Vivek Mehrotra
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Succession Planning (Part Ii)

Succession Planning is not just a process to merely find a deputy or 2IC (Second - in command). It is a conscious attempt to ensure the continuity of business operations, organization policies and work culture. It saves the organization from a sudden cultural shock and provides it the strength to move forward. However, the sudden demise of the CEO is not the only reason as to why an organization must embrace succession planning. There are several other reasons that necessitate the need for a solid succession plan by every organization. In today's business world, organic growth due to mergers and acquisition is the order of the day. Without a proper succession plan, a smooth transition may not take place. Promotions, demotions, transfers, and business reengineering too require a robust succession plan in place for an organization to fulfill its vision and missions. According to labor economist Braddock, "Global aging (Over the 1998 - 2008 period), more job openings are expected to result from replacement needs (34.7 million) than from employment growth in the economy (20.3 million)".

Succession Planning is not something that has been discovered recently. It's an age old art. In the good old days, the prince was sent to various places for education and learning martial arts, well before the king declared him as his successor. In India there are numerous instances where businessmen had conducted tests what we call in present days as assessment centers to decide upon their successor. The objective of these tests was to ensure that they hand over the reigns of their business to a child of theirs who had the necessary acumen to take it to the future generations. If we look at functions of HR department, we will notice that classically it has two major responsibilities: one of recruitment of right people and second to retain good performers for future business growth. The former helps the organization in 'Workforce Planning', whereas the latter in 'Succession Planning'. Workforce planning involves 'Getting the right number of people with the right skills, experiences, and competencies in the right jobs at the right time'. The focus of workforce planning is always on the present business scenario. In contrast, the focus of succession planning is on future, i.e., to ensure that there are highly qualified members in all important positions. Not just for today, but for tomorrow, next year, and five years from now.

The question arises as to what does an organization lose if it does not implement succession planning - is it the revenue, market share, company's image or the market Cap? One can't answer this with confidence; organization may or may not lose any of these things. Yes, if the news emanates and reaches to media then to an extant it may affect the company's image or may bring down the stock prices. However, one thing is sure that it will lose its most precious resource, i.e., Human Capital. The workplace will lose high performers and the skilled workforce that understands the business well. It may create an imbalance in the skill mix for the future. The organization may also lose leaders to accomplish its vision and mission.

There is direct correlation observed between the Succession Planning and the Commercial Success of an organization. According to a survey published in 'HUMAN RESOURCE MANAGEMENT, VOL. 13 No. 1 2005 there is a direct correlation between:

  • Organization's ability to develop senior executives and its confidence to meet future growth needs.
  • Organization's ability to recruit highly able executives and having a well-organized program to develop Hi-Pos.
  • Developmental 'stretch' assignments provided within the company and the personal involvement of the CEO.
  • Organization's need to hire outside leaders and its lack of confidence to meet future growth needs.

In short, we can say Succession Planning is a process that ensures that there are right people to lead tomorrow, especially who live the organization's values today. Through effective Succession Planning, an organization not only identifies and recruits future leaders but also provides opportunities to its employees for developing new competencies and skills. Also, the organization succeeds in alerting its rising stars to potential leadership opportunities; well in advance before they think of exploring it out side. Thereby, it ensures better talent retention, greater employee satisfaction, enhanced commitment to work by the employees, and the improved image of organization...

(Excerpts from the talk delivered on Succession Planning at Malaysian HR Congress, Kuala Lampur)

Vivek Mehrotra

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