Ensuring the whole management team of a firm identify the impact of properly crafted succession plan: The effects of its presence and absence on business continuity and competitiveness.
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Business Case For Succession Planning
1. Business Case
for
Succession Planning
Dr. Elijah Ezendu
FIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM,
PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr
2. Learning Objectives
At the end of the course, participants should be able to do the
following:
1. Identify the role of succession planning in ensuring business
does not cease to be a going concern.
2. Identify the problem of overindulgence in talent war, as a
means of using outsiders for every key position.
3. Identify the drivers of changing nature of work and their
impact on organisational structure as well as implications for
succession planning.
4. Explain the implications of business environment dynamics
for business survival.
5. Identify how the management of succession can serve as
terrific catalyst in enlivenment of business plan for
achievement of organisational objectives.
3. “A good plan is like a road map: It shows
the final destination and usually the best
way to get there.”
- H. Stanley Judd
4. What is Succession Planning?
“Succession Planning is the systematic
identification and professional development
of internal talent. It’s goal is to cultivate
internal human capital in preparation for
assuming leadership roles and other key
positions that may become vacant due to
retirement, expected or unexpected
separations.”
- LaCoya Shelton-Johnson, Talent Management & Succession Planning
5. “A means of identifying critical management positions,
starting at the levels of project manager and
supervisor and extending up to the highest position
in the organization. Succession planning also
describes management positions to provide a
maximum flexibility in lateral management moves
and to ensure that as individuals achieve greater
seniority, their management skills will broaden and
become more generalized in relation to total
organizational objectives rather than to purely
departmental objectives.”
Source: Norman Carter, Guaranteeing Management’s Future
Through Succession Planning
6. Succession Planning is the link between
strategic planning and workforce
planning, wherefore distinctive
corporate objectives must be explored
and analyzed in order to reengineer
workforce planning for preparation of
people to take over leadership batons at
various levels of an organisation.
7. C-Level Succession Planning
This focuses on identifying and preparing pool of
potential successors for filling key positions at
the top management echelon.
8. Multi-Level Succession Planning
This has a broadly designed succession
framework spanning many levels and in
some cases stretching from Supervisorial
stratum to the Chief Executive Officer, with
the intention to provide for every key
position.
9. “Leadership succession planning is a
fundamental part of the strategic
planning process and must be linked to
the organization’s business plan and the
organization’s workforce planning and
talent development.”
- A.J. Lindemann
10. Intellectual Capital drives corporate
business plan from arrangements at the
drawing board through resource-interplay
to attainment of strategic goals.
Therefore, a business plan without fitting
intellectual capital is a blank dream.
11. Human Capital is Key
Human Capital is the most important
component of Intellectual Capital due to
its ability to provide leveraging platform
for synchronizing the others.
12. Business As a Going Concern
An organisation must have the right caliber of
human capital effectively placed on key
positions to ensure continuity of operations or
else it shall soon cease to be a going concern.
13. GC Test
A going concern test proves whether an
organisation has the ability to meet up with its
responsibility at a specific future date.
Contemporary thinking had focused too much
attention on financial capital without due
consideration for intellectual capital.
14. The Dilemma of Focusing on Only Financial Capital
Total Market Value
Financial Capital Intellectual Capital
15. Effectiveness of GC Test
The value of Going Concern Test is underscored
by its ability to uncover dissonance between a
firm’s future state and standard requirements
to meet its obligations. Accordingly, a proper
Going Concern Test should highlight clear
profile of a firm’s human capital future state.
16. “Just as thousands of candidates are
competing for jobs everyday, your
business is also competing with other
companies to hire the most qualified,
talented workers.”
Source: HR World
17. “Companies that adopt a talent war mindset often
wind-up venerating outsiders and downplaying the
talent already inside the company, set up
competitive, zero sum dynamics that makes
internal learning and knowledge transfer difficult,
activate the self-fulfilling prophecy in the wrong
direction, and create an attitude of arrogance
instead of an attitude of wisdom. For all of these
reasons, even fighting the war for talent may be
hazardous to an organization’s health and
detrimental to doing the things that will make it
successful.”
Source: Jeffrey Pfeffer, Fighting The War For Talent Is Hazardous
To Your Organisation’s Health
18. Problems of Endorsing Quick Fixes Through
Talent War Instead of Succession Planning
1. Inclination to prefer outsiders for filling sensitive and important job
positions at the top echelon.
2. Increase in level of corporate exposure to the risk of acquiring wrong
candidates.
3. Predisposition to heighten disenfranchisement of employees,
thereby increasing staff turnover.
