Succession Planning

There is a considerable body of literature on succession planning. Walter Mahler (1973) wrote a book entitled "Executive
Continuity." It was the first book to completely explore the subject. In the 1970s, Mahler was instrumental in shaping the
General Electric succession process, which became the gold standard of corporate practice. Companies need to develop their
talent to compete in a global market. Top management is mainly responsible for the growth and survival of the organization.
To discharge such responsibilities, each organization needs to plan management succession. All organizations, no matter
their size, need succession planning. Management succession planning is the process of ensuring that capable managers are
available to fill vacant managerial posts. Succession planning is the process used to identify replacements for high-level
positions. It helps increase the availability of candidates prepared to fill critical roles when the senior leaders leave or retire.
Succession planning involves organizing leaders, managers, and protocols to ensure a smooth power transition and that the
new leadership is prepared for their new roles.

Three questions need to be answered: first, are there enough potential successors available-a supply of people coming
through who can take key roles in the longer term? Second, are they good enough? Third, do they have the right skills and
competencies for the future? Succession planning can be seen in terms of identifying successors for key posts and then
planning career moves and or development activities for these potential successors. It is a business strategy companies use
to pass down leadership roles to another employee or group of employees. It ensures that business continues to run
smoothly and without interruption after important people move on to new opportunities, retire, or pass away.

Succession planning is done in different time frames to ensure the availability of the right managerial personnel at the right
time in the right position for continuing organizational strength. Most organizations plan for immediate requirements that
match their budgets and business plans. This short sightedness leads them to an alarming situation when they find a
shortage of managerial manpower to man different positions in the organization, resulting in organizational collapse. To
avoid this, good organizations try to plan succession in three time frames: immediate, intermediate, and long-term.
Succession planning enables organizations to identify talented employees and provide education to develop them for future
higher levels and broader responsibilities. Unfortunately, many companies still struggle with creating a formal process aimed
at identifying, developing, and retaining high-potential people within the organization.

Elements of succession planning

Succession planning is not about replacing an existing employee. The purpose is to prepare the organization and develop its
"bench strength" for future organizational requirements. Organizations should communicate to all employees that they are
always looking for talent, especially from within. Communicate that the organization is actively engaged with succession
planning as a means to not only support business continuity but to invest in individuals' professional growth with the
organization. According to Jones (2020), there are a few elements managing a succession plan and these are: a) identifying
key positions for which a succession plan is necessary, b) identifying the successor or successors, c) identifying job
requirements, d) building competencies, e) assessing progress.

It is essential that the organization that creates a succession plan and invests in the development of employees assess its
progress toward the intended outcome. It has been correctly observed that succession planning is about "what is next?" and
not just "who is next?" There will be one set of competencies (i.e., knowledge, skills, and abilities) for each position.
However, in creating development plan to build the competencies of succession candidates to be ready for the intended
future role, there will be different development plans for each succession candidate (Shand, 2010). The organization may
have more than one employee who has demonstrated the knowledge, skills, potential, and interest to develop to a level of
additional responsibility. The commitment to the process and abilities of the succession candidate are integral to identifying
who to develop.

Steps of Succession Planning

The succession planning process must look at building the competencies and skills for current and future organizational
needs. Succession planning is not about replacing an existing employee. The purpose is to prepare the organization and
develop its "bench strength" for future organizational requirements. There are five elements to managing a succession
process Bhattacharyya (2008) states that succession planning involves a few steps, which are discussed below: a) The first
step is to prepare and develop a management staffing plan and plan for all anticipated needs in different time frames. b) The
second step is staffing and development. Staffing is concerned with recruitment, selection, and placement. Development of
managerial personnel is done through training, job rotation, projects and board assignments, performance appraisal,
counseling, and guidance. c) The third step is to ensure a congenial organizational environment to retain the desired
managerial personnel. d) The fourth step is to develop a good performance appraisal system to get feedback on managerial
performance and to review their progress and shortfalls. e) The preparation of the management resource inventory is the
final step in succession planning. Such an inventory contains details of personnel data, performance records, skills, potential
career goals, and the career paths of managerial personnel.

