the management tier just below. They are encouraged to enter a development programme that taps into the skills of external coaches and internal mentors. This ethos is encapsulated in Asda’s Accelerated International Management (AIM) initiative, whereby those deemed to be ready are given top jobs abroad. (2004, p.34)[14]

Surely, it cannot be an accident that successful companies have home-grown CEOs:-

Tesco – Sir Terry Leahy – 25 years

GlaxoSmithKline – J P Carnier – 14 years

AstraZeneca – Sir Tom McKillop – 34 years

BP – Lord Browne – 38 years

Pantaloon India – Kishore Biyani – 22 years

Source: Management Today, December 2003 (updated) in Zneimer (2004, p.37)[15]

As Zneimer points out, the succession policies of Asda and Tesco contrast greatly with that of Marks & Spencer, which has gone awry in recent years. Instead of continuing to ‘grow their own’, they have been ‘spending a fortune on a revolving door CEO succession policy’, which has resulted in a couple of very high profile failures. (2004, p.34)[16]

This difference in fortunes highlights very well the benefits of a good succession management process. Ram Charan points out in the Harvard Business Review that, in Europe, 70% of outside CEOs, who departed in 2003 were forced to resign by their boards, as compared to 55% of insiders. In the US, these figures were 55% and 34%, respectively. (2005, p.74)[17]

Management Commitments

All of the theory and best practice covered in this report will come to nought if management commitment is not secured and followed through. Rothwell makes the point that a programme will be effective only when it has the support of its stakeholders; they must perform as well and own the process. (2001, p.116)[18]

Lucy McGee quoted in People Management, the European head of HR at Matsushita observed, “Without support from the CEO, you might as well not bother”. (2004, p.49)[19]

The DDI Study, Succession Management Practices, found that effective succession management systems are more likely to be found in organisations which, among other things, involve the CEO; have the support of senior management and involve line management in identifying candidates.

The McKinsey study of ‘the war for talent’ in corporate America, cited by Hirsch in Succession Planning Demystified, contends that with talent comes business success:

“You can win the war for talent but first you must elevate talent management to a burning corporate priority.”

According to a survey conducted by Consultancy Fairplace, as cited in Human Resources Magazine, talent management is not getting the funding it needs. In Human Resources Magazine’s opinion, this suggests a lack of commitment to talent management. (2004)[20]

It is recognised that not all organisations, particularly those in the sector forming the target of this report, are able to fund succession management programmes along the lines of those underway at companies such as Asda and Tesco.

Succession management, however, really need not cost a great deal of money. In fact, lack of support for this issue is not generally based on lack of budget but more a function of time. Without priority given to this issue, management keeps its focus on customer demands and is too busy reacting to business crises to give the necessary attention to the succession management process. A great deal of management fails to realise that by always focusing on the urgent (not on the important) instead of delegating, they are missing out on an important development process.

Of course, there are numerous ways that a succession planning process may be set up and it is not necessary to include such expensive techniques as external executive coaching. Indeed, small to medium-sized companies may still manage to instil a culture of development without recourse to such methods.

Combating The Lack of Support:

Obtaining management commitment to a succession management programme will not come easily or quickly. HR professionals must be prepared to give time and effort to the task if they are to be successful.

In order to succeed, it is important to demonstrate a need and develop a business case for succession management. Rothwell believes that a succession management programme will be successful only when it has the support of its stakeholders; indeed, in order for it to work they must own the process. (2001, p.116)[21]

According to the Corporate Leadership Council, there are increased internal and external business trends, which are forcing companies to focus attention on succession management. Fig. 1 outlines current business trends that may be used to make a case for a succession management process.

Where top management support is difficult to obtain, Rothwell suggests that the best strategy is to win over ‘idea champions’ to support the cause. Ideally, such champions come from well-respected top managers who, possibly, have experienced work-related problems as a result of the lack of a successor to a critical role. (ibid, p.69)

The Role of Human Resources

If HR really is to contribute at a strategic level and take its place at the top table, it must rise to the challenge. Lance Richards, writing in Personnel Today, suggests this is the challenge of “delivering the right people in the right place at the right time and at the right cost” and goes on to say that HR’s ability to do this could be the key to future organisational success. (2004, p.15)[22]

Certainly, much has been written on the contribution that HR is able to make to business. Lucy McGee believes that HR must educate its organisation’s leaders to understand that business plans for growth and change simply don’t stand up without a serious commitment of their time and energy to developing people. (2004, p.48)[23]

The overwhelming considered opinion about the role of HR seems to be as a champion of the process, guiding rather than taking ownership. This view is in accord with the CIPD, which feels that, although succession planning needs to be owned by managers, led by the CEO, HR has a critical role in supporting and facilitating the process. (2004, p.5)[24]

Conger and Fulmer are of the opinion that, although in most companies, HR is the primary owner of the succession planning and leadership development process, this is a mistake. They believe that, in order to be successful, these processes need multiple owners. It is only by active commitment from the top and not just gratuitous support – which managers will sense this is a fundamental activity, which must be taken seriously. (2003, p.83)[25]

Conger and fulmar also says that it is not realistic or desirable for the CEO and their executive teams to have sole responsibility. HR needs to be involved in order to bring with it the necessary time and expertise. (ibid, p.83)

Certainly, Hirsch found that, although the general role of HR could be described as ‘facilitator’, the term really did not do justice to the range of activities carried out. Hirsch also says that a project conducted by the Careers Research Forum qualified ‘facilitator’ in this context as shown in figure 2.

HR as Facilitator

Process designer: Advising on how information should be collected and collated. Framing agendas and questions.

Process Manager / Facilitator: Direct personal involvement in making sure meetings happen and, on occasion, acting as ‘referee’ in ensuring the discussion is wide-ranging and objective.

Good and conscience: Looking further to the future; asking ‘seriously difficult; questions; highlighting problems that executives may prefer not to see.

Direct personal intervention as broker: Knowing people well enough to be able to suggest successors, candidates for vacancies; development opportunities for individuals and influencing executives to take these suggestions on board.

Counsellor: Trusted to help executives talk through their issues and to help individuals work out their career directions.

Information support: Maintaining quality information, which delivers a direct service when internal candidate search is required or more general questions are asked.

Despite this general agreement concerning the important role of HR within the succession management process, the CMI survey found that it is rare for HR directors to have board-level influence. At the end of 2004, only 11 companies in the FTSE 100 had HR directors on their Boards. (CMI, 2005)

A large number of organisations are looking now to management tools, some web-based, to assist in their succession management programmes and there is a plethora of talent management software systems on the market. Lance Richards argues, however, that we should pay no heed to the software salesman who offers elaborate, expensive packages – they are nice but not required. HR should start the succession planning process, if only in a simple paper and pencil format – sometimes, the first step is both the simplest and the hardest to make. Richard’s advice is not to dumb-down succession planning but to show that it can be done simply and “without spending the GDP of Denmark in the process.” (2004, p.15)[26]

Succession Management Process

So, where does all this opinion and theory brings us? Almost without exception, good practice points towards a formal succession planning process, at the heart of which lies leadership / employee development.

According to Hirsch, succession planning sits inside a much wider set of resourcing and development processes, called ‘succession management’. Succession management encompasses links to business strategy, resourcing supply and demand, skills analysis, hiring processes and management development (including graduate and high-flyer programmes). (2000 p.ix)[27]

Michael Liebeman in Rothwell supports this view; he feels that succession planning should not stand alone but should be paired with succession management, which assumes a more dynamic business environment. (2001, p.31)[28]

For this view of succession management to be truly successful, it is vital that it be engrained in the culture of the organisation and functioning at all levels.

Conger and Fulmer see this as a file-rule process, with the four subordinate rules resting on the fundamental rule of development.

They believed that succession planning and leadership development are natural allies that share a fundament goal of getting the right skills in the right place. (2003, p79)[29]

Implementing the Process

Having secured management commitment, arguably the most difficult task of all, the next step is to implement the process.

Identification

When looking at a succession planning / management system for the first time, it is vital to establish the positions that the organisation wishes to include in the process. The selection of individuals may be linked to particular key posts or identified as having high potential.

Conger and Fulmer suggested that by merging succession planning and leadership development into a single system, companies are able to take a long-term view of the process of preparing middle managers, even those below the director level, to become general managers. They suggested that these systems should focus on linchpin positions-roles that are essential to the long-term health of the organisation. (ibid, p79)

Whatever the criteria, it is important that the process is tied in to business strategy and the risk posed by the loss of an incumbent is considered when reaching a decision.

Composition of Team

It is imperative that the composition of the succession planning / management team is such that sufficient weight is attached to the process to ensure its success.

In addition to regular team members, most likely the CEO / MD, senior executives / managers and, preferably, HR, it may be a good idea from time to time to second interested parties. Not only will this provide valuable input into selection of candidates but also secure the assist in spreading commitment to the process throughout the organisation.

Top level / company commitment and HR involvement are explored in more details in other areas of this report.

Measure for Success

Once the succession planning / management strategy is in place, it is important that the organisation puts measures in place in order to ensure that the system is operating efficiently and also to highlight any opportunities for improvement.

Conger and Fulmer found that succession management systems were effective only when they reacted to changing requirements. They went on to say that none of the best-practice companies in their study expected that their succession management system would be able operate without modification for more than a year. (2003, p.84)[30]

An additional important reason for monitoring the system is to demonstrate any success and, thereby, provide information to sustain management commitment.

Retention

Once an organisation has found its high performers and leaders of the future, it is important to retain these employees and to ensure not only that their aspirations are fulfilled but also that their talents are used to the best advantage of the organisation.

Remember that just as organisations are interested in high performers, high performers are keen to be associated with organisations with a strong reputation. In the field of IT in particular, this reputation extends to cutting-edge technology and product development. Organisations need to hold the interest of these individuals if they are not to be lost to more attractive competitors.

In addition to the attraction of personal development, one issue of major importance is the subject of recognition / reward and organisations need to give significant consideration to rewarding high performers.

It may be necessary to look at alternative / additional methods of compensation, for example, stock options; performance-related bonus schemes; financial support for professional development.

What is important is that high performers feel recognised and rewarded in relation to their perceived worth and at levels that are viewed as competitive in the marketplace. According to Susanna Mitterer of TMI, writing in People Management, “Pay attention to how your incentive and bonus schemes are designed, making sure all means of reward are fair, consistent and transparent.” (2004)[31]

Time has moved on but the expectancy theory of Victor Vroom and notions of fairness expounded by Jacques and Adams still ring true today.