4. Excessive attention to individual, and undermining team value.
5. Tendency to neglect cultural and processual developmental factors.
6. Tendency to presume a company is the most competitive
intellectually driven firm in a particular sector due to its knack and
vivacity for talent war.
7. Abdication of corporate responsibility to prepare manpower for
achievement of established strategic plans.
19. Regardless of strategic pursuit, its
particularly important for organisations
to understand the issues in admixture of
insiders and outsiders at the top echelon.
If the insiders should not be disregarded,
then succession planning must be put
into action.
20. Current Changes in Nature of Work
• Content
• Structure
• Process
• System
• Flow Dynamics
21. Major Drivers for Changing Nature of Work
• Customer Values
• Competition
• Technology
• Organisational Agility
• Innovation
• Expansive Career Thrust
• Financial Leverage
• Operational Mobility
• Advancement in Capacity Management
• Advancement in Lean Enterprise
• Advancement in Process Based Management
22. Impact of Changing Nature of Work on
Organisational Structure
• Flatter Structures
• Increase in Project Groups
• More Emphasis on Cross-Functional Teams
• Rise of Kaizen Philosophy
• More Complex Reporting Relationships
• Increase in Interactive Bonds Between Top
and Bottom
• Indistinct Boundaries
23. Drivers, Solutions and Issues for the Workplace
Drivers Workplace and technology solutions Issues and concerns
Increased use of
teams and cross unit
work; more pressure
for communication
and information flow
More meeting space, Greater variety of
meeting spaces (open & enclosed, large
& small), Smaller individual workspaces,
More open individual workspaces,
Unassigned workspaces, Greater
interior visibility to support awareness,
Mobile supports (phones, laptops,
PDAs, wireless), Personal video, instant
messaging, desktop team software,
More use of project rooms, Displayed
information and work progress, Small
rooms for individual focus, Lockers for
personal belongings
Increased noise, Increased distractions
and interruptions, Potential for "over
communicating", Cultural barriers to
behavioral change, Individuals working
longer hours to compensate for lack of
time to do individual tasks, Expectations
that workers are always available
Greater use of
dispersed work
groups—often global
Increased use of video conferencing,
computer-based team tools, More
reliance on conference calls, Greater
need for mobile technological supports
for meeting rooms, Use of facilities
beyond normal working hours
Expansion of the workday to
accommodate geographically dispersed
team meetings, Loss of opportunity to
develop trust through face to face
interaction, More difficulty managing and
coordinating, Very high dependence on
technological reliability
24. Continual
reorganization and
restructuring
Flexible infrastructure to support rapid
reconfiguration, Mobile furnishings
Acoustical problems with loss of good
enclosure, Potential for reduced
ergonomic effectiveness
Reduced
costs/more
efficient space use
Shared or unassigned workspaces,
Centralized filing system, Reduced
workstation size and increased overall
densities, Greater overall spatial variety
to enable different kinds of work to be
accommodated at same time
Increased distractions and interruptions,
Increased noise, May meet with
employee resistance, More difficult for
paper intensive work
Improved quality
of work life and
attraction of new
workers
More equitable access to daylight,
views, and other amenities, More
equitable spatial allocation and
workspace features, Amenities for stress
reduction and quiet relaxation
Resistance from those who support
hierarchical space allocation
Drivers, Solutions and Issues for the Workplace Continued
Adapted from Judith Heerwagen, The Changing Nature of Work and Workplace
25. Implications of Changing Nature of
Work for Succession Planning
• Lesser loyalty of employees to organisations
destabilizes single layered succession plans.
• Tendency of companies to use competency
based frameworks for succession planning.
• Development of global portfolio of successors
in global organisations where workers are
highly dispersed.
• Demand for Highly Adaptive and Flexible
Succession Plan
27. Social Factors
• Media views
• Tradition
• Values
• Norms
• Attitudes & Opinions
• Lifestyle
• Work-Week
• Social Events & Influences
• Religious beliefs
• Roles
28. Technological Factors
• Technology maturity
• Intellectual Property
• Energy
• Biotechnology
• Innovation Potential
• Research & Development
• Information Systems
• Communication Systems
• Manufacturing Capacity
29. Economic Factors
• Interest Rate
• Exchange Rate
• Taxation
• Availability of Credit Facilities
• International Trade
• Fiscal and Monetary Policies
• Per Capita Income
• Levels of Disposable Income
• Business Cycles
• Drivers of Economy
• Level of Unemployment
30. Environmental Factors
• Environmental Impact
• Climate Neutrality
• Clean Energy
• Pollution
• Triple Bottom Line
• Green Branding Issues
• Waste Disposal
• Recycling
• Sustainable Development
31. Political Factors
• Pressure Groups & Lobbying
• International Wars
• Internal Conflict
• Government Term
• Devolution of Power
32. Legal Factors
• Employment Law
• Health and Safety Law
• Competition Law
• Regional Legislation
• Investment Law
34. Demographic Factors
• Household Patterns
• Ethnic Mix
• Educational Levels
• Age Distribution
• Number of People Within Working Age Group
• Net Inward Migration
35. Every forward-looking firm must be involved in
environmental intelligence activities so as to
be abreast with the key indicators of the rapid
changes in its business environment, which
would facilitate clear identification of
appropriate action points for attainment of
organisational objectives.
36. “In the last decade, we have witnessed a 59
percent increase in the overall rate of CEO
turnover and 318 percent increase in
performance-related departures. In spite of
these alarming statistics, many organizations
lack a strong, viable succession management
plan for their top positions.”
“Companies with stronger leadership
development systems enjoy higher returns on
equity and profit than their competitors.”
Source: DDI
37. Top 12 reasons to implement succession planning
1. Meet the requirement of the Board of Directors and other stakeholders
that a leadership succession planning process is in place.
2. Understand the hidden talents of your leadership team to optimize their
utility in day-to-day projects and initiatives. This raises productivity for the
entire organization.
3. Optimal deployment of leadership talent creates a competitive advantage.
4. Use this knowledge base to flex the existing organization structure to the
changing demands of the marketplace.
5. Extend the process quickly to collect data for organization design initiatives
to assimilate new leaders post acquisitions and mergers.
6. Robust “people data” is very useful for downsizing situations - so the right
people remain in order to successfully rebuild.
7. Have strategic staffing needs drive the expenditures for executive
education, thereby ensuring a suitable return on investment.
38. Top 12 reasons to implement succession planning Continued
8. Having the strategic staffing needs of the organization drive people
development efforts ensures these efforts are truly meaningful in the eyes
of leaders involved in the learning, thereby making executive education
and development actually contribute to retention.
9. Provide a framework to improve organizational culture by regularly and
candidly discussing the strength of the current leadership team and the
leadership bench.
10. Determine which specific key leaders are at high risk of leaving and create
strategies to retain undesired losses.
11. Predict which key leadership jobs will become open in the next 12
months. Prepare replacements with a sense of urgency or network for
external replacements, thereby saving search fees. In either event, reduce
problems associated with abrupt changes in key leaders.
12. Exert appropriate management control and proactively manage the
process of having the right leaders in the right place at the right time.
Source: Mark Caruso, Succession Planning: What Every CEO Should Know
39. The Impact of Succession Planning
• To accelerate the development and improve the retention of talented
people. This argument is particularly relevant to the development and
retention of talented women, a group often neglected in organisations;
• To identify ongoing needs for replacement and design appropriate
training and employee development programs;
• To increase the pool of talented employees to fill key positions;
• To add value to the organisations strategic plan and contribute to ongoing
business strategies;
• To ensure individuals receive appropriate developmental opportunities
and are successful in their career goals;
• To ensure that the organisation has full access to the intellectual capital of
their employees;
• To improve employee morale and commitment to the organisation
• To encourage the development and advancement of the diverse group of
employees.
Source: W.J. Rothwell, Effective Succession Planning
41. The Company
Motorola, Inc is an electronic and wireless communications company based in Illinois, United
States of America. In 1998 it had 142,000 employees and an annual turnover of $27 billion.
The Results
Through the use of various initiatives including succession planning Motorola has
significantly improved the outcomes for women in its organisation.
One measure that illustrates this is the number of female vice presidents. In 1989 Motorola had
two female vice presidents. In 1997, six years after the modification of Motorola's succession
planning so that it incorporated the company's diversity objectives and sought to accelerate
the advancement of women and minorities within the organisation, Motorola had forty
female vice presidents, including seven women of colour.
How was this achieved?
Reason for change
In the late 1980s due to changing demographics in its workforce, Motorola began to redesign
its established succession planning process to make the development of women and
minorities a priority. This process culminated in 1991 with Motorola's succession planning
process, known as the Organisation and Management Development Review (OMDR) being
amended to include diversity objectives.
Setting of goals and commitment
As part of the amendment to the OMDR Motorola set a clear goal: within ten years the
number of women and minorities at all levels of management should be representative of
the number of women and minorities in the available talent pool. They also made a
commitment that every year at least three women and minorities would be among the
twenty to forty people appointed vice-president.
42. The program
Motorola’s OMDR guarantees that women and minorities, as well as white men are not only
identified as high potential managers but also that they move along through the
organisation.