Succession planning stages include being proactive about unforeseen departures, engaging stakeholders early in the process,
choosing employees thoughtfully based on skill and potential, and sharing frequent feedback throughout the
implementation of the development plan.

Fundamentals of Succession Planning

Most organizations found that they must rely on their employees as the only way to become stable in this competitive age.
Organizations need to develop their employees' knowledge, skills, talents and capabilities. Many organizations use
succession planning to develop and maintain powerful leadership and other key employees to make sure that they address
all the skills and competencies required for the economic environment.

Succession planning is the process whereby an organization ensures that employees are recruited and developed to fill each
key role within the company. In this process, managers ensure that they will never have a key role open for which another
employee is not prepared.

The fundamentals of succession planning include support from the CEO, building a development mindset in the organization,
an approach that is not just top-to-bottom but also bottom-to-top and cross-functional, aligning the succession plan with the
overall strategy of the company, ensuring data-driven decision-making, and assessing the performance culture on a regular
basis.

To make succession planning effective, it must be integrated with other processes of talent management, including
performance management, training and development, compensation, and assessment; succession planning needs to be
linked to competency management; it must be integrated with career development tools; and it is equally important to
automate the succession planning process for greater efficiency and to minimize operational risk.

Factors affecting succession planning

Most organizations have found that they must rely on their employees as the only way to become stable in this competitive
age. Organizations need to develop their employees’ knowledge, skills, talents, and capabilities. Many organizations use
succession planning to develop and maintain powerful leadership and other key employees and to make sure that they
address all the skills and competencies required for the economic environment (Butler, 2002). One of the human resource
tools that can help meet the current and future needs of organizations is succession planning. Succession planning is a
helpful approach to finding the appropriate people who are needed for leadership positions or other key positions in
organizations.

Osibanjo Omotayo Adewale (2011) developed a theoretical framework for succession planning. This framework consists of
six variables, such as talent retention, turnover rate, career development, supervisor's support, organizational conflicts, and
nepotism. He explained the relationship among these variables regarding the survival of organizations . Sohu and Mirani
(2020) conducted a study in Pakistan and found that there were three independent variables, such as coaching and
mentoring, training and development, and performance management, that affected the effectiveness of one dependent
variable, succession planning. Sherman (2010) asserts that a good number of factors must be considered when making a
succession plan. These factors are: supply of internal candidates; talent development; multiple candidates; retention;
diversity; and a team approach.

Shadi Ebrahimi Mehraban (2011) conducted a study in the private commercial banks in Iran and found a good number of
factors that influence the successful implementation of succession planning. There are: training, management support,
clarifying the career path, creating a positive vision, a strong organizational culture, technology advancement, a flat
organizational structure, and the financial conditions. For example, a strong organizational culture that provides values,
beliefs, standards, and paradigms for all employees also affects effective succession planning. Financial conditions affect the
implementation of effective succession plans. For example, having enough budgets for human resources is one of the most
important conditions for training people. For implementing a successful succession planning system, there a need lot of
support from the managers.
Who is Involved in Succession Planning? HR leaders or senior leaders play a major role in making an organization's
succession plan. Management's commitment to succession planning means that supervisors will mentor employees to
transfer knowledge and expertise. The HR department plays a crucial role in Succession planning. They advise managers to
identify vulnerable positions that may soon become vacant. Board members may also be involved in the succession planning
activities for the top positions, including CEOs, in a company. The role of those involved is to identify positions that may be at
risk and then begin the planning process to identify successors and possible skills gaps. In addition, those involved in
succession planning need to consider how these efforts will be communicated to the organization and its staff members,
which can lead to one of the drawbacks of succession planning. Those involved in the succession planning process should
craft their communication messages carefully to focus on why certain positions are considered to be key, the skills and
requirements necessary for those positions, and the process to be used in finding successors.

Advantages of Succession planning

The goal of succession planning is to ensure that a company is prepared for the future. To do so, organizations recruit new
talent, or train internal candidates, who will eventually move into a leadership position once the current one leaves.