Turnover

Although it may be argued that some turnover is acceptable, even desirable, quite clearly excessive turnover is to be avoided. The cost to the organisation may be seen on many fronts and, in many cases, may not be recognised or considered. In addition to the oft-championed areas of recruitment, training, temporary / contractors costs, there are issues such as lost productivity, customer dissatisfaction and management time, as well as the very important area of loss of skills and knowledge, both explicit and tacit. This final issue, which is of particular significance in this report, is of vital importance to technology organisations, operating as they do in such a knowledge-rich environment.

There are many reasons for voluntary turnover in an organisation and according to the CIPD survey, lack of development or career opportunities accounted for 37% of voluntary terminations in the UK. Additionally, 41% highlighted increased learning and development opportunities as a step taken specifically to address staff retention.

Make it transparent

It is important that the whole process is as transparent as possible. Conger and Fulmer were of the opinion that, although this was a sensitive issue to manage, it was the right view to take. They believed that, if employees knew what was expected of them to reach a particular level, they would be able to take the necessary action. Not making the process transparent and the criteria for inclusion absolutely clear, leads to misunderstandings, feelings of inequality and discontent.

Lucy McGee, writing in People Management, believes that there is a genuine urgency at the moment for succession planning and that every manager must become a ‘talent agent’ – “spotting, nurturing and lobbying for people with leadership potential” – and offers her 12-point guide. (2004, pp.48-49)[32]

The Small / Medium-Size Business Viewpoint

Although, as mentioned previously in this report, the smaller organisations often cannot afford to implement such practices as, for example, executive coaching, the basic principles of succession management remain open to all.

Having said this, there are certain restrictions facing the smaller organisations. In addition to the likely limitations on cost, there are the obvious limited developmental opportunities, which could lead to possible difficulties in retention of able and ambitious employees. A consequence of this is the reduced pool of talent from which potential leaders may be drawn.

The smaller organisation may also find its senior staff stretched in many different directions, which could lead to difficulty in obtaining commitment to the issue of succession management. Obtaining this commitment, and finding ways to mitigate the particular problems highlighted above, is a role to be embraced by HR.

According to the Corporate Leadership Council, there are a number of imperatives and practices that the smaller organisation may consider to improve the situation, as shown in Figure 3.

Although, quite clearly, these actions are to be advised in all situations, with regard to small organisations they become all the more relevant.

The IT Viewpoint

The IT industry in general is a very young, fast-moving and dynamic industry. A low average age, coupled with technical expertise, brings with it developmental and career aspirations that need to be satisfied and will ‘wait for no man’. It is important that Companies recognise this and form policies accordingly, in order that they are able to sustain the requirements for technical and career advancement. For this reason, a culture of ongoing development, whilst important and extremely desirable in all industries, takes on a more critical role in high technology organisations.

It may be that the particular problems facing the smaller company are exacerbated when the company affected sits within the IT sector.

Additionally, it could be argued that turnover rate within the IT industry takes on a slightly different hue. Turnover needs to be low enough so that it is not a real and expensive concern but just high enough to ensure that the organisation is not allowed to stagnate and is always accessing new ideas. A company that lives by innovation and increased technology needs to bring new people into the organisation and it may be that a turnover rate less than that which prevails in times of stability would not be the best for the organisation.

The Case against Succession Planning

Although succession planning / management is almost universally acknowledged and supported, it is distrusted still in some quarters, possibly as it carries with it associations to the old-style, traditional view of succession planning.

One consequence of this traditional view is the concept of the 'glass ceiling'. According to Rosabeth Moss Kanter in Rothwell (2001, p.9)[33],

"Because of the situation in which managers function, social similarity tends to become extremely important to them. The structure sets in motion forces leading to the replication of managers as the same kind of social individual. And the men, who manage, reproduce themselves in kind."

Rothwell also says that, as a consequence, white males tend to pick as successors other white males. (ibid, p.9)

Although the term 'glass ceiling' has tended to have the connotation of reference to women, in reality this may also be a consequence of class. In the case of succession planning the armed forces, historically, have been the perfect example. Although one may argue that latterly the selection and development within the armed forces now allows for real potential to come through, the initial selection of 'officer material' still has its roots in the class system, which may have the effect of excluding potential talent. This view is supported by Mary Chapman quoted in Personnel Today Training Magazine, "In the 2004 research, job experience contributed just as much as innate ability. What you gain from experience is more highly valued than personality." (Training Magazine, 2005)[34]

Rothwell extends this view to say that succession planning may be affected also by internal company politics, where management may use the corporate ladder to promote friends while punishing enemies, regardless of talent or qualifications. If allowed to operate unchecked, Rothwell believes that "corporate politics can supplant performance and potential as an advancement criterion." (op.cit, p.69)

It is important that formal processes, which allow objectivity to come through, replace subjective decisions of this kind.

There is also possible concern that, in such a dynamic world, the skills selected for their importance today may not align with future requirements, leaving present-day decisions obsolete.

Internal Vs External Candidates

Despite all the good theory concerning succession planning, do not assume that the internal candidate is always the right choice. If companies are to have access to fresh ideas and not allow themselves to stagnate, it may be argued that there must be some external influence.

As Ram Charan says, '...... Sometimes, an external candidate exists who is, very simply, the best available choice.' Ram Charan also says that just as external recruits are not always bad applicants, internal candidates are not always good and, sometimes, can present a greater risk.

