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ANALYSIS OF ORGANIZATIONAL PERFORMANCE BY USING


SUCCESSION PLANNING AND TALENT MANAGEMENT

by

Mahbuba Raiyan Milky


ID: 1020197

An Internship Report Presented in Partial Fulfillment


Of the Requirements for the Degree
Bachelor of Business Administration

INDEPENDENT UNIVERSITY, BANGLADESH


December 2013

ANALYSIS OF ORGANIZATIONAL PERFORMANCE BY USING


SUCCESSION PLANNING AND TALENT MANAGEMENT

by

Mahbuba Raiyan Milky


ID: 1020197

has been approved


December 2013

_______________________
Dr. Shibly Noman Khan
Assistant Professor
School of Business
Independent University, Bangladesh

Letter of Transmittal
December 12, 2013
Dr. Shibly Noman Khan
Assistant Professor
School of Business
Independent University, Bangladesh
Subject: Submission of internship report on Analysis of Organizational Performance by using
Succession Planning and Talent Management
Dear Sir,
It gives me enormous pleasure to submit the internship report on Analysis of Organizational
Performance by using Succession Planning and Talent Management. Working in Siemens
Bangladesh Limited as an intern, was an inspiring experience for me. I feel the immense
knowledge and experience will facilitate me a lot in my future career life. I have done the study
in a complete form and I have done my level best to conduct this in a professional manner. Your
acceptance and appreciation would surely inspire me. For any further explanations about the
report, I will be gladly available to clarify the ins and outs.
Yours Sincerely,
________________________
Mahbuba Raiyan Milky
ID#1020197

Acknowledgement
The successful completion of this report might never be possible in time without the help of
some person whose inspiration and suggestion made it happen. First of all I want to thank my
academic supervisor Dr. Shibly Noman Khan, Assistant Professor (Human Resource
Management), for helping me completing my internship report on Analysis of Organizational
Performance by using Succession Planning and Talent Management
I would also like to thank Mr. Mushfique Mahamud, my supervisor in Siemens Bangladesh
Limited. Without him this project would have been very difficult to complete. I also thank all of
my other collogue for helping me to complete not only this report but also whole BBA Program.
For their suggestions and comments which inspired me greatly to prepare the report successfully
and their heartiest cooperation which makes my destination easier.
Finally, my special thanks go to the whole human resource department of Siemens Bangladesh
Limited for their continuous support, inspiration and giving me the opportunity to deal with
different work situations during the period of my internship.

Table of Content
Topic

Page No.

Part- A: Working Report


Executive Summary

Introduction

Siemens in Bangladesh

Management & Corporate Structure

Industry Sector

Energy Sector

Healthcare Sector

10

Infrastructure & Cities Sector

11

HRM at Siemens Bangladesh Limited

13

Human Resource Management Policy

14

Significance of the Study

15

Part-B: Research Paper


Statement of the Problem

16

Purpose of the Study

18

Literature Review

19

Conceptual Framework

28

Hypothesis

29

Research Question

29

Methodology

29

Data Analysis

32

Findings

42

Conclusion

43

References

44

Appendix

52

List of Tables
Table No. and Topic

Page No.

Table-1: Gender

32

Table-2: Age

32

Table-3: Gender*Age Cross tabulation

34

Table-4: Reliability Statistics

33

Table-5: Item-Total Statistics

35

Table-6: Reliability Statistics

36

Table-7: Reliability Statistics

36

Table-8: Reliability Statistics

37

Table-9: Correlations- Organizational Performance and Succession

37

Planning
Table-10: Correlations- Organizational Performance and Talent

38

Management
Table-11: Correlations- Organizational Performance and Succession

39

Planning
Table-12: Correlations- Organizational Performance and Talent

40

Management
Table-13: Model Summary

41

Table-14: Model Summary

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PART-A: WORKING REPORT


Executive Summary
Internship is part of BBA which gives students to get familiar with the corporate environment
and learning opportunity to understand how works are done in an organization. It gives students
to integrate the theoretical knowledge and practical experience on how to implement them.
Siemens is a German multinational engineering and electronics conglomerate company
headquartered in Munich and Berlin. I really enjoyed the internee period. Siemens is one of the
leading companies in the growing area of electrical engineering and electronics sector in the
world. Its association with this country began in 1956, and since then we have been involved in a
number of Bangladesh's major modernization and infrastructure development programs. I believe
that this will definitely help me to build my career. This report is the outcome of my internship
and it contains a clear idea about the activities, the procedure of activities and the performance of
that company.
This report has been divided into two broad parts-Organizational Part & Research Part. The
Organization part included overview of Siemens Bangladesh Limited, its HR activities. In
second part a research has conducted with one independent variable which is Organizational
Performance and two dependent variables which are Succession Planning and Talent
Management. The study is a descriptive research. This research used IBM SPSS Statistics 21
because it is such a statistical data analysis tool that offers greater flexibility in data analysis and
visualization.

Introduction
Siemens is a German multinational engineering and electronics conglomerate company
headquartered in Munich and Berlin. It is the largest Europe-based electronics and electrical
engineering company. Siemens is a global powerhouse in electronics and electrical engineering,
operating in the industry, energy and healthcare sectors. The company has around 336,000
employees worldwide (in continuing operations) working to develop and manufacture products,
design and install complex systems and projects, and tailor a wide range of solutions for
individual requirements. For over 160 years, Siemens has stood for technological excellence,
innovation, quality, reliability and internationality.

Siemens in Bangladesh
Siemens is one of the leading companies in the growing area of electrical engineering and
electronics sector in the world. This German electrical giant operates in 190 countries, creating
leading-edge innovations for better life, and driving profitability and corporate responsibility
around the globe.
Its association with this country began in 1956, and since then we have been involved in a
number of Bangladesh's major modernization and infrastructure development programs. Siemens
has been active in railway projects in the country since 1962. In 1968, it privileged to become the
first direct foreign investor to start a joint venture with the government to manufacture telephone
switches and sets. It has been quite successful in the power and energy sector of Bangladesh. In
1967, they actively involved in constructing the Ashuganj power plant and thus gained a major
market share of the country's power sector. And from the beginning, their medical systems and

solutions have been the country's technology of choice in the sector. Siemens Bangladesh Ltd. is
also playing a prominent role in Bangladesh by helping to establish the country's mobile network
infrastructure.

