Succession Planning Practices and Challenges Study of Indian Organisations 2014 Procedia Economics and Finance
Succession Planning Practices and Challenges Study of Indian Organisations 2014 Procedia Economics and Finance
Succession Planning Practices and Challenges Study of Indian Organisations 2014 Procedia Economics and Finance
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Procedia Economics and Finance 11 (2014) 152 165
Abstract
Succession planning is a key in the current scenario of tight talent markets and competitive times. Strengthening talent has a
direct impact on bottom line results and contributes to organizational growth. Hence development at talent level is a must for
overall organizational development.
The present study focuses on current practices and approach of succession planning followed by the industry. The study is based
primary data collected as a feedback on on parameters related to succession planning practices in the across various industry
organisations. In the study group, all companies had some or the other activity in bracket of succession planning. It hence
becomes necessary that these positions are filled as soon as they become empty so that business doesn't suffer any loss.
This enabled us to compare, hence benchmarking against certain criteria was done. Benchmarking succession planning based on
various factors like HIPO (high potential) identification, Scope of planning, talent pool creation, automation, and linkage. GAP
analysis was done to identify the various GAPS in the process. Based on all the observations, business recommendations were
provided.
2013
2014 The
Elsevier
B.V.Published
This is an by
open
accessB.V.
article under the CC BY-NC-ND license
Authors.
Elsevier
(http://creativecommons.org/licenses/by-nc-nd/3.0/).
Selection
and/or peer-review under responsibility of Symbiosis Institute of Management Studies.
Selection and/or peer-review under responsibility of Symbiosis Institute of Management Studies.
Keywords: Succession planning, Talent Management, HIPO (high potential)
2212-5671 2014 Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/3.0/).
Selection and/or peer-review under responsibility of Symbiosis Institute of Management Studies.
doi:10.1016/S2212-5671(14)00185-3
Suruchi Pandey and Deepesh Sharma / Procedia Economics and Finance 11 (2014) 152 165
1. Introduction
The Human Resources Management in any organsations today is struggling to maintain the workforce and face two
harsh realities of which exist at any organization:
x
It's clear that, organization need talent to be able to compete in global market and hence they need to develop and
retain it. Although it is very easy to assume that all organizations would be successful in succession planning and
practices numerous ways to address talent gaps but in practice only select few organizations are able to practically
plan for the gaps and fill them in time.
Organisations struggle with forming a formal process for identifying, developing and retaining high potential people
within the organization. Hence most of the organizations these days are looking for alternatives to plan who will
succeed the important positions in an organization.
It seems to be an easy process but actually, it cannot be achieved in few days or months. It takes time, to refine the
process. Commitment and involvement from every employee is required be it the HR managers, Line managers and
senior management.
2.
Literature Review
Literature review was done to identify and understand need of succession planning in various organizations. Ram
Charan (2011) had stressed on need of good leaders grown out of a company itself rather than hiring them. Hiring
should be stressed at lower levels only, but leaders should grow out of an organization.
Carniege D. (2009) suggests "succession planning as a systematic way to ensure that employees in a particular
organization are competent enough to develop and then replace strategic roles in organization hierarchy".
Rothwell (2005) throughout his book explains that an organization which does not have a succession planning
system in place i.e. they lack a formal succession plan find trouble in various areas such as : key positions are not
filled in an timely manner, key positions are filled by external candidates, constant horror of turnover at key
positions, potential replacements are never ready and lack essential skills, most qualified talent is not retained. These
are some problem areas which organizations face and never realize. It's just due to lack of formal planning.
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Obviously good management will never happen by itself and succession planning is continuation of that (Pernick
2002). Pernick goes on to discuss some disadvantages if succession planning is not provided in an organization such
as : chaos, poor image, bad publicity to stakeholders and finally spirals to bad revenues and loss of customers.
Similar ideas are shared by Edward (2012) that not identifying key position is one of the biggest blunder which
organizations make. Spencer Stuart (2011) shares the Indian perspective and how organizations are taking this
seriously as a major concern of their HCM plans.
During study of literature it was revealed that, there is lack of awareness in companies of the long term impact of
ignoring succession planning, also there is not rigid structure or model existing for succession planning, hence study
aimed e to incorporate a model which can capture the essence and be a fit to most organizations seeking to
implement succession planning.
3.
How well is automation used and how can it become more useful in future.
This survey was supplemented by telephonic interviews with few respondents responsible for succession planning
function to gather more specific information.
Sustainability reports available online and other data from trusted sources made up for secondary data. Secondary
data was collected from internet, industry journals and magazines. This also helped in conducting benchmark study.
