Employee development also has applications in succession management. At this writing, decision makers in public, private, and nonprofit organizations are scurrying to prepare as members of the so-called baby boom generation approach retirement age. Organizations offering early retirement packages are already feeling the need to replace many of their most experienced workers.
The effects of the problem in the United States are widely known. Labor economist Douglas Braddock (1999) noted that "over the 1998–2008 period, more job openings are expected to result from replacement needs (34.7 million) than from employment growth in the economy (20.3 million)" (p. 75). By one estimate, about one-fifth of the largest U.S. companies are already beginning to lose up to 40% of their senior executives (Caudron, 1999). Perhaps not so well known is that aging-related issues, of which succession management is but one, are global in scope. Over the next 20 years, workforce replacement needs will emerge as a key concern in all nations of the developed world and in most nations in East Asia, Southeast Asia, and Latin America. This is significant for organizations that do business internationally.
Many principles that apply to employee development and individual employee career management and development, which are usually driven from the bottom up with employees taking the lead, are also applicable to succession management, which is usually a top-down process initiated by management. Employee development plays a key role in both employee life-career development and succession management. It is through employee development that individuals are prepared for a longer-term future, perhaps extending beyond the next job or position.
Rothwell (2000) supplied one conceptual model for establishing a succession management process. The model consists of a series of steps, which begins with decision makers' commitment to installing the system. Next, analyses of the work and competencies necessary for current work success are followed by evaluations of individual performance. Similar analyses are conducted for the work and competencies needed for future success, followed by evaluations of individual potential to meet those needs. This model thus reveals two gaps: one between current competencies and performance and a second between the competencies needed for the future and the individual's potential to acquire them. Gaps are pinpointed and employee development activities are planned to narrow those gaps. The last step of the model is an evaluation of the succession management effort.
Some organizations have established leadership development programs as a focal point for accelerating the development of so-called high-potential employees (Rothwell & Kazanas, 1999). High-potential employees are defined in different ways, depending on the organization, but are commonly thought of as exemplary performers who may be capable of advancing horizontally (across a continuum of professional competence) or vertically by two or more levels in 5 years or less. Competency identification, modeling, and assessment are keys to these programs.
Employee development, individual career management, and succession management processes must all work together. Employee development efforts may reveal individual goals, strengths, and areas for development, but a succession plan provides direction for productive and effective action.