They have been operating in the country for more than 50 years, during which time they
established ourselves as a leading solution provider in Transportation System, Power
Transmission and Distribution, Medical Solutions, Power Generation, Power Distribution and
Lighting Solution in the electrical and electronics market, Automation and Drive, Industrial
Solutions and Services.

With a work force of around 120 people and comprising four business units, Siemens
Bangladesh Ltd. is providing the country's latest technologies and innovations.
Siemens have tremendous faith in the country's potential for further development and are
confident that we can provide various technological solutions for Bangladesh and its
modernization efforts.
The new "state-of-the art" headquarters in Dhaka facilitates easy access to our customers and
therefore create value through long-term partnership. This new office depicts Siemens' renewed
pledge to our enduring commitment to Bangladesh.

In fiscal 2012, Siemens received its first contract in the mobility area in Bangladesh: a contract
to install signaling systems for Bangladesh Railway. Siemens has been active in Bangladesh
since 1956, primarily in the energy and healthcare areas. Siemens Healthcare Sector has
supplied more than half the medical diagnostics equipment used in the countrys hospitals and
clinical laboratories.

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Key Figures
In fiscal 2012 (October 1, 2011 September 30, 2012), Siemens sales to customers in
Bangladesh amounted to more than EUR 131 million and new orders totaled EUR 69.5 million.
Siemens currently has about 110 employees in Bangladesh.

History
Siemens association with Bangladesh began in 1956, and the company has since been involved
in a number of major modernization and infrastructure development programs. Siemens has been
active in railway projects in the country since 1962. The company has long been a major player
in the energy area. Siemens medical products, systems and solutions have been the country's
technology of choice in the healthcare area.

Key Project
The Energy Sector signed a contract with Hyundai Engineering Co. Ltd. to build a compressor
station for Gas Transmission Company Limited (GTCL), a company belonging to Petrobangla,
Bangladeshs national oil company. Under the contract, Siemens will supply gas turbines and gas
boosters for pipelines and provide all the technical services needed to complete the project.

From a small back building workshop in Berlin to a global firm - there are few industrial
corporations that can look back on such a long history of success as we can.
In fiscal 2012 (October 1, 2011 September 30, 2012), Siemens sales to customers in
Bangladesh amounted to EUR 10 million and new orders totaled EUR 19 million.
Siemens currently has about 120 employees in Bangladesh.

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Siemens started its first business in Mobility with the Bangladesh Railway for developing its
signaling systems in fiscal 2012.
Siemens has been active in the country since 1956, primarily in the energy sector and
healthcare sectors. The healthcare sector has supplied more than half of the medical
diagnostic equipment used in the countrys hospitals and clinical laboratories.

Values and vision


To achieve the highest performance with the highest ethics, we integrate our vision and our
values related principles into daily business decision-making in our specific environment. We
know that our stakeholders, from customers, shareholders, employees, and suppliers to the
societies, in which we live in, expect nothing but the best from us.
Our vision: Siemens - The pioneer in
Energy Efficiency
Industrial Productivity
Affordable and Personalized Healthcare
Intelligent Infrastructure Solutions
Values : Highest performance with the highest ethics
Responsible: Committed to ethical and responsible actions
At Siemens, they are determined to meet and wherever possible, exceed all legal and ethical
requirements. Their responsibility is to conduct all business according to the highest professional
and ethical standards and practices: there must be no tolerance for non-compliant behavior.

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The principles related to "Responsible" serve as the compass by which they navigate our way
through our business decisions. They must also encourage business partners, suppliers and other
stakeholders to adopt a similar standard of ethical behavior.
Excellent: Achieving high performance and excellent results
At Siemens they set themselves ambitious targets derived from our vision and verified by
benchmarks and give our all to achieve them. We stand beside our customers in the search for
perfect quality, coming up with solutions that exceed expectations. Excellence demands we
define a path of continuous improvement, constantly challenging existing processes. It also
requires us to embrace change so we are in the right place when new opportunities open up.
Excellence also means attracting the best talent in the marketplace and giving them the skills and
opportunities they need to become high-achievers. We are committed to living a highperformance culture.
Innovative: Being innovative to create sustainable value
Innovation is a cornerstone of Siemens' success. They closely align R&D activities with business
strategy, hold key patents and have a strong position in both established and emerging
technologies. Our goal is to be a trendsetter in all of our businesses. They unlock the energy and
creativity of our employees, embracing the new and different. They are also ingenious and we
embrace this quality in all its varied meanings original, inventive and resourceful.
They are entrepreneurs whose innovations are successful on a global scale. They measure the
success of our innovations by our customer's success. They constantly renew our portfolio to
provide answers to societies' most vital challenges, enabling us to create sustainable value.

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Management & Corporate Structure


Management

Indranil Lahiri
CEO and MD

Md. Bul Hassan


CFO

Corporate Structure

Executive
Management

Business
Sector

Industry

Energy

Corporate
Units

Healthcare

Infrastructure
and Cities

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Industry Sector
Siemens Industry Sector is the worlds No. 1 supplier of manufacturing, transportation, building
and lighting systems. With the end-to-end automation technologies and a comprehensive array of
industry solutions, theyre increasing the productivity, efficiency and flexibility of our customers
in the industry and infrastructure segments.

Industry Automation

Industry Automation leads the world market in automation systems, low-voltage switchgear and
industrial software, offering from standard products for the manufacturing and process industry
to industrial automation solutions and systems for entire automobile production facilities and
chemical plants.
Drive Technologies
Drive Technologies supplies products and services for production machinery and machine tools.
Its integrated technologies cover the entire drivetrain and its modules, electrical and mechanical
components for the associated applications.

Products, systems, applications and services are for Integrated Drive Systems. Across a
bandwidth from 100 W to 100 MW, we are your competent partner offering everything from a
component to an optimum solution. Siemens assure maximum productivity, efficiency and
reliability.