Research Methodology

Research Strategy

In addition to carrying out a survey, the author conducted a search of material published on the subject of succession planning and succession management, using previous research, the CIPD, textbooks, trade publications and the Internet.

Access to similar research carried out by the Corporate Leadership Council (2003)[35], provided a basis from which the questionnaire was adapted.

The method chosen for the survey was one of quantitative data by use of a postal questionnaire addressed to the HR Officers / Managers, as far as possible by name, in small to medium-sized high-tech companies / organisations in the UK and India private sector. IT is the industry in which the author of this report operates; whether or not it brings its own peculiarities remains to be seen.

In the context of this report, small to medium-sized organisations are taken to be those with an annual sales turnover of less than 100 million GBP and an employee level of up to 500.

In addition to the data obtained by use of the postal questionnaire, use was made also of secondary archive data.

The author of this report utilized a list of participants of an IT sector salary survey, which provided 106 companies in the chosen sector. For inability in some cases to obtain personal contact details, 99 only of the list of participants were circulated, 21 of which were sent by email. Following email, postal and telephone reminders, the final total of questionnaires received was 21, just over 21% of the sample surveyed. Although this response is not particularly good, bearing in mind the method used and the effort required by respondents to complete some of the answers, it was not surprising.

It was noted that the email route produced the best response without the requirement for follow-up.

Rationale

The advantages and disadvantages of qualitative data versus quantitative data were measured and it was considered that the collection of such data, by means of a postal survey, would be the most appropriate method by which accurate data could be elicited.

The main advantage of using a postal questionnaire in this case was the easy access to a suitable list of respondents within the IT industry. Additionally, it was reasonably inexpensive and a relatively simple and expeditious way of reaching respondents who covered the length and breadth of the UK. To use any other form of survey in these circumstances, e.g. telephone, would have been extremely difficult, not to say expensive and time-consuming, to conduct.

The main disadvantages for the author of the use of postal questionnaires were the difficulty in obtaining personal contact details of the HR representatives and the generally low response rates. Bias can be a particular problem with low response rates for, as suggested by Hussey & Hussey, those who respond may have a particular interest in the topic and, therefore, are not representative. (1997, p.163)[36]

The author tried to mitigate the problem of low response by using telephone follow-up as well as postal and email reminders to elicit responses.

According to Oppenheim, using postage stamps on the initial survey, as opposed to commercially franked envelopes, tends to aid response. Additionally, Oppenheim considered the inclusion of a stamped return envelope indicates trust and will increase response rates. (2000 pp. 104-5)[37]

The use of anonymity and confidentiality also were a consideration. Confidentiality is quite easy to offer as this concerns only the handling of the actual data and, in many cases, confirmation of total confidentially should be sufficient. In a number of instances, however, HR representatives may be suggesting less than attractive views of their organisations and the use of anonymity would be a inducement, hopefully, to encourage completion of the questionnaire. In order to make the questionnaires as anonymous as possible, they were identified by number, rather than name. complete anonymity is very difficult to offer, however, as this would not allow for the follow-up reminders. As follow-up is an essential component in this type of data collection, the author chose to offer to destroy company details following final completion (as may be seen on the questionnaire cover sheet).

Qualitative data was considered at the outset but discounted in this case as it was felt this would distort the results. When questioned, most people agree that succession planning is a good idea and until faced with hard data could be of the opinion that this occurs, to a lesser and greater extent, in their organisations.

Questionnaire Structure

The questionnaire was divided into five sections and used to establish:

• General & Training;
• Succession Planning / Management Process (Section 1);
• Company commitment to process (Section 2);
• Culture of development (Section 3); and
• Effectiveness of process (Section 4).

The decision was taken to use pre-coded or closed questions in the survey. As maintained by Oppenheim, this would be easy to process, make group comparisons easy and be useful for testing specific hypotheses. (ibid, p.115)

One opportunity only was provided to respondents to make any additional comments.

Findings

Secondary Data

In order to support in findings secondary data was used from following sources to the data obtained from the questionnaire

CLC (Corporate Leadership Council): High Impact Succession Management: From Succession Planning to Strategic Executive Talent Management, 2003.

DDI (Development Dimensions International): Succession Management Practices.

CIPD: Recruitment, Retention and Turnover, 2004.

CMI (Chartered Management Institute): Management Development Works: The evidence, 2005

Questionnaire

There were many difficulties to get back the questionnaires from all companies, though sufficient data was collected to support comparison and analyse.

Different sections were made in questionnaire to be answered at different levels of employees.

Sections three and four were designed to be answered by Executive or senior management level employees. While sections two and one were designed for middle and junior management level employees respectively.

Section One

Question 1.1: My organisation has a succession planning / management process / procedure in place, either formal or informal?

Purpose of the question:

This question was asked in order to recognise the perceived benefits of succession planning.

Responses:

Almost all respondents answered this question.

Analysis:

87% of respondents believe that their company operates succession planning in formal or informal way.

CLC Survey showed that 88.64% people agreed to the presence of formal or informal planning process existence. While CIPD survey shows 78% of UK respondents undertaking either formal or informal succession planning and this figure is 86% in Ireland.

It seems quite clear from this analysis that most organisations recognise the benefits of succession planning.