4.
Actual universal population of the whole organization becomes too large to study hence focus was on a smaller
sample group.
Suruchi Pandey and Deepesh Sharma / Procedia Economics and Finance 11 (2014) 152 165
5.
Data is gathered and analyzed in a short time months hence may not reflect the depth of study.
Figure 1.1
A Majority [66%] respondents indicate that Difficulty in finding successful management candidates as the key
criteria/need for succession planning. Followed by Unexpected loss of key leaders [36%].
5.2. Why succession planning takes a back-seat
Study reveals that companies are allocating lot more money for others functions in talent management instead
of succession planning. Responses which establish above are:This has a dual effect. Firstly, the loss of HIPO employees recognized by the organization. Secondly, all other
talent management initiatives are dependent on other and hence not linking with succession planning can cause a
series of failures.
Succession planning does not have an immediate effect hence many organizations do not recognize its potential.
It takes effect slowly and helps in long run, which many fast paced organizations cannot appreciate.
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Figure 1.2
Companies are required to knit succession planning with other functions so as to this makes it a complete life-cycle
of an employee.
5.3. Succession Planning Challenges
These challenges fall under two categories: challenges which arise due to the process also the technology related
issues. Various issues which occur in process can be non-formation of talent pool and lack of clarity in future needs.
Meanwhile, lack of assessment tool came out to be examples of technology challenges.
These issues which arise in succession planning are a smaller part of the bigger pie also known as HCM, i.e.
acquiring the talent that is needed and at the same time addressing talent requirements for the future.
Figure 1.3
All [100%] respondents agreed that creating a talent pool was a major challenge in succession planning. Followed
by inability to identify future needs was also observed in majority of responses [96%].
Suruchi Pandey and Deepesh Sharma / Procedia Economics and Finance 11 (2014) 152 165
Figure 1.4
Respondents were also asked about whether the whole process is automated or partially automated, majority of
companies seem to be using partially automated system.
Response
Number
Percentage
Fully Automated
12%
Partially automated
22
88%
Partial automation refers to, either one part or more than one part of the process is done by some means of
technology. Companies having a more formal process find it easy to automate certain segments in it. A fully
automated system requires a rigid system which has been in use [time-tested] hence automating it becomes more
feasible.
5.5. Linkage
Succession planning is just not one exclusive process, but it needs to be linked with other processes like Individual
development Plan, Career aspiration mapping, Manpower forecasting etc. Such linking makes succession planning
wholesome and more efficient; most of the companies do not link it completely. Most of companies are linked to
either one process or not at all linked.
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Figure 1.5
Even though there is awareness about need of linking, but it is not done yet in 36% of the organizations studied.
Even though most of them had linking with at least one process but none had linking with all three. Such linkages
are required to make the whole system robust and sustainable in long run.
5.6. Benchmarking of Succession Planning across various Industries
Companies chosen in study were from various industries hence giving the project maximum exposure to bestpractices prevailing for succession planning. All these were compared on some set predefined criteria which were
broadly classified as, Successor Planned, Scope, HIPO identification, Linkage and Automation.
Suruchi Pandey and Deepesh Sharma / Procedia Economics and Finance 11 (2014) 152 165
After Benchmarking GAP analysis were done with respect to the various best practices in companies across
industries. Given below is the table showing GAPS and remarks for same
5.7. Gap Analysis
GAP ANALYSIS
Criteria
% study
group
satisfying
criteria
Majority
of Org.
Remarks
TALENT POOL
80%
No
COMPETENCIES
DEFINED FOR EACH
ROLE EXPLICITLY
26.7%
No
KEY ROLE
IDENTIFICATION
80%
Yes
Criteria
% study
group
satisfying
criteria
Majority of
Org.
Remarks
SUCCESSION
PLANNING AT
SENIOR
MANAGEMENT
LEVEL
100%
Yes
SUCCESSION
PLANNING AT MID
MANAGEMENT
LEVEL
93.3%
Yes
SUCCESSION
PLANNING AT
EXECUTIVE LEVEL
66.7%
No
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HIPO IDENTIFICATION
Criteria
% study
group
satisfying
criteria
Majority of
Org.
Remarks
APPRAISAL
100%
Yes
ASSESMENT CENTRE
93.3%
Yes
AUTOMATION TOOL
13.3%
No
SEPARATE
PROGRAM
33.3%
Yes
Yes
360 DEGREE
60%
LINKAGE
Criteria
% study
group
satisfying
criteria
Majority
of Org.