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Energy Sector
Products, solutions and services for the entire energy conversion chain from power generation
and transmission to distribution. Siemenss Energy Sector is the worlds leading supplier of a
wide range of products, solutions and services for power generation, transmission and
distribution as well as for the production, conversion and transport of the primary fuels oil and
gas. Theyre the only supplier worldwide with comprehensive knowhow encompassing the entire
energy conversion chain and, in particular, plant-to-grid connections and other types of
interfaces. They focus primarily on the requirements of energy utilities and industrial companies
particularly those in the oil and gas industry.

Fossil Power Generation

Fossil Power Generation offers highly efficient products and solutions for power generation
based on fossil fuels, ranging from individual gas and steam turbines and generators to turnkey
power plants.

Renewable Energy

Renewable Energy offers environmental friendly energy development, connecting a number of


activities in the wind energy business both for onshore and offshore wind parks, with highly
efficient, solid and reliable wind turbines.

Oil & Gas


Oil & Gas offers customer products and solutions used for the extraction, conversion and
transport of oil and gas.

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Energy Service
Energy Service provides comprehensive services for complete power plants as well as rotating
machines such as gas and steam turbines, generators and compressors.
Power Transmission
Power Transmission offers products and solutions in the high-voltage field such as High Voltage
Direct Current, substations, switchgear and transformers.

Healthcare Sector
Siemenss Healthcare Sector is one of the worlds largest providers to the healthcare industry,
offering solutions based on core competencies and innovative strengths in diagnostic systems,
therapeutic technologies and knowledge processing including information technology and
systems integration. Their acquisitions in the field of laboratory diagnosis have made us the first
integrated healthcare company to combine imaging systems, laboratory diagnostics, treatment
solutions and healthcare IT rounded off by consulting and services. They offer single-source
solutions for the entire healthcare continuum from prevention and early detection to diagnosis,
treatment and follow-up care.

Imaging & IT
Providing imaging systems for early diagnosis, intervention as well as for more effective
prevention, systems from the Imaging & IT division are networked with high-performance
healthcare IT to optimize processes.

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Diagnostics
In in-vitro diagnostics, we offer a broad portfolio of performance-driven diagnostics solutions
that provides more effective ways to assist in the diagnosis, monitoring and management of
diseases.
Workflow & Solutions
For fields in cardiology, oncology and neurology, this Division delivers solutions for womens
health, urology, surgery and audiology as well as turnkey solutions and consulting

Infrastructure & Cities


More than half the worlds population now lives in urban areas and the number of city dwellers
is increasing every day. With a portfolio comprising integrated mobility solutions, building and
security systems, power distribution equipment, smart grid applications and low- and mediumvoltage products, our new Infrastructure & Cities Sector offers sustainable technologies for
metropolitan centers and urban infrastructures worldwide. Combining the expertise of existing
businesses in our Industry and Energy Sectors, Infrastructure & Cities is well positioned to be a
major player in an addressable market of 300 billion.

As an integrated technology company, Siemens enables cities to improve energy efficiency, ecofriendliness and quality of life.

Ever greater numbers of people want to live in cities and will do so. Today, over half of the
global population already lives in cities and this share will climb to 60 percent within 20 years,

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an increase of 1.4 billion urban residents. In response to this growth, cities throughout the world
will have to massively invest in expanding their infrastructures.

Siemens Infrastructure & Cities Sector offers sustainable technologies for large urban centers
and their infrastructures. These include mobility solutions, building and security technologies,
power distribution systems, smart grid applications as well as low- and medium- voltage
products.

Smart Grid
It is time to bring knowledge to power. Their smart grid technologies increase energy system
efficiency. They offer innovative medium-voltage components and systems, efficient solutions
for energy automation, and services for electrical systems and networks.
Low and Medium Voltage
Whether in industrial plants or functional buildings, every technical system depends on its
reliable supply with electric power. Even short failures have severe consequences. Siemens low
and medium voltage components facilitate the competent control over your systems whatever
the specific power distribution requirements may be.
Mobility
Siemens network various transportation systems in order to move people and goods efficiently.
In doing so, they combine expertise in operation management systems for rail and road traffic
with solutions for airport logistics, postal automation and rail automation for mass transit,
regional and long distance service.

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Building Technologies
Building Technologies offers various products and solutions such as intelligent building
systems, heating and air conditioning, ventilation, access control, intrusion, and danger
management in its four business areas - building automation, HVAC products, security &
safety and fire safety.

HRM at Siemens Bangladesh Limited


HR department of Siemens Bangladesh Limited is always concerned about their employees.
They treat every individual as an asset to the company and take necessary steps to retain them.
They assure that employees get proper attention and they are trained to develop themselves and
to improve their skills. This helps Siemens Bangladesh limited (SBL) to prepare employees for
achieving their goal. The growth of Siemens all around the world has provided promising prospects for
all competent and highly motivated employees in a continuous manner. They provide rich HR practices
and offer the employees competitive compensation package to attract and retain potential employees in
the company.

Working environment in SBL is very much cooperative and friendly so that they feel
comfortable while working. Siemens believe in ensuring a working environment where management
and employees put combined effort towards the growth of the company. Maintaining the global culture
SBL is the place to work where a favorable working environment is prevailed to showcase employees
talents and allows stretching ones abilities to the fullest. Support, encouragement and leadership one can
expect to receive from his/her Managers in every step.

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Human Resource Management Policy


Siemens Bangladesh Limited is one of the regional companies of SIEMENS AG where the
employees are diverse in aspect of their religious belief, nationality, race & gender. To ensure the
equal opportunity policy, the company is committed to treat every employee with respect, fair
judgment and assess with their performance & capabilities.

The SBL human Resource practices determine to ensure every employees growth with highest
potentiality by providing a healthy & competitive work environment where the employee gets
opportunity to excel their knowledge & skills .It also ensures the appropriate career opportunities
in line with the capabilities & performance through Siemens Performance Management Process.
The main objective is to provide an honest & open communication practice in order to retain
highly motivated workforce who are entirely dedicated towards their respective job
responsibilities in order to obtain company objectives.
SBLs motto is to achieve highest performance with highest ethics. So the HR of SBL needs to
consider the fact that in every step of the HR process how it can add value to get the best and
qualified human resources keeping in the mind its ethical standard and policies. As we know the
organizational performance can be only be achieved if the HR process is effective & efficient.

