CSCMP's Supply Chain Quarterly
January 21, 2019
Forward Thinking

How to plan for future supply chain leadership

With the "baby boomer" generation retiring and demand for supply chain skills outpacing supply, companies without a well-considered succession plan risk being left without leaders for crucial supply chain roles.

The United States' population is aging, putting the workforce at risk of losing some of its most experienced workers to retirement. According to the Centers for Disease Control and Prevention (CDC), nearly 24 percent of the total U.S. workforce will be 55 or older by 2018, compared to 18 percent in 2008.

Supply chain management is one of the most vulnerable industries when it comes to this changing employment landscape. As the space quickly grows and evolves, hiring managers are recruiting talent of all experience levels to fill skills gaps across their organizations.

To keep up with the growing demand for supply chain leadership, companies need to have a succession plan that helps them identify and develop new leaders who can replace existing leaders as they transition out of the company. Unfortunately, most have no such plan in place. According to a recent study from the American Management Association, only 18 percent of managers and executives have a succession plan in place to respond to a sudden loss of key executives—not nearly enough to keep business productivity up as people retire, despite the added number of supply chain undergraduate and graduate programs.

Proactive succession planning and a thoughtful recruitment plan are vital to the long-term success of any organization. But before a company can even begin to put recruitment and development efforts into place, it needs to have a clear vision of what type of skills it needs. The following three steps can help with that process.

  • Make your mission clear. To get started, define an organization or team mission that identifies the specific objectives of your vertical, then use that mission as the foundation of your succession plan. An example of a mission may be: "Our goal is to provide quality service to customers while using technology to be sustainable." Keeping your objectives at the forefront of your succession plan will be a constant reminder to your human resources (HR) department of what is important to your organization. From there, you can begin developing your succession road map.
  • Engage stakeholders across the board. Succession planning should involve team members beyond just the HR department. You want to be sure executives like the CEO, CFO, and supply chain team managers are also invested in the process. Having input from all affected shareholders is vital to understanding the keys to overall success for your organization and will allow you to look for the skills you will need in the future.
  • Look toward the immediate future. To be most effective, you must understand the dynamics and skill sets of your current team and prepare for potential staffing changes over the next year. For example, you'll need to think about things like who may be getting ready for retirement, who will be looking to move up the ranks soon, and where potential holes will be as people transition out of their current positions. Once you have a good grasp of which employees or roles you may need to replace or fill, you can determine whether you need to train existing talent or recruit new talent.

After laying this foundation, one of the most important steps you can take in creating a succession plan is to understand and further develop the strengths of your current staff. To accomplish this, consider taking the following steps:

  • Evaluate current skill levels. Look at your current employees' skills and use a numeric scale (for example, 5=excellent) to evaluate their performance as part of their annual review. Five- or seven-level scales are the most common and allow you to see exactly how an employee is performing, although for it be most effective, each number should have a corresponding detailed description of that number's representation. Doing this will help determine where internal candidates stand and help employees grow their skills, so they can continue to move up. Providing measurement tools and growth opportunities to current employees will also help reduce turnover by making employees feel more connected to the development process and by giving them confidence that their employer is invested in the future of their career.
  • Provide regular training. Regular training and development opportunities, especially those that focus on leadership and management, are a vital part of any succession plan. They provide your internal talent with the tools they need to move into positions that may be vacated in the coming months and years. When it comes to developing these training programs, it is not necessary to go it alone. Industry associations, for example, frequently provide learning and professional development opportunities, such as classes or workshops, that can be leveraged to develop your internal team.
  • Reduce turnover. High turnover rates can result in organizational inefficiencies, so it is crucial to examine turnover rates and determine their root cause. The logistics industry, for instance, is known to have turnover because of salary concerns, a desire for a better work-life balance, and a lack of regular training. To properly prepare for succession, employers must not only address and resolve conditions that contribute to high turnover but also focus on creating a positive work environment with competitive salaries and benefits packages.

While it's ideal to look internally, the truth is that sometimes you must go outside your organization to find the right person to lead your logistics or supply chain organization in the future. With senior leadership potentially approaching retirement, partnering with outside resources, such as a recruiting firm, can help you fill important roles. Here are some additional steps that can help you attract top talent.

  • Use social media. Tools like LinkedIn and the new "Jobs on Facebook" feature helps identify the right talent for your needs, using either a basic search or industry-specific group pages. You can see the discussions happening in real time and interact with engaged, informed talent through online conversations or targeted videos showing what makes your company unique.
  • Leverage professional trade organizations. Companies can work with trade organizations to meet talent, either through the organization's website or at trade organization-sponsored job fairs and other events. Professionals who are deeply involved with trade organizations are frequently the best ones to target because they are committed to long-term careers in the industry and are likely very knowledgeable.
  • Partner with educational institutions. Working with the supply chain or business programs at universities to recruit college graduates can help you find those hard-to-attract millennials. A few top schools to consider are those included in Gartner's "2016 Top 25 North American Supply Chain Undergraduate Programs" report. By hiring talent directly out of college, you can get an early sense of the candidates' capabilities and build your workforce from the ground up to ensure that your future supply chain leaders have the right management skills.

Once you have attracted the attention of job seekers, you need to choose the right candidates and make sure they end up at your company. To weed out unqualified candidates from the outset, provide a detailed definition of the skills and experience needed for potential employees to excel at your company. This means outlining the day-to-day responsibilities of a particular role in addition to what will be needed for long-term success. It will help to look back to your succession plan during the interview process to understand the diverse traits a leader-in-training will need to someday take on a high-level role.

Finding the right talent can be difficult no matter the employment situation, but in today's candidate market, a best-fit candidate can be challenging to find. When you do find the right candidates, you will need to make them an appealing offer quickly or risk losing them to a competitor. Know the salaries in your area and what kinds of benefits packages your competitors are offering. To help understand what to offer potential employees, use tools like the Ajilon Salary Guide to understand how you are stacking up and what candidates are looking for.

Succession planning requires a long-term, thoughtful approach that is flexible and capable of responding to a quickly changing talent landscape. By using these best practices for monitoring employee skills and engaging outside talent, you will be able to build a team of great future leaders.

Tisha Danehl is a vice president for Ajilon, a specialty recruiting firm.

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