T+D January 10 // Intelligence //
Turbulent Times Highlight the Need for Succession Planning
By Eileen McKeown
Risk is high if an actionable and cost-effective CEO succession plan is not in place.
How much risk is your company willing to take? If your organization does not have an actionable and cost-effective CEO succession plan in place, then its willingness to gamble is high.
Research shows that faulty integration of senior executives can cost a company 10 to 20 times the executive’s salary in lost opportunity costs. Moreover, public mistrust in managing transitions can generate a loss of productivity and social costs valued at nearly $14 billion per year.
According to “The Role of the Board in Turbulent Times: CEO Succession Planning”—a recent report released by The Conference Board—creating a board committee dedicated solely to succession planning duties is the first critical step in a five-step roadmap to ensuring the success of a company during times of high-level executive change.
Estimates for 2008 indicate that, in the United States, CEOs from more than 1,400 public companies left their positions. Many of them were sudden and unforeseen departures.
“Of course, some sectors were affected more than others,” says Matteo Tonnello, associate director of corporate governance at The Conference Board and co-author of the report along with John C. Wilcox and June Eichbaum. “The financial services industry was affected because of the heightened public scrutiny of the last year and the many banks around the country that became the target of government interventions. But this surge in CEO turnover remains a generalized phenomenon, and all corporate boards should take notice.”
Although CEO succession planning is not federally regulated in the United States, the topic seems to be moving toward more regulatory oversight. Currently, the listing standards by the New York Stock Exchange, section 303A.09, require boards to explicitly address a CEO succession plan in their corporate governance guidelines. In addition, a bulletin issued by the SEC Division of Corporate Finance on October 27, 2009, regarding rule 14a-8(i)(7) states that in light of recent events, “CEO succession planning raises a significant policy issue regarding the governance of the corporation that transcends the day-to-day business matter of managing the workforce.”
Having a well-defined CEO succession plan is more necessary than ever. The Conference Board report suggests that along with assigning a board committee of independent directors, a corporation also must make succession planning continuous and integral to business strategy and corporate culture; integrated with a top-executive compensation policy as well as risk management strategies; and transparent both internally and externally.
Note: “CEO Succession Planning” is one of six reports, collected in a single book titled The Role of the Board in Turbulent Times: Leading the Public Company to Full Recovery, released September 2009 by The Conference Board.
See this month’s Infograph for more on succession planning.
T+D January 10 // Public Policy //
Engaging in the Public Workforce System
By C. Michael Ferraro
Options abound for workplace learning professionals who want to become engaged with the public sector.
As a learning professional, you understand the importance of engaging your employees in the work they do for your organization. And you probably stress this in all of your programs—the more employees engage in their own learning and development, the more they will get in return through personal and professional growth. It’s a win-win situation.
Engagement in the public workforce system can also be a win-win for you and your organization. In 1998, Congress passed, and President Clinton signed, the Workforce Investment Act (WIA). WIA established the state and local workforce investment boards (nearly 600 across the country), and each of the boards has appointed state and local representation. You can apply to serve on your local workforce investment board.
But your engagement on the local workforce board doesn’t have to be at the board level. You can meet with your local executive director and offer to be a business partner or engage with the board in some other capacity. By being aware of partnership opportunities at the local level, you may be able to access additional training funding for your organization that can help you grow and develop your talent. And you may be able to participate in a partnership with a local institution of higher education (community college or university) or a not-for-profit organization (such as Goodwill), all of which could apply for a training grant. On the other hand, your organization may want to participate in a sector strategy approach to workforce development in your community.
In addition to the nearly 600 state and local workforce investment boards around the United States, WIA also created the nation’s One-Stop Career Center system. Currently, there are more than 3,000 full-service and satellite one-stop centers throughout the United States. Visit one of these centers in your community, meet with the center’s director, and find out how you can work more closely with the center to develop skilled talent in the community.
Some ASTD members have engaged in the workforce investment system on behalf of their organizations and have developed some very interesting programs. Bob Leber, director of education and workforce development for Northrop Grumman Shipbuilding’s Newport News Operations, is one example (see sidebar for his story).
So where should you begin? One place to start is the Department of Labor’s Service Locator (www.careeronestop.org). It will help you to locate your state or local workforce investment board and your nearest one-stop center. Another resource is the workforce development or continuing education department of your local community college or university. They may be looking for employer partners for federal or state grant opportunities. You may also want to contact your state workforce agency for other funding sources.
Engagement with the workforce development system at the state and local levels can benefit you and your organization. And ASTD has tools to help you along the way. Visit www.astd.org/publicpolicy for more information. I wish you luck as you navigate the system.
T+D January 10 // Coaching & Mentoring //
Coaching Benefits: From Winning the Race to Winning in the Office
By Victoria DeVaux
A new survey pinpoints the top benefits of coaching, according to the coaching clients themselves.
While clearing hurdles and sprinting past competitors are immediate ways to gain an edge on the track, the benefits from a coach’s words of encouragement, reminders to breathe, and lessons to maintain a steady pace will help you win the race. Workplace coaching is no different.
“My coach has helped me break down things I see as large problems into smaller, easier-to-deal-with tasks I can tackle as I gain new skills,” said one International Coach Federation (ICF) client on ICF’s Global Coaching Survey.
ICF surveyed more than 155,000 people and found that the majority of coaching clients achieve positive changes in their goal areas, emerge pleased with their coaching experience, and realize a significant return-on-investment, both individually and for their companies as a whole.
