The Impact Of Management Succession In An Organisation Goal Attainment

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The Impact Of Management Succession In An Organisation Goal Attainment


Abstract


This study aimed at empirically establishing whether management succession impacts company goal attainment in Nigeria. and the extent to which such practices had been implemented. In addition, it aimed to establish the implications such practices have on employee performance in the Nigerian oil and gas sector. The design of the study adopted was descriptive research, and data was collected using questionnaires and interview to key informants. Both descriptive and inferential statistics were used to analyze the data. The findings show that although a number of management succession practices existed with high impetus for the same in the Oil and gas sector organizations studied, there was rather low level of implementation a factor largely attributed to lack of senior management support among others. This was noticeable with the findings that there was a general low employee satisfaction level across all the three organizations and that the public sector organizations were losing their best employees to their competitors.


Chapter One


Introduction

1.1 Background of the Study

The earliest author to support and accept the benefits of succession planning was Henry Fayol. As the managing director of a large coal mine in France, Fayol became fascinated by the practice of management, and mapped out the principles for effective organizations through his fourteen principles of management in 1916.He believed that deliberate leadership replacement planning was a requirement of managers and that it was the only way to avoid organizational missteps by putting persons in positions for which they were not ready. Stability of tenure of personnel as one of his principles, explains the need for employees to be given time to settle with their jobs, absence of which may lead to unnecessary turnover and bad management. This indicates that failure to prepare the workforce of tomorrow would lead to filing leadership vacancies improperly. Fayol was also passionate in his belief that all employees should have a chance to prosper and that talented employees could climb from the lowest to the highest levels of the hierarchy. (Rothwell 2005, Weihrich, Cannice, and Koontz 2008)

It was research into the impact of leadership changes in baseball team performance that perhaps triggered interest in succession as an important organizational activity (Azure, 2008). Gamson and Scotch (1964) put forth a ritual scapegoating theory of succession that was demonstrated through the work of their study of professional baseball. The team owners and general managers generally have a more significant role in obtaining talent and conducting the operations of the team, but when the performance of the baseball team falters, the on-field manager (or coach) is the one that is publicly fired, ultimately displacing the blame, and creating a succession approach. (The Leadership Quarterly 2005)

Succession management as a formal mechanism probably made its biggest advances with the rise of the “corporation” in the 1950s and 1960s. Growing complexity of size and organizational scope demanded a more systematic way to capture information about individuals, their performance, potential to progress and readiness to take a greater responsibility(Azure, 2008).. Directors and shareholders of multinational companies such as Pepsico began to worry about the future success and direction of their organizations. They realized that by planning who would take over senior positions, they could help ensure company growth and stability. By following the ideas of Fayol and example of pepsico and others, major companies began to adopt succession strategies. Toyota, International Business Machines (IBM), General Electric (GE) and Microsoft are now among the globally – recognized names that use succession planning (Continuum Briefing, 2013)

Grusky (1960) who puts forth the vicious-circle theory states that succession is a universal organization process and its absence leads to organization instability. The incidence of turmoil through changes in policies and practices put forth by the new leader is a part of the vicious circle. Grusky developed research methods to test hypotheses within succession and pave the way for other researchers to follow. His basic reasons for the study of succession were hinged on the following: that administrative succession always leads to organizational instability and that succession planning is a phenomenon that all organization must cope with.

Kesner and Sebora (1994) observed that it was Walter Mahler (1980) that first recognised the advantages of succession planning to companies’ performance and encouragement to preplan for transition by focusing on impacts of succession such as company size, type, industry, methodologies, internal versus external candidates, psychological characteristics with succession, and more in his research.

