What Is Succession Planning Commerce Essay

What Is Succession plan Commerce EssayIn Lawrence S. Kleimans belles-lettres almost the post-hiring phase, he give nonices several elements that include instruction and stimulatement, compensation, productivity improvements and some(prenominal) financial and non-financial rewards (p.8). However, some other authoritative element that todays employees seriously consider when accept a mull over opportunity is the winmentiveness think frame trifle of the establishment in question. Succession mean basically involves the establishing of the righteousness state in the right positions at the right time to enable the di view and last the musical arrangement to progress towards its goals. Atwood (2007) reiterates this when he explicates that sequence cookery is the on-going extremity of identifying upcoming leaders in an fundamental law and developing these leaders to enable them to channelise the composition in effect (p. 1). Atwood in any case goes on to explai n that the era provision work at involves the fall overing of the system of rules of ru slight strategic plans, analysing the existing work force, forecasting po ten dollar billtial tr dyings and developing employees through and through a twistd plan to elegantise over from current leaders who retire or decide to leave the nerve for whatever reasons (p. 1).In Roth well(p)s (2010) writings, term cooking is defined as a means by which to identify and develop internal talent to meet current and next talent reads of the physical composition (p. 7). The author that emphasises that taking over supplying is a deliberate and systematic effort of an organisation to mark off leaders continuity at heart the organisation. It is also a means to develop talented and companionship capital for the future, and to spur individual advancement (p. 7).Singer and Griffith (2010) advise that episode preparedness is to a greater extent than only when re rollment be subsequentl y or merely filling va targetcies within the organisation as they occur. The author also states that comprehensive epoch guidance integrates talent management with the organisations strategic readying (p. 1). Succession cookery is a proactive possibility which does non forbear for the talent or those in key positions to leave the organisation in the beginning the process kick-starts. Succession proviso is an opening night that is ahead of the curve, anticipating, developing, and ensuring that key tasks ar accomplished and cognition is sh ard as well as transferred healthily (p.7).A nonher explanation of era planning to mull over is Olstein, Marden, Voeller and Jennings (2005), whereby the authors designate that succession planning is a utility that encompasses a well-developed plan to defecate for the future generational change (p.15). Succession planning is further reiterated as a methodical process that involves analysing the existing custody, identifying the needs of the workforce in the future and determining the gap between the current and future. It also includes implementing solutions so that the organisation is able to carry through its integrated aspirations (p. 16).Hastings (2005) explains succession planning in four phases as illustrated below in diagram 1.1plat 1.1 Four Phases of Succession readying (Source Hastings, 2005, p. 2)The diagram above talks ab come forth 4 phases in succession planning that are crucial for the process to be trenchant. Hastings also reiterates the earlier statements that succession planning is an on-going process and not retributory a one-time effort. The organisation has to keep the cycle of succession planning going in separate for it to be able to effectively position its leaders tail enddidates in the right places.1.1 Who Needs Succession Planning?Succession planning should be under shootn by organisations who wish to continue their successes in the future or who plan to expand their success in t he future. Shipman (2007) states that agonistical organisations know that investing in their employees with career maturement and a swell succession planning framework is an investment that entrust reap triplex rewards (p. 24). Shipman also states that due to the ageing workforce, succession planning is a antecedence that must be looked into in todays organisations (p. 25). It is an initiative that should involve employees with trustworthy mental process and who show great potential for leading roles within the organisation. Succession planning can involve employees from all take aims of occupancys.Hastings (2005) states that succession planning is ask for staff, with input from staff as well, as staff need to be aligned to the organisations succession planning framework in order for it to work effectively (3).In Rothwells (2005) writings he states that organisational leaders must hear that their companys long-term viability is at stake if they do not seriously structu re succession planning. It will affect the retention of qualified talents within the organisation which will lead to serious effects on the organisations strategic objectives (p. 27).An effective succession plan will enhance the smooth transfer of byplay and allow the organisation to maintain good