Effects Of Succession Planning On Organizational Performance

Effects Of Succession Planning On Organizational Performance

Abstract

The purpose of this study is to evaluate the effect, practices and challenges of Flour Mills Nigeria Plc, in succession planning on organisational performance. The study used primary and secondary data. The cross-sectional survey was used to collect primary data from 92 senior managers. Interviews were conducted with the top 5 HR managers directly involved in the implementation of the program. A descriptive analysis was conducted to assess the effect, challenges and practices. The data collected was analyzed with SPSS version 20. The study found that Flour Mills Nigeria Plc’s succession planning and management program addresses challenges such as identifying the least qualified talent, selecting candidates , inability to track progress and processes, information gaps, low visibility Due to these difficulties, Flour Mills Nigeria Plc may have difficulty visualizing the program in light of SP & strategic tools to meet its operational needs, but the system remains the continuum of planning.

Chapter One

Introduction

1.1 Background of the Study

Whether public or private, the organization’s survival is based on its ability to bring on board and sustain high quality workforce over a period of time. Many organisations are currently facing mounting pressures to ensure their sustainability, flexibility, and responsiveness to the increasing uncertainty and limitations in the economic world. Ultimately, increased turbulence in the employment environment, characterized by organizational restructuring, funding uncertainties and increasing program complexities have substantial effects on the ways organisations respond to workforce replacement (Odhiambo, 2014).

At a global level, succession planning in the recent past has received more attention not only as a concern for the management of human resources, but also as institutional strategic management component for ensuring performance and growth. In a survey by Rothwell (2010), top corporate companies revealed that the main reasons for having succession planning programmes are attributed to the challenge to maintain a pool of potential successors.

The rate of employee turnover in the changing and highly competitive business environment is on the increase in most organizations in the world today (Sullivancited in Stephen et al., 2013). This phenomenon has led to changes in workforce demographics, global competition, mergers, acquisition volumes, and technology that call for the act of developing a pool of talent to take up leadership responsibilities and push the businesses to the next level. Although some managers feel that the problem of high attrition rate is insignificant because of the high rate of unemployment, it is however threatening to add another impediment to the growth and survival of many firms (Pattanayak, 2005).

In Nigeria firms that undergo shrinking or close up do so because of lack of competent managers that are able to motivate employees to stay longer (Adewale, 2011). On the contrary, employee turnover can be quite expensive. Beside recruitment and selection expenses, the cost associated with creating new employee records in the human resource department, establishing payroll records in the accounting section and the provision of safety equipment are costs incurred when employees leave hence the need to manage succession planning properly (Woods, 1997).

Succession planning represents a deliberate and systematic effort to ensure leadership continuity in key positions, retain and develop intellectual and knowledge capital within key employees for the future, encourage individual advancement, ensure the stability or “bench strength” of key personnel, provide an overarching approach to continue effective performance of the organization, and organize concerted programmes for the development, replacement, and leveraging of key people to ensure a deep talent pipeline (Schoonover, 2011).

1.2 Statement of the Problem

Every organization needs a process of anticipating and making provisions for the movement of people into, within and out of the organization. Organizations constantly face challenges which are not only associated with the perpetual evolving social, political and economic environment, but also with respect to rapid changing demographics of their workforce.

Today’s 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 on how to motivate and connect their employees in order to create competitive advantage that would ultimately lead to higher productivity. 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.

In today’s 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 today’s organizations.

It has been usually agreed that the purpose of researching is to identify a problem and provide adequate solution to such particular problem confronting the organization. This research therefore is expected to probe the likely problem associated with succession planning and organizational performance with a special reference to Flour Mills Nigeria Plc.

1.3 Objectives of the Study

The study will be conducted with the following objectives;

1. To investigate the effect of succession planning on organisational performance.
2. To explore the relationship between corporate leadership planning and organizational growth.
3. To examine if succession planning allows an organization to prepare for the absence of an individual.
4. To highlight the current challenges hindering corporate succession planning in Flour Mills Nigeria Plc.

1.4 Research Questions

The undertaking of this study will be guided by the following research questions:

1. Is succession planning a significant predictor of organisational performance?
2. What is the relationship between corporate leadership planning and organizational growth?
3. Does succession planning allow an organization to prepare for the absence of an individual?
4. What are the current challenges hindering corporate succession planning in Flour Mills Nigeria Plc?

