Succession Planning "Thinking About Tomorrow Today"
In organizational development, succession planning is the process of identifying and preparing suitable employees through mentoring, training and job rotation, to replace key players - such as the chief executive officer (CEO) - within an organization as their terms expire. From the risk management aspect, provisions are made in case no suitable internal candidates are available to replace the loss of any key person. It is usual for an organization to insure the key person so that funds are available if she or he dies and these funds can be used by the business to cope with the problems before a suitable replacement is found or developed.
Succession Planning involves having senior executives periodically review their top executives and those in the next-lower level to determine several backups for each senior position. This is important because it often takes years of grooming to develop effective senior managers. There is a critical shortage in companies of middle and top leaders for the next five years. Organizations will need to create pools of candidates with high leadership potential.
Succession planning involves a careful balancing of the concerns and needs of a firm’s founding and senior managers, on the one hand, and its more junior investment professionals and managers, on the other hand. The founding and senior managers want to be properly rewarded for their efforts in building and growing the firm, and this may include rights to continue to participate in fund economics after these managers have begun to wind down their active involvement. These desires must be balanced against the need to provide increased economic benefits and firm governance rights to junior managers and investment professionals in order to develop the next generation of managers for the firm.
Definition
Succession planning can be broadly defined as identifying future potential leaders to fill key positions. Wendy Hirsh1 defines succession planning as 'a process by which one or more successors are identified for key posts (or groups of similar key posts), and career moves and/or development activities are planned for these successors. Successors may be fairly ready to do the job (short-term successors) or seen as having longer-term potential (long-term successors).'
According to Hirsh, succession planning sits inside a very much wider set of resourcing and development processes called 'succession management', encompassing management resourcing strategy, aggregate analysis of demand/supply (human resource planning and auditing), skills analysis, the job filling process, and management development (including graduate and high-flyer programmes).
Enforcing the succession plan:
A careful and considered plan of action ensures the least possible disruption to the person’s responsibilities and therefore the organization’s effectiveness. Examples include such a person who is:
• suddenly and unexpectedly unable or unwilling to continue their role within the organization;
• accepting an approach from another organization or external opportunity which will terminate or lessen their value to the current organization;
• indicating the conclusion of a contract or time-limited project; or
• moving to another position and different set of responsibilities within the organization.
Coverage
Organisations differ in size, scope and type, so it is difficult to point to any single model of succession planning. However, it is most common for succession planning to cover only the most senior jobs in the organisation, plus short-term and longer-term successors for these posts. The latter groups are in effect on a fast-track, and are developed through job moves within various parts of the business. This focus on the most senior posts - perhaps the top two or three levels of management - means that even in large organisations, only a few hundred people at any given time will be subject to the succession planning process. It also makes the process more manageable, because it is much easier to concentrate on a few hundred individuals rather than (say) several thousand. That said, however, many large organisations attempt to operate devolved models in divisions, sites or countries where the same or similar processes are applied to a wider population.
The role of HR
Succession planning needs to be owned by line managers, and should be actively led by the chief executive who has a key role in ensuring that it is given the importance it deserves by other senior managers; ensuring that there is a healthy pipeline of potential leaders is about nothing less than the future of the organisation. But it is not realistic for CEOs and those around them to have sole responsibility for this; they have neither the time nor the expertise.
The HR function therefore has a critical role in supporting and facilitating the process, not least in compiling all the necessary information on potential candidates. Any career move at senior level is a process of multiple dialogues, in which a senior representative from HR will collect views from senior line managers in an iterative fashion, testing, challenging and amending them as the dialogue goes on, making sure that all possibilities are covered, and maybe putting proposals for decision to a succession development committee. HR departments are of course also heavily involved in giving career advice and information to individuals, and assessing and advising on their development needs. The HR function is also centrally concerned in the design and management of assessment processes and information support, including the development and maintenance of computerised databases.
The Importance of Succession Planning:
Succession planning is an essential part of doing business, no matter how certain your future appears. It's not easy to put off planning when everything seems to be going so well. Now is the time to begin succession planning. Here are some reasons why it can't — and shouldn't — wait:
1. You can't plan for disaster.
2. Succession planning benefits the business now.
3. Succession planning gives your colleagues a voice.
4. A succession plan can help sustain income and support expenses.
5. Succession planning gives you a big picture.
6. Succession planning strengthens departmental relationships.
7. Succession planning keeps the mood buoyant.
Succession Planning Process:
STEPS:
I. Reviewing talent
The purpose of the talent review is to figure out the talent required to implement the business strategy and constantly strengthen the talent pool. The talent review and planning process helps identify talent for emerging roles in the organisation.
II. Planning the process
The bench strength of current and future leaders gives a competitive edge to every organisation. At Wipro, the succession planning programme is called Talent Review and Planning (TRP), and it is the most critical part of the organisation’s leadership building and talent management process.
III. Clear focus
It is a known fact that while most managements are interested in developing a pool of successors for key positions, they find it a difficult task to ensure the success of their efforts. Succession planning can get very complicated. Organisations must therefore have a clear focus.
IV. The training difference
Organisations are less vulnerable to leadership crises when there’s a shadow group of successors who are able and available to step into their shoes. Training plays a key role in succession planning. It is imperative to strategise, design and implement programmes to train future leaders.
Most organisations do skill-gap analysis of the selected candidates. A schedule is drawn for the prospective individual to acquire the knowledge, skills and competencies within a time-frame.
V. Just-in-time succession
There’s just-in-time succession, which maps existing competencies of the staff to fill an important position. Succession planning software uses competency analysis which lets companies understand the demand side of the equation with what their staff have to offer.
CASE STUDIES:
I. GE (General Electric Inc.)
In November 2000, General Electric Inc. (GE) announced that Jeff Immelt, the president and CEO of GE Medical Systems, would be the successor to Jack Welch, the Chairman and CEO of the company. Welch was to retire in September 2001, after a successful 41-year stint at GE.
The three candidates for the top spot at GE were Immelt, W. James McNerney, CEO of GE Aircraft Engines, and Robert L.Nardelli, president and CEO of GE Power Systems.
The succession planning by Welch for his post had started way back in 1994, when Welch, with help of Bill Conaty and Chuck Okosky, both vice-presidents, HR and Executive Development, created a list of essential qualities, skill and characteristics an "ideal CEO" should posses.
II. RANBAXY LABORATORIES (LTD.)
The case discusses the CEO succession planning controversy at Ranbaxy Laboratories Limited (Ranbaxy), India's largest pharmaceutical company. It describes the concept of succession planning and its importance in managing large companies (especially family owned businesses). The case describes how and why Parvinder Singh (Ranbaxy's promoter, also CEO) believed in running the business professionally and handed over the company's management to D S Brar (Brar), a professional (and a non-family member), amidst stiff opposition from family members. The case then details how Brar transformed Ranbaxy from a small Indian pharmaceutical company into a research based global pharmaceutical major.
It examines the reasons for Brar's decision to step down as the CEO and comments on his succession plan. The case concludes with a discussion of whether Ranbaxy's promoters would take over the company's management or continue to allow professionals to manage their business.
Click here to Download Free Training & Development Projects- http://www.managementparadise.com/mba-projects/training-development-projects/
In organizational development, succession planning is the process of identifying and preparing suitable employees through mentoring, training and job rotation, to replace key players - such as the chief executive officer (CEO) - within an organization as their terms expire. From the risk management aspect, provisions are made in case no suitable internal candidates are available to replace the loss of any key person. It is usual for an organization to insure the key person so that funds are available if she or he dies and these funds can be used by the business to cope with the problems before a suitable replacement is found or developed.
Succession Planning involves having senior executives periodically review their top executives and those in the next-lower level to determine several backups for each senior position. This is important because it often takes years of grooming to develop effective senior managers. There is a critical shortage in companies of middle and top leaders for the next five years. Organizations will need to create pools of candidates with high leadership potential.
Succession planning involves a careful balancing of the concerns and needs of a firm’s founding and senior managers, on the one hand, and its more junior investment professionals and managers, on the other hand. The founding and senior managers want to be properly rewarded for their efforts in building and growing the firm, and this may include rights to continue to participate in fund economics after these managers have begun to wind down their active involvement. These desires must be balanced against the need to provide increased economic benefits and firm governance rights to junior managers and investment professionals in order to develop the next generation of managers for the firm.
Definition
Succession planning can be broadly defined as identifying future potential leaders to fill key positions. Wendy Hirsh1 defines succession planning as 'a process by which one or more successors are identified for key posts (or groups of similar key posts), and career moves and/or development activities are planned for these successors. Successors may be fairly ready to do the job (short-term successors) or seen as having longer-term potential (long-term successors).'
According to Hirsh, succession planning sits inside a very much wider set of resourcing and development processes called 'succession management', encompassing management resourcing strategy, aggregate analysis of demand/supply (human resource planning and auditing), skills analysis, the job filling process, and management development (including graduate and high-flyer programmes).
Enforcing the succession plan:
A careful and considered plan of action ensures the least possible disruption to the person’s responsibilities and therefore the organization’s effectiveness. Examples include such a person who is:
• suddenly and unexpectedly unable or unwilling to continue their role within the organization;
• accepting an approach from another organization or external opportunity which will terminate or lessen their value to the current organization;
• indicating the conclusion of a contract or time-limited project; or
• moving to another position and different set of responsibilities within the organization.