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PART-B: RESEARCH PAPER


Significance of the Study
The main aim of the study was to understand if succession planning and talent management have
any effect on organizational performance. The result from the research may help organizations to
find out how to increase organizational performance. If there is a relation among the variables it
may help the organizations to get better outcomes than they are having now by improving or
implementing any of the programs. Succession planning is done for a specific position where the
focus is preparing an eligible employee by training him or any other way so that he or she is
ready to fill a position immediately after it is vacant. Talent management is for an individual
employee development. It does not focus on a position rather on individual employees. These
employees are being trained, mentored or involved in other necessary programs for their
individual development to accomplish their responsibilities efficiently.
In a country like Bangladesh least is done to improve organizational performance. In public
sectors of Bangladesh both Succession Planning and Talent Management programs are not
maintained. As bureaucracy system is followed everywhere they do not happen to think about
their employees who actually are responsible of the outcome of the company.
In private sector organizations they are aware of these components and practice them at least in
minimal level to keep motivated their employees in the organization. Even in the banking sector
if not practiced these two programs they make sure to use incentives for their employees. Talent
management is followed in almost every organization. They make sure that every employees
talent is recognized and used in a proper manner to utilize the talent through training or other
necessary programs. Multinational companies operating in Bangladesh practice these two

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components very seriously and they give importance to these programs. They understand if they
practice them it can increase employee productivity and performance of the organization at the
same time.
Organizations not using succession planning or talent management or both, they suffer from
weak performance and blame the employees but proper planning and implementing them they
can make sure employees are ready to move on to a new position through succession planning.
Organizations need to recognize the unique talents of the employees and utilize them to bring out
the best input from them which can lead to better organizational performance.

Statement of the Problem


Succession planning is a plan an organization uses to fill its most critical leadership and
professional positions. It involves forecasting vacancies, developing a talent pool, and selecting
the right personnel for those critical positions in order to support the organizations strategy.
Succession planning also details processes for transferring institutional knowledge and
preserving institutional memory. These plans have been used for decades in the private sector,
but are less likely to be developed or implemented in the public domain. (Garman & Glawe,
2004)
Some researchers explained succession planning as a systematic effort to help managers, who
needs to identify a pool of high-potential candidates, develop leadership competencies in those
candidates and then select leaders from the pool of potential leaders. Others have referred to it as
a strategic, systematic, and deliberate activity to ensure an organization's future capability to fill
vacancies without patronage or favoritism (Mamprin , 2002).

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An important issue in the field of human resource management is succession planning. Finding
the methods of developing the talent management programs and finding the important elements
of succession planning programs is the concerns of many researches (Johnson, Costa, Marshall,
Moran, and Henderson, 1994).
Organization systems and process often fail to support the organization vision and strategy. As a
result, organizations focus on, and measure, the wrong things. For example, the performance
management system may rely on general measures that communicate little information, and thus
it may not recognize or hold people accountable for the specific behaviors required to respond to
customer needs. (Owen, Mundy, Guild and Guild, 2001)
Todays environments are changing rapidly that organizations are facing serious unpredictability
and uncertainty, which sometimes causes instability in the business operations. In this unstable
environment, organizations need to rely on the most important assets: their people. Organizations
need to strategize to motivate and connect their employees in order to create competitive
advantage and achieving higher profitability. Organizations may consider methods like
succession planning and management to promote their employees knowledge, skills, talents, and
capabilities to tackle problems created by the challenging environments (Mehrabani and Mohamad,
2011).
In todays dynamic world where competition is high, work is fluid, environment is unpredictable,
organizations are flatter, and the organizational configuration frequently changes, the old view of
succession planning by defining specific people for the specific job does not work. Nowadays,
organizations need a group of high potential people at all levels of their organizations.
Developing general competencies, creating flexibility and creating the leadership potential at all
organizational levels is a wisely action in todays organizations (Bucher and Kelly, 2005)

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Since succession planning and management is a process and a system, like any other human
resource activities it need to be properly implemented in business organizations. As pointed by
the researches in the review, there are benefits and returns achieved by firms that had implement
successful succession planning and management. (Mehrabani and Mohamad, 2011)

Purpose of the Study


The purpose of the study is toa) Measure the practice of Succession Planning and its impact on Organizational
Performance.
b) Measure the practice of Talent Management and its impact on Organizational
Performance.
c) Disclose the relation between the variables and find out the impact of dependent
variables on independent variable.
d) Test the hypothesis regarding the relation the independent variable which is
Organizational Performance and two dependent variables which are Succession
Planning and Talent Management.
e) Use the study to recommend better succession planning approaches, so that overall
organizational performance can increase and help the company get better performance
from the employees.

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Literature Review
Succession Planning
Succession planning is the process by which an organization seeks to ensure future
success and vitality (Dodd & Simons, 2005), by promoting key individuals who
understand the organizations vision, its intended direction, its opportunities and
competitive challenges, and the current and projected business climate (Nowack, 1994,
p. 51).
Leibman et al. (1996) called on executives to modify their approach to succession planning to
assure that it remains a relevant means of regenerating corporate leadership. Leibman et al.
(1996) pointed out the most important goal of succession planning must become the
development of strong leadership teams. They described changes needed in succession planning
approaches and named the new or changed approach succession management.
The effects of principal succession on school performance and change have been examined
(Hargreaves et al., 2003); also, the succession of principals has been investigated to some extent
through the lens of socialization theory (Bengtson et al., 2010; Hart, 1991, 1993).
According to Kimball (2006), succession planning is defined as a dynamic, ongoing process of
systematically identifying, assessing and developing leadership and management talent: and
assessing, developing and recognizing key contributors to meet future organizational strategic
and operational needs (Carl: 2006. Corrections today, Goliath Business Knowledge, 2006).
Succession planning and talent management provide organizations with a method to address
issues such as the close to retiring employees and staff turnover. In todays aggressive market it
is very important for organizations to take steps to attract, develop and retain employees that
have the potential to be strong leaders (Krauss: 2008).

