A study on Succession planning management

With special reference

To

Meghalaya Rural Bank, Tura Branch

Course-in-charge: Ms. Sehnaj Laskar

Submitted by: Swarnima Tiwari (MBA3110)

Department of Management North Eastern Hill University, Tura Campus Tura

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Succession planning:
Succession planning is the identification and tracking of high-potential employees capable of filling higher level managerial positions. It is basically a process for identifying and developing internal people with the potential to fill key business leadership positions in the company. It focuses on assessing and auditing the talent in the organization. Succession planning ensures that there are Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available highly qualified people in all positions, not just today, but tomorrow, next year, and five years from now. All organizations need to be able to find the right skills to fill key top jobs and to be future leaders, and this process needs to be managed. Traditionally, organizations ran highlystructured, mechanistic and top down schemes aimed at identifying internal successors for key posts and planning their carrier paths to provide the necessary schemes range of experience. Essentially the worked reasonably well in a stable environment where structures were fixed and careers were long term. But with growing uncertainty, increasing speed of change in the business environment, and flatter structures, succession planning of this sort declined in the 1990s. One apparent result was that more and more people came to be appointed on top jobs from outside organizations. In todays highly competitive global environment, human capital is an organizations most important asset, often differentiating highly successful businesses from those that struggle. Yet, in the ongoing effort to develop a strong and capable workforce, many organizations focus almost entirely on hiring and training. They neglect succession planning-perhaps the most essential ingredient in building an organization that is capable of achieving it strategic goals. Today, succession planning requires more than just an organizational chart showing who holds what job within the organization. Best practice organizations use succession planning to develop and maintain strong leadership and to ensure that they address al the skills and competencies required for todays business environment. Succession planning can also be an extremely powerful tool in motivating and retaining top talents. Succession planning is an ongoing, dynamic process that helps an organization to align goals and its human capital needs. It also ensures that the organization can keep pace with changes to the business, industry, and overall marketplace. To achieve outstanding results using succession planning, the organization must develop an effective and highly focused strategy that centers on organizational excellence. It is based on the information supplied by talent audits, supply and demand forecasts and performance and potential reviews. In some large organizations, in which demand and supply forecasts can be made accurately, highly formalized succession planning process exists based on the sort of management succession planning schedule. In the past, succession planning typically targeted only key leadership positions. In todays organizations. It is important to include key positions in a variety of job categories.

Companies that are well known for their succession planning and executive talent development practices include: GE, Honeywell, IBM, Marriott, Microsoft, Pepsi and Procter & Gamble

Definitions:
1. Succession planning is the process of identifying, developing and tracking key individuals for executive positions. (Boblander and Smell:2004) 2. Succession planning is a process by which one or more successors are identified for key posts (or groups of similar key posts), and carrier moves and/or development activities are planned for these successors. Successors may be fairly ready to do the job (short term successors) or seen as having longer-term potential (long-term successors). (Wendy Hirsch: 2000)

3. Succession Planning is concerned with getting the right number of people with right skills, experiences, and competencies in the right jobs at the right time. (Cheryl Zimmerman) From an analytical study of the above definitions, we may conclude that: Succession planning establishes a process that recruits employees, develop their skills and abilities, and prepares them for advancement, all while retaining them to return on the organizations training investment. Succession planning involves: 1. Understanding the organizations long term goals and objectives. 2. Identifying the workforce development needs. 3. Determining workforce trends and predictions.

 Objectives of succession Planning:

Succession planning entails putting an organizations knowledge to work Main objectives of succession planning are: 1. To build organizational leadership: Succession planning addresses the need of the organization as senior management ages. It is not unusual for a management team, particularly a CEO, to spend years leading an organization. During that time, business practices and procedures become increasingly entrenched and daily issues take precedence. Too often, the organization neglects succession planning and does not have people available who are fully prepared to assume the top posts. Although large 2