Question 1.2: How long have the succession planning / management process / procedure been in place?

Purpose of the question:

This question was asked in order to provide evidence with regard to the tenure of succession planning as well as providing data for further questions.

Responses:

Almost all respondents answered this question.

Analysis:

62% of respondents believe that their company operates succession planning for up to 5 years or less. While this figure was 67% in CLC report. The DDI survey supported this view with a figure of 75% of companies with a formal plan had them in place for five or less years.

Section Two

Question 2.1: Please indicate which of the following form the succession planning 'team'.

Purpose of the question:

This question is intended to try and establish the purported level of commitment to the process by indicating the depth of personnel involved.

Responses:

This question was answered by all respondents who think their organisations have succession planning process.

Analysis:

Seventy-nine percent of those respondents owing succession planning programmes had MD/General Manager involved. Board and Senior management membership was fairly even at 86% and 83% respectively, where HR representatives at 36%. 11% respondents did not know about succession planning team in their organisation.

Having looked at DDI survey supported this statement by showing that they found 88% of programmes involved CEO while 93% had support of senior management.

By itself, this data has little meaning other than to corroborate the assertion by the organisations that succession planning programmes exist, although the DDI findings are more encouraging in that they speak of visible support of senior management.

Question 2.2: How frequently does the succession planning team meet to identify and discuss employees in the succession planning programme?

Purpose of the question:

This question was posed in order to establish and try if real commitment to the process existed. Although succession planning teams may be set up, unless regular meetings take place, it is difficult to believe the commitment is sincere.

Response:

This question was answered by all respondents.

Analysis:

52% respondents believe that succession planning team meets only annually and 25% thinks bi-annually. None of the respondents think that these meetings held less than quarterly basis, where 12% respondents don't know if they meetings are held at all.

After looking at these responses, author believes that it shows a lack of HR and senior management involvement.

The CLC survey found that 52% met only annually, with 29% bi-annually and 12% quarterly. Very few organisations reported monthly or weekly team meetings.

Hence annually or bi-annually meetings seem better than weekly or even monthly succession planning meetings.

Question 2.3: Approximately how much time each month do the MD / GM spend on this process?

Purpose of the question:

This question was designed to establish the amount of real top-level commitment given to the process.

Responses:

All respondents answered this question.

Analysis:

It's quite difficult to get responses on such question as much of the work could go without letting HR know about it. That's why 29% of respondents don't know about it. Hence most of the responses received are either by relying on some manager or their own estimation.

CMI research shown that, many HR managers are unaware of the extent of development activities being undertaken by managers in their organisations. Only 14% thinks that MD / GM might be spending more than a day every month on the process.

CLC finding with regard to this question shows that 16% of respondents spending two days + on the process. These figures do little to support a view that real commitment is shown by very senior people in the organisations.

Question 2.4: Approximately how much time each month do HR personnel spend on this process?

Purpose for the question:

HR often has the primary responsibility for the development needs of employees and carries out most of the leg-work around the process. The responses to this question should offer good indication of whether this is true succession planning process with HR involvement or merely a selection process where decisions are reached at top level.

Responses:

All respondents answered this question

Analysis:

Bearing in mind the fact that HR personnel were responsible for completing this questionnaire, it may be that there is tendency to bias in the responses!

Despite this, 32% of those reported that they spend two to five days per month on the process, whilst 14% thinks between six to ten days.

The responses from the CLC survey are really quite interesting in that they show 26% spending two to five days on the process, with a surprising 25% at six days and above (including 24% over 11 days).

One explanation for this could be that the questionnaire in this report was circulated only within the IT industry, which tends to be populated by employees with a technical bias and for whom often self-development is part and parcel of the role.

Despite this discrepancy in responses, the total time spent would seem to indicate high HR involvement. Some of the other responses (Q 3.3; Q 4.6) however, bring into question the level of this involvement. This view is borne out by CMI survey, which found that many HR managers are unaware of the extent of development activities being undertaken by managers in their organisations.

Section three

Question 3.1: What level of management is included in your succession planning process?

Purpose of the question:

To show if organisations are serious about real succession planning.

Responses:

Answered by all respondents.

Analysis:

43% of respondents say that process was applied to executive / board level only, with additional 29% extending to senior management, while 14% for middle managers, 10% for junior managers and 5% for all levels.

CLC survey showed that 44% and 32% at executive and senior levels respectively, where as 8% at junior and 2% for all levels. It seems quite clear from these responses that, in the majority of organisations, succession planning is restricted still to executive and senior management levels.

Question 3.2: Which positions or people are typically included in your organisation's succession planning process?

Purpose of the question:

This question was asked with intentions to know if succession planning / management process was linked to organisation strategies.

Responses:

This question was answered by all respondents.

Analysis:

The chart shows that 100% of positions above a certain level are included in the succession planning process, with 43% agrees for high potential employees. This comes very close to CLC, which reported 93% and 55%, respectively. Linkage to specialist skills and sourcing difficulties fell away quite considerably in both sets of data, rising in the case of significant impact to 29% only in the primary data and 44% in the CLC survey.

The response concerning link to specialist skills, particularly within the IT sector, was extremely surprising, although this may not be viewed separately from high potential in the minds of the respondents.

The linkage with impact to the business, reported at 29% in the primary data, although rising to 41% in the CLC survey, is quite disappointing.