relationships with employees and agate air travel line partners by sort of (excerpt from the Canada Business Network)Protecting the bank line legacyBuilding repute for the organisations and its bloodlineProviding financial security for stakeholdersDealing with unexpected leaders absences such as death, resignations or termination.Preparing for the future of the bank line consequently it can be think that succession planning is not only need for the organisations workforce notwithstanding also for the organisation itself to maintain its competitiveness and to achieve its corporate objectives and goals.1.2 The immensity of Succession Planning tally to Rothwell (2005), succession planning is consequential for 4 main reasons (p. 41)The continued success and survival of the organisation which depends on the right wad being at the right positions at the right time.The insufficiency of good leaders in the market at large to take on the helm of an organisationTo encourage diversity and multiculturalism within the organisationTo establish the base for career path planning, development and training plansIn the Houston Chronicle (http// lower-ranking championship.chron.com/ enormousness-succession-planning-5129.html ), Louise Balle suggests that succession planning is an progress whereby an organisation or blood owner transfers knowledge or even the brass of the vocation to another up to(p) or well-equipped individual upon retirement, disability or even death. Balle further reiterates that a succession plan is important because it offers the organisations management or the business owner an alternative for when the need arises.In Elizabeth Harrins (2010) oblige in The Glasshammer website, it is state that the issuing of managers available to step into leadership roles will drop dramatically in the coming years according to a study by EgonZehnder worldwide. The study states that the average company will be go forth with just one half of its talents by 2015, due to the fact that there are just not sufficient people with the right skills and experience to take the reigns for the future (except from http//www.theglasshammer.com/news/2010/04/27/developing-future-leaders/ ). Therefore, succession planning is a crucial element to ensure leadership continuity within an organisation, without which the organisation will check no capable leaders at the helm for the future.The HR Council for the Non-Profit Sector (excerpt from http//hrcouncil.ca/hr-toolkit/planning-succession.cfm_secA3 )states that succession planning is important because it can offer the following(a) benefitsThe assurance that the organisation is prepared for leadershi p crises and can maintain leadership continuity.The continued supply of qualified and motivated people who are capable and prepared to take on the current senior positions within the organisation.Assures concurrence of the organisations vision and military man resources that rebound a good understanding for strategic clement capital planning.Shows the organisations strong commitment towards developing its peoples career paths as well as enabling the organisation to facilitate effective recruitment and retention of high- carry throughing employees.A strong reputation as an employer who invests in its people and deliver the goodss opportunities for advancement.Strengthen employee engagement conveying the message that the organisation values its employees.In an member in The StarBiz (2 July 2007), it is stated that Malaysian companies are generally alive(predicate) of the immenseness of succession planning, particularly larger corporations. The article quotes SMR Technologies Bhd Chairman and principal Executive Officer, Dr R. Palan as saying that common sense dictates that an organisation should build a succession plan in place despite their coat and status. Palan also states that in Malaysian presidential term-linked companies, much effort has been made to develop the next level of leadership in a conscious and aforethought(ip) manner. He said that there is a common trend widely distributed for large companies to focus on developing stars and A players the authorize 5 per cent of a companys manpower. He reiterates that smooth successions were a result of well-thought plans to ensure business continuity (excerpt from http//biz.thestar.com.my/news/story.asp? stick=/2007/7/2/business/18179462sec=business ).Dr Palan offers an example in The General Electric Company (GE), whereby he states GE is arguably one of the most successful companies in the human with a good track record of returns to shareholders. Dr Palan explains that this is attributed t o GEs CEO Jack Walsh, having a pool of three successors, before he retired, to take on the administration of the company. One succeeded Jack Walsh whilst the other two went on to reach successfully in other corporations. Dr Palan stresses that companies should obligate a succession plan as it is the only way to stay relevant in a ever-changing world (excerpt from http//biz.thestar.com.my/news/story.asp?file=/2007/7/2/business/18179462sec=business ).Another statement by a Malaysian business stouthearted in The StarBiz (2 July 2010) Dr Michael Yeoh states that Malaysian corporations were now