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December 14, 2017
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Creating an SCM "dynasty": How to build your team like the pros

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Talent-retention and succession-planning strategies from the world of professional sports can help supply chain organizations ensure strong leadership for years to come.

Ask any professional sports coach or executive what it takes to become a championship contender and you will get a one-word answer: talent. Innovative strategies and great coaching are important, but it still takes skilled players to win. While teams regularly practice and train to sharpen players' skills, the top franchises are constantly building their "bench" strength to drive continued success. They know that if the future stars are not being groomed, a few untimely injuries or "free agent" defections by players whose contracts have ended could quickly turn a dynasty into a disaster.

A similar scenario is playing out in the corporate world. As supply chain management (SCM) takes on greater strategic importance and new business requirements emerge, companies need to have stronger talent with a broader set of skills. Leading organizations are also beginning to recognize the link between talent availability and supply chain strategy. That is, the game plan is only as good as the team that will execute it. But they are facing a major challenge when it comes to SCM talent. According to recent research, the pool of leadership-ready supply chain professionals inside most organizations is relatively thin.1 Just as in football and other sports, a few retirements or resignations can prove devastating.

Article Figures
[Figure 1] Company engagement in SCM succession planning
[Figure 1] Company engagement in SCM succession planning Enlarge this image
[Figure 2] Attitudes toward SCM succession planning
[Figure 2] Attitudes toward SCM succession planning Enlarge this image
[Figure 3] What strategies are used by your organization to improve talent retention?
[Figure 3] What strategies are used by your organization to improve talent retention? Enlarge this image

Overcoming this supply-demand mismatch requires a comprehensive talent management initiative that includes developing strategies and practices for the acquisition, development, and advancement of supply chain professionals. Each process is detailed in the three modules of a talent-development study sponsored by the Council of Supply Chain Management Professionals (CSCMP) and conducted by Auburn University and Central Michigan University faculty. These modules address the three main processes involved in building a strong SCM team: Acquire (strategic talent acquisition), Develop (training and education), and Advance (advancement and retention). All three reports are available here.

Our investigation revealed that of the three, the advancement process has received the least attention from companies. Of the 350-plus supply chain professionals who participated in the study, only 12.5 percent indicated that their organizations have formal succession-planning programs (Figure 1). Yet nearly 80 percent indicated that an effective SCM succession plan positively impacts talent retention and company performance (Figure 2).

Organizations that fail to manage this important factor in their long-term success are leaving individuals to create their own progression plans. This potentially can create uncertainty for supply chain professionals, who may not understand the available career options within their company. It also leaves the door open to misinterpretation about the timing and requirements for promotion. When these situations arise, individuals may feel that they are being unfairly passed over for advancement and will look for "free agent" opportunities with other companies.

Instead of taking a hands-off approach that generates unwanted turnover, companies should actively engage in talent advancement through targeted professional-growth opportunities and succession-planning efforts. This will support retention and the preparation of high-caliber SCM professionals who possess the skills needed to win when they are handed the ball, so to speak.

To ensure deep bench strength at every critical position and to drive succession planning, supply chain executives should consider adopting the following proven talent management strategies from the world of professional sports.

Create a depth chart
A fundamental talent management tool used by professional football teams is a "depth chart" that identifies the primary and backup players. There will often be three people on the depth chart for the quarterback position and other critical roles. Talent scouts and general managers use these depth charts to evaluate personnel quality across the system and to identify gaps in the talent pool. This information is invaluable for planning roster moves, player trades, and draft picks. Baseball and hockey teams also track players in their minor-league systems to create an extended depth chart that lists potential replacements in case of injury or poor performance.

Supply chain executives and human resources (HR) specialists also should develop detailed depth charts outlining their company's existing talent base. These charts should identify the potential candidates for each critical role, what further development each candidate needs in order to be ready to take on that role, and how long it will take before each candidate is ready for advancement. This information serves as a direct input to workforce planning, development needs, and personnel promotions.

Depth charts proved helpful to a technology equipment manufacturer when it was developing a supply chain transformation road map. During that exercise, the executives overseeing the project realized that talent planning was absent from the initiative. The company has since established a five-year workforce plan—including depth charts of its global talent pool and individual development requirements—to ensure that supply chain talent is available and ready to carry out the planned transformation. The plan also gives executives a new framework for monitoring and organizing their people resources, while employees have a much clearer view of future opportunities.

In supply chain personnel depth charts, accuracy and detail are essential for informed decision making. This can be accomplished by replacing paper-based processes with talent management software. These tools provide a readily accessible and up-to-date, companywide repository of information regarding the supply chain talent pool. The software facilitates the collection and dissemination of dynamic organizational charts, useful information regarding key supply chain roles, and the capabilities of current position holders.

A heavy equipment manufacturer deployed this type of solution to achieve visibility of supply chain talent across its global operations. The company's supply chain leaders use the software to find and evaluate internal candidates for open positions, analyze bench strength, and drive succession planning. Within the database, every key position holder is required to create a list of three potential successors. Details regarding these replacement candidates are pooled, and a broad "marketplace" of promotable supply chain talent is generated for the organization.

Develop your prospects
A successful transition from amateur or collegiate sports to the professional level is not guaranteed. Only a rare talent can make an immediate impact during his or her rookie year in a professional league. Often, a team will sign a player knowing that years of development will be required for that individual to achieve peak performance. That's why professional teams employ player-development personnel, trainers, and strength coaches to facilitate player conditioning and to improve fundamental skills. Training camps allow players to hone their craft under the watchful eyes of coaches. Moreover, minor-league assignments allow young talent to get on the field rather than sit on the bench of a major-league team. Although these developmental efforts require time and money, they help turn raw prospects into key contributors to a team's success.

Similarly, success is neither immediate nor guaranteed for supply chain professionals. They require ongoing training support to build the essential skills for their current roles, and they need developmental opportunities to gain the experience needed for promotions. However, the traditional model of 70 percent on-the-job learning, 20 percent mentoring and feedback, and 10 percent formal training is no longer adequate to prepare supply chain professionals for today's expanded roles in the organization. In addition, an overreliance on self-directed learning can create the perception that leadership is not investing in talent development. This leads to employee frustration and turnover.

To avoid these potential problems, SCM and HR leaders must alter the traditional learning and development strategy. They must supplement job-based training (skills that promote efficient completion of tasks) with the development of broader business competency (capabilities, knowledge, and behaviors that contribute to overall success). This adjustment builds a stronger supply chain workforce that is consistently capable of supporting long-range plans and delivering results on key strategic initiatives.

This approach was the driving force behind the recent revision of the SCM personnel-development process at a consumer packaged goods (CPG) company. The company moved to a universal development framework for supply chain personnel that included broad managerial competencies, technical mastery requirements, and a consistent career-progression process. Employees now have greater clarity about the capabilities required for a long-lasting and productive career with the company. Other important outcomes include greater job satisfaction, empowerment, and retention among the company's supply chain workforce.

It should be noted that competency-based development is not a "cookie-cutter" method, where everyone goes through an identical training program. Skill levels vary from person to person, and training opportunities should reflect those differences. A logical approach is to first assess each employee's potential and performance in regard to the key competency and technical skills requirements. From this assessment, the employee and a senior manager can jointly craft an individual development plan (IDP) designed to promote professional growth.

Realizing that a plan is only beneficial if it is executed, a global logistics services provider uses IDPs to build a calendar of internal and external training activities for its employees. By converting the goals into a financially supported action plan with a timetable for completion, the organization helps individuals make annual progress toward readiness for positions of greater responsibility.

Call top prospects up to the big leagues
Success in training camps and minor-league games does not guarantee that a player will prosper when promoted to the professional ranks. The level of competition, combined with the pressure to win when important games are on the line, can be very stressful. To breed confidence and familiarity, professional teams will temporarily promote prospects to the big leagues. Preseason football games, soccer exhibitions, and late-season baseball games (for teams out of playoff contention), where winning may not be the primary focus, are valuable opportunities for up-and-coming players to gain experience. They can be evaluated under game conditions, receive exposure to new systems, and play different positions. As a result, they will be better prepared when long-term roster spots become available.

Short-term projects can also be used to build the skills and confidence of emerging supply chain talent. Rather than promoting a promising employee into an unfamiliar role with a steep learning curve, companies can take a measured approach to advancement. They can temporarily assign greater professional responsibilities to promising supply chain personnel, monitor their progress, and use that knowledge to revise the employees' IDPs.

An electrical products and services provider deploys this strategy by assigning high-potential supply chain professionals to special projects. While they work on the projects, they are exposed to key business challenges, engage with members of the executive team, and meet influential people in the industry. The young leaders also participate in cooperative learning ventures with other top firms and academic institutions.

Job sharing and rotational programs are two additional ways to give high-potential employees valuable exposure to the supply chain. A typical rotational program moves the employee through a planned series of three- to six-month assignments in critical functions such as procurement, demand planning, production, and fulfillment operations. The participants handle day-to-day responsibilities and work on special projects. These short-term assignments help individuals understand the big picture of SCM and expand their personal knowledge and capabilities—all necessary if they are to join the next generation of supply chain leaders.

Recognizing the need for a boundary-spanning, finance-savvy SCM workforce, a leading beverage manufacturer is working to cross-train its high-potential talent in manufacturing, bottling operations, and warehousing. This requires some sacrifice on the part of the individual, who may have to move to a new location or work odd shifts, but the payoff is meaningful. Participants gain firsthand knowledge of the relationships among processes and how those relationships drive growth. Both are considered essential for advancement to supply chain leadership roles within the company.

Protect your franchise players and coaches
In professional sports, teams use special strategies to retain top talent. Under the rules of the National Football League's collective bargaining agreement, each year every team can apply a "franchise tag" to one player whose contract is about to expire. This designation allows the team to retain this highly skilled player for an additional season, rather than have the individual immediately become a free agent. The one-year contract extension (with a commensurate salary increase) protects the team from short-term turnover of essential talent and gives the parties time to negotiate a new contract. Within the coaching ranks, some franchises will elevate a highly sought-after assistant coach to a "head coach in waiting" role with commensurate increases in the individual's responsibilities and salary. These franchise tag initiatives promote talent retention and mitigate talent "poaching" by competitors.

Unfortunately, supply chain executives do not have the luxury of franchise tags or long-term contracts to retain talent. Still, they must be proactive in identifying their top candidates for future leadership roles and in accelerating their development. To minimize turnover risk, companies must also support compelling career progression for high-potential SCM professionals. One way to do this is through a leadership development program (LDP) in which a select group of high-potential individuals participates in an extended series of skill- and expertise-building experiences.

The LDP of one international supply chain services provider is tailored to the needs of senior middle managers. Participants in the company's Global Executive Leadership Program build cross-divisional networks, explore the latest business strategies, and develop leadership skills. Key content areas include global trends, corporate strategy, financial performance, and effective leadership. In addition, these future leaders can pursue an Executive Master of Business Administration (MBA) degree at the company's expense as well as participate in an international mentoring program.

Companies can use other methods to send positive signals regarding their future prospects to talented supply chain professionals. Interim promotions and special assignments help to round out supply chain capabilities and minimize career wanderlust. Educational programs at respected universities are good resources for developing important general management skills. Figure 3 includes examples of strategies participants in our study found useful.

Programs like these can be adapted to a company's individual needs and culture. In a unique twist on job rotations, the top supply chain executive for one specialty retailer deliberately shifts directors into unfamiliar and uncomfortable roles before they are offered a vice president-level position. For example, the longtime distribution director transitioned into the role of transportation director for a year. This individual quickly learned the transportation function with support from knowledgeable direct reports and guidance from senior executives. This initiative gives participants another perspective of the supply chain, requires them to manage a broader array of strategic trade-offs and challenges, and compels them to build relationships with a different group of suppliers and customers. Collectively, this broader exposure helps to round out the supply chain capabilities of potential future leaders.

Wisely leverage the free-agent market
Each year in professional sports, some veteran players will choose to enter the free-agent market rather than stay with their current teams. This allows the players to pursue new opportunities and potentially sign lucrative contracts with different franchises. Free agency also allows a franchise to quickly fill roster gaps and potentially sign the superstar who will carry the team to a championship. Of course, success is not guaranteed, as a player's fit with the team or capabilities may not work out as expected.

In a sense, organizations can also pursue supply chain "free agents." Hiring external talent can be a logical solution, particularly when there is no internal candidate with the appropriate skill set or experience to fulfill a critical role. This strategy can also supplement the supply chain talent pool without putting pressure on the company's bench strength.

Companies should recognize, however, that the free-agency model presents risks. Hiring outsiders—particularly for senior-level supply chain roles—may create animosity among current high-potential employees, upset the existing salary structure, or require a longer-than-expected acclimation period. For these reasons, the free-agency model should be used sparingly to supplement internal development and succession-planning efforts.

To make external hiring successful, supply chain executives should use a combination of proactive recruiting methods. The overwhelming majority of companies in our study view executive recruiters as the most effective method for recruiting senior-level SCM professionals.

The beverage company mentioned earlier subscribes to this multipronged recruiting approach. It uses "headhunters" that specialize in the food and beverage industry to help fill managerial and department leadership roles, and military-transition recruiters to link veterans to supervisory roles. Supply chain executives work with their HR counterparts to thoroughly vet the capabilities, experiences, and cultural fit of candidates suggested by these external recruiters.

What it takes to win
It takes more than a standout talent like the legendary basketball player Michael Jordan or ice hockey's all-time top scorer, Wayne Gretzky, to build a dynasty. Senior executives need to surround their superstars with the right talent. And it doesn't happen overnight: Recall that the Chicago Bulls did not win their first National Basketball Association championship until Jordan's seventh season. Time, resources, and a comprehensive talent strategy that cultivates top prospects across the system into long-term franchise players are required to build and maintain a winning tradition.

The same goals and requirements apply to SCM talent management. Savvy supply chain executives recognize the role of depth charts, tailored training, short-term assignments, retention strategies, and outside hiring in augmenting their current leadership team, and they are using adaptations of these tools to groom future leaders and a highly capable support organization. Those who take inspiration from sports teams' talent-retention and succession-planning strategies will be able to develop the nucleus of a long-lasting dynasty of their own.

Note:
1. C. John Langley Jr. and Capgemini, 2015 Third-Party Logistics Study: The State of Logistics Outsourcing—Results and Findings of the 19th Annual Study (2014).

The authors would like to express their appreciation for the contributions of their late colleague, Dr. Robert L. Cook, the Jerry and Felicia Campbell Endowed Professor of Marketing and Logistics at Central Michigan University, to the research that formed the basis of this article.

Brian J. Gibson is Wilson Family Professor of Supply Chain Management at Auburn University. Sean P. Goffnett is Associate Professor of Logistics and Marketing at Central Michigan University. Zachary S. Williams is Associate Professor of Logistics and Marketing at Central Michigan University

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