Question 3.3: At what stage does your organisation typically identify an employee for inclusion in the succession planning process?

Purpose of the question:

This question was designed to show if culture of identifying and developing talent early exists or employees get involved in the process only if they have risen sufficiently in the organisation.

Responses:

All respondents answered this question.

Analysis:

10% respondents say that employees were identified while hiring, while 29% says in first two years. 37% thinks in 3 to 5 years. Only 7% respondents think who had been in organisation for 6 to 10 years. 20% respondents couldn't answer this question.

The responses from the CLC were markedly different in that they showed a slow start for employees with only 2% being identified on hiring, 15% within the first two years, 31% in both 3 to 5 years and 6 to 10 years and 22% in 11 years +.

The difference could be possible because of primary data being obtained within the IT industry. Invariably, employees are selected for specific technology skills and the brightest more easily identified.

Although these results vary, it seems apparent still that identification of candidates for succession planning is linked to progress within an organisation and not recognised on hiring or functioning in the lower levels.

Question 3.4: To what level of employee does your organisation establish individual development plans?

Purpose of the question:

Designed to establish if commitment to culture' of development.

Responses:

This question was answered by all respondents.

Analysis:

30% respondents believe that development plans exists for all employees in their organisations, while 5% and 7% thinks at levels one and two respectively. The balance of 58% covered executive and senior management levels only.

These responses show some links to previous question 3.1, although development plans are extended to employees not included in the formal succession planning process.

The author's own organisation has a process of self-assessment for all levels, where employee and managers draw up Learning and Development plans jointly. Despite this mandated process, the extent to which this is carried through is extremely 'patchy' and has little credence in the minds of the ordinary employee.

This view is supported by HR survey, which reports that only 36% of organisations surveyed speak of assessing the talent they have already in place.

The CIPD survey supports this view by reporting that lack of development or career opportunities is quoted by 37% of respondents as the reason for employee turnover.

Question 3.5: Do you agree that a culture of succession planning exists in your organisation?

Purpose of the question:

To establish if a feeling of culture of succession planning exists, despite responses to other questions.

Responses:

This question was answered by all respondents.

Analysis:

29% of the respondents agree, to a greater or lesser extent, that a culture of succession planning exists. To some extent, this is quite surprising, bearing in mind only 5% of all levels of employees were reported as being included in the succession planning process.

One explanation for this reasonably high level could be that a link is being made, erroneously, between the extension of development plans to 29% of employees and a succession management culture. Additionally, the questions have been asked of HR representatives and not the general employee population.

Section Four

Question 4.1: How many years, on average, have members of your senior team been with your organisation?

Purpose of the question: This is the first of the questions designed to establish the effectiveness or otherwise of the succession planning process, albeit at a senior level.

Responses:

All respondents answered this question.

Analysis:

21% of respondents reported an average tenure for their senior teams between one and three years. This rose to 33% with a four to six year tenure and 42% between seven and twelve years. None of the respondents had senior team members with more than 15 years service.

These responses were almost a reversal of the data obtained from the CLC survey, where 32% of the organisations reported employees with 16+ years service, with an additional 26% with 10 - 12 years.

One likely reason for this complete turnaround in data is the difference in the industries covered by the surveys. The IT industry of the primary data, although not restricted to recently created businesses, in the main tend to have a younger average age, with impatient career aspirations. For this reason, employees of some sectors within the IT industry either move up the management structure relatively quickly or move on.

This problem is exacerbated within the small/medium business sector, as fever opportunities exist for progression, particular with regard to very senior positions.

Question 4.2: How many years, on average, have members of your senior team been in their current positions in your organisation?

Purpose of the question:

To know whether or not organisation involved in real employee development by showing progress of senior team.

Response:

All respondents answered this question.

Analysis:

21% of respondents said between 1 to 3 years tenure, 38% said 4 to 6 years, 25% said 7 to 9, 13% said 10 to 12 and 4% said 13 to 15 years. No member of senior team reported to be in current position for more than 15 years.

The CLC reports 38% for between 1 to 3 years, 34% for 4 to 6 years and 28% for up to 12 years, and no member with more than 12 years.

One possible reason for the long service of some senior employees in the primary data is the nature of the organisations questioned. Small to medium organisations tend to have owner or founders on the management team who may have remained with the company since its inception and this may restrict the progress of more recent eager candidates. In the case of technology companies, this may be exacerbated in that some of the organisations are relatively recent with the founders still in place.

Despite this, overall the progress of the senior team members seems not unreasonable, although without knowledge of the size of the senior teams within the organisations it is difficult to be dogmatic.

Question 4.3: What % of your senior team is due to retire within the next five years?

Purpose of the question:

This was supportive question for Question 4.6.

Responses:

This question was answered by all respondents.

Analysis:

96% of respondents said that not more than 10% of employees were due to retire within next five years. 88% of them reported 5% or less in which 63% reported that no member of senior team was due to retire.

This data was conflicting with CLC data, which shows only 9% of respondents without any senior team members due to retire. 19% between 1 to 5% of team members, 21% shows between 6 to 10% members with 24% reporting up to 20% of their senior team due to retire within five years.

Although the poor response to the questionnaire may have had some bearing on the primary data, it is quite likely that this discrepancy is accounted for by the low average age of technology employees, even among senior personnel.