Remarks
INDIVIDUAL
DEVELOPMENT PLAN
46.7%
No
CAREER ASPIRATION
MAPPING
46.7%
No
Suruchi Pandey and Deepesh Sharma / Procedia Economics and Finance 11 (2014) 152 165
MANPOWER
FOREACASTING
33.3%
No
ALL 3 ABOVE
20%
No
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These gaps were then analyzed, i.e. the time outlook in which they need to addressed and the relevance of the gap to
the organization.
6.
After studying the existing practices and models researchers suggested following points to strengthen the existing
succession planning process and a model for
6.1. Creation of a talent pool from initial level
The management should consider creating a talent pool at initial level, which can be developed over time to meet
talent needs. Preparing your mid management level and low management levels to take on responsibilities of higher
levels.
Proposal
The talent pool should be based on two aspects, i.e. performance and potential of employee. Performance rating can
be used as input for performance. For gauging the potential of employee following approaches can be followed:
New tailor made program according to organization specifications to be made with HR team.
This would be roughly for 60-70 employees based on following calculations of a renowned IT company with
employee strength of 1,60,000 employees: [Live case]
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280
11.2
50.4
Total candidates
62
Once we have potential score for employees then we can map them onto a grid and hence have a ready
reference of talent availability and probable successors based on their previous performance and potential in them.
Figure 1.6
Suruchi Pandey and Deepesh Sharma / Procedia Economics and Finance 11 (2014) 152 165
Figure 1.7
Only deciding on organizational front about an individuals development wont be realistic, hence it should also be
aligned with Career Aspirations of the individuals in a realistic manner. CAM [Career Aspiration Mapping] exercise
is to be done and linked to succession planning. Actual benefit of succession planning can be reaped when it is
linked with the manpower forecasting. This should help in real time assessment of talent need.
Figure 1.8
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6.4. Model for Succession planning and its evaluation using metrics :-
Figure 1.9
No process is complete without a proper evaluation, merely implementing a succession plan wont solve the need
and system thus created wont be sustainable. Based on certain metrics it needs to be evaluated again and again.
Such evaluation would
Succession plan metrics for process review
Metrics
Description
Indicator
Fulfilment percentage
Positive
Ready Pool
Positive
Positive
Positive
Positive
No Successor
Negative
Positions covered
Positive
Performance
promoted
of
recently
Suruchi Pandey and Deepesh Sharma / Procedia Economics and Finance 11 (2014) 152 165
7.
Conclusion
Succession planning is one such process which cannot be ignored keeping in mind the competitive industries.
Strengthening this process directly impacts the organization as it is the nourishment of talent. this activity cannot be
carried out as an ad-hoc exercise but needs to be a systematic approach. It can be further fine tuned varying from
organization to organization and different industries but the major structure remains same.
We need to ensure that key positions in an organization are always filled with capable talent and this pipeline
keeps on churning out seamlessly. The landscape has totally changed if we compare to what it was a decade ago and
hence the approach has to evolve, rather than being reactive and shedding flab later, pro-active approach needs to be
followed where we are capable enough to chalk out plan of individual in an organization keeping in mind the macro
picture.
Succession planning not to be considered just an exercise, but focused upon so much that succession planning can
be converted into succession development hence developing the talent pipeline and hence achieving organizational
goals.
References
ADRC. (2011). Leadership Transition and Succession Planning,. Retrieved from http://www.adrc-tae.org.
Carnegie, D. (2009,pg: 4-7). The Nuts and Bolts of Succession Planning.
CLC. (2012,pg: 4-5). Corporate Leadership Councils 2012 High Potential and Top Talent Survey.
Cloudfront. (2010). Succession Planning & Management in Tough Economic Times. Retrieved from
dcb9maxnxelio.cloudfront.net/.../Succession-Planning-and-Management.
Deloitte. (2009). Talent Management and Succession Planning at the Executive Level. Deloitte.
Edwards, B. (2012, pg: 3-4). 8 Mistakes Made In Succession Planning and How to Fix Them.
paper, F. w. (2011). A Roadmap to succession planning.
PrabhashThaku, D. G. (2011, pg: 7-11). India: An Attractive BPO Destination Marred By Alarming Attrition.
Global Service Delivery Advisory Services.
Ram Charan, S. D. (2011,pg:21-37). The leadership Pipeline, How to build leadership powered company. josseybass.
SpencerStaurt. (2011,pg: 3-5). Succession Planning The Indian Perspective .
TECH., N. (2010,pg: 9-13). From enterprise learning to succession planning, SAP Module Nakisa implementation.
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