INTRODUCTION - Covenant University



MANAGERIAL SUCCESSION AND E-BUSINESS.

BY

ADENIJI, ANTHONIA ADENIKE

e- mail: anthoniaadenike@

DEPARTMENT OF BUSINESS STUDIES

COVENANT UNIVERSITY, OTA, OGUN STATE, NIGERIA.

INTRODUCTION

There have been several studies on managerial succession otherwise known as succession planning but greater percentage of them focused on succession planning as related to family owned small to medium sized enterprises (SME’s), government establishments, effects of succession planning on performance and profitability of a business organization, CEOs perspectives on planning for succession, family business and succession planning to mention just a few (Motwani,et al 2006,Brown 2007, Dunemann & Barreff, 2004).

There is a dearth of research about managerial succession and e-business, in this world of globalization where organizations are clamoring for survival in the globally competitive environment therefore; this chapter will focus on why succession planning is crucial in e-business and in the global economy. To do this effectively, available literature will be explored on the key aspects of an effective succession management system, the continuum of succession processes in e-business and in the global world. Also varieties of views and notions of individuals and groups in respect of the key issues to clarify and the key question impacting the design of succession management system in organizations and the succession planning grid will be considered.

The views of the academicians and professionals on the succession management process, obstacles to effective succession management in an e-business environment and the key recommendations for succession management to remain competitive and survive in a globally competitive environment will be traced.

BACKGROUND:

Succession planning in e-business is an issue of growing importance. Businesses generate a significant proportion of the economic activity in our countries, and a majority of these businesses are approaching the point where they will be transacting businesses on-line and will most likely by making serious decisions regarding their long time future .The manner in which such large number of potential business successions is managed will impact not only upon these individual businesses and society in which they operate but also upon the global economy .

As a result there is wide spread interest in various aspects of business succession planning and particularly, the central question of, how to do it.

However, some common themes emerge from a study of the succession management literature and the suggested models on offer .The required successor attributes needs to be identified and appropriate processes for selecting and nurturing a suitable successor determined .The timing and the manner of any handover needs to be matched to existing circumstances in the e- business environment .The roles and needs of all important participants should be acknowledged, e- business vision shared by all participants ,maintaining good relationships and open communication processes is vital. Finally, the future of the incumbent in relation to the requirements of e-business must be clearly determined and managed.

Succession is the plan an organization employs to fill its most vital leadership and professions positions (Huang,2001).It is the ongoing, purposeful and systematic identification of qualified and appropriate successors to leadership ,with a commitment to assessing , developing and investing in organizational leadership to enhance performance ,development and preparedness (Kim2003; McDonald 2006).According to Michelson(2006),succession planning requires putting the right people on the business, getting the wrong people off the business and positioning the right people in the right seats .Others have argued that succession planning is simply having the right people in the right place at the right time(Conger and Fulmer,2003; Rothwell,2005).Succession planning reinforces the desired perceptions of the organization ,fosters employee legitimacy ,builds on the strategic plan to manage the organization through future challenges ,meets the demand of the public and addresses the strength and weakness of the organization (Cohn,Khurana and Reeves 2005).

Effective succession management happens when corporations adopt a talent –finding mindset and developing guideline for building a leadership pipeline among which include; focusing on development, identifying linchpin position, making it transparent and measuring progress regularly.

MAIN FOCUS OF THE ARTICLE

Reasons why succession planning is important in e-business

Scholars and knowledge practitioners’ maintain that administrators are ignoring the coming leadership crisis and/or rejecting the imminence of the predicament (Green, 2000,Michelson, 2006,Ospina, 1992).

Consequently, many leaders of organizations lack an exit strategy, offer little evidence of a formal transition and treat succession management as nothing more than lining up personnel for vacancies (Michelson, 2006). Four distinct areas of exploration include the development of a succession plan, selection and training of staff, sustainability of the program and its impact on the workforce, and measurement and evaluation of the process in practice.

Planning and development of succession planning

Succession planning usually begins when an organization initiates a demand forecast to determine overall future workforce needs, as well as succession analysis to predict the number of the employees to staff specific positions (Pynes, 2004). There is no “one best way” of developing, implementing or supporting a succession plan [Karaevli and Hall, 2003]. Therefore, administrators should not rely on an off-the-shelf, one-size- fits-all approach [Cohn, et al 2005]. Succession plans need not be overly complex or difficult [Berchelmann, 2005] and may employ formal versus informal tactical versus strategic [Ospina 1992] or “just-in-time” versus “integrated” methods (Young, 2005). Rothwell, (2005) and Waltuck, (2005) opined that strategic planning results in the socialization, development and advancement of potential high-performing managers.

Selection and training.

Many organizations fail in succession planning because they get “lost in the tree of succession planning forest” [Dessler 2006]. The importance of the identification and development of potential leader is lost among demographic statistics and summary information resulting in a talent shortage [Dychtwald, Erickson &Morrison 2006, Gandossy & Verma, [2006]. Succession planning seeks to resolve this disconnect by creating strong talent pools prepared to become future leaders of the organization. [Dessler 2006].

Organizations globally in an e- business environment are becoming more innovative in recruiting, developing and retaining talent (Patton and Pratt, 2002). Some of the creative ideas implemented include the increased usage of job rotation, establishment of co- managers in critical function to ease older leader into retirement and prepare new leaders for new role, and outsourcing hard- to fill functions and diverting existing managers more strategic role [Green,2000]. In addition, organizations are offering to train their staff on job skills trend will make them relevant and better relate in the competitive global environment (Green, 2000). Thus, the organization offer resources and connections to the global world as well as provide the perfect venue to pursue learning objectives which serve as an excellent strategy for hiring and retaining top talent. (Green 2000). This is because learning agility is needed in an e-business ever-changing, competitive, chaotic work environment where the differences in defining high-potential employees are as diverse as the organization involved (Karaevli & Hall, 2003).

Sustainability

Many organizations offer ‘employment deals’ promoting self-development over management-driven succession with an added emphasis on developing a talent pool that matches preferred competencies necessary for effective future business performance in an e-business environment (Waltuck, 2005). The main goal, whether high performances are identified or empowered is to find those employees who have a high sense of job satisfaction, encourage proactive career development and provide growth opportunities to those who are willing or able (Berchelmann, 2005; Karaevli & Hall, 2005).

Evaluation

Succession plans should provide assessment and measurement over the long-term by establishing core competencies matching the strategic focus of the organization, as well as identifying any gaps that may exist (Conger & Fulmer 2003and McDade, 2004). Succession plans specifically examine the ability of the organization to fill vacancies and respond to the needs in the e-business environment (Conger & Fulmer, 2003) and encourages self determination (Kim, 2003). Succession planners develop a comprehensive, organization-wide, competency-focused, manager-centric career development program relying upon multiple dimensions of feedback (Kim, 2003).

Reasons why Succession Planning is important in e-business

1. Rapid, radical and discontinuous change.

2. Increasingly complex challenges.

3. Greater leadership responsibility at lower levels.

4. Recruitment and retention of the best talent.

The Continuum of Succession Processes in e-business:

|Replacement planning Succession planning Succession management |

|Identify successors. Identify successors. Identify successors. |

|Develop successors. Develop successors. |

|Include all organization levels. |

|Basic Comprehensive |

Continuum of succession processes.

Source: Human Resource Management (8th Edition).

Different succession processes can be placed on a continuum ranging from relatively simplistic end bounded to relatively complex and comprehensive. At the most simplistic end of the continuum is the replacement planning. Replacement planning denotes a minimal succession approach in which successors (i.e. replacements) are identified at the top managerial levels, but there is little or no development of those successors other than ad-hoc on the job experience. The focus is on forecasting with no attention to development issues. Succession planning falls near the middle of this continuum of succession planning. It is more systematic and extensive than replacement planning because it is linked with intentional development initiative targeted at successors. However, it is mainly for the top two or three management levels, like replacement planning. Succession management anchors the most comprehensive end of this continuum in that it identifies successors (replacement planning), develops them (succession planning) and it is also directed at all managerial levels. The overarching goal of succession management is to have a pool of or pipeline of prepared leaders and not just a list of prospective candidates across all organizational levels to fill vacancies in key positions when needed.

Key questions impacting the design of succession management system

The followings are the key questions impacting the design of succession management system in organizations operating in an e-business environment that is highly competitive and dynamic.

✓ What is a key or “corporate –critical” position?

✓ What constitutes a high potential manager?

✓ What are the common aspects of exemplary job performance?

✓ How should the organization fill key positions?

✓ What percentage of open positions should be filled from within the organization?

✓ What percentage of key positions should have at least one identified successors?

✓ How should high-potential manager be prepared for advancement?

✓ How desirable are international assignments for designated successors?

✓ How important are individual employee career goals and objectives in the succession management plan?

Effective succession management process

This is critical for a successful talent identification process. A climate of honesty, trust and transparency is an important factor in the systems ultimate success. The following are the features of succession management process;

✓ High level review of the talent pipeline by the CEO and his direct reports.

✓ Review of each business function and strategic area of focusing on what new capabilities will be needed to deliver this strategy and any new corporate critical roles that will be needed.

✓ Review of top 200 leaders using the “nine-box” performance /potential grid. This is shown below;

|Potential |Performance |

| |Low |Medium |High |

|High |Demonstrated high potential for |Demonstrated high potential and |Highest potential for senior |

| |advancement but is not meeting current|consistently meet performance |leadership position that usually |

| |performance expectations. |expectations. |always exceeds performance |

| |Needs coaching and intervention: Wrong|Valued talent who need additional |expectations. |

| |job or wrong boss? |challenge, rewards, recognition or |Star talent who should be targeted |

| | |opportunity to develop. |for accelerated development |

| | | |opportunities |

|Medium |Promoting potential one level or |Promotion potential one level or lateral|Promotion potential one level or |

| |lateral move with greater challenge |move with greater challenge: presently |lateral move with greater scope or |

| |but presently under -performing. |meeting but not exceeding performance |challenge always meets and usually |

| |Consider coaching or corrective action|expectations. |exceeds expectations. |

| | |Keep things running but might need |Strong contributor who could have |

| | |additional motivation, greater |additional developmental challenges|

| | |engagement or additional rewards. |to grow and possibly improve |

| | | |potential. |

|Low |Has reached career potential and is |Specialized technical talent or has |Specialized technical talent or has|

| |not delivering. |reached career potential but |reached career potential but |

| |Counsel or terminate. |consistently meet performance |consistently exceeds performance |

| | |expectations. |expectations |

| | |Motivate and focus. |Valuable in developing others; |

| | | |retain and reward. |

✓ Development and discussion of succession plans for high and medium risks corporate-critical roles that exist now and are anticipated in the future.

✓ Development planning for this population.

✓ Link the plan design to the needs and vision of the CEO, senior management team and the requirements of e-business in the global environment.

However, succession management process includes preparation, planning and development.

Preparation; the goal is to understand the context.

Planning; the goal is to identify positions on talents.

Development; the goal is to prepare and develop talent. The key processes here are assessment, challenge, and support.

Obstacles to Effective Succession Management

Ultimately, an investment in succession management is an investment in individual and organizational learning, but like many things, this is easier said than done. There are many potential factors that can derail succession management process. Below is the list and brief discussion on some likely culprits:

• Event-based or episodic thinking. This implies succession planning as well as leadership development. Both of them are ongoing processes, yet the conventional thinking is that they are addressed episodically. Succession planning typically is conducted only once in a year and leadership development is treated as a series of ‘loosely coupled’ events or episodes, usually in the form of programmes. It is a mistake to try to completely de-couple development from work.

• No strategy for development. What is the organization philosophy of succession management and development? These are the key concerns in terms of presenting and defining the concepts and principles that will serve as the pillars of the conceptual framework for the initiative.

• Assuming it is solely a staff function. In most cases, the human resource function has the primary responsibility for succession management. A common mistake and typical obstacle to effective implementation is failing to engage line management from the onset.

• Over-embedding the initiative in a single champion. Having a champion, especially at top levels, is an important driver for success, however, if the initiative becomes too heavily associated with any one person no matter how high ranking this could lead to follow through problems if that champion derails or leaves the organization.

• Not connecting with strategic business imperatives.

Development for development’s sake might be a generally good thing; however it might not be helpful for long-term support. It is easy to lose sight of what specifically needs to be developed and why.

To implement a formal system with lack of fit with the organizational culture.

Trying to implement a formal system with a lot of preparation and paperwork in an informal culture would likely be met with resistance, if not outright hostility introducing an informal system into a highly structured and formal organization may result in the in the initiative not being taken seriously.

RECOMMENDATION

Succession management can also aid in the recruitment and retention of the talent that is needed to be competitive in the global economic and Electronic business.

However, the followings are the key recommendations for succession management;

• Understand the unique context of your organization.

• Recognize that organization have special challenges and opportunities when its comes to succession management in an E Business environment

• Identify key positions and the talent potentials for these potentials (Nine-Box Grid” may be helpful).

• Establish succession plans for key positions that identify at least one and preferable more than one potential successor.

• Engage in detailed developmental planning for the targeted successor populated.

• Use leadership competency models with caution – the future is imperfectly predicted.

• Avoid the basic obstacles to an effective succession management system.

• Work towards continuous succession management system improvement.

FUTURE RESEARCH DIRECTIVE

It had been said that effective succession planning involves more than just a replacement planning process. It also includes a comprehensive employee development system, thus, future researches should focus on development strategies for both the SME’S in their local markets and for the global competition in the international market.

CONCLUSION

The chapter dwells richly on the succession planning in an e – business environment. It considers the reason why succession planning is important in the global economy, the key aspects of an effective succession management system, the continuum of succession processes in e- business, and the key questions impacting the design of succession management system. Also, the chapter looked at the succession planning grid, the obstacle to effective succession management in an e- business environment and the key recommendation for succession management were given.

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KEY TERMS.

E-business: this is the transacting of business on-line or on the internet.

Managerial Succession: this is the ongoing, purposeful and systematic identification of qualified and appropriate successors to leadership, with a commitment to assessing, developing and investing in organizational leadership to enhance performance, development and preparedness.

Globalization: this is the interconnectivity of business of nations all over the world. In other words, that all economies are connected to do business together where each will now gain competitive advantage over its products.

Successor: this is when a person comes after and takes the place of somebody.

Leadership Pipeline: this is having a pool of prepared leaders and not just a list of prospective candidates across all organizational levels to fill vacancies in key positions when needed.

Linchpin Positions: these are positions between middle to senior management positions that are essential to organization’s long term health.

Competitive environment: this is an environment where companies and nations have the opportunity to compete effectively with one another considering the regulations in the environment.

Replacement Planning: this is the minimal succession approach in which successors (i.e replacements) are identified at the top managerial levels, but there is little or no development of those successors other than ad-hoc on the job experience.

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