The two most commonly reported reasons for clients to turn to coaching are a desire to improve self-esteem or self-confidence (79 percent) and work-life balance (76 percent). In terms of priority, however, the two most important reasons to entreat a coach’s service are to improve career opportunities (15 percent) and business management practices (14 percent). Additionally, clients view coaching as an action plan rather that a passive exploration of problems such as therapy or counseling. This in turn motivates clients to seek coaching services over other alternatives to actively engage in improving their lives.
Personal development or growth is the most commonly reported benefit of coaching (35 percent), followed by lifestyle improvements (13 percent) and improved awareness, realization, insight, and knowledge (13 percent).
One client revealed “forward movement in life, happier family life, [and] truly incredible spiritual and emotional insights” as major benefits in the lifestyle department. And as another explained, coaching “made me more aware of my capabilities and more responsible for my actions or nonactions.”
ICF also measured the results of coaching in 13 predetermined areas and found self-esteem or self-confidence to be the number one sphere in which coaching affected clients positively, with 80 percent of clients reporting positive change on a scale of -3 (much worse) to +3 (much better). This category remained at the top regardless of whether the client had intended to improve in this sector or not.
As far as customer satisfaction, almost all clients were at least somewhat satisfied, and more than 95 percent gave their coaches a good or excellent rating and confirmed that they would choose coaching again.
In addition to contented clients with better performance, confidence, and general life skills, coaching also brought about measurable financial gains. The ROI sample size was relatively small, but of the 189 respondents, 68 percent of individuals made back their initial investment or more, with a median profit of 344 percent. Eighty-six percent of all company clients made their initial investment back, with a median profit of 700 percent.
“Company financial gains may come directly from processes and skills developed through coaching or through improved corporate culture,” according to ICF.
Just as in sports, coaching in life can make or break an individual or a company. Taking action to improve one’s lifestyle pays off mentally, physically, and financially. The real reason the tortoise beat the hare? He had a coach.
T+D January 10 // Communication //
By Aparna Nancherla
Bosses need to remember to keep their employees informed, because it could affect their workplace reputation.
Although most employees might appreciate the tough role their bosses have had to fill in navigating them through an economic downturn, it doesn’t mean they necessarily trust the higher-ups. According to a recent survey by Adecco Group North America, 53 percent of respondents question the honesty of their bosses.
“These results show that many American workers feel that their bosses are not up-front about the state of their companies in the economic climate,” says Lois Cooper, vice president of employee relations and diversity at Adecco Group North America. “From an overall workforce perspective, there are lots of employees who feel that they’re being overworked and underpaid in their current positions and will be considering their professional options once the job market regains footing.”
Although employees may not have full faith in their supervisors, they are certainly not envious of their roles. Sixty-one percent of workers said they would not want to take their bosses’ jobs, and a mere 14 percent have greater respect for what their bosses do every day since the recession began.
Cooper notes that workers certainly understand the pressure and stressful environment that their higher-ups face, but asserts that it’s still imperative that managers and employees communicate.
In fact, the results reflecting manager-employee communication are hopeful—87 percent of workers reported that their bosses are as accessible as they were prerecession, and 89 percent indicated that their relationship with their boss was as important, if not more important, to their job satisfaction as it was before the recession.
According to Cooper, ways in which bosses can maintain positive relations with their employees include encouraging an honest dialogue by starting or continuing an open forum with employees; showing loyalty by communicating both good and bad news to key employees; improving morale and motivation through teambuilding exercises, challenging work projects, staff contests, rewards, and recognition of a job well done; and communicating opportunities for employees to progress, such as special assignments and learning initiatives.
Another chief motivator is feedback and evaluation, and 87 percent of workers reported that their bosses have the same amount of focus on performance reviews, if not more, as they did before the recession.
“While companies may not be able to offer financial incentives at the moment, performance reviews and professional development are excellent ways to keep employees engaged and on a career track, regardless of the economic climate,” says Cooper.
Employees should also remember that communication is a two-way street, and their supervisors and managers can’t always read their minds.
T+D January 10 // Fast Facts //
Maintaining a Business Image When Workingat Home
With unemployment reaching 10 percent in the United States, many people are starting their own businesses, but Barbara Pachter, business etiquette expert, warns that maintaining a business image is crucial, especially when your office is in your home.
Pachter, author of When the Little Things Count…And They Always Count, offers seven tips for entrepreneurs who work outside the office setting:
1| Have a separate space for your office. Create a space where you won’t hear dogs barking or children screaming.
2| Answer the phone professionally. Invest in a separate line for work calls, and answer the phone in a professional manner. If you are not able to answer the phone, create a professional business message.
3| Create a website. The site should explain what you do and how to contact you.
4| Be organized. Invest in file cabinets, keep good business records of your contacts, and develop quality business cards.
5| Create a professional Internet presence. Use LinkedIn and Facebook to let people know about your business. Blog about your work, but don’t let your social media sites distract you from your other business needs.
6| Dress up if you need to. If you need to dress up to feel professional, then do it.
7| Have an appropriate meeting space. Always have an appropriate place to meet with clients. If you don’t have that kind of space in your home, use a meeting room or restaurant.
Working at home can have its benefits, but it can also blur the lines between professional time and personal time. Set a schedule, and stick to it.
T+D January 10 // Infograph //
Succession Planning in C-Suite Is Lagging
A Korn/Ferry Institute study finds that the majority of companies do not have a C-suite succession plan in place.