Succession

Planning
 Succession
Planning
Succession Planning is the systematic and
deliberate process of ensuring the
availability of highly qualified people for
all positions not only in the present time,
but at any point in the future as well.
 WHY WE SHOULD DO
SUCCESSION PLANNING
Rothwell (2001) has reviewed the major reasons for having a succession
plan:

To accelerate the development and improve the retention of talented people.

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 organizations 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;
 TRADITIONAL AND
EXTERNAL SUCCESSION
PLANNING
 TRADITIONAL SUCCESSION
PLANNING

Traditional succession planning approaches

is that they often rely solely upon the
opportunities for development that exist
within the walls of their organization
 External succession planning
The name is pretty much self-explanatory: external
succession planning is much like traditional succession
planning, with the exception that the scope is expanded to
include both external talent and job assignment
opportunities for development outside the organization.

This can be in the form of job assignments

outside the boundaries of the traditional
organization. Such opportunities could occur
with customers, vendors, strategic partners,
and if you are really bold even
competitors.

Example: "Up-Out-Up" An oil company

 MODELS OF SUCCESSION
PLANNING
Three Models of Succession Planning

1. Succession planning by position

management driven .
2. Creating succession planning pools .
3. Top-down/bottom-up succession planning .
 Succession planning by position
management driven
Incumbent identifies the individual(s) who are in their view best
qualified to move into the position.
short term - 1 year)
the medium term- 2-3 years or
the longer term (3-5 years);
The incumbent may also identify their perception of the development
needs of the candidates they have named;
Sometimes the organisation decides that the succession plan is a
strictly confidential document
consequently the only people who are aware of the succession plan
are those who develop it.
 Succession planning by position
management driven
Advantages of this approach:

This is the simplest model; based on the assumption that the best
person to identify who would be able to do the job is the person who is
currently doing it;

The most common reason why organizations use this model is that it is
often the approach the CEO is most comfortable with.

If there are any positions which have no identified successors (thus

identifying succession gaps in the organisation).
 Succession planning by position
management driven

Disadvantages/risks:

High risk of encouraging corporate "cloning".

This can have serious business implications.

Problematic in large organizations in which the incumbent in the

position does not know employees across the organisation.

Risk that the person identified does not aspire to the promotional
positions they have been identified for .
Creating succession planning pools
In this model, high potential candidates are identified within the
organisation as the senior managers of the future;

They are usually selected by a task force of senior managers (often

with the assistance of Human Resources).

To facilitate decision making, they will often agree on some criteria by

which to select the individuals.

In some cases, candidates may be further narrowed down through an

assessment center process or through an interview/evaluation process;
and
 Creating succession planning pools

Advantages of this approach:

This type of approach tends to be somewhat fairer because more

managers are involved in the selection of the people who are identified
for the High Potential program; thus providing some checks to offset
bias.; and
This approach is also more likely to recognize the value of providing
broad background for the high potential employees rather than a single
functional stream of experience.
 Creating succession planning pools

Disadvantages/risks:

In large organizations, most decision are influenced by the level of

visibility the person has in the organisation As a result, talented
employees who do not have a high profile may be overlooked all
together; and

In many organizations, it is widely known which employees have been

identified as high-potentials; the other non-identified employees can
be severely discouraged and demoralized.
 Top-down/bottom-up succession planning
Senior management as a group determines what competencies are
required to enable a person to take on the key roles .
All employees at a pre-determined level are provided with the
information .
Senior Management conducts a session about succession planning .
Employees then participate in a workshop in which they are given
guidance and led through such processes as:
a) using 360 degree feedback
b) developing their own individual development plan and reviewing it with other appropriate
people,
c) learning how to take responsibility for their own career growth, and
d) considering what would be good "next moves" for them to make in their careers.
Assessment centers could also be used as part of the workshops;
 Top-down/bottom-up succession
planning
Advantages of this approach:

The program serves to empower employees; to help them feel that they have
some control over their careers and are not at the mercy of others;
The across-the-board criteria for progression ensure that there is less chance
to "work the system"; and
The process is transparent. There need be no secrets or hidden agendas. This
engenders a higher level of trust.
 Top-down/bottom-up succession
planning
Disadvantages/risks:

Three things are pre-requisite for the success of this

program:
Strong across-the-board support at the most senior
levels of the organisation,
consistency in application, and
follow-through.
 Guidelines for effective succession
planning
Succession planning should be driven by the line function and not HR
executives.
Succession planning should develop key candidates, in anticipation of
future openings.
Succession planning is not just selection. Development through job
rotation, mentoring and formal training programs is equally important.
Succession planning must take into account the culture of the organization.
Succession planning must be consistent with the future strategic direction
of the company.
 What the CEO needs to do
Many CEOs fail to handle succession planning effectively for a variety of
reasons:
They forget the big picture and stay focused on day to day operations.

They have an exaggerated sense of self importance and begin to think they are
indispensable.

They are poor in building a second layer of management because of an

unwillingness to tolerate good people or to delegate.

They try to avoid conflict and hesitate to send a clear message who the
successor is going to be.

They continue to play a role in the company even after the new CEO has been
put in place.
 The Indian Scenario

Family managed businesses

Progressive Indian business houses like
Ranbaxy, the Murugappa group and the Eicher
group have demonstrated a high degree of
professionalism.
 Example- Lucent Technologies

Lucent has divided succession planning into two phases:

identifying leadership requirements and the talent available
and
talent development.
 Example- Lucent Technologies
Lucent evaluates possible successors on two primary
criteria: performance and the ability to develop and
adopt.

Some of the important attributes, the company looks for

in future leaders include
ability to think globally
ability to focus on results
ability to perform tasks and projects with speed
customer orientation
concern for people
respect for people
ability to inspire trust in employees.
 EXAMPLE-Thermax
The Pune-based company has been known
to take good care of its employees, making
it a favorite employer among many of
Indias premier technical institutions.
Yet
 EXAMPLE-Thermax
Five years after founder Rohinton Agha
passed away, the entire board of governors
had to resign.
The company struggled to compete in a
changing business environment.
Thermaxs market capitalization declined
sharply from Rs.990 crore (on July 22,
1996) to Rs.186 crore (on April 4, 2000).
 EXAMPLE -GE

GE is quite clearly one of those few

companies which has been able to grow
leaders consistently.
Welch himself honed his leadership skills at
GE under the guidance of his illustrious
predecessor, Reginald Jones.
 EXAMPLE -GE

GEs Leadership Development Institute in Crotonville, New York has

ensured that activities aimed at developing leaders are closely linked to the
companys business strategy.

Each year, the Crotonville institute trains some 10,000 GE employees.

Welch himself took the lead in choosing action- learning topics for annual
executive-development courses.

GE also trains executives in change management by disseminating its

accumulated expertise in this area .

GE interviews company leaders around the world to assess future business

needs and the leadership characteristics needed in the years to come
 EXAMPLE -GE

Welch took quite sometime to appoint his own successor.

As far back as 1991, Welch had remarked in a speech:

From now on, choosing my successor is the most
important decision I will make. It occupies a considerable
amount of thought almost every day.

Welchs successor, Jeffrey Immelt who has been chosen

very carefully after a long screening process, recently took
charge.
 Conclusion
Succession planning is a key strategic issue that needs the
time and attention of top management on an ongoing basis.

A proactive approach is far more desirable than an ad hoc

knee-jerk approach.

It is heartening to note that some Indian companies are

taking succession planning more seriously than others.
Hindustan Lever (Lever) and ITC are few among them.
Thank you