Question 4.4: What percentage of your senior team was hired from outside the organisation direct into their current positions?

Purpose of the question:

To find out whether succession planning is used effectively or they still need to rely on outside recruitment agencies.

Responses:

Answered by all respondents.

Analysis:

Only 4% of respondents said total internal appointments. 17% of respondents said between 1 to 10% external recruitment; 42% said between 11 to 40%; 13% said between 56 to 70%; 17% said 71 to 85% on external recruitment.

This data was quite similar to CLC survey. These figures for external recruitment seem quite high but it's not surprising as there is general agreement about the short length of time that succession planning processes have been in place.

Coupled with this is the length of time senior team members have been with the organisation, which in some cases supersedes succession planning processes. (Refer Q4.1)

CIPD reported that 87% of the UK survey respondents now advertise positions internally. This increasing fondness for internal recruitment seems to have done little to assist in this area and, despite the suggested factors affecting the responses, early indications of the effectiveness of the succession planning are not particularly encouraging.

Question 4.5: What % of the senior team hired from outside direct into their positions have remained with the organisation after two years in the role?

Purpose of the question:

This question is designed to show good selection and development.

Responses:

Answered by all respondents

Analysis:

42% of respondents reported between 86% and 100% retention, with a further 25% claiming between 71% and 85%. 33% of respondents report quite poor retention, with 16% retaining only 26% to 55% of senior team member hired direct into roles.

The retention rates reported by the CLC survey were much higher, with 74% claiming 86% to 100% remaining after two years in the role.

Once again, a reason for the difference in retention rates could be the industry under review. Applicants for positions within the IT industry, arguably more than any other, are selected for specified technical skills and this selection criterion may be at the expense of a good culture fit. Also here again, the position may be made worse by the fact that small/medium organisations may not have the opportunities to support an impatient workforce.

Question 4.6: For approximately what percentage of your senior team have successors been identified?

Purpose of the question:

This question is designed to indicate whether the succession planning process is working or not.

Responses:

Answered by all respondents.

Analysis:

This question scores relatively poorly, with only 13% of respondents claiming between 86% and 100% identification of successors. This figure rises to 25% maintaining that 71% to 85% are identified.

There were a high percentage of respondents who didn't know the answer which shows lack of HR involvement in the process.

The CLC survey results had a similar pattern overall with 39% reporting 86% to 100% identification, with 15% claiming 71 to 85%. There were no 'don't knows' recorded, which in a survey of 276 organisations is quite surprising. This may be accounted for by the level of the respondents to the CLC survey, which was indicated as being Senior HR Executives and their teams.

Although, these responses indicate possible coverage for question 4.3, in relation to the primary data there is no extension beyond the immediate identified retirees. This would appear to indicate that the succession planning is failing at its basic level.

Question 4.7: On average, how long does it take to fill a senior team vacancy in your organisation?

Purpose of the question:

This question is designed to validate the process. If successors have been identified early, the average time to fill vacancies should be very low.

Responses:

Answered by all respondents.

Analysis:

54% of respondents reported a period of between 1 to 3 months, with 33% indicating four to six months and 13% taking seven to twelve months.

The CLC survey does not provide results that show any improvement, with only 7% reporting a period of up to one month, 40% showing between one and three months and 40% indicating between four and six months.

The CIPD survey reported an average of eight to nine weeks overall, rising to 13.3 weeks for managers and professionals.

Although the data does not provide any differentiation of senior management levels, the time to fill really does not show any real advantage over national figures.

This data does not offer any evidence to show that succession planning, at its raison d'etre of providing internal replacement candidates, is succeeding.

Turnover: The last two questions refer to turnover; first of all within the senior team and then within the organisation in general. The comments concerning these two questions have been combined.

For the purpose of this survey, turnover rate in the total number of leavers during the month divided by the average number of employees x 100. (Regular employees, excluding redundancy)

Purpose of the question: The turnover questions are designed to validate the responses to all the questions in the survey, in particular with regard to the following:

1. Does succession planning take place throughout the organisation?
2. Does succession planning take place only within the senior team?
3. Does a culture of succession planning exist in the organisation?

Responses: Answered by all respondents. Turnover figures used were in respect of regular voluntary terminations only. The IT industry hires a considerable number of contractor and fixed-term employees and it was considered that inclusion of such data would distort the findings.

Analysis: In respect of the senior team, the primary data shows 38% of respondents with a turnover between 11% and 15%, and 4% with a turnover between 16% and 20%. For organisations as a whole, these figures rose to 54% and 21% respectively.

This data compares quite unfavourably with the CIPD survey indicating an average of 9.3% for voluntary terminations within the IT sector.

Bearing in mind that 97% of the HR representatives survey believed that succession planning existed within their organisations, these findings are extremely disappointing.

It should be borne in mind that the findings are from a limited number of respondents and in respect of the senior teams, may refer only to a small number of employees; for this reason, some distortion could occur. Nevertheless, it is felt that the data confirms the findings with regard to senior management retention.

As the balance of the data in this report shows quite clearly that succession planning does not extend beyond the senior team, to a certain extent the company average is academic, although it would tend to point to a lack of development overall.

The main question centres on whether true succession planning exists for the senior team. These findings would seem to confirm that this is either not the case or it is being done so poorly as to be ineffective.

Questionnaire - Supplementary question

An opportunity was provided to respondents to raise any additional issues with regard to succession planning.

