Finance’s succession woes

MANY FINANCIAL services organisations react in a ‘knee jerk’ fashion to the departure of a senior executive and resort to conducting expensive searches offshore, despite claiming to have succession plans in place and the existence of qualified candidates already in Australia, according to an executive search firm

MANY FINANCIAL services organisations react in a ‘knee jerk’ fashion to the departure of a senior executive and resort to conducting expensive searches offshore, despite claiming to have succession plans in place and the existence of qualified candidates already in Australia, according to an executive search firm.

The cost of recruiting a new employee, as opposed to promoting from within, was 158 per cent of that person’s salary, which included the damage it did to client relationships, the time involved and the training needed, said Catherine Andersen, managing partner for Highland Partners.

“Companies need to think about how the succession planning dividend affects the bottom line when there is a pool of excellent talent in Australia, many of whom have good international experience and could fill these positions,” she said.

“In addition, there has been a flood of highly experienced expatriates returning from overseas post September 11. These candidates are being overlooked as there is a real ‘grass is greener’ mentality. 80 per cent of briefs we take have at least one offshore candidate on the shortlist.”

Looking offshore for a replacement could also be damaging to employee morale and could result in more senior executives leaving due to being overlooked for the position, according to Andersen.

“However it’s a balance – we’re not saying that looking offshore is a bad thing. It’s just got to be balanced with good internal succession planning programs and be a last resort.”

Another issue was that a lack of mentoring existed within financial services organisations in Australia, said managing partner Alexandra Goodfellow.

“There’s a distinct ‘she’ll be right’attitude here, whereas in the US and UK, for example, employees in investment houses are involved in mentoring programs where their career is nurtured and they are guided through the ranks,” she said.

“What we see here, however, is that companies have become so lean their whole focus is just about getting deal done, and everything else tends to get sidelined.”

Another symptom of ineffective succession planning was the increasing emergence of the ‘counter offer’– when an employee resigned and the organisation offered them more money and perks to stay, according to Goodfellow.

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