The Nigeria oil industry comprises of numerous companies; prominent among which are: Oando Oil Nigeria Plc, Conoil Nigeria Plc, Total Oil Nigeria Plc, Shell Petroleum Development Company Plc, Mobil Oil Plc, MRS Oil Nigeria Plc, and Eterna Oil Plc. The Department of Petroleum Resources is the official industry regulator, with the responsibility to supervise the activities of all companies licensed to operate in the industry. Hoffman and Womack (2011) posit that the oil industry is highly specialized and technical in nature with some companies having handful of non-executive employees-including some five or six layers deep in the organization –who have a significant impact on company results. These individuals have unmatched technical knowledge and experience that is critical to the company’s core mission in key areas such as geosciences, offshore and international operations, reservoir engineering etc. losing a handful of these pivotal talents over a short time frame would cripple some companies.

Therefore, it has become critical for the oil industry to tap on management succession which may provide a significant long-term competitive advantage, ensuring that the company has the talent, skills and expertise to achieve its strategic objectives over time.


1.2 Statement of the Problem

Some business organizations pay less attention to their talent/skill gaps and make poor choice of leaders during leadership transition. This can disorganize the leadership transition and open such organizations to potential losses; which could be monetary or otherwise. Often the greatest loss to an organization from an ineffective leadership transition is the loss of mission-related activity and growth. When energies are focused elsewhere, mission-related opportunities are missed or are passed over from fear of change.

The increase in worldwide labour turnover and retention problems owing to attractive incentives offered by high grade companies for accomplished managers to join them has disrupted many organizations. Companies that are not prepared for accomplished managers’ departure may experience huge financial losses in filling the vacant positions created by their departure. More so, extended and prolonged vacancies can result to delay in projects, revenues are unrealized, accounts are lost, innovation is lost and employees’ morale may suffer.

When organizations put unsound human resource policies and practices (such as poor career development and disregard for skill and leadership development among others) in place employees feel unsatisfied, unsafe and may not work to their full potentials. The need to seek opportunities elsewhere is therefore encouraged and promoted.
The corporate environment has historically promoted employees with leadership roles thoroughly evaluating true capabilities of the individuals. Possessing a technical skill often times has been the basic reason for promotion. However, technical skill does not always translate into leadership ability. Many of these talented individual drown in their new roles largely occasioned by lack of leadership training.

Scholars have extensively discussed the principles and operational procedures of management succession. However, there has been insufficient information on the implementation of management succession and its effect on survival and goal attainment in Nigerian oil and gas industry. Against this background a study of the effect of management succession on corporate survival and goal attainment in the Nigerian oil and gas industry is pertinent.


1.3 Objectives of the Study

The task before the researcher calls for the examination of the effects of management succession on goal attainment in corporate organizations in Nigeria using the oil and gas industry as a case study. To this end the following specific objectives have been formulated:

  1. To ascertain the extent to which management succession can function as a strategy for growth and profitability in Nigerian oil and gas industry.
  2. To assess the extent to which management succession encourages healthy competition and advances continuity of corporate objectives in Nigerian oil industry.
  3. To ascertain the extent to which challenges of management succession influence survival and goal attainment in Nigerian oil and gas industry.
  4. To determine the prospects associated with the adoption of management succession in Nigerian oil and gas industry.
  5. To ascertain the extent to which management succession engenders labour retention among employees in Nigerian oil and gas industry.

1.4 Research Questions

  1. To what extent does management succession function as a strategy for growth and profitability in Nigerian oil and gas industry?
  2. How do we assess management succession efficiency in terms of competition and advancement of continuity of corporate objectives in Nigerian oil industry?
  3. To What extent do challenges of management succession influence the survival and goal attainment in Nigerian oil and gas industry?
  4. What prospects are associated with the adoption of management succession in Nigerian oil industry?
  5. To what extent does management succession engender significant labour retention among employees in Nigerian oil industry?

1.5 Research Hypotheses

  • H1: management succession to a large extent functions as a strategy for growth and profitability in Nigerian oil and gas industry.
  • H2: management succession significantly engenders healthy competition and advancement of continuity of corporate objectives in Nigerian oil industry.

1.6 Significance of the Study

This work will expose the usefulness of management succession as one of the ways of curbing leadership crises in the industry and other corporate organizations. It is therefore of relevant assistance to management and staff of the industry other management practitioners as it will educate them on how to cope with leadership crises and talent management.