Please make any additional comments concerning succession planning within your organisation.

In general, the additional comments centred around four areas:

• Management commitment - More commitment was required from middle management level - no real follow-through - all talk!
• HR involvement - In many instances, HR involvement was on a supportive, transactional basis only. Input at a strategic level was virtually non-existent.
• Reward - Although, in all the responses concerning this issue, performance-related compensation was in force, feedback from employees showed that there was general dissatisfaction concerning the vagueness of the link.
• Transparency: The feeling was that the process of succession planning was shrouded in secrecy.

In general, these responses on management commitment and HR involvement serve to validate other findings in this report.

The comments concerning reward and transparency are important issues, which bear significantly on the success of succession planning system.

Rewarding high performers is an important consideration in the process and insufficient clarity in this area may be exceedingly demotivating.

A process that is not transparent and open and does not encourage engagement demotivates employees and may lead to misunderstandings, particularly with employees who feel that they have been overlooked by the system.

Conclusion

Statement of Personal Reflections

The difficulties experienced by me during the compiling of this report came somewhat as a surprise.

The relative ease (despite personal company difficulties) with which I undertook the Management Report at the conclusion of my CIPD studies led me to believe that I should be able to carry out this dissertation in a similar manner.

The main problem occurred in the selection of topic, which I found enormously difficult as the company size was small and problems were unusual. In fact, I pursued three separate paths, quite extensively, before deciding on succession planning very late in the day.

The main cause of my problem was my search for originality; it took me some time to realise this was originality of thought that was required, not necessarily originality of topic.

The lateness with which I undertook my literature search was of particular significance with regard to the questionnaire. If I had more time in which to investigate information and theory on best practice, I would have had better opportunity to consider my decision regarding the method of primary research.

Whilst appreciating the inherent difficulties in questionnaires, e.g. poor response, time and effort required chasing down responses; quite possibly, I still would have taken this route. I would have had time, however, in which to frame my research questions more appropriately and undertake a pilot study. I believe that result of this would have been the probable exposure of the inadequacy of the questions; a serious concern for me when analysing the findings.

In spite of this, I do believe that my conclusions are an accurate reflection of how organisations really behave within regard to succession planning, notwithstanding the impression given by initial responses.

What is succession planning

Succession planning is defined by Hirsh(2000)[38] as 'a process by which one or more successors are identified for key posts (or groups of similar key posts), and career moves and/or development activities are planned for these successors. Successors may be fairly ready to do the job (short term successors) or seen as having longer-term potential (long term successors).'

So succession planning brings up methods to identify future potential leaders to fill key positions.

All organisations need to find people with the right skills not only to fill top leadership roles also other positions in an organisation have to be filled. This is most important to let the organisation go on and keep it away from disturbances due to a lack of skills in an important position of the organisation. The process of finding such talents needs to be managed and used to be managed in well-established companies. In these companies the method was more defined by time and experience of long-term careers. Changing job environments was not as common as it is today and talents of people that are ment for leading positions were developed as well as figured out with time and experience.

Changing speed of business environment and flatter structures made this sort of succession planning not practical anymore since the 1990's.

The solution would be either trying to keep the employers in the organisation for long term or to establish a system of finding potentional leaders to fill empty positions in the organisation. But how can one plan for jobs which may not be there next year? In more and more organisations leadership positions are filled from outside companies instead filling these positions with people that we already know from their performance in the company, but in another position and work-environment.

Especially in an economic downturn talent management and succession planning are becoming more important for an organisation. In such times it is more important than ever to explore, where the key roles in the organisation are situated.

Succession planning in young companies can be fundamental because of a fast employee-fluktuation. Especially in IT-companies there is a high level of fluktuation of the employees. So the more importance should be given to hold the people with the most capabiltity in the organisation.

While an organisation is growing it has to be made sure, that newly leading positions are covered by a person that is fitting in the role.

Here it is necessary to find the methods that are already experienced in succession planning and that are also applicable in small young companies.

Competencies

For evaluating an individual's potential for a special role it is one opportunity to find out about special technical and generic competencies of the person that lead to a range of desired skills and behaviours. For that many organisations have developed frameworks for these competencies.

The critics of such competencies is that they are aiming to the past and the present, not at the future. A succession plan should aim to the future, so there should not be an over-reliance on competencies in order to maintain succession planning.

The future of the business

For a good succession planning there should be an idea of the future development of the market and the needs of the organisation in the future so that it is more clear, which competences will be needed in the organisation. For example for a programmer the skills to learn new techniques and to be motivated are two very important aspects, because of the changing of the requirements.

Why is it important?

Succession planning is elementary to keep the organisation out of unexpected fluctuations. As we can see in the annual survey report 2009[39] on Table 22, page 26, IT-services have besides call centers and Hotel-, catering-, and leisure-services the highest rate of voluntary leavers in the organisations. That shows, that the focus should be set either on making the employees to stay at their position or to find equal or better succession for the empty positions.

In young IT-companies there are not so many possibilities to make people stay at the same organisation for long time. Lack of financial opportunity is one reason besides the lack of opportunities to give social support. So you can focus an the second solution of keeping an eye on good successors for all key positions.

To make people being motivated to stay in their organisation.

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Chief Executive Officer

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Recruitment, retention and turnover, annual survey report 2009, cipd