Protection from Unexpected Situations: Effective corporate succession planning increases the availability of capable
individuals who are prepared to assume such roles as they become available. Succession planning is essential for
keeping your organization moving in the right direction even when several key employees or staff quit, retire, or
move on for other reasons. Succession planning protects the company from the chaos of uncertainty when a leader
is expected to retire or suddenly resigns, is dismissed or experiences bad health. Succession planning should begin
long before the departure of leadership to ensure the company does not experience the pitfalls of a sudden
leadership change.
Clarity and Direction: Succession planning is an important part of human resource planning. It helps eliminate
confusion as to who will carry on the legacy of the business when you are no longer available to make decisions.
Effective succession planning brings advantages for both employers and employees.
Enhanced Self-Esteem and Job Satisfaction: Employees who know that the next role awaits them receive a boost in
self-esteem and self- respect. This enhances their efficacy and value as an employee. An employee can know the
organization's plans for the next potential opportunity, and this will reinforce an employee's desire for career
development and career opportunities. They know that there is a chance for advancement and possibly ownership,
which could lead to more empowerment and higher job satisfaction. This development is one of the things that
employees want most from their employer.
Employee Self-Awareness and Development: An employee can identify the skills, experience, and development
opportunities necessary to help him become prepared for advancement when the next job opportunity turns up. The
employee's value is shared with the rest of the organization so that if an opportunity comes up, the managers can
consider the employee to fill the role.
Enhances Organizational Performance: Employers benefit from succession planning as well. An employer can rely on
staff to carry out the mission and the vision and accomplish the goals of the organization. The loss of a key employee
can undermine an employer's ability to accomplish these important objectives. The employer needs to prepare
employees to step into roles as the company grows and expands its offerings and services. Effective, proactive
succession planning leaves your organization well prepared for all contingencies.
Strengthens Leadership Bench: Successful succession planning builds bench strength. Thus, one of the benefits of
succession planning is reduced risk associated with a loss of experienced leadership.
Boosts Morale and Engagement: Succession planning is also an office morale and engagement booster. Grooming
employees for their future roles by giving them more complex tasks and investing in their growth keeps them
focused, motivated, and loyal to the company.
Proactive Approach: A formal succession planning process is a proactive approach to filling a top position. It helps
HR professionals anticipate problems in the process before they get started. It fosters cross-functional development
and facilitates the integration of HR planning components, processes, and procedures. This is very important to
avoid negative and dysfunctional situations.
Reduces Costs: Effective succession planning activities have a positive effect on performance management, not only
because they make sure that key positions are filled with competent workers, but also because they save money on
hiring and training people from the outside, which can be much more expensive than promoting from within.
Improves Strategic Planning: An important benefit of strategic succession planning is identifying in advance where
there may be gaps between what employees need to know and what they currently know. The gaps may be based
on current needs for key positions and the lack of employees with the required skills, as well as on a look into the
 future. Proper succession planning benefits shareholders of public companies, especially when the next candidate
for CEO is involved in business operations and is well respected years before the current CEO retires. Also, if
investors observe a well communicated succession plan, they won't sell the company's stock when the CEO retires.
Key Steps in the Succession Planning Process: Succession planning is a four-step process that HR managers use to
determine their organization's leadership needs now and in the coming years. It involves making a strategic
leadership human resource plan, building long-term relationships with potential successors, and giving all key
stakeholders a sense of direction.

Succession Planning Challenges

Successful succession planning builds bench strength. Thus, one of the benefits of succession planning is reduced risk
associated with a loss of experienced leadership, Succession planning is also an office morale and engagement booster.
Grooming employees for their future roles by giving them more complex tasks and investing in their growth keeps them
focused, motivated, and loyal to the company. Succession planning is important for any business focused, motivated, and am
of capable and qualified staff members to move into key roles as they become vacant due to retirement or attrition. Lacking
a successful plan is dangerous. Although succession planning offers several benefits, businesses need to be aware of the
drawbacks. When assessing the advantages and disadvantages of succession planning, it is crucial to take the disadvantages
seriously. The company must be prepared to manage its weaknesses to reap the full benefits of succession planning.
Effective succession planning is a difficult task. John B. (1994) indicated that succession planning faces some challenges.
These challenges fall into two categories: challenges with the process and challenges with the technology.

