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Companies develop programs to fast track in-house managers as fears loom of a talent crisis

By S. Adam Cardais
Staff Writer, The Prague Post
June 16, 2005


When the question was put at a packed seminar in Prague, the response was telling. "So how many of your companies have succession planning and leader development programs?" asked the speaker, professor James Craft of the University of Pittsburgh's Katz Graduate School of Business office in Prague. About five hands went up in a room of 50 people.

The June 1 seminar illustrated a common dilemma companies face in the Czech Republic. Many are keen on the concept of grooming employees for top jobs but few have taken the steps to implement programs that do this.

Two major Czech companies with very different backgrounds, mobile phone operator Oskar Mobil and power giant ČEZ, are now running with the concept in order to keep up with expected growth and deal with a looming talent crisis predicted by many business experts.

Oskar has had succession planning in place since 2002, but is now looking to grow the program, partly in response to new growth opportunities resulting from its takeover by UK-based Vodafone and increased employee mobility likely to result from being part of a much bigger international outfit.

This year Oskar extended the program from middle management down to what company representatives describe as the front-line organization, including sales representatives at retail branches. Talent should be identified at an earlier stage, they added.

Employees singled out as high potentials during Oskar's annual talent review sessions have the option of joining 12- or 24-month tailor-made programs.

"[These] programs are important to build the company for the future," said Francinne Hansen, Oskar's vice president of learning and growth, the company's euphemism for human resources. "Talent is something that needs to be prized and developed, and [that's] something that every organization struggles with. Every year we get better and better."

"Talent is something that needs to be prized and developed."

Francinne Hansen, vice president of learning and growth, Oskar
ČEZ, the biggest Czech-owned company, is in the process of creating similar programs. It launched a succession planning program and another to identify and develop high-potential employees in May, said Barbora Pencová, company human resources manager.

ČEZ has already started selecting candidates for year-long sessions, where they'll receive management and leadership development training. The initiatives were a response to the company's new focus on sales and marketing and rapid expansion. ČEZ has bought power companies in Romania and Bulgaria and is seeking other opportunities across southeast, Central and Eastern Europe. "The company is going through a transformation and expanding," Pencová said.

The company, which employs just under 23,000 people across the whole group, was also sparked into action by what many human capital experts perceive as a talent crisis resulting from an increasing number of managers nearing retirement age and a decline in university graduates.

The benefits of succession planning and leader development programs are difficult to quantify. Backers, however, argue the performance of some of the world's most successful companies speaks for itself. Leading multinationals such as General Electric (GE), Dell and 3M all have programs that delve deep into the companies to uncover talent. Such structures, which can involve years of commitment to a single person, serve the dual role of training employees to perform in their present post while preparing them to step into key roles in the future.

Foreign companies with branches in the Czech Republic have been quicker to transplant their home-grown programs. Carolyn Cooke, managing director of 3M Czech Republic, launched a program here drawing on her experience within the multifaceted, international company. Cooke said she will continue to build talent from within because it isn't available for hire.

The benefit is real for the employee as well as the employer. Grooming talented personnel with individual coaching increases job satisfaction and retention, said Michiel van den Berg, senior consultant of human capital advisory services and management consulting at Deloitte.

Grooming programs are also a more cost-effective way to fill vacancies than external searches, he said. When a top manager leaves a company, it costs nine times their monthly salary to hire someone new, and that's not even taking into account the costs of operational disruption and training, van den Berg added.

Yet very few Czech businesses, or companies worldwide, have grooming programs, and fewer have ones that work. The cost and difficulty of establishing effective frameworks is one reason why, according to experts.

Top management must be actively involved in and give their full support to the projects. "You simply must have the CEO in strong support, and he must 'walk the talk,'" said Craft, who specializes in organizational behavior, human resources management and management theory.

At Oskar, management has given top priority to grooming programs as a key function of the entire organization, not just the human resources department. Management at ČEZ was directly responsible for noticing the need to recruit and train new talent, said Pencová. The company recently spurned internal promotion to top management posts. Current CEO Martin Roman was brought in from engineering giant Škoda Holding and quickly recruited a raft of new, mostly young, managers in his wake.

While providing an incentive for some, programs can also have a cost. A policy that fast tracks some can leave others feeling left on the wayside. Oskar stresses the transparency of its program thanks to regular performance reviews. Pencová said ČEZ will make sure employees know programs are there to benefit them.

Employees may be wary, questioning whether the prospect of a fast-forward career path will hold up if the company they are working for is taken over. Polish-based Orlen, the new owner of the Czech Republic's biggest refinery and chemicals group, Unipetrol, underlined that point last week when it announced wholesale management changes in the mother company and subsidiaries, bringing in a raft of Polish managers. It's not clear whether recent takeover targets Oskar and Český Telecom will undergo a similar management earthquake.

— Petr Kašpar contributed to this report.



S. Adam Cardais can be reached at acardais@praguepost.com




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