1.5 Research Hypotheses

The following hypotheses will be tested in the course of this study:

Hypothesis 1:

• Ho; Succession planning is not a significant predictor of organisational performance.
• HI; Succession planning is a significant predictor of organisational performance.

Hypothesis 2:

• Ho; There is no significant relationship between corporate leadership planning and organizational growth
• HI; There is a significant relationship between corporate leadership planning and organizational growth

1.6 Significance of the Study

Succession planning and management with its tremendous benefits, helps organizations to assure the business and leadership continuity. Since this study addresses the contemporary challenges and practices of succession planning and management in Flour Mills Nigeria Plc, it will benefit different stake holders.

1. Primarily, the study will help the organization to look back and realize the implementation of succession planning and management practices and challenges exhibited.
2. Other similar organizations in the manufacturing sector might use it as a guideline and be aware of the challenges ahead before they start implementing succession planning and management and if they have similar liabilities they might extrapolate the study.
3. Helps policy makers to look the succession planning and management from different perspective.
4. Finally, it will serve as a reference for future researchers who have interest on the area.

1.7 Scope of the Study

This study tries to assess the challenges and practices of succession planning and management. It is limited to figure out the challenges exhibited in the succession planning and management system of the organization and the way those challenges are tackled to enhance the organizational performance..

1.8 Limitation of the Study

Since the sampling contains the employees from throughout the country there has been a challenge in collecting the questionnaire. But with the help of the succession department the problem has been alleviated. As the study is limited to the first and second pools it might not cover all the challenges of the process of all pools.

1.9 Operational Definitions

Leadership Crisis

An anticipated phenomenon characterized by an acute shortage of leaders in an organization mainly due to massive retirements of baby-boomers and the lack of an adequate supply of candidates prepared to replace the retirees (Mackey, 2008).

Replacement Planning

Any effort that “focuses on the identification of replacements of the key positions, usually at the top two or three levels of an organization” (Berke, 2005, p. 1). Often, this process does not deliberately develop and prepare candidates for the earmarked positions (Berke, 2005). Replacement planning is the simplest form of the succession process (Rothwell, 2005).

Succession Plan Chart

A tangible document, chart, or schedule that shows when leaders are expected to retire and which, when, and how groups of candidates should be developed for filling different key leadership positions (Sobol et al., 2007).

Succession Planning and Management (SPM)

“Any effort designed to ensure the continued effective performance of an organization, division, department, or workgroup by making provision for the development, replacement, and strategic application of key people over time” (Rothwell, 2005, p. 10). SPM is, in essence, a combination of succession planning and succession management. According to Rothwell (2005), the succession planning and management effort can be a formal or an informal process.

Talent Management

is the process of and strategies for recruiting, retaining, and developing talent or high potentials, those employees who are viewed as strategically important for the future of an organization (Rothwell, 2005)

Chapter Five

Summary of Major Findings, Conclusions and Recommendations

5.1 Summary of Major Findings

The findings of the study have shown that succession planning and management has been one of the strategic tools of the organization which enables it achieve its business goals. It is identified that the Flour Mills Nigeria Plc has traced its definition of succession planning and management. But it is found in the study that the definition is hung over the second stage in SP&M continuum i.e. succession planning.

It is likely identified by the study that, the Flour Mills Nigeria Plc has been applying a six stage succession planning process which are namely, organizing the succession effort, identifying and prioritizing succession problems, identifying critical competencies for key and hard to fill positions, identifying and evaluating applicant pools, implementing strategies and programs for succession and the last one is evaluating the program. As the effectiveness of this process analyzed in relation to the different literatures, Flour Mills Nigeria Plc has been at assessment of organizational needs, identification and selection of leadership potentials. But there have been some draw backs in the formulation and use of succession planning charts. Rewarding and retaining potential successors too. In embracing the processes, the top management participation has been profound and likely the culture supports the program.