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Succession is a challenging endeavor even in the best scenarios. If you have a business you care
about, you need a plan. In my experience, many business owners have a broad vision of where
their company will be when they leave, but only about one-fourth of them have a solid plan
(Rawls, 2005).
Succession planning perpetuates an enterprise by filling the pipeline with high-performing
people to assure that every leadership level has an abundance of these performers to draw from,
both in the present and in the future (Charan et al, 2001).
According to Harrison, McKinnon & Terry (2006, p. 22), succession planning refers to a
systematic process of developing individuals to fill an organizations key roles. When an
organization has a well-planned succession planning and management program, there are a
number of qualified people available who are prepared to transition into a number of leadership
roles (Harrison, McKinnon & Terry, 2006; Bonczek & Woodward, 2006).
It is a proactive approach of filling future organizational needs of internal supply and Promotions
of employees and for ensuring the continuity of talent within the organization for all critical
positions (Christee, 2007).
The main aim of succession planning that distinguishes it from workforce planning is to have
right leadership at all key positions in all organizational levels (Dessler, 2008).
In a general definition, succession planning is a fundamental structure that takes into account the
organizations resources for the protection and development of high potential employees
(Johnson, Costa, Marshall, Moran, Henderson, 1994).

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Organizational Performance
One of the important questions in business has been why some organizations succeeded while
others failed. Organization performance has been the most important issue for every organization
be it profit or non-profit one. It has been very important for managers to know which factors
influence an organizations performance in order for them to take appropriate steps to initiate
them. However, defining, conceptualizing, and measuring performance have not been an easy
task. Researchers among themselves have different opinions and definitions of performance,
which remains to be a contentious issue among organizational researchers (Barney, 1997). The
central issue concerns with the appropriateness of various approaches to the concept utilization
and measurement of organizational performance (Venkatraman & Ramanuiam, 1986).
Researchers among themselves have different opinions of performance. Performance, in fact,
continues to be a contentious issue among organizational researchers (Barney, 1997). For
example, according to Javier (2002), performance is equivalent to the famous 3Es (economy,
efficiency, and effectiveness) of a certain program or activity. However, according to Daft
(2000), organizational performance is the organizations ability to attain its goals by using
resources in an efficient and effective manner. Quite similar to Daft (2000), Richardo (2001)
defined organizational performance as the ability of the organization to achieve its goals and
objectives. Organizational performance has suffered from not only a definition problem, but also
from a conceptual problem. This is what Hefferman and Flood (2000) stated.
In pre-modern organizations, the participants were wholly contained in their organizations, and
their rights and interests were determined by their membership which was built on a strict
hierarchy (Scott, 2003). Over time, individuals gained rights, corporate actors also gained rights,
and both were allowed to pursue their interests under a charter given by the organization, (Scott,

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2003). Traditional notions of organizational performance were focused on productivity, profit,


growth, and stability under a rational system. The emerging notions of organizational
performance focus on quality, durability, and customer satisfaction (Scott, 2003). Both
traditional and emerging notions of organizational performance are influenced by external
environments which require quality in processes and finished products. Measuring organizational
effectiveness requires a set of standards, indicators, work sampling size, and evaluation of the
samples against a defined standard (Scott, 2003).

While subjective self-rating performance measures have been criticized in the management
literature (Thornton, 1968), there is empirical evidence to suggest that the associated halo effect
is over-rated and that self-rating provides a more accurate measure of performance than objective
upper management (superior) ratings (Heneman, 1974; Viswesvaran Schmidt and Ones, 2005).
Dunk (1993) argues that upper managers may only have fragmented knowledge of the job
behaviors of their subordinates because managers have limited personal contact with
subordinates, and that limited personal contact is restricted to particular situations. Given that
there are many precedents in organization research for using subjective self-rated performance
measures (e.g. Douglas and Judge, 2001, Powell, 1995), we feel the use of the Govindarajan and
Guptas (1985) performance instrument is justified. This instrument measures performance along
a multiplicity of dimensions rather than on any single dimension and utilizes the degrees of
importance of each dimension as weights to calculate the overall performance measure. The six
dimensions include both financial and non-financial criteria, for example, achievement of budget
targets, quality of output, new product development and cost reduction.

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Talent Management
The concept of talent management first emerged in 1998 in response to a published paper by
McKinsey consulting in the USA entitled The War on Talent (McKinsey, 2001). Talent is
defined as natural or innate aptitudes or characteristics which are separate from learned
knowledge or skills - for example, an innate talent for art or sport which can be further developed
and enhanced with practice and learning.
In relation to the workplace, talent is described as the personal qualities of those individuals
who can make a difference to organizational performance either through their immediate
contribution or, in the longer-term, by demonstrating the highest levels of potential (CIPD,
2012). The characteristics of talent within the workplace are wide ranging and dependent on the
individual company but can involve skills, knowledge, cognitive ability and potential.
Employees values and work preferences are also of major importance in identifying talent.
Despite the lack of a universal definition of talent appropriate to all industries and companies, all
require knowledge of what talent is needed, how to identify it and how best to develop it
(Stewart, 2006) and it is the processes involved in this that are known as Talent Management.
Talent management is the additional management processes and opportunities that are made
available to people in the organization who are considered to be talent (Ashridge consulting,
2007; Likierman, 2007).
Talent management can be a planning tool for human resource management, as a planning tool
talent management looks very similar to workforce planning, but where HR will experience a
real opportunity for contribution to the organization is in the quality of implementation
supporting the plan. Talent management is the systematic attraction, identification, development,
engagement/ retention and deployment of those individuals who are of particular value to an

30

organization, either in view of their high potential for the future or because they are fulfilling
business/operation-critical roles. (McCartney, 2006; Cappell, 2008).
Talent management is a combination of typical human resource department practices activities
expert areas such as recruiting, selection, deploying, development, retention, career progression
and succession management (Byham , 2001).
Talent management is a systematic process that describes dynamic interaction between many
functions and processes. Talent management is about attracting, identifying, recruiting,
developing, motivating, promoting and retaining people that have a strong potential to succeed
within an organization and definitely increases the performance of the organization (Van Dijk,
2008).
Talent management and global talent management in particular, are increasingly cited in research
studies as a new strategic cornerstone (Boudreau & Ramstad, 2002; Cappelli, 2008; Farndale et
al., 2010; Frank et al., 2004). Many argue that effective talent management constitutes an
essential competitive tool for organizations worldwide (Beechler & Woodward, 2009; Boudreau
& Ramstad, 2004). The intensely competitive and volatile business environment essentially
forces organizations to draw on their human capital to survive, succeed, and gain a competitive
advantage (Farndale et al., 2010; Holland et al., 2007; Kontoghiorghes & Frangou, 2009; Makela
et al., 2010). At the same time, practitioners realize that traditional approaches to gaining a
competitive become inadequate in the new dynamic context and explore new approaches to
talent management to enhance their competitiveness (Cappelli, 2008; Holland et al., 2007;
Mellahi & Collings, 2010).

