1. WhitepaperSuccession Planning:Rise of the Talent EcosystemA SumTotal White PaperThe Succession Planning ImperativeOnce reserved for the upper echelons of senior management, and often viewedFigure 1: Top Talent Challenges erroneously so as replacement planning to mitigate risk (e.g., a catastrophebefalls company leaders), todays succession planning is being redefined.The discipline has broadened in both breadth and scope to become a centralcomponent of strategic talent management.#1 ChallengeDefined as the process of identifying, preparing, and tracking high potentialGaps in leadershipemployees for promotion and advancement, several dynamics are driving thepipelineevolution of succession planning today: The recognition that top-notch talent and retaining that talent #3 Challenge Difculty lling keydrives bottom-line financial performance, customer satisfaction, and employee positionscompetitive advantage. Researchers such as Accenture, McKinsey,#4 ChallengeRetentionand Towers Watson have empirically validated these linkages.problems Global talent shortages due to retiring baby boomers, shifting workforce demographics, and globalization. Fifty-three percent of companies are Source: Bersin & Associates, July 2008 facing significant talent shortages today1 and this percentage will grow as baby boomers start retiring. In fact, the U.S. Bureau of Labor Statistics estimates a shortage of 10 million workers by 2010. Mitigating the risk of untimely departures of high performers and essential personnel as labor markets continue their inexorable shift in favor of buyers (i.e., job seekers). A confluence of market conditions impacting specific industries. For instance, within healthcare, increasing demand for services from baby boomers is coinciding with a shortage of skilled talent (e.g., nurses, technicians). In the public sector, an aging workforce coupled with competitiveness from the private sector and an inability to attract younger talent is posing challenges. And in technology, CEOs are finding it increasingly difficult to fill key positions as older workers retire.Many companies are starting to recognize these dynamics (especially thechallenges). In a 2008 Bersin & Associates study, three-out-of-five of the toptalent challenges cited by global survey respondents were related to successionplanning (see Figure 1).www.sumtotalsystems.com1

2. Succession Planning: Rise of the Talent EcosystemYet the same study paints a more ominous picture. Only 20 percent of companieshave an enterprise-wide succession planning process, and fully 53 percent haveno process at all. Indeed, a 2010 SumTotal study revealed that 59 percent ofHR professionals do not believe that their personnel are adequately preparedto meet their companies future growth plans. All of this market data pointsto one inescapable conclusion: The majority of companies are aware of thechallenges yet most are completely unprepared to deal with them. Therefore,new and innovative ways of deploying succession planning are required. Theseinclude extending succession planning across the organization and integratingsuccession planning into the broader talent ecosystem.Extending Succession Planning Across the OrganizationApplying succession planning beyond senior management is critical to retaininghigh performers across all levels of the organization and mitigating the risk ofuntimely departures of key personnel. Retaining existing employees not only hasthe potential to minimize the effects of the global talent shortage, it also providessignificant and tangible cost savings (since replacement costs range from 100%-150% of the salary for the departing employee).ALFA provides an ideal example. Based in Mexico and employing more than50,000 people, ALFA is a diversified global company consisting of four distinctbusiness units: petrochemicals, aluminum auto components, refrigerated food,and telecommunications.A key challenge facing the company was promoting cross-business unit transfers,thereby minimizing employee attrition to the competition. ALFA was losinghigh-performing talent because it was unable to find growth opportunities foremployees within the organization. Due to the proliferation of different humanresources (HR) systems at each of its four business units, ALFA suffered frominconsistency in managing its global HR processes as well as a lack of visibilityinto key employee information that could be used to drive succession planning.To address its challenges, ALFA standardized on a single, integrated talentplatform across its diverse business units. This platform, provided by SumTotal,became the centerpiece of ALFAs employee lifecycle, which consists of planning,hiring, compensation, performance management, learning and development,succession planning, reporting and analysis, and HR management. ALFAalso leveraged SumTotals global experience in developing and implementingstandard HR policies and best practices. As a result, it is far more common forALFAs employees to jump from one business unit within the company to another,expanding their experience and skill sets via promotion and advancement.www.sumtotalsystems.com 2 3. Succession Planning: Rise of the Talent EcosystemConnecting Succession Planning into the BroaderTalent EcosystemSuccession planning is one of several key processes that enable organizations toembrace a holistic talent management strategy. At its heart, Talent managementis the strategic approach to integrating and optimizing talent-related processesacross the enterprise, including talent acquisition (recruiting and hiring),performance management, development and learning, succession planning, 360feedback, compensation and rewards, and talent profiles. Software technology,a key enabler of talent management strategy, provides a best practices platformfor information integration and process optimization. One such example of thisplatform is the SumTotal Talent Platform (see Figure 3).At the center of this platform is the talent-based employee system of record,which includes employee