It is also of great relevance to the shareholders. As owners of the companies, they will benefit from high dividend payment as well as retained profits for future growth with the adoption of management succession by their companies. Government economic policy makers will benefit greatly from this work in their policies making.

The study is also of relevance to students and future researchers who may wish to carryout research work on management succession. More so, the study points out areas of further research which act as a guide to the aforementioned prospective researchers.


1.7 Scope of the Study

This study is specifically an investigation into the effects of management succession on corporate performance in the oil industry between 2009 and 2020. Following the creation of Niger Delta Ministry, the year 2009 was the year 15000 insurgents across the Niger Delta turned both themselves and their guns in and declared an indefinite ceasefire(Economist 2009, Davis 2009) thus creating enabling environment for corporate governance and management of oil and gas industry.


Chapter Five


Summary of Findings, Conclusion and Recommendations

5.1 Summary of Findings

  1. It was discovered that management succession is a strategy for growth and profitability. Provision of strong talent with growth opportunity is the major variable of management succession as a strategy for growth and profitability.
  2. It was also discovered that management succession is efficient with regards to competitiveness among firms as it makes provisions for highly trained and skilled human resources who create the competitive edge.
  3. It was revealed the challenges of management succession to a large extent influence the survival and goal attainment mainly through gaps in leadership pipeline, difficulty in filling key employee’s positions and inadequate career paths and ineffective line management.
  4. It was also discovered that supply of talented, experienced, motivated and high morale staff ready for key positions and coping with the effect of attrition are the major prospects associated with the adoption of management succession in the oil industry.
  5. It was also discovered that most organization within the industry do not have formal succession plans in place but adopt an informal method to develop talents for leadership positions and promotion to leadership level is strictly based on merit. However, the staff have clear understanding of management succession and are conversant with its objectives and goals.
  6. It was revealed that management succession engenders significantly retention among employees as it equips high potentials leaders so as to prepare them for the future.

5.2 Conclusion

All organizations need strong leaders in order to maintain continuity and remain relevant in the ever turbulent environment. management succession is aimed at identifying, attracting, filling and retaining strong talents into leaderships position – the leaders who will best drive business performance and obtain optimum output for the organizations. Thus, the organization does not cease to continue in the absence of its leaders, or on retirement of its executives as it maintain a pool of motivated, skilled and experienced talents supplied through internal efforts. The short comings of leadership gap and difficulty of filling key employees are therefore easily surmountable.

Many organizations that engage in management succession have transitioned from traditional approaches that seek to identify and prepare leaders for specific future positions to processes that seek to identify and develop pools of talented individuals who can assure a variety of unknown future positions (Caruso, Groehler and Peny, 2005)


5.3 Recommendations

Management succession should not be seen as the sole responsibility of HR. For the impact of management succession to be felt the line should be fully involved as it (the line) owned the talent. HR should be seen as the facilitators. The commitment and collaborative efforts of the CEOs, HR team and business leaders towards planning for management succession would yield the best results.

Management should identify their key positions and align these positions to appropriate and formal succession planning. Such plans should depict what the candidates need to do and prepare them for that position. Formal management succession should be enshrined as part of the integral business process and not seen as an ongoing in-depth process.

Efforts should be shown towards ensuring the use of appropriate forecasting tools to project future needs and on a timely basis for successful results to be achieved. The use of charts, assessment centers and 360 degree appraisal etc should be used more widely.

Management should ensure the growth and development of key individuals and talent pools through the proactive and systematic strategies identification of potentials and assessment of current strength tailored towards future development needs and requirement.

The choice of staff to fill key leadership position should be made transparent and not limited to the top echelon members of the organization alone. The bottom-up approach should be adopted to ensure the participation of all those concerned.

The evaluation of management succession programme must be pursued by the organizations, it will assist to determine the pros and cons and expose difficulties and hindrances of effective management succession.


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