By 2015, millions of baby boomers will have retired, leaving a significant gap in the American workforce.

And it's an issue that two out of three of SMBs are willfully ignoring. A mere 35% of SMBs have a succession plan in place, a recent report by the Aberdeen Group found.

"It all comes down to a lack of urgency among senior management," says Kevin Martin, research director in Aberdeen's Human Capital

Management practice and co-author of the report., "The Loomin g Leadership Void: Identifying, Developing and Retaining Your Top Talent." Additionally, he says, SMBs "lack awareness of solutions that are out there."

Building bench strengthSuccession planning is far more than grooming the next generation of the family members or senior managers for company takeover. SMB job functions, even at lower levels, often require very specific skill sets.

"It's about how to have the right supply of people for your organization when you need them," says Brian Wilkerson, national practice director for talent management at Watson Wyatt.

Training and succession planning go hand in hand, says Fran Luisi, principal at HR recruiting firm Charleston Partners. Many of Luisi's clients have focused succession planning on grooming people to step into specific roles. It's a step in the right direction, he says, but not enough. Organizations like to talk about having "names in the box," says Luisi, but the question is whether those people are ready to take over their potential new job function immediately.

"Succession planning is two-fold," he says. "It's learning and skills in the long-term and ... development [in the short-term] to have that 'ready in 24 hours' factor." (See sidebar, "Sleeping well at night."below)

Says Martin: "Succession planning is a combination of process, tools and disciplines that enable an organization to plan for anticipated leadership needs as well as identify, develop, retain and allocate key talent."

Best practices
Nearly 40% of best-in-class organizations maintain some sort of database of both "active" and "passive" successor candidates over the past year, the survey suggests. Seven in 10 plan to do so in 2008.

In addition, 58% have defined both "hard" and "soft" skills required for each position. More than one third plan to do so in the next year.

Best-in-class organizations measure the skills of successors and potential successors though analysis of key performance indicators on a regular basis. More than half measure KPIs on at least a twice-yearly basis.

While many believe that internal hiring is the way to go, "it needs to be a blend" of internal and external, Luisi says. External hires can bring in fresh ideas and a new perspective in a way that those immersed in a corporation's culture are sometimes unable or reluctant to do.

Indeed, "almost half of our best-in-class companies allow access to employees across divisions rather than limiting internal search to each business unit," says Jayson Saba, research associate at Aberdeen and co-author of the report. 

 The old "one-to-one" idea of succession planning is a thing of the past, Wilkerson says. "[Companies] need to create a set of options to build that next generation of leaders."

Tech tips
As companies grow increasingly familiar with using technology for day-to-day business needs, they should consider automating the succession planning process, Martin and Saba suggest.

While the majority (64%) of organizations surveyed by Aberdeen currently use a paper-based succession planning solution, more than half intend to go paperless in the next year.

Automating the process can be as simple as maintaining a computer file or Excel spreadsheet on each employee in a leadership role. Update the information regularly with the employee's latest tasks, scores on performance reviews and performance metrics, and keep track of employees in other departments with similar skill sets.

New technologies such as high-quality data organization charts or in-house tracking metrics can also make the process much more streamlined for larger SMBs (300 employees and up).

But most of all, it's a matter of action. Retirement and labor gaps are looming, whether you want them to or not.

"Don't get caught up in the term 'succession planning,'" Martin says. "Forget about that - get caught up in what succession planning is supposed to do."

Have a succession planning question or experience to share? Send them to McLean.Robbins@sourcemedia.com, and we'll address them in a future Web exclusive.