31

Organizational Performance and Succession Planning


Succession planning is defined as the drive to employ high-potential individuals for different
leading posts in every organization with the purpose to maintain the leadership high quality for
now and future given the existing constraints (Charenet, 2001, p176). HRD managers are
expected to be involved with the creation of learning environment through HRD tools (Rao,
2007). In that sense they are concerned with development rather than traditional personnel
functions.
Succession planning and management includes replacement planning; however, it also involves
the development of leadership capabilities with an emphasis on change and teamwork (Groves,
2003; Karaveli and Hall, 2003; Leibman et al., 1996). It is proactive and attempts to ensure the
continuity of leadership by cultivating talent from within the organization through planned
development activities. It should be regarded as an important tool for implementing strategic
plans (Rothwell, 2010).
There is abundant evidence (Carretta, 1992; Gutteridge et al.,1993; Pattan,1986; Sahl 1992;
Walker, 1998; Wallum 1993) that companies with formal succession plan for their top
managerial posts enjoy a higher return on investment(ROI) than those that do not have one. The
advantage is even greater for firms that adopt plans covering the managers two tiers below the
top (Carretta, 1992).
Strategic management succession plans enable firms to specify managerial functions and
performance standards, ensure continuity in management practices, identify outstanding
candidates for senior management posts, and satisfy the aspiration of employees for career
advancement (Pattan, 1996).

32

By implementing a succession program firms can lower turnover rates, improve staff morale, and
promote the most highly qualified employees to key positions (Johnson et al., 1994). In addition,
the outcome of human resources may differ not only between firms that do or do not adopt
succession plans but also between firms that adopt more sophisticated programs and those that
adopt less sophisticated ones (Gutteridge et al.,1993).
Firms carry out succession plans with varying degrees of skill and sophistica tion. Classifying
plans by level of sophistication, suggests that firms could avoid the turmoil and confusion that
surround the departure of top managers by implementing an optimal succession plan.(i.e. one
embodying the highest level of sophistication). By adopting a comprehensive, well designed
succession plan a firm can strengthen its human resource function and more effectively tap the
full potential of its human resources (McConnell, 1996 and Sahl, 1987).

Organizational Performance and Talent Management


The impacts of talent management practices on organizational performance have led to a number
of studies which associated the impact of HR practices to firm outcomes. All businesses need a
wide variety of people with the most potential to deliver new sources of competitive advantage.
In order to create and sustain a culture of excellence, having a comprehensive talent management
system is the key of success. Chambers, et al. (1998) wrote that organizations need to elevate
talent management to a burning corporate priority. Talent management needs to be seen as
essential for achieving the organization's goals and objectives if it mange properly in a
comprehensive way.
So, accordingly, investment in various HR practices have been linked to firm's business
performance such as: training (Russell, Terborg and Powers, 1985), selection and staffing

33

(Terpstra, Rozell, 1993), appraisal (Borman, 1991), and compensation (Gerhart and Milkovich,
1992). Organizations will need to develop formalized and effective policies and practices across
all of the primary human resource areas. In order to effectively recruit and retain scarce labor,
organizations need to create and perpetually refine employee value proposition organizations that
are able to successfully recruit and retain valued employees (Ashton and Morton, 2005).
The field of talent management is lacking rigorous academic research to establish what
constitutes effective talent management and how it can influence organizational performance
(Collings & Mellahi, 2009; Makela et al., 2010; McDonnell et al., 2010). Even very recent
publications take a rather theoretical approach on the issue, trying to define and distinguish talent
management from human resource management (see for example Boudreau & Ramstad, 2004;
Cappelli, 2008; Collings & Mellahi, 2009; Farndale et al., 2010; Lewis & Heckman, 2006;
Makela et al., 2010; Ready & Conger, 2007). A review of these studies shows that most are
theoretical or descriptive essays, while empirical evidence is limited to descriptive statistics or
qualitative case study explorations (Beechler & Woodward, 2009; Glen, 2006; Holland et al.,
2007; Tarique & Schuler, 2010).
Many MNCs utilize competency maps to guide competence development and provide a common
language around which to discuss talent development needs (Isrealite, 2010). These maps or
frameworks are typically standardized across all units of the organization and are used to identify
individual and business unit development needs. There is a set of mixed views concerning the
use of competency models especially in the context of identifying and developing high potentials
(Hollenbeck et al., 2006). However, they are very popular in many organizatio ns. Competency
models typically articulate behavioral standards that frequently look to the past rather than the
future (Tornow and Tornow, 2001).

34

The impacts of talent management practices on organizational performance have led to a number
of studies which associated the impact of HR practices to firm outcomes. All businesses need a
wide variety of people with the most potential to deliver new sources of competitive advantage.
In order to create and sustain a culture of excellence, having a comprehensive talent management
system is the key of success (Abbasi, Sohail, Cheema and Syed, 2010).
Organizations need to elevate talent management to a burning corporate priority. Talent
management needs to be seen as essential for achieving the organization's goals and objectives if
it mange properly in a comprehensive way (Chambers, et al., 1998)
Talent management ensures organizations that right people with fit skills located at right place to
access business strategy. In fact, talent management include complete set of process for
recognize, managing people for successful of business strategy that organization used it
(Ballesteros, 2010).

Conceptual Framework
Dependent Variable

Succession Planning
Independent Variable

Organizational
Performance

Talent Management

35

Hypothesis
1. There is relationship between Organizational Performance and Succession Planning
2. There is relationship between Organizational Performance and Talent Management

Research Question
1. Is there any relationship between Organizational Performance and Succession
Planning
2. Is there any relationship between Organizational Performance and Talent
Management

Methodology
Descriptors of Research Design
1. The degree to which the research question has been crystallized is formal study. This is
formal study because it was studied beyond developing hypothesis and research question.
This study further tests developed hypothesis empirically.
2. In this study the method of data collection is communication study as data was collected
by questioning employees working in different organizations, through structured
questionnaire.
3. The purpose of the study is causal explanatory, because the study explains how
organizational performance varies depending on succession planning and talent
management in an organization.

36

4. This study is Ex post facto, because here the variables are not manipulated but are
presented on the basis of actual feedback of the samples.
5. In this study samples were interviewed for once, so this is a cross-sectional study on the
frame of this time dimension.
6. The researcher conducted practical interviews with the samples and collected the data.
So, the research environment here would be field conditions.
7. The tropical scope breadth and depth- of the study is statistical study as it emphasizes
more on breadth. Here, a sample is used to generalize either succession planning and
talent management in an organization actually influenced the organizational performance.
To do so sample is used and from their feedbacks the overall pattern is tried to be
generalized.
8.

The study was conducted by actual routine because the samples here were aware of the
purpose of interviewing them.

Research Instrument
To find out and analyze how organizational performance varies with succession planning and
talent management both primary and secondary data was used. For collecting primary data a
questionnaire containing ten questions was used. Employees were provided the questionnaire so
that the influence of the two dependent variables on the independent variable can be found. The
survey questionnaire has two parts. In the first part demographic characteristics of the respondents
such as age, gender and occupation is mentioned. In the second part, questions contained regarding
all variables of the conceptual framework. To measure the organizational performance and talent

management four questions were used for each of them. For relational succession planning two
questions were used. For all the questions asked, likert scale was used. All answers to the

37

question are Strongly disagree, Disagree, Neither Agree nor Disagree, Agree and
Strongly Agree. All are five point likert scales ranges from 1 (Strongly Disagree) to 5 (Strongly
Agree).

Sample Size
40 employees were chosen who are working in different organizations where succession
planning and talent management is done.

Sampling Method
To conduct the sampling, random probability method were selected where every individual of
the population had equal chance of being selected for the survey.

38

Data Analysis
Descriptive Analysis
Demographic analysis
Table: 1
Gender
Frequency

Valid

Percent

Valid

Cumulative

Percent

Percent

Male

25

62.5

62.5

62.5

Female

15

37.5

37.5

100.0

Total

40

100.0

100.0

In this study a sample size of 40 were used where 62.5% of them were male respondents and
only 37.5% were female respondents.
Table: 2
age
Frequency

Valid

Percent

Valid

Cumulative

Percent

Percent

20-30

15

37.5

37.5

37.5

31-40

17

42.5

42.5

80.0

41-50

17.5

17.5

97.5

51 and above

2.5

2.5

100.0

40

100.0

100.0

Total

39

Most of the respondents in the survey were aged between 31-40 years, which is 42.5% of the
sample size. In second was the age group between 20-30 years Employees working in different
organization that represented 42.5% among them. At third is the age group of 41-50 years which
is 17.5% of the total respondents. Only 2.5% respondents were aged 51 years and above.
Table: 3
gender * age Crosstabulation
Count
age
20-30

31-40

Total

41-50

51 and
above

Male

10

25

Female

15

15

17

40

gender

Total

In this table an analysis has been done using cross tabulation. According to this there were 9
male respondents and 6 female respondents within the age group 20-30 years. Total respondents
in this group are 15. Then, there were 10 male respondents and 7 female respondents within the
age group 31-40 years. Total respondents in this group are 17. In the age group 41-50 years there
were 5 male respondents and 2 female respondents and a total number of 7 respondents. There
were only 1 male respondent in the age group 51 years and above.

Reliability Analysis

40

In this section reliability of the questions fixed for certain variables are measured. Cronbachs
Alpha Value should be between 0.5-0.6 which is sufficient to declare the reliability. I f the value
comes 0.7 and above it is desirable because it represents that the questions selected to measure a
certain variable is perfect or correct. Cronbachs Alpha value cannot be negative. If it is negative
it is not reliable.
Table: 4
Reliability Statistics
Cronbach's

N of

Alphaa

Items

-.009

a. The value is negative


due to a negative average
covariance among items.
This violates reliability
model assumptions. You
may want to check item
codings.
To measure the reliability of the first variable four questions were selected. After the reliability
analysis it shows Cronbachs Alpha value as negative. The value is -.009 which shows that these
questions are not reliable to measure the variable.
Table: 5

41

Item-Total Statistics
Scale Mean

Scale

Corrected

Cronbach's

if Item

Variance if

Item-Total

Alpha if Item

Deleted

Item Deleted

Correlation

Deleted

11.3000

.882

.133

-.288a

clear sense of direction

11.1750

1.071

.015

-.039a

rapidly adapt needed

11.5250

1.128

-.061

.096

11.3750

1.266

-.094

.125

practice effective two


way cmn

org changes
effective planning at all
levels
a. The value is negative due to a negative average covariance among items. This
violates reliability model assumptions. You may want to check item codings.

The above table shows that if question number three or four is deleted from the reliability test the
value for Cronbachs Alpha will come as a positive number.

42

Table: 6
Reliability Statistics
Cronbach's

N of

Alpha

Items

.096

After deleting the third question from the list of the questions the Cronbachs Alpha value is
.096, which is a positive number. Still it is less than 0.5. It means that the scales are very poor.
They are not good enough to be used to measure such variable.
Table: 7
Reliability Statistics
Cronbach's

N of

Alpha

Items

.359

For the second variable Cronbachs Alpha value is 0.359. This number resembles that this scale
is also not so good to measure the reliability of the variables.

43

Table: 8
Reliability Statistics
Cronbach's

N of

Alpha

Items

.195

Cronbachs Alpha is 0.195 for the third variable. As it is less than 0.5 it is not a good scale to
measure relational recovery preference.