According to the findings of the research the following challenges of the SP&M program have been exhibited: bias in the selection of candidates due to proximity and relativity to the leaders and government officials, looking at the long range benefits of SP&M and neglecting the short term benefits, inability to make use of technology: this has been the big challenge because there is no personnel who will operate the software programs. There is also poor communication flowing only down to the employees and this perpetuated information gap. There is also lack of alignment between some HR practices like, compensation and reward, recruitment and selection and training and development with SP&M. And the very most challenge is neglecting talent at the lower level. This is very much related to the recruitment and selection in the early stages even.

According to the findings, the challenges of SP&M can be handled by preparing reliable assessment tools which are regularly conducted throughout the organization. Likely, trainings should be given based on the IDP of the employees and, either employee should be trained so as to run the software programs or an expert should be hired to address the challenge of tracking progress in one’s table. Looking at the talent everywhere in the organization from the novice employees to the experienced ones should be a culture.

The study found that succession planning and management process is mostly aligned with the training and development aspect of HRM. Candidates get ample training though they are denied their need implied in their IDPs. Recruitment and selection is linked with the candidates in the pools in time of vacant positions, but novices who have the talent denied the chance. While compensation gets along with the program, reward is denied for candidates in the pool. This has been a reason for some to leave the pools and the organization.

Lastly the study found that, the organization hasn’t been doing much to relate individual’s career aspirations within that of the organization. Though there is a sink of light in this regard in promoting the successors in the pool towards the target position, employees are not satisfied because they are denied their interests indicated in their IDPs. If the individual developments were applied to this end, the employees’ career aspirations and the organizational pools will be aligned for better success.

5.2 Conclusions

According to the findings of the study the following conclusions are made

Although the succession planning management practice has been formulated with experts the underlined view in the organization has hung up on the planning aspect of the succession continuum.

The six step succession planning and management process in the Flour Mills Nigeria Plc has weaknesses, for it doesn’t include succession planning and management charts, in its mechanisms in rewarding and retaining the groomed candidates to succeed the outgoing leaders. More over the practice denies mentoring practice while the outgoing leaders leave the organization. Neglecting the successors individual development plans become another drawback of the practice.

Top management support, is less in promoting leaders who inspire internal development. But from the formulation of the policies to assigning accountable officials top management has done good. Likely, the cultural context is aspiring in case of flourishing succession planning and management. But it lacks integrating the SPM with some human resource activities like, recruitment and selection, reward and performance appraisal

The following challenges are the main challenges hampering the SP&M process in the Flour Mills Nigeria Plc:

• Bias in the selection of candidates
• Low visibility
• Inability to make use of technology in supporting the program
• Poor communication
• Like of alignment with HR practices
• Neglecting talent at lower levels

The above challenges can be handled by preparing the reliable tools for assessment and conducting the at daily basis, giving trainings and development opportunities with the IDPs of employees, hiring experts or training employees to run the software programs meant to integrate the SPM practices, looking at talent everywhere every time.

5.3 Recommendations

Based on the findings of the study the following recommendations are forwarded

1. First and foremost, the view of the SP&M program should be clearly speculated to be in upper continuum. It should clearly identify the overall continuum. It doesn’t have to hang up on the second continuum rather it should include the management aspect that it will include talent at all levels.
2. The succession planning and management process should inculcate the succession planning charts and they have to be discussed with all employees who are aspiring to join the pools.
3. Potential successors in the pools should be rewarded in by their achievements so as to inspire others apply to the potential talent pool.
4. Employees should be trained in order to run the computer programs meant to gear the SP&M or as an alternative Flour Mills Nigeria Plc should hire an expert to run the program and further train other employees. Moreover, the computer system should unify all units so as to track progress and facilitate the program.
5. The Flour Mills Nigeria Plc should create a reliable assessment tool to identify potential successors’ blind spots and strengths. This should also be done in timely fashion with strict follow ups. With this it can minimize bias due to proximity and relativity.
6. Moreover, talent should be identified early in the induction stage of recruitment and selection of novice employees and all employees in the organization lower levels. This will help the Flour Mills Nigeria Plc to have a formidable bench strength
7. Employees’ individual development plans should be given due attention because this will inspire them to stay in the organization and exert their efforts in achieving excellence to march in the same dream with the organization.
8. Intrinsic mechanism to motivate employees should be considered in retaining successors in the pools.

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