organizations are at risk, the problem can prove especially severe at small organization, which often flounder, and sometimes collapse, after the founder or CEO leave. At any businesses, having little or no succession planning wreaks havoc when the organizations leader retries. Nobody is fully prepared to assume the top post. 2. To Help Formulate Contingency Plan: Succession planning helps an organization to prepare for an unexpected event. It is often difficult to plan for the unimaginable. Yet, the sudden illness or death of a key executive can reverberate throughout an organization, paralyzing both management and employees and impeding the organizations ability to execute its business plan. Unfortunately, diseases, automobile accidents, plane crashes, and other disasters are an ongoing reality. Although it is not feasible to plan for every possible scenario, and particularly for the loss of several key leaders at the same time, it is entirely realistic to ma out a chain of command and understand who will assume control it and when a key executive is lost. Recent world events illustrate how important succession planning is. 3. To sustain organizational performance: succession planning ensures that an organization has the right to function at peak efficiency. Today, many organizations strive to identify key objectives and business goals and shape a work force accordingly. Although executives and senior managers play a crucial role in defining such organizations, there is a need for specific skills and competencies throughout the organization. Not only does succession planning serves as a way to create an organizational hierarchy, but it can also help organizations manage in a more holistic way. Although successful organizations usually focus on training to development to develop leadership from within the execute circle, they also understand that it is sometimes wise to look outside for particular skills and knowledge. There is no simple template for putting a succession planning process in place. Every organization is different, and each organization must develop a succession plan that fits its specific need. Management must guide this process and the human resource department must oversee it. And both must focus heavily on the organizational culture-what exists and what is required in order to succeed. Effective succession planning also demands assessment systems that can measure the developments of skills competencies and knowledge within the organization. Apart from these there are also some other important objectives of succession planning which are: y y y y y y Identify those with the potential to assume greater responsibility in the organization Provide critical development experiences to those that can move into key roles Engage the leadership in supporting the development of high-potential leaders Build a data base that can be used to make better staffing decisions for key jobs Improve employee commitment and retention Meet the career development expectations of existing employees 3

Counter the increasing difficulty and costs of recruiting employees externally

 Characteristics of Succession planning

1. Balance between individuals and organizations: succession planning takes into account not only organizational needs but also the growing recognition that people men as well as women- increasingly need to make their own career decisions and to balance career and family responsibilities. So the emphasis is about balancing the aspirations of individuals with those of their employing organizations, as far as possible customizing moves to meet the needs of employees, their families and the challenging skill requirements of the organization. 2. Broadening experience by lateral moves: Traditionally, people would have gained experience by upward moves, with accompanying increases in status and salary. Nowadays that may not be possible, because organizations are less hierarchical, with fewer management layers. A sideways move into different job may be all that is available, without any extra cash. Traditionally fast-tracking created expectations of upward progression, and if status and money are thought to be motivators, different methods of generating commitment may have to be found 3. Roles, not Jobs: In the past, people would move up to specific, often specialist, jobs. Now (although some jobs will always require specialist) the main focus is o identifying ad developing groups of jobs to enable potential successors to be identified for a variety of roles. So jobs might be clustered by role, function and level so that the generic skills responsible for particular roles can be developed. The aim is to develop pools f talented people, each of whom is adaptable and capable of filling a number of roles. Because succession planning is concerned with developing longer term successors as well as short term replacements, each poll will be considerably larger than the range of posts it covers. 4. Competencies: Many organizations have developed frameworks for technical and generic competencies, which relate to a broad range of desired skills and behaviors. The assessment process attached to generic frameworks (especially for management competencies) can provide useful starting point or evaluating an individuals potential for a senior role. Thus succession plans need to be integrated with existing competency frameworks. However, there should not be an over-reliance on competencies because they may be too limiting and mechanistic to assess skills such as leadership. Moreover, they

relate to the past and present rather than to future, which is where organizational leaders need to look. 5. Links with business planning: Those responsibilities for succession planning need to know as much as possible about the future of the business, how it is likely to change, and how such change might affect the number involved and the skills they need to possess. Of course this is not easy, but it does imply a close relationship at a senior level between the top managers responsible for shaping the future of the business (including in particular chief executive) and the HR function, which acts as a facilitator. 6. Openness, fairness and diversity: Greater openness and transparency have come with greater emphasis on the individual and the focus on roles rather than jobs(in the past it was felt that the motivator of those not on the fast track would e sapped by the knowledge that they ere not on it.) secrecy is being gradually reduced, and advertising of internal jobs in increasing, it is now more widely believed that employees need to understand the succession process, the methods use to judge potential successors, and the kind of jobs that are considered suitable for each individual. With openness should go fairness; objective assessment of all available candidates need to be made, and succession development committees exists in organizations to review key talent and succession plans and to examine how to improve the process. Those covered by the process need to be able to make an input about their own carrier aspirations, references and constrains. The also need feedback about how they are perceived by their employees and the sorts of jobs moves for which they would be considered. 7. Insiders and outsiders: All organizations need a certain amount of new blood to bring in new ideas and approaches, and fill unanticipated roles. Many seem to rely either too much on outsiders or too much on insiders, suggesting that it is difficult to find the right balance. Some academic commentators suggest that ratio of around 80:20 between insiders and outsiders is about right. Some also argue that outsiders should not be brought level but somewhere below it, so that people with outside experience can become accustomed to the corporate culture and undergo development before making the next set up. Others, though argue that if an objective business case can be made bringing in outsiders at board level, it should be done (although not over-done) and in particular that a failing business needs to recruit from outside, and needs to be seen to be doing so satisfy investors. Nevertheless, it is not difficult to make the case that many organizations would be better served if they spent as much on developing their own talent through succession planning. 8. Databases: various software packages exists to enable organizations to link available jobs with potential successors, to scan them to see whether filling 5

vacancies with particular individuals would help to develop them, and to make sure that developmental actions are followed up. Of course the database needs to be continuously updated and to be supplemented by discussion between managers. 9. An evolving Process: organizations are not static. They evolve, similarly as those involved in succession planning gain experience of its operation, and as structures and requirements change, they will continually aimed the system and how it operates. If they do not, the process will become less effective.

 Succession Planning Process:

Research suggests that the development of high potential employees involves three stages. A large pool of employees may initially be identified as high potential three employees, but the numbers are reduced over time because of turnover, poor performance or a personal choice not to strive for a higher position. In stage 1. High potential employees are selected. Those who have completed elite academic programs (like an MBA at Stanford) or who have outstanding performers are identified. Psychological tests such as assessment centers may also be used. In stage 2, high potential employees receive development experiences. Those who succeed are the one who continue to demonstrate good performance. A willingness to make sacrifices for the company is also necessary (such as accepting new assignment or relocating to different region). Good oral and written communication skill, an ease in interpersonal relationships, and a talent for leadership are critical. In what is known as tournament model of job transitions, high-potential employee who meet their senior managers expectations in this stage advance into the next stage of the process. Employees who do not meet expectations are ineligible for higher level managerial positions in the company. To reach the stage 3, high potential employees usually have to be seen by top management as fitting into the companys culture and having the personality characteristics needed to successfully represent the company. These employees have the potential to occupy the companys positions. In stage 4, the CEO becomes actively involved in developing the employee, who are exposed to the companys key personal and are given a greater understanding of the companys culture. It is important to note that the development of highpotential employees is a slow process. Reaching stage 3 may take 15 to 20 years. Companies devise elaborate models to characterize their succession and development practices. Most reflect a cyclical series of activities that include these fundamentals: 1. Identify what positions are included in the plan. 2. Identify the employees who are included in the plan

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Develop standards to evaluate positions (e.g., competencies, desired, experiences, desired knowledge, and developments value).

4. Determine how employee potential will be measured (e.g, current performance and potential performance). 5. Develop the succession planning review. 6. Link the succession planning system with other human resource systems, including training and development, compensation, and staffing systems. 7. Determine what feedback is provided to employees. The first step is succession planning is to identify what positions are included in the succession plan, such as all management positions or only certain levels of management. The second step is to identify which employees is part of succession planning system. For example, in some companies only high-potential employees are included in the succession plan. Third, the company needs to identify how positions will be evaluated. For example, will the emphasis be on competencies needed for each position or on the experiences an individual needs o have before moving into the position? Fourth, the company should identify how employees potential will be measured. That is, will employee performance in their current jobs as well as rating of potential be used? The employees position interests and career goals be considered. Fifth, the succession planning review process needs to be developed. Typically, succession planning reviews first involve employees managers and human resource. A talent review could also include an overall assessment of leadership talent in the company, an identification of high- potential employees, and a discussion of plans to keep key manager from leaving the company. Sixth, succession planning is dependent on other human resource systems, including compensation, training and development, and staffing. Incentives and bonus may be linked to completion of development opportunities. Activities such as training courses, job experiences, mentors, ad 360degree feedback can be used to meet development needs. Companies need to make decision such as will they fill an open management position internally with a lessexperienced employee who will improve in the role very time, or will they hire a manager from outside the company who can immediately deliver results. Finally, employees need to be provided with feedback on future moves, expected career path, and development goals and experiences.

In many companies, over the past several years, the emphasis has shifted from planning job assignments to development, with much greater focus on managing key experiences that are critical to growing global business leaders. North American companies tend to be more active in this regard, followed by European and Latin American countries.

PepsiCo, IBM and Nike are current examples of the so-called "game planning" approach to succession and talent management. In these and other companies annual reviews are supplemented with an ongoing series of discussions among senior leaders about who is ready to assume larger roles. Vacancies are anticipated and slates of names are prepared based on highest potential and readiness for job moves. Organization realignments are viewed as critical windows of opportunity to create development moves that will serve the greater good of the enterprise. Assessment is a key practice in effective succession planning. There is no widely accepted formula for evaluating the future potential of leaders, but there are many tools and approaches that continue to be used today, ranging from personality and cognitive testing to team-based interviewing and simulations and other assessment center methods Companies struggle to find practices that are effective and practical. It is clear leaders who rely on instinct and gut to make promotion decisions are often not effective. Research indicates that the most valid practices for assessment are those that involve multiple methods and especially multiple raters "Calibration meetings," composed of senior leaders can be quite effective judging a slate of potential senior leaders with the right tools and facilitation. With organizations facing increasing complexity and uncertainty in their operating environments some suggest a move away from competence based approaches. In a future that is increasingly hard to predict leaders will need to see opportunity in volatility, spot patterns in complexity, find creative solutions to problems, keep in mind long term strategic goals for the organization and wider society, and hold onto uncertainty until the optimum time to make a decision.

 Benefits of succession Planning:

1. 2. 3. 4. 5. 6. Better retention. Valuable training goals. Increased preparation for leadership. Greater employee satisfaction. Enhanced commitment to work and the workplace. Improved corporate image.

Research Methodology

 Research Objectives:
As a management student, it has been thought to is that the systematic process of any work is done through setting the objectives. Without framing or setting the objectives and prioritization the assigned job, many come out with unhappy results. Apart from this, one proceed to do any assignments or project works, if the objectives are not set and given due importance.

1. 2. 3. 4. 5. 6. 7. 8. 9.

To know about whether the company follows a succession plan or not. To know about the key positions for which succession planning is done. To know about the process followed for succession planning. To know about the methods and procedure used for assessing the employees potential and competencies. To identify the employees who are included in the succession planning procedure and asses the task and responsibility they handle along with their qualification. To analyze critical success factors. To know about the strategies being followed for performance development of the identified employees. To know about the type of recruitment strategy being used for identifying the potential successors and the assessment and selection tools used. To know about the evaluation plan being used for succession management.

Keeping in mind that, with the definite objectives of the work, the works are completed in a clear cut way. I have framed some objectives to study the succession management of Meghalaya rural bank, Tura Branch which are as follows: Thus, the objectives so set up for the given topic were helpful in carrying out the project work successfully. Without the setting of objectives, systematized manner

 Research Methodology:
There are various methods available for collecting the information. The methodology used in conducting this was: y Questionnaires y Observations y Interview Basically, there are two types of data methods: Primary and Secondary. My informations are collected from both the sources (primary and secondary). 9

 Primary Data: The primary source includes:

1. Questionnaire: In this method a set f questions are prepared with a view to collect the requisite information. For using this method, I first made the questionnaire, get it typed in the computer and then obtained the printed questionnaires were then given to the respondents to fill it. Questionnaire can be classified into four main types: a) b) c) d) Structured- non- disguised Structured-disguised Non structured-non-disguised and Non-structured-disguised

Another important aspect in the questionnaire method is the type questionnaire methods is the type of questions used. Questions can be classified into: y Open-ended questions and y Close-ended questions In collecting the information about my project I used. Structured-non-disguised questionnaires and the type of questions which I used in the questionnaire are mostly close-ended questions. All the close-ended are multiple choices and the type of open-ended questions is completely unstructured.

2. Direct interviewing: oral interviewing (whether formal or informal) is one of the best ways to collect the information. Most part of my informations are collected with the respondents

observation is another important technique of collecting the 3. Simple observation: information. Some of my in formations are gathered from simple observations. Some things are easily observable but some are not. Whether things I have observed are added to my information collected.

 Secondary data: secondary data are those data which have been gathered earlier for some other purpose. The primary data collected by one person may become the secondary for another. For my study, I made use of these secondary sources too. The data I gathered through these secondary sources are the company profile, area detail, companys goals and objectives etc. 10

Research Design:

Design of Research

Primary data

Secondary data

Sources of data i. ii. Questionnaire Observation

Data needed are founded I. II. Company Internet

Data analysis Through interpretation of data

Period of time

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Findings and analysis

After the conduction of the project work through various methods, the important aspects as regards to the topic were found out. All necessary details are described one by one below: 1. To know about whether the company follows a succession plan or not. From the study conducted it can be conclude that Meghalaya rural bank does follows a succession management like any other organization. They follow succession management procedures mainly for better retention, second line ups, promotions and appraisal.

2. To know about the key positions for which succession planning is done. From the study it was found that almost all the positions are included in the succession plan in Meghalaya rural Banks. Succession planning is done for all employees including both lower level employees and the higher key positions. Since it is a government owned organization and its recruitment policies are regulated by the government. 3. To know about the process followed for succession planning. During the study it was found out that Meghalaya rural bank follows no definite procedure for succession planning, it is basically done on seniority basis and qualifying exams and employees past and present performances also future prospects. 4. To know about the methods and procedure used for assessing the employees potential and competencies From the study conducted it can be concluded that Meghalaya rural bank, Tura branch does not follow any strict methods and procedures for assessing the employees potential and competencies. They just prepare a yearly confidential record of the employees Attitude, job knowledge, customer service, conduct, discipline, integrity, dignity and sincerity. All these factors are rated on daily basis and at the end of the year the records are assessed for evaluating their employees potential and competencies. 5. To identify the employees who are included in the succession planning procedure and asses the task and responsibility they handle along with their qualification. From the study conducted it can be concluded that the employees included in the succession plan of Meghalaya Rural Bank, Tura branch include all the employees of the branch including branch manager, Assistant manager, Accountant, clerk and their field officer. 12

The task and responsibility that each employee handle depends upon their job content and designation and the qualifications are matched in accordance to that. 6. To analyze critical success factors. From the study conducted it can be concluded that the critical success factors for the employees include right attitude, proper discipline, proper job knowledge and customer service, integrity dignity and sincerity. All these factors are very important success factors for the employees of Meghalaya rural Bank to succeed. 7. To know about the strategies being followed for performance development of the identified employees The strategies that are being followed for performance development in Meghalaya Rural Bank Tura branch are promotions, incentives, recognition, and appraisal. Apart from this sometimes training is also being provided for the improving the employees performance which is provided by the various organizations in the banking sector like NABARD, SBI, RBI, SIRD. 8. To know about the type of recruitment strategy being used for identifying the potential successors and the assessment and selection tools used. From the study it can be concluded that Meghalaya rural bank Tura branch has no specific recruitment strategy of its own it is regulated by the government authorities and follows a predefined strategy. Most of the time recruitment is done externally with the help of qualifying exams and sometimes through promotions and transfers within the same organization. 9. To know about the evaluation plan being used for succession management. From the study conducted it can be concluded that Meghalaya Rural Bank, Tura Branch maintains a daily report focusing employees characteristics and with the help of the report prepared a confidential report at the end of year which include assessment of the employees Attitude, job knowledge, customer service, conduct, discipline, integrity, dignity and sincerity.

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 Conclusion:
In conclusion it can be said that Meghalaya Rural Bank, Tura, Branch follows a succession management like any other organization. And almost all the positions are included in the succession plan in Meghalaya rural Banks. Succession planning is done for all employees including both lower level employees and the higher key positions. It follows no definite procedure for succession planning, it is basically done on seniority basis and qualifying exams and employees past and present performances also future prospects. The branch does not follow any strict methods and procedures for assessing the employees potential and competencies. They just prepare a yearly confidential record of the employees Attitude, job knowledge, customer service, conduct, discipline, integrity, dignity and sincerity. All these factors are rated on daily basis and at the end of the year the records are assessed for evaluating their employees potential and competencies. And the strategies followed that are being followed for performance development in Meghalaya Rural Bank Tura branch are promotions, incentives, recognition, and appraisal. Apart from this sometimes training is also being provided for the improving the employees performance which is provided by the various organizations in the banking sector like NABARD, SBI, RBI, SIRD. Meghalaya Rural bank, Tura Brach like other organizations also faces some problem during the succession planning. The problem mainly arises when there are problematic employees in the organization. And sometimes there are errors in the rating software, which leads to employees grievances.

 References:

1. Das, Topnoy, Human resource management . 2. www.wekipedia.com/sucession planning 3. www.meghalaya rural bank

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