Importance of Succession Planning

By

Reema Negi
Sr. Lecturer
NSB School of Business
B-II/1, MCIE, Delhi-Mathura Road, New Delhi-110044
 

In today's fast moving environment, succession planning may be more important – and more difficult to conduct – than ever before. Executives frequently lament that their firms are chronically short of talent. Yet in a recent survey of 150 executives within the nation's 1,000 largest companies, while all agreed on the value of identifying successors, only 72 percent said they are currently preparing someone to take their place. The absence of a succession plan can seriously hamper the growth prospect of an organization. Imagine the disastrous consequences when there is a sudden vacuum at the top level. Critical plans needing immediate action get postponed. Suitable candidates may not be available internally, as no one has been groomed in the past, keeping such an eventuality in mind. Bringing in outsiders may mitigate the crisis temporarily but the long-term impact is bound to be negative. Internal forces may start a rebellion and create tug-of-war situations with frustrating regularity.

The purpose of succession planning is to identify and develop people to replace current jobholders in key positions. Through succession planning, companies assure a steady flow of internal talent to fill important vacancies. Succession planning encourages 'hiring from within' and creates a healthy environment where employees have careers and not merely jobs. It helps in identifying human resource shortages and skill shortages before opening occur. Thereafter, it becomes easy to groom qualifies candidates for future vacancies. The organization is thus assured of continuity of operations and better-qualified incumbents.

Whether the approach is formal or informal, businesses have known potential successors for all levels of management. In some large organizations, succession planning is formal and structured with potential upper-level managers being put through development activities, including on-the-job trials that test them with specifically delegated assignments. Smaller organizations rarely engage in formal succession planning, but they aren't really necessary. Each manager can identify and prepare potential successors without a formal program. First-line managers who oversee the activities of employees doing hands-on work have the best opportunity to develop successors.

Succession planning management includes the following activities:

* Identifying the shortage of leadership skills and defining the requirements.

* Identifying potential successors for critical positions.

* Coach and groom the 'Stars': Enriching developmental opportunities must be thrown open to potential successors such as handling two important projects, a foreign country assignment, a major market research job, a new product launch, a complex industrial relations exercise etc.

* Secure top management's commitment and support.

Preparing a schedule for succession is critical to the success of a company, especially at the top level. When the baton changes over a period of time, disruption and dislocation are minimized. Indeed, when a new CEO is meant to consolidate on past successes, a slow shift is ideal. If qualifies candidates are not available within the company, outsiders can be considered readily for possible openings. Complete dependence on succession from with or from outside is not desirable. Internal candidates require a 'pat on the back' when they do well. External candidate are needed for injecting fresh blood into the company.

References:

* Snell Scott and Bohlander George (2007), Human Resource Management, Thomson.

* Rao V.S.P. (2000), Human Resource Management Text and Cases, Excel Books.

* www.nfib.com
 

Reema Negi
Sr. Lecturer
NSB School of Business
B-II/1, MCIE, Delhi-Mathura Road, New Delhi-110044
 

Source: E-mail August 9, 2008

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