change magnitudely aware of the importance of succession planning in order to establish business continuity in the interests of stakeholders. He quotes that some heeded companies on Bursa Malaysia now have three or four possible candidates that could replace the CEO if and when necessary (http//biz.thestar.com.my/news/story.asp?file=/2007/7/2/business/18179462sec=business).1.3 The Current Is sues in Succession PlanningThe current issues affecting succession planning can take on many an(prenominal) facets. According to Rothwell (2001), these issues can include (article 78)An aging workforce and retirement of Baby Boomers.Changes in the work environment with varying processes, technologies and mechanisms.Changes in the workforce with regard to diversity, with the increasing number of immigrant workers in all sectors.Globalisation which includes rules and regulations, government polices and processes as well as evolving methods of business transactions.Military conflicts, affecting countries with civil instability.Technology accelerators, that enable business to be done in a myriad of methods which are different from past business transactions in the 1990s and before that.Tight labour marketUnethical and inexpert behaviour of organisation leadership, that includes prejudice, unequal opportunities and unprofessionalism, amongst others.According to Mathis and Jackson (2010 ), issues surrounding succession planning are prevalent worldwide. The authors state that the percentage of the aging tribe in the workforce in Japan, Germany, Italy and England, are even higher than in the USA. Their analysis says that with the growth of the immigrants, employers are facing both legal and workforce diversity issues. The authors also state that in countries with growing native workforces, such as China and India, succession planning is crucial (p. 290).Mandi (2008) explains that issues relating to succession planning can stem from various looking ats. Effective succession planning involves the realization and selection of future key leaders, however, if there are no commensurate candidates for leadership within the organisation, that poses another problem (p. 88). formations must have a formal and structured succession planning framework to ensure the success of this process. Without a formal and structured framework, organisations are sure to meet failure. s ome(prenominal) organisations today, particularly the smaller establishments, may not see the succession planning as mission critical until a leadership crises hits them. However, succession planning does not always guarantee success for the organisation, however, it can apparel the organisation on the right path to success. Achieving that success is altogether another outlook to consider and contemplate.1.4 How To Effectively Conduct Succession PlanningAccording to an article in The Star (30 October 2012), change can be traumatic. Large organisations, small businesses, families and even governments are at their most vulnerable during a leadership transition. In many cases, the moment a new CEO takes up the reins, there will be issues, regardless of how competent or experience the new leaders is on paper. The article suggests 6 critical stairs to kick-start succession planning within the organisationAlign the get on with and exonerate management with the organisations busines s strategy and map out short-term, mid-term and long-term wins. It defeats the offer of identifying new leadership candidates to lead the organisation into the future if the future itself is not clear.Build leadership profiles. Identify the attributes needed to help the company achieve its corporate goals. Identify the ideal skills needed and analyse the boards or pull in managements vision of the ideal CEO in the next five to ten years.Identify high potential talent. Find people within the organisation and externally, who have leadership potential and match them to the ideal vision of the corporate leadership.Develop talent. Have clear cut developmental plans for high-potential leadership candidates, so as to groom these candidates to take on the intended leadership roles within the organisation. Identify their areas of weakness or inexperience and device structured plans to address these areas and provide them with opportunities for more exposure within the organisation. This m ight mean giving them the opportunity for hands-on experience in management positions that they have never dealt with previously, sending them on overseas assignments, improving their technical skills and business acumen and even shadowing a member of senior management to convey the ropes.Coach high potential candidates. Management succession candidates should overhear one-on-one sessions with high level executives to apprise more about top management functions and how to manage problems. Internal mentoring is a powerful tool and is incredibly valuable. External executive coaching is also an excellent way to learn new and innovative techniques from other successful leaders.Transfer knowledge. It is crucial for succession planning to establish mechanisms that maintain succession planning despite board or management turnover. The succession planning momentum must be maintained regardless of the changes happening within the organisation. Only then can succession planning be effecti vely administered within the organisation.Close monitor of candidates progress. Succession candidates must be closely monitored with regard to their progress and development. A candidate chosen today may not be sufficient anymore after a one-year period. Candidates must be evaluated sporadically on their current suitability for potential leadership positions in the future.According to Durai (2010), prerequisites for successful succession planning include the following (p. 246)Complete oblige and patronage from top management.The organisation must periodically review the list of critical positions within the organisation and bring them under the succession planning programme.Whilst determining HR strategies for training and development, the succession planning requirements must be taken into account.The knowledge, skills and capabilities of employees must be developed on a keep up basis.A proper mechanism must be established to provide constant feedback to the potential successor s about their accomplishment and progress.The organisation needs to buy up a strategic and holistic approach to succession planning as well as the development of its leadership.1.5 ConclusionMany organisations realise the importance of succession planning and have great plans to support this idea. However well these plans may have been crafted, there may be hitches in them that need to be addressed. According to Durai (2010), these impediments may include the following (p. 246)Lack of criteria for the realization of the successorOrganisations must set clear-cut criteria for the selection of potential succession candidates. This will outline an unbiased framework for the selection of eligible and capable candidates.Existence of traditional succession planning systemsMany traditional succession planning systems entail the selection of succession candidates to replace specific individuals kind of of the position. This kind of system can often end-up with the identification of a few subordinates by the senior managers for inclusion in the succession planning programme. The organisation should instead identify key positions to be included in the succession planning programme. Only then it should develop a pool of high-potential candidates for inclusion in the succession planning process.Inaccurate diagnosis of development requirementsThere are many cases where organisations make a wrong estimate of skills requirements of potential candidates. When skills requirements are misjudged, it can lead to the inaccurate selection of training and development approaches as well as performance evaluation methods. Therefore it is crucial for organisations to engage proven methods to identify skills and knowledge requirements for its succession planning candidates.Insufficient emphasis on interpersonal skills requirementsLeaders should have good interpersonal and team-building skills that can help them engage employees. Therefore, succession planning candidates for leadersh ip positions must be evaluated on their ability to engage people within the organisation. Often this is not properly evaluated leaving gaps on communication, motivation and enculturation skills for potential candidates.Lack of sufficient and timely sharing of feedbackThe lack of feedback and guidance towards a succession candidate can drive the successor out of the organisation due to frustration and a lack of heading. Therefore it is importance for potential candidates to know that they are in the succession planning line for leadership positions in order for them to be well-aligned with HRs plans.Lack of follow-up actionsIn many organisations, succession planning often remains in the background signal without clear-cut follow-up plans and actions. In these organisations, management fails at taking succession planning to its logical end, resulting in the chosen candidates for succession being left in limbo. This speaks about bad planning and implementation for succession planning within the organisation.Absence of managerial initiative and supportManagement initiative and support are crucial to the success of succession planning. Therefore it is important for HR to educate management on the benefits of succession planning so that management can support this concept on a uphold basis.Psychological effects and insecurity of superiorsIt is quite common for managers to feel endanger when succession planning is done for their positions as they see it to be an end of their own career. In cases like this, an insecure superior may show disinterest and even apathy in sharing his skills and knowledge with potential candidates. To address this, top management must enlighten managers about the purpose surrounding the succession planning framework and dispel apprehensions about the programme. gesture 2 COMPETENCY-BASED PAY2.1 What is Competency-based redeem?Lawrence Kleinmans article on Human choice Management (HRM) offers a broad perspective of human resource manag ement. The article suggests that human resource has gone beyond just hiring and gifting employees. Instead, he states that HRM encompasses a whole paradigm of human capital management with many facets, one of which includes the strategic intent behind an employees correct scale.Traditionally, wage have always been determined by the assigned billet of an employee. However, in todays human resource management, many organisations are adopting the approach of competency-based grant. According to Caruth and Handlogten (2001), competency-based contain is a salary structure whereby workers are paid not simply for the job they may be doing presently , but on the basis of the tally number of jobs they are able to perform or on the basis of the depth of knowledge they have acquired (p. 146). Another explanation of competency-based remunerate by Baldwin (2003) states that employees value depends on what they can do, based on their respective competencies. The more an employee is able t o do, the more the organisation can expect and the greater the individuals value (p. 101). The author states that competency-based pay stresses importance on the competency of an employee (p. 101).According to Robbins, Odendaal and Roodt (2003), competency-based pay is another alternative to job-based pay. Instead of having an individuals job title define his or her pay, competency-based pay sets pay levels on the basis of how much an employee can do and how many skills the employee has (p. 161). The United Kingdoms Local Government Employers (excerpt from www.lge.gov.uk ) define competency-based pay as a system that rewards individuals who positively contribute to the overall values and objectives of the organisation basically meaning, rewarding the way people work and not just acknowledging their delivery capabilities.Another definition to consider is one by Jackson, Schuler and Werner (), who explain that a competency-based pay structure is associated with the skills of individu als, whereby pay rates are reflect the value assigned to the demonstrated skills of employees and not the value affixed to their job or task (p. 383). In article by Sriyan De Silva (1998) for the International Labour Office, competency-based pay or skill-based pay refers to a pay system which is linked to the depth of skills an employee acquires and applies. De Silvafurther adds that competency-based pay is a person-based pay system and not a job-based pay system. It rewards an employee for what the employee is worth it rewards a broad range of skills which encourages the employee to be multi-skilled and flexible (excerpt from http//www.ilo.org ).2.2 Why Adopt A Competency-based Pay Scheme?Caruth and Handlogten (2001) suggest that the competency-based pay schemes are a result of organisational downsizing and restructuring. As organisations come leaner and more approach conscious, it is crucial for employees to be able to perform multiple tasks. (p. 146). Kusluvan (2003) states th at competency-based pay systems motivate employees to develop and apply their agility and initiative when performing their duties or servicing customers (p. 795). This is a kind of incentive to ram more hidden talents out of employees and harness their hidden potential. In todays mercenary world, as much as it may sound decadent, money is the highest prompt factor for workers. Employees who were once redundant and unproductive can be real change to be more innovative, contribute more productively and achieve performance excellence by way of monetary incentives. This, of course, may not work for certain groups of people who are not motivated by money however, the majority seems to jump with the sight of monetary-based incentives.Robbins, Odendaal and Roodt (2003) suggest that competency-based pay offers tractableness from a management perspective (p. 161). Filling vacancies is easier when employee skills are interchangeable this is especially true in todays context whereby orga nisations are downsizing and cutting the surface of their workforces. The authors state that downsized organisations require more generalists as compared to specialists (p. 161). With competency-based pay schemes employers are less likely to encounter self-centeredness amongst employees and the attitude of Its not my job. Another aspect that Robbins, Odendaal and Roodt (2003) raise is that competency-based pay schemes help meet the needs of ambitious employees who expect minimal advancement opportunities (p. 161). These employees are able to growing their earning capacity and knowledge without a promotion in job title or role. Competency-based pay is also able drive performance excellence and improvements. Robbins, Odendaal and Roodt quote come off of Fortune 1000 companies which found that 60 per cent of those on a competency-based pay scheme indicated higher success rates in increasing organisational performance, whilst only 6 per cent considered this approach unsuccessful (p . 161).In todays business environment, where productivity is number one, competency-based pay systems offer employers an edge to garner more productivity from their employees, resulting in break away business performance and more improvements.2.3 The Advantages and Disadvantages of Competency-based PayAdvantagesDisadvantagesAccording to Messmer (2007), competency-based pay schemes create incentives for sustained improved performance (p. 174). This approach appeals to high performers who prefer to be paid on the basis of what they contribute and not on seniority (p. 174).According to Messmer (2007), competencies must be sketch carefully to avoid potential discrimination charges. Messmer also suggests that it may be incompatible with labour contracts associated with unionised workers (p. 174).Competency-based pay schemes helps employees grow in place and provides them the guidance for closing knowledge gaps required for lateral moves within the organisation (Arthur, 2001, p. 67).Com petency-based pay schemes can lead to employees being topped-out, which means they can learn all the skills the programme calls for them to learn, which in turn will frustrate employees after they have become challenged by an environment of learning, growth and continual pay raises (Robbins, 2003, p. 179).It reduces the need for promotion in order to earn higher wages and offers employees the opportunity earn higher wages through skills enhancement (DeSilva, 1998, www.ilo.org ).Competency-based pay schemes do not address the level of performance, instead it only deals with whether an employee can perform the skill (Robbins, 2003, p. 179).The broadening of skills results in employees developing a better perspective of operations in its entirety (DeSilva, 1998, www.ilo.org ).Associating competency to pay requires actual investments in training and development facilities as well as competence assessment systems, in order to provide all employees the opportunity to increase competency and pay levels (White, Druker, 2000, p. 88).Competency-based pay schemes break down narrow job classifications and enlarges job roles (DeSilva, 1998, www.ilo.org ).Can be tedious and challenging to manage as pay has to be unceasingly calculated based on the set formula and criteria.2.4 How To Conduct An Effective Competency-based Pay Scheme For Middle Managers in the market DepartmentIt is crucial for an organisation to constantly evaluate and review their total pay structure in order to remain relevant in the ever-evolving business environment and to retain critical talents. In order to drive performance and maximise value, it is crucial to remunerate employees based on their competence levels, skills sets, capabilities, contributions and result-based performance.Competency-based Pay for Campaps Middle ManagementThis study will analyse competency-based pay scheme to be implementedforCheeWah Corporation Berhad a stationary solutions supplier in Malaysia operating with the brand name Campap (excerpt from www.campap.com). The company has outlets located in major cities in Malaysia and has a marketing department comprising of 55 employees. The marketing department comprises the following organisational structureDiagram 2.1 CheeWah Corporations merchandise Department Organisation ChartIn the case of CheeWah, the competency-based pay scheme will be introduced first to shopping center managers in the marketing department, which are the Senior Marketing Managers. The competency-based pay scheme will need to take into account the companys vision which is We aspire to be the LEADING supplier that commits to meet and exceed our customers expectations (excerpt from www.campap.com ). Their human resource management is aligned around the theme Developing our people to drive corporate growth. Before this study delves into CheeWahs competency-based pay model, other pay models will be discussed for comparison.Competency-based Pay ModelsKusluvan (2003) describes a comp etency-based pay model whereby it is a process identical to a selection strategy where traits most wanted by the organisation are identified and ways to embed these traits into the employees competencies and performance goals are derived (p. 795).Heneman (2002) describes a competency-based pay model whereby compensation is adjusted when an employee demonstrates with knowledge and performance tests that he or she has the required skills to reach the next level (p. 160).Wright (2004) describes a competency-based pay model that takes into account innovation, quality enhancement and cost reduction aside from the employees skills and competencies (p. 4).In the case of CheeWah, the competency-based pay model for middle managers will take the following approachCheeWah Corporations Competency-based Pay Model for the Marketing DepartmentOrganisational Vision, Business Strategy and Human Resource Mandate call for Employee BehaviourHR and Reward PoliciesIndustry LeadershipProactive and consta ntly seeking to expand their areas of coverage.Regular association and engagement with constancy leaders and leadership platforms.Pay raise based on annual achievements of effort engagement opportunities.Financial remuneration for each leadership platform penetrated on an annual basis.Corporate GrowthThe ability to establish new business opportunities and penetrate new markets.A 2 percent commission on each new business gained and 10% increment per annum for the total number of new business gained per annum.The opportunity for an all-paid overseas trip for the achievement of industry awards for performance excellence.Cost Reduction/ MinimisationThe strategic ability t