Learning Objectives At the end of the unit, am able to: 1.Understand the Succession Planning and its concepts, 2.Know the time framework applied in suecession planning 3.Comprehensively understand the elements and explore the issues and generalize solution Setting Up Name: ‘Year/ Section: Direction: Answer the following questions after watching the video in the link below: 1. What do you think is the problem encountered by the personnel in the video? 2. How is the problem being resolved? https://www.youtube.com/watch?v=GZ8C3ie0drw Lesson Proper Introduction: Survival, Growth, and efficient continuous existence of an organization requires a succession of people to fill various important jobs. The purpose of succession planning is 105to identify, develop and make the people ready to occupy higher level jobs as and when they fall vacant, Higher level jobs fall vacant, Higher level jobs fall vacant due to various reasons like retirement, resignation , promotion, death, creation of new position and new assignments, Succession may be form internal employees or external people. Succession from internal employees is advantageous to the organization as well as to the internal employees. Organization can buy the employees loyalty and commitment, belongingness, shared feeling of development along with the organization by promoting the internal employees. Employees get the benefits of growth in the organization. the organization mostly prefers to encourage the growth and development of its employees as such tend to prefer succession from within, Organizations, appraise employees’ potentialities, identify training ‘gaps for future vacancies, and develop them for higher and varied jobs. The scope of succession plan would be more when the organization grows steadily and employees have potentialities to take up higher responsibilities. Professionally run organizations ask their managers to identify the internal employees having potentialities and develop them in order to occupy their positions as and when they fall vacant However, it is necessary to allow the inflow of new blood. Hence organizations should also search for outside talent in certain cases like when competent internal people are not available, when major expansion, diversification and growth plans are in offing, complete dependence on either internal source or external source is not advisable to any organization. Hence a judicial balance between these two sources should be maintained. Meaning and Purpose of Succession Planning Succession Planning is the process of ensuring a suitable supply of successors for current and future senior or key jobs arising from business strategy, so that the careers of individual can be planned and managed to optimize the organizations needs and the individual's aspirations. 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 resources shortages and skill shortages before openings occur. Thereafter, it becomes easy to groom qualified candidates for future vacancies. The organization is thus assured of continuity of operations and better qualified incumbents. Replacement Charts ‘A Succession Plan is plan for identifying who is currently in post and who is available and qualified to take over in the event of retirement, voluntary retirement, dismissal or sickness. A typical Succession Chart shows details of key positions of executives and brief references to their possible successors. The replacement chart is a visual representation of who will replace whom if there is a job opening, Time Frame 106Right person for the right job, at the right place and right time implies the time frame of succession planning. Time frame is applied for mentoring, training and job retention, As the process of succession planning is to find right person within the internal framework, there are possibilities when no intemal candidate is available, so here the management uses succession planning to recruit a person from outside. Within the organization the top level authorities keep supervising and training their subordinates for promoting them to higher post applying succession planning effectively. Elements of Succession Planning 1, Management Succession Planning In organizational development, succession planning is the process of identifying and preparing suitable employees through mentoring, training and job rotation, to replace key players such as the chief executive officer (CEO) within and as their terms expire. From the risk management aspect, provisions are made in case no suitable internal candidates are available to replace the loss of any key person. It is usual for an organization to insure the key person so that funds are available if she or he dies and these funds can be used by the business to cope with the problems before a suitable replacement is found or developed. Succession Planning involves having senior executives top executives and those in the next lower level to determine several backups for each senior position, This is important because it often takes years of grooming to develop effective senior manager. If there is a critical shortage in companies. form middle and top leaders in the next five years, the organization will need to create pools of candidates with high leadership potential. A careful and considered plan of action ensures the least possible disruption in the delivery of work and services, Example includes such a person who is suddenly and unexpectedly unable or unwilling to continue their role within the organization; accepting an approach from another organization or external opportunity which will terminate or lessen their value to the current organization; indicating the conclusion of a contract or time-limited project; or moving to another position and different set of responsibilities within the organization. A succession plan clearly set out the factors to be taken into account and the process to be followed in relation to retaining or replacing the person, 2. Business Succession Planning Business succession planning involves planning for the smooth continuation and success of a business which depends greatly on the availability of competent people. Be it profit or non- profit organization, one of the concerns is there may be no successor to drive it once the leader or key employee leaves either by choice or by circumstances. This concer has been repeatedly expressed in the papers by leaders from the private and government sector. It is people or more aptly, the right people that make things happen. 107But the music will stop one day! If the leader of key personnel does not retire he will end his time of service when he dies. And when they do, problems often set in. the day after is often filled with chaos and uncertainty. Family Business Succession Planning Due to the complexities surrounding the transfer of ownership of family business from one generation to another, specific resources have been developed for family business owners planning for this transition. Among these resources is the McCabe Arch which a visualization and planning tools for the American business owner. It offers practical solution for planning the orderly consumption and distribution of financial and emotional wealth. The process, like the construction of an arch, begins with two solid cornerstones, the business owner who is willing to plan for his or her eventual departure from the business and the willing successor. However the unique aspect of an arch was that we continually build it from two sides. For succession planning model to work, we need commitment from the owner and the protégé. It was imperative that both sides complete their assignments with the ultimate goals of the finding and resolving the key issues that were represented by the various blocks. Harry MeCabe (author of Pass it On: The Entrepreneur’s Succession Planning book) Bach building block on each side of the arch represents a step in the 7 Steps to Succession, which provides a time table and road map for Family Business Succession Plans, Issues in Succession Planning and Solutions 1. There is compelling argument that gifting family businesses to the next generation destroys businesses and family relationships. When family members purchase shares in a family business they are required to assess their own skill and ability to generate wealth from the business. Families that skip this step, families that gift ownership encourage children to work in and often lead family businesses for all the wrong reasons 2. If the employees retire or exit for other reasons, the ethos and dynamics of the business will inevitably change. If the value of the business is to be maintained or enhanee, it is imperative that these changes are carefully controlled. The first step is to formally decide precisely what difference their departure will make. If the retiring director/manages were responsible for sales dynamism, strict financial control, key account customer loyalty or engineering innovation, for example, these are the critical skill gaps which will need to be seamlessly filled 3. The assumption is companies will need to recruit externally to fill operational gaps arising as they undergo change. This is not necessarily the case. 4, Extemal HR professionals can be brought in to work as change managers. They can identify current or anticipated gaps in managers’ range of skills and employees’ competencies and then develop the most cost efficient ways to fill these gaps. But there is more to succession planning, Rather than just being a way of averting the 108dangers of a foreseeable motivational and management vacuum, it can be an opportunity to refresh, revitalize or reposition a staid enterprise in a rapidly changing world. 5. Businesses can move forward by optimizing the contribution of their existing management, staff and workforce. It is highly likely existing personnel will have undiscovered capabilities and talents. Assessing Learning Name: Date: Section: Score: EXERCISES 8.1 109