a) Integration of succession planning with other HRM functions: Integrating succession planning with other processes
is the main challenge that companies are facing. Challenges with making the process work include the inability to
locate or create a pool of active and passive candidates and a lack of interest from senior executives.
b) Lack of assessment tools: A study indicated that it is difficult to make effective succession planning due to a lack of
assessment tools, succession planning tools, and career development tools (Amato, 2013). These concerns in
succession planning represent a broader challenge in human capital management, i.e.; getting the talent needed and
addressing the talent requirements for the future.
c) The high cost of poor succession planning: Many large companies fail to pay enough attention to their leadership
pipelines and succession practices. That leads to excessive turnover at the top and destroys a significant amount of
value-close to $1 trillion a year among the S&P 1500 alone (Nagel and Green, 2021). There is a high cost to poor
succession planning. The biggest costs are underperformance at companies that hire ill-suited external CEOs, the loss
of intellectual capital in the C-suites of organizations that executives leave behind, and, for companies promoting
from within, the lower performance of ill-prepared successors. The solution isn't that complicated: Firms need to
start succession planning well before they think they need to; make sure they identify and develop rising stars;
appoint the most promising executives to the board to help prepare them to take on the top job; and look at both
internal and external candidates.
d) Data management and analysis: One of the disadvantages of succession planning is data management. Companies
must prepare to assess all data to ensure they identify the best individuals for the job, adequately prepare
successors, and assuage any concerns others may have about the transition of power.
e) Top management support: Another challenge with succession planning includes a lack of support from top
management. Succession planning needs to be aligned with the business objectives of the company. CEO and other
senior management involvement is a critical step. Succession planning will not become a companywide initiative if
the management is not involved and plays an active role in ensuring a more cohesive succession.
f) Marinating employee morale: One of the side-effects of succession is the negative impact it can have on company
morale. Deep down, everyone worries about retirement, or redundancy. And the taboo of talking about moving on
in one way or another can impede open discussion and threaten the importance placed on succession planning in
organisations. To be effective succession planning needs to be a simple, open process. Every organisation should
openly discuss who's taking the reins next.
g) Indecision who to promote: It is difficult to decide whom to promote when the number of qualified people exceeds
the requirement. But with careful planning, it is possible to put the right person in the role without upsetting your
other candidates Identifying potential candidates early in the succession planning process and proactively arranging
appropriate learning and development courses is one possible solution to this painful problem.
h) Lack of trust: Lack of trust is a great challenge. Trust is one of the challenges of succession planning for sensitive
roles like the CEO. The CEO may not always trust others to run the business as they do. With this belief, paranoia will
set in and make it difficult for the CEO to take steps toward planning for succession. Leaders need to accept the fact
 that someone will do a great job when it's time to take charge. Giving control to a competent and worthy heir can
and should be very freeing. A leader may find it challenging to completely commit to the idea of succession if there
isn't a culture of trust and confidence in the organization. It becomes impossible to retain anyone who appears even
marginally capable of doing so when someone is convinced that no one can step into their shoes.
i) Understating the successor: A leader may sometimes fail to give a potential successor the resources and support
needed to do well in the role. A controlling, insensitive, or cynical leader can hurt a newcomer's morale, making it
much harder for them to prepare for the job. After proving their worth, a candidate should be given the freedom to
carve out their own path towards established corporate goals, instead of being put in a restrictive box that stunts
their growth and sets them up to fail.
j) Choosing the wrong successors: Sometimes, succession is hampered by bad selection. An insecure leader might
choose a safe, unthreatening, and therefore less-qualified successor. A leader might make the wrong pick due to
disengagement from the succession planning process. The right hire will come with the skills and talents needed to
lift up the whole organisation and keep their predecessor's legacy alive.
k) Resisting Bias: The temptation to hire someone who fits a certain stereotype can override logical, skill-based thought
processes. Leaders tend to search for successors who resemble themselves. Men tend to pick men; women tend to
choose women; scientists tend to pick scientists; and so forth. The problem with the "like me" bias is that you might
overlook the talent your business needs because certain people do not fit your mold. Planning ahead to identify
characteristics required for a successor will ensure the candidate with skills best suited to the job (beyond their age,