data, talent profiles, job profiles, and competencies. Allof this information, once made consistent across the organization, feeds criticalHR business processes, facilitates the linkages across these processes, andultimately enables improved business analysis, insight, and decision making. Figure 3: SumTotal Complete Talent ManagementThe role of succession planning within the broader talent ecosystem is uniquebecause it is dependent upon inputs from several other core HR processes.Whereas an annual performance appraisal process can be executed in arelatively self-contained fashion (assuming it has access to core employee data),the same is not true for succession planning. To illustrate the point, consider howHR practitioners have traditionally built succession plans.www.sumtotalsystems.com 3 4. Succession Planning: Rise of the Talent EcosystemConventionally, HR practitioners will spend weeks or months manually scouringdifferent parts of the organization for information needed to build lists of nomineesfor specific job families or positions. The information required to generate thelists may include self assessments, past performance appraisals (often paper-based), and 360 feedback. After a lengthy period of information gathering andaggregation followed by manual analysis (e.g., nine-box, gap analysis), HRprints the results, collates hundreds of pages of paper into three-ring binders,and presents its recommendations to senior management. This time-consuming,inefficient process is still common practice today (recall that only 20 percent ofcompanies have an enterprise-wide succession planning process in place).Yet by centralizing talent processes and information in the above scenario,performance management, 360 feedback, and succession planning onto asingle, integrated talent management platform, the time to develop successionplans can easily be reduced from weeks or months to mere hours. Thebenefits can be significant: reduce HR costs, reallocate HR resources fromtactical activities to more strategic endeavors, and mitigate the risk of untimelydepartures of essential personnel.Additionally, a natively-integrated talent management platform promotes thelinkage of learning and development planning with succession planning. Bybridging the processes, nominees who are not ready for advancement canbe assigned detailed development plans that guide them to improve thecompetencies required for new job positions. Learning paths and even specificcourses can be established for employees to facilitate their career growth. Byproviding learning opportunities and development plans to employees, HR cantake a more active role in promoting employee retention.Finally, a single talent management platform facilitates enterprise-wide HRreporting and analysis, since all of the relevant talent data resides within a singledata structure. Reporting and analysis are key to an organizations success inmanaging employee resources and implementing HR strategies that supportcorporate objectives and initiatives.Figure 4 (next page) pulls all of these processes together and highlights thecentral role succession planning plays within the broader talent ecosystem. Inthe manual, paper-based world of conventional HR and also in siloed HRtechnology deployments which are equally prevalent this level of integrationand its inherent benefits are not possible.www.sumtotalsystems.com 4 5. Succession Planning: Rise of the Talent EcosystemFigure 4: Succession Planning Within The Broader Talent EcosystemConclusionSuccession planning is not a silo. Companies of all sizes and in all industries mustreevaluate how succession planning fits within their enterprises. In order to takeadvantage of new opportunities, avoid the looming talent crisis, and mitigate therisk of untimely departures, companies must extend succession planning acrosstheir organizations and fully integrate succession planning into their broader talentecosystems. This can best be achieved by leveraging a single talent managementplatform coupled with a strong focus on process and strategy.Endnotes1High-ImpactTalent Management: Trends, Best Practices, and Industry Solutions,Bersin & Associates, May 2007www.sumtotalsystems.com 5 6. Succession Planning: Rise of the Talent Ecosystem Authored By Steve Bonadio, Director of Product Marketing, SumTotal Systems, Inc. For more information, contact cfaust@sumtotalsystems.com. About SumTotal SumTotal Systems, Inc. is the global leader in complete talent management software that enables organizations to more effectively drive business strategy. Recognized by industry analysts as the most comprehensive talent management solution, SumTotal provides full employee lifecycle management, including a core system of record, from a single provider for improved business intelligence. The company offers customers of all sizes and in all industries the most flexibility and choice with multiple purchase, configuration, and deployment options. With more than 1,800 customers and 25 million users worldwide, we have increased the performance of the worlds largest organizations. For more information, or to request a demonstration, please call +1-866-766-6825 (US / Canada), +1 352 264 2800 (international) or visit www.sumtotalsystems.comCorporate Headquarters EMEAAPACSumTotal Systems, UK SumTotal Systems, UKSumTotal Systems India Pvt. Ltd. 2010 SumTotal Systems, Inc. All rights reserved. SumTotal, the SumTotal2850 NW 43rd Street59-60 Thames Street 7th Floor Maximus Towers logo, ResultsOnDemand, and ToolBook are registered trademarks or trademarksSuite #200 Windsor, BerkshireBuilding 2B, Mind Spaceof SumTotal Systems, Inc. and/or its affiliates in the United States and/orGainesville, FL 32606 USAUnited Kingdom, SL4 1TX Raheja IT Park, Cyberabadother countries. Other names may be trademarks of their respective owners.Tel: +1 352 264 2800 Phone: +44 (0) 1753 211 900 Hyderabad, AP- 500081, India 11_0107LSFax: +1 352 264 2801 Fax: +44 (0) 1753 211 901 Phone: +91 (0) 40 6695 0000 Fax: +91 (0) 40 2311 2727www.sumtotalsystems.com 6