The process of identification of high potentials requires each division to submit lists of candidates
in four categories: white men, women, minorities and technical staff. Career development
plans are prepared for each high potential and their progress through the company is then
tracked. If they leave or fall off the list in the future, the individuals manager must explain
why this happened.
To counter the perception that most women and minorities are still in the feeder pool, a
replacement chart that identifies key positions and three people who could fill each one was
developed.
Line one is the immediate successor.
Line two is the person who should success the incumbent if the company had three to five years
to prepare.
Line three is the most qualified woman or minority candidate at that time, in addition to any
women or minority person already on line one or two. Women and minorities must be
included even if it means hiring externally.
Other key elements of the Motorola program include:
Career Planning: Individuals receive guidance to set career goals and develop strategies through
which to achieve them. Guidance is given by:
Managers helping employees they are responsible for who are involved in succession planning, to
plot a career course.
43. Informal mentoring: Senior management are encouraged to seek out opportunities to mentor
women and minorities.
The company's women's leadership conference.
Business Rationale: Motorola promoted the link between the succession planning initiative and
the company's business goals of pursuing quality, productivity, new markets and profits.
Emphasis was placed on the business success that can flow from having a socially diverse
workforce.
Leadership Role: The Chief Executive championed the initiative. Presidents of major operational
areas develop plans for meeting diversity goals. They report quarterly on the progress of
these plans to the Chief Executive. The managers and Chief Executive then meet once a year
to discuss the progress of the initiative.
Accountability:
Motorola sees diversity as a business initiative and as such line managers not the HR
department should be responsible for its implementation. Senior managers are required to
keep track of and report on the representation of women and minorities in their units.
Key messages:
Clearly define targets and goals. Setting a time frame and numbers creates impetus for action.
Have a broad definition of succession planning to include the widest talent pool.
44. Ensure that women and minorities are not only identified, but that once identified that they are
among those being groomed for senior positions. It is never too early to begin: As one
Motorola's vice president stated, it is important to get the feeder people on the radar. Once
they are on the radar more questions are asked about their development and it is harder for
them to be lost within the organisation. Organisations cannot wait for women to appear in
management.
Implement careful and strategic planning for targeted individuals career development. Being
identified is not enough. Consider potential benefits of encouraging informal mentoring.
Ensure there is strong leadership and commitment from senior management. Initial and on-going
personal involvement of the Chief Executive is crucial to success.
Integrate succession planning into business and diversity objectives. A clear link between
business goals and the desired results of the succession planning will assist in gaining
commitment from the organisation and staff. To be successful it must be portrayed as a core
issue.
Make managers accountable for the success of the initiative. As it is a business initiative, business
people should be responsible and accountable for its delivery.
Adapted from Motorola Inc
45. Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise
in Interim Management, Strategy, Competitive Intelligence, Transformation, Restructuring, Turnaround
Management, Business Development, Marketing, Project & Cost Management, Leadership, HR, CSR, e-
Business & Software Architecture. He had functioned as Founder, Initiative for Sustainable Business
Equity; Chairman of Board, Charisma Broadcast Film Academy; Group Chief Operating Officer, Idova
Group; CEO, Rubiini (UAE); Special Advisor, RTEAN; Director, MMNA Investments; Chair, Int’l Board of
GCC Business Council (UAE); Senior Partner, Shevach Consulting; Chairman (Certification & Training),
Coordinator (Board of Fellows), Lead Assessor & Governing Council Member, Institute of Management
Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead
Consultant/ Partner, JK Michaels; Turnaround Project Director, Consolidated Business Holdings Limited;
Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Executive Director (Various Roles),
Fortuna, Gambia & Malta; Chief Advisor/ Partner, D & E; Vice Chairman of Board, Refined Shipping;
Director of Programmes & Governing Council Member, Institute of Business Development, Nigeria;
Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic
Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria;
Country Manager (Nigeria) & Adjunct Faculty (MBA Programme), Regent Business School, South Africa;
Adjunct Faculty (MBA Programme), Ladoke Akintola University of Technology; Editor-in-Chief, Cost
Management Journal; Council Member, Institute of Internal Auditors of Nigeria; Member, Board of
Directors (Several Organizations). He holds Doctoral Degree in Management, Master of Business
Administration and Fellow of Professional Institutes in North America, UK & Nigeria. He is Innovator of
Corporate Investment Structure Based on Financials and Intangibles, for valuation highlighting
intangible contributions of host communities and ecological environment: A model celebrated globally
as remedy for unmitigated depreciation of ecological capital and developmental deprivation of host
communities. He had served as Examiner to Professional Institutes and Universities. He had been a
member of Guild of Soundtrack Producers of Nigeria. He's an author and extensively featured speaker.