Hypothesis Testing
Spearman Correlation
Table: 9
Correlations
Organization

Succession

al

Planning

Performance
Correlation
Organizational

Coefficient

Performance

Sig. (2-tailed)
N

1.000

-.066

.686

40

40

-.066

1.000

.686

40

40

Spearman's rho
Correlation
Coefficient
Succession Planning

Sig. (2-tailed)
N

44

The table shows the value of (rho) is -.066 and value of (alpha) is .686. To find out if
variables have any relationship between them it has to be (rho) 0 and (alpha) <0.05. In this
table both the conditions are not fulfilled, only one condition is fulfilled which is (rho) 0. So,
there is no relationship between Organizational Performance and Succession Planning.
Table: 10

Correlations

Correlation
Organizational

Coefficient

Performance

Sig. (2-tailed)
N

Organizational

Talent

Performance

Management

1.000

.034

.837

40

40

.034

1.000

.837

40

40

Spearman's rho
Correlation
Coefficient
Talent Management
Sig. (2-tailed)
N

The table shows the value of (rho) is -.034 and value of (alpha) is .837. To find out if
variables have any relationship between them it has to be (rho) 0 and (alpha) <0.05. In this

45

table both the conditions are not fulfilled, only one condition is fulfilled which is (rho) 0. So,
there is no relationship between Organizational Performance and Talent Management.
Pearson Correlation
Table: 11
Correlations
Organizational

Succession

Performance

Planning

-.114

Pearson Correlation
Organizational
Performance

Sig. (2-tailed)
N

.484
40

40

-.114

Pearson Correlation
Succession Planning
Sig. (2-tailed)
N

.484
40

40

The value of Pearson correlation here is -.114. The values of the Pearson Correlation
range from -1 to +1 with negative numbers representing a negative correlation (as one
variable increases, the other variable decreases) and positive numbers representing a
positive correlation (as one variable increases, the other also increases). The closer the

46

value is to -1 or +1, the stronger the association is between the variables. Here the
value is in the range. So, there is relationship between the variables.

Table: 12
Correlations
Organizational

Talent

Performance

Management

.009

Pearson Correlation
Organizational
Performance

Sig. (2-tailed)
N

.958
40

40

.009

Pearson Correlation
Talent Management
Sig. (2-tailed)
N

.958
40

40

The value of Pearson correlation here is .009. The values of the Pearson Correlation
range from -1 to +1 with negative numbers representing a negative correlation (as one
variable increases, the other variable decreases) and positive numbers representing a
positive correlation (as one variable increases, the other also increases). The closer the
value is to -1 or +1, the stronger the association is between the variables. Here the
value is in the range. So, there is relationship between the variables.

47

Regression Analysis
Table: 13
Model Summary
Mode

R Square

l
1

.114a

Adjusted R

Std. Error of

Square

the Estimate

.013

-.013

.68186

a. Predictors: (Constant), Organizational Performance

In regression analysis R square values represent how much a dependent variable is explained by
the independent variable. Here the value for the R square is .013 which is 1.3%. It shows that the
dependent variable Succession Planning is related to the independent variable which is
Organizational Performance with only 1.3%.
Table: 14
Model Summary
Mode

R Square

l
1

.009a

.000

Adjusted R

Std. Error of

Square

the Estimate

-.026

1.34771

a. Predictors: (Constant), Organizational Performance

In regression analysis R square values represent how much a dependent variable is explained by
the independent variable. Here the value for the R square is .000 which is 0.0%. It shows that the
dependent variable Succession Planning is related to the independent variable which is

48

Organizational Performance with 0%. It means that dependent variable is explained by


independent variable by 0%.

Findings
The study done in this research paper shows that there is no relation between organizational
performance and succession planning. There is also no relation between organizational
performance and talent management. This is based on Spearman correlation. If result is analyzed
it shows even if organizations implement succession planning or talent management or both it
would not have any effect on the performance of an organization. In this case, these programs are
not helpful to an organization. At present it may not have any relation with organizational
performance but if the organizations work on it there will be outcomes which will affect the
organizational performance.
According to the Pearson correlation there is relation between the dependent and independent
variables which are succession planning, talent management and organizational performance.
Many organizations are there which do not have succession planning or talent management
programs. As the Pearson correlation indicates that there is a relationship between the variables it
will help them to increase employee motivation and with these succession planning and talent
management program they can make their employees perform better which will lead to a better
performance of the organization. If succession planning is maintained and done by preparing
employees to fill any specific position it will bring better output as the employee is prepared and
trained to fulfill the duties and responsibilities required for that position. On the other hand,
talent management by an organization will help individual employees to improve and develop

49

themselves. This will help them as individual to perform their required responsibilities more
effectively and efficiently, which will lead to a better performance of an organization. In both
cases, performance of the organization is affected in a positive way by increasing the efficiency
and performance of an organization.

Conclusion
This research paper concludes the two components of organizational performance which are
succession planning and talent management. Connections between these three variables are
shown through hypothesis and conceptual frameworks. The results from the research show that
both succession planning and talent management can play a vital role in improving
organizational performance.
With reliability testing reliability for the questions to measure the three variables were tested.
The hypothesis testing made sure, if the variables have any relation with each other, and lastly
regression analysis showed how much a dependent variable is explained by the independent
variable.
Succession planning can help a organization to fill the positions which is going to be vacant in
near future. Organizations prepare employees so that they fulfill the new responsibility given to
them. Talent management makes sure that employees having different talents are maintained and
retained through various trainings and other necessary programs. If used and practiced properly
succession planning and talent management can lead to a successful organization with great
organizational performance.

50

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Appendix
Survey Questionnaire

This research is conducted for academic purposes only. So please do not hesitate to answer. Your
information will be kept confidential.

Personal Information

1.

Male

Female

2. Age: 20-30
31-40
41-50
51 and above
3. Occupation _______________________
---------------------------------------------------------------------------------------------------------------------

1
Strongly
Disagree

2
Disagree

3
Neither Agree
nor Disagree

4
Agree

5
Strongly
Agree

59

Please circle the number, which most closely responds to your thinking.

1. My organization practice effective two-way

communications
2. My organization have a clear sense of direction
and focus

3. My organization rapidly adapt to needed


operational changes
4. My organization Practice effective planning at
all levels
5. Place a high priority on workforce training and
development?
6. My organization conduct formal performance
appraisals on a regular basis
7. At my department my performance on the job is
evaluated fairly.
8. My organization has policies that encourage career
growth and developmental opportunities
9. My organization Builds a deep reservoir of
successors at every level
10. If you left your job tomorrow, someone in your unit
could immediately take over.
11. My organization has policies that encourage career
growth and developmental opportunities

Thank you for your cooperation.