gender, and background) will be hired. Write up a description of the characteristics and skills a person would need to
fill the position effectively. Then search for candidates based on their attributes. You might be surprised by which
candidates rise to the top (Walsh, 2021).
l) Excessive reliance on outside sources: Large companies' excessive tendency to hire leaders from outside is one of
the biggest problems with succession practices. They do not develop good successors within the organization.
Another negative by-product of poor succession planning and excessive outside hiring is rising CEO compensation as
companies compete for the same top executives. Maintaining company morale is difficult. One of the side effects of
succession is the negative impact it can have on company morale.
m) Inadequate budget: Without clarity on the best way forward, organizations are likely more hesitant to funnel
resources into succession planning and this is one potential barrier preventing organizations from reaching their true
potential. Many organizations do not have the budget to develop qualified human resources. Inadequate training
and development will result in employees who are not ready for a promotion.
n) Family considerations: Succession in family businesses takes the form of transfer from one generation to another,
but succession planning appears to be left to chance by many firms. This neglect of succession planning and the
emotions generated by the process make owners ill-prepared for succession (Frishkoff, 1994). Most family
businesses do not survive to the third generation. A well- designed succession plan can help avoid this fate. In a
family-owned company, succession can be particularly problematic because business mixes with family dynamics.
Due to the relationships and feelings involved, succession planning in family companies may be particularly difficult.
This difficulty is increased by the fact that most individuals are uncomfortable talking about matters like aging,
mortality, and their financial affairs, even with their immediate family. Family members should be given the
opportunity to learn about the company and decide if they want to be a part of it while in turn being evaluated for
leadership potential. There are also other considerations, such as tax planning and equity transfer between
generations.
o) Team Approach: No executive should be fully responsible for choosing a replacement (Sherman, 2022). A succession
plan is a project for the firm and its board of directors, not for a specific individual. You don't want to hire a carbon
copy of a departing executive, so be aware of the precise skill set, knowledge base, and traits you're seeking (these
may be different or similar to the individual who's leaving).
p) Poorly conducted succession planning: A poorly conducted succession planning process will lead to poor decisions,
disharmony, and ultimately poor company performance as well (Minto, 2021). Making poor decisions is never a good
practice, and this will happen if proper thought, time, and consideration are not applied.
q) Unawareness of personality factors: These and other challenges must be addressed so that a company has a
successful transition of leadership. Failing to do so may mean the failure of the business. Many of the issues in
succession planning mentioned here can be linked to the leader's personality features. A stable, agreeable leader will
allow things to move forward smoothly, whereas deep fear, pride, and mistrust can sabotage the peaceful transfer
of power, hurting an entire workforce from the top down. This is why development and insight are crucial for
leaders. Executives who "know themselves" and are enlightened about how they may be derailing succession plans
can choose better behaviors for the good of their colleagues and their own legacies. We all have room for
 improvement in our self-awareness. When leaders take honest inventory of their own personalities, they're more
able to secure a graceful retirement, create succession plans in the best interest of their organizations, and cultivate
the talent that's most worthy of assuming the helm.

Book Question solve

Can you suggest some ways of making human resource planning more effective?  To make human resource planning
more effective, you can: align HR strategies with business goals, conduct regular workforce analysis, utilize gap analysis
to identify skill gaps, implement robust succession planning, foster employee development through training programs,
leverage data analytics, actively engage leadership in the process, and regularly review and adapt plans based on
changing business needs; all while ensuring open communication and collaboration across departments.

Where does employee retention fit with HRP?  Employee retention is a key component of Human Resource Planning
(HRP), as it is considered a critical factor in ensuring an organization has the necessary workforce to meet its future
needs by proactively keeping valuable employees from leaving, thus minimizing recruitment and training costs
associated with high turnover.

What would happen in absence of HRP?  Without Human Resource Planning (HRP), a company would likely face
significant challenges like difficulty predicting future workforce needs, inability to adapt to changing market demands,
potential overstaffing or understaffing issues, lack of skilled employees due to poor recruitment strategies, and a general
inability to effectively manage employee development and career progression, potentially hindering overall business
growth and performance.

Are there any best practices for succession planning? 

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