Succession planning in business organizations
and abilities, and prepare them for advancement or promotion into more challenging roles.
Challenges to effective succession planning
· Size of the organization: Organizations with few positions have limited opportunities for advancement; employees with the potential and the desire to advance
their careers may move to larger organizations
· Lack of financial resources: employees may leave for
better salaries and benefits offered in other workplaces
· In some cases, senior leaders are staying on in their
positions, despite the fact that the skills needed for the
job may have changed or they are no longer making a
meaningful and productive contribution to the organization
The precedents have also shown that most companies in
India are highly unprepared to deal with succession planning issues, especially when they are run by families or
first generation owners. The same has been witnessed by
Dr. Reddy’s Laboratories and Yes Bank in the recent past.
Often personal/ sibling rivalry also comes in way of
smooth succession planning.
Timing and clear communication of organizations’ succession planning strategy is also of utmost importance as it
may lead to frustration among employees and make
things go out of control. The recent trends in Infosys provides the best testimony to this fact and this is evident in
sports and politics as well.
· Indiscriminate inclusion of employees in the succession
plan including those who are disinterested, unmotivated or lack capacity to advance
· A plan that does not promote people in a timely fashion, leading potential successors to leave the organization to seek new opportunities
· Poor communication resulting in confusion and turmoil
within the organization as staff speculate about what
the succession plan really is
Some real life examples
Some of the recent ongoing trends in the business world
indicate that the companies are divided as far as their
approach to succession planning is concerned. Even the
post transition scenarios differentiate the organizations
significantly. For example, Apple ex-CEO and founder Steve Jobs planned his succession for years, and built a large
library of instructional and multi-media materials to help
continue his legacy. Tim Cook, his successor, was also
groomed for many years. In this case there were likely
other candidates, but it was clear to the outside world for
quite some time that Tim Cook was Jobs' replacement. But unlike IBM, where Palmisano stood aside
calmly at the peak of his career, Mr. Jobs chose to work
right up until his death. This is an admirable and inspirational approach, but it did not calm shareholders, customers, and employees. Apple stock dropped about 6% since
this transition took place, and most Apple watchers were
nervous about what will happen next.
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Concluding remarks
Succession plan is a unique reflection of an individual organization and consequently, succession plans are as
different from each other as the organizations for which
they are developed. Effective succession planning aligns
with the organization’s long term goals. To ensure the
process is fair and the succession plan considers different
perspectives, seeking inputs from all key stakeholders
may also prove to be worthwhile as well as helps in trust
building.
October 2014 |CONSILIUM