Coverage
Organisations differ in size, scope and type, so it is difficult to point to any single model of succession planning. However, it is most common for succession planning to cover only the most senior jobs in the organisation, plus short-term and longer-term successors for these posts. The latter groups are in effect on a fast-track, and are developed through job moves within various parts of the business. This focus on the most senior posts - perhaps the top two or three levels of management - means that even in large organisations, only a few hundred people at any given time will be subject to the succession planning process. It also makes the process more manageable, because it is much easier to concentrate on a few hundred individuals rather than (say) several thousand. That said, however, many large organisations attempt to operate devolved models in divisions, sites or countries where the same or similar processes are applied to a wider population.
The role of HR
Succession planning needs to be owned by line managers, and should be actively led by the chief executive who has a key role in ensuring that it is given the importance it deserves by other senior managers; ensuring that there is a healthy pipeline of potential leaders is about nothing less than the future of the organisation. But it is not realistic for CEOs and those around them to have sole responsibility for this; they have neither the time nor the expertise.
The HR function therefore has a critical role in supporting and facilitating the process, not least in compiling all the necessary information on potential candidates. Any career move at senior level is a process of multiple dialogues, in which a senior representative from HR will collect views from senior line managers in an iterative fashion, testing, challenging and amending them as the dialogue goes on, making sure that all possibilities are covered, and maybe putting proposals for decision to a succession development committee. HR departments are of course also heavily involved in giving career advice and information to individuals, and assessing and advising on their development needs. The HR function is also centrally concerned in the design and management of assessment processes and information support, including the development and maintenance of computerised databases.
The Importance of Succession Planning:
Succession planning is an essential part of doing business, no matter how certain your future appears. It's not easy to put off planning when everything seems to be going so well. Now is the time to begin succession planning. Here are some reasons why it can't — and shouldn't — wait:
1. You can't plan for disaster.
2. Succession planning benefits the business now.
3. Succession planning gives your colleagues a voice.
4. A succession plan can help sustain income and support expenses.
5. Succession planning gives you a big picture.
6. Succession planning strengthens departmental relationships.
7. Succession planning keeps the mood buoyant.
Succession Planning Process:
STEPS:
I. Reviewing talent
The purpose of the talent review is to figure out the talent required to implement the business strategy and constantly strengthen the talent pool. The talent review and planning process helps identify talent for emerging roles in the organisation.
II. Planning the process
The bench strength of current and future leaders gives a competitive edge to every organisation. At Wipro, the succession planning programme is called Talent Review and Planning (TRP), and it is the most critical part of the organisation’s leadership building and talent management process.
III. Clear focus
It is a known fact that while most managements are interested in developing a pool of successors for key positions, they find it a difficult task to ensure the success of their efforts. Succession planning can get very complicated. Organisations must therefore have a clear focus.
IV. The training difference
Organisations are less vulnerable to leadership crises when there’s a shadow group of successors who are able and available to step into their shoes. Training plays a key role in succession planning. It is imperative to strategise, design and implement programmes to train future leaders.
Most organisations do skill-gap analysis of the selected candidates. A schedule is drawn for the prospective individual to acquire the knowledge, skills and competencies within a time-frame.
V. Just-in-time succession
There’s just-in-time succession, which maps existing competencies of the staff to fill an important position. Succession planning software uses competency analysis which lets companies understand the demand side of the equation with what their staff have to offer.
CASE STUDIES:
I. GE (General Electric Inc.)
In November 2000, General Electric Inc. (GE) announced that Jeff Immelt, the president and CEO of GE Medical Systems, would be the successor to Jack Welch, the Chairman and CEO of the company. Welch was to retire in September 2001, after a successful 41-year stint at GE.
The three candidates for the top spot at GE were Immelt, W. James McNerney, CEO of GE Aircraft Engines, and Robert L.Nardelli, president and CEO of GE Power Systems.
The succession planning by Welch for his post had started way back in 1994, when Welch, with help of Bill Conaty and Chuck Okosky, both vice-presidents, HR and Executive Development, created a list of essential qualities, skill and characteristics an "ideal CEO" should posses.
II. RANBAXY LABORATORIES (LTD.)
The case discusses the CEO succession planning controversy at Ranbaxy Laboratories Limited (Ranbaxy), India's largest pharmaceutical company. It describes the concept of succession planning and its importance in managing large companies (especially family owned businesses). The case describes how and why Parvinder Singh (Ranbaxy's promoter, also CEO) believed in running the business professionally and handed over the company's management to D S Brar (Brar), a professional (and a non-family member), amidst stiff opposition from family members. The case then details how Brar transformed Ranbaxy from a small Indian pharmaceutical company into a research based global pharmaceutical major.
It examines the reasons for Brar's decision to step down as the CEO and comments on his succession plan. The case concludes with a discussion of whether Ranbaxy's promoters would take over the company's management or continue to allow professionals to manage their business.
Click here to Download Free Training & Development Projects- http://www.managementparadise.com/mba-projects/training-development-projects/
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