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Succession Planning By Vivek


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This presentation was first delivered at Malaysian HR Congress held at Kuala Lampur. Presentation outlines:
Succession Planning - an introduction
Succession Planning @ family run business
An approach towards Succession Planning
Steps to effective Succession Planning
Identifying and nurturing Hi-Pos
Potential and Performance mix of a Hi-Pos
Putting success into Succession Planning
How to measure its effectiveness

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Succession Planning By Vivek

  1. 1. Malaysian HR Congress 2007 Succession Planning
  2. 2.  What if something happens to the CEO or to a senior executive of my organization?  Who will replace him?  Will the new incumbent have the maturity and the desired competence to execute all responsibilities?  Are people other than him, groomed enough to fill the void that would be created by his absence?
  3. 3.  Charlie Bell, President and COO of McDonald, succeeded Jim Cantalupo, CEO hours after the sudden heart attack death  Mr. Zeien, succeeded Chairman and CEO Colman M. Mockler of Gillette Co.'s when he died of a heart attack in his office The Wall Street Journal Online
  4. 4. Session Outline  Succession Planning - an introduction  Succession Planning @ family run business  An approach towards Succession Planning  Steps to effective Succession Planning  Identifying and nurturing Hi-Pos  Potential and Performance mix of a Hi-Pos  Putting success into Succession Planning  How to measure its effectiveness  Conclusion
  5. 5. Succession Planning  Is not just a process to merely find a deputy or 2IC  It is a conscious process to ensure continuity of  Business Operations  Organization’s Policies  Organization’s Culture
  6. 6.  Organic Business Growth  Mergers  Acquisition  Promotions, Demotions & Transfers  Business Re-engineering Succession Planning “Global aging (Over the 1998 - 2008 period), more job openings are expected to result from replacement needs (34.7 million) than from employment growth in the economy (20.3 million)” (Braddock, 1999)
  7. 7. Succession Planning: an age old art H Recruitment of appropriate candidate etaining the good performers
  8. 8. Getting the right number of people with the right skills, experiences, & competencies in the right jobs at the right time. Workforce Planning Nancy B. Kiyonaga, NYS Department of Civil Service
  9. 9. Succession planning ensures that there are highly qualified members for all important positions, not just today, but tomorrow, next year, and five years from now. Succession Planning Kathryn Towe Littleton
  10. 10. What does an organization lose if it does not implement succession planning?  Revenue?  Market Share?  Company’s Image?  Stock Prices or Market Cap?  Human Cap?  Workplace will lose high performers  Lack of skilled workforce that understand business well  Right skill mix for the future  Right leaders to accomplish organization’s Vision & Mission
  11. 11. Succession Planning = Commercial Success There is a direct correlation between:  Organization’s ability to develop senior executives & Confidence to meet future growth needs  Organization’s ability to recruit highly able executives & having well-organized program to develop Hi-Pos’  Developmental ‘stretch’ assignments within company & the personal involvement of the CEO  Organization’s need to hire outside leaders & Lack of confidence to meet future growth needs HUMAN RESOURCE MANAGEMENT, VOL. 13 NO. 1 2005
  12. 12. A process that ensures… • Right people to lead tomorrow… who live the values, today • Organization identify / recruit future leaders • Employees develop new competencies & skills • Organization alerts its rising stars to potential leadership opportunities; well in advance Succession Planning… what is it?
  13. 13. A process that ensures… • Better talent retention • Greater employee satisfaction • Enhanced commitment to work by the employees • Improved image of organization Succession Planning… what is it?
  14. 14. Succession Planning… what isn't?  Succession Planning is similar to Workforce Planning  It’s an option with management to develop leadership  Succession Planning & Leadership Development are  Two different HR processes  Stand-alone activities coordinated by HR department  Line Managers do not have much role in Succession Planning & Leadership Development  Lack of Succession Planning may not pose a similar threat as accounting blunders or missed targets
  15. 15. Succession Planning: the reality  Most globally recognized Indian organizations are not properly equipped with a sound succession plan  Very few Indian companies have been able to effectively implement a succession plan for its important and strategic positions (A survey by the Associated Chambers of Commerce and Industry of India)
  16. 16. Succession Planning @ Family run businesses  More than half of the top 100 companies are family owned  De-merger of business families, with trauma and acrimony, is fairly common in India.  Reliance Industries – Mukesh & Anil Ambani  Bajaj Auto – Rahul & Shishir Bajaj  Escorts – Rajan & Anil Nanda  Jumbo Group – Bhavika, Kiran & Komal Chhabria Sahad P.V. - Family Values
  17. 17. Succession Planning @ Family run businesses  Family run business groups, which dealt with Succession issues successfully  Murugappa Group  Dabur India  Thapars  GMR Group Sahad P.V. - Family Values
  18. 18. Succession Planning @ GMR group’s Succession Plan  Clearly articulated set of rules to deal with  Management succession  Ownership succession  Control and power sharing Sucheta Dalal, CHEQUES AND BALANCES
  19. 19.  Family Constitution  Family Business Board  Laid down policies on  Consensus in decision making  Media policy  Code of conduct  Process of inducting family members into the business  Providing benefits to those who do not want to enter the business Succession Planning @
  20. 20.  G M Rao to step down at the age of 70  Three next generation successors to decide next chairman  Dead lock trustee  Induction of family members is on merit and are paid on par with other professionals employed  The economic benefits of shareholding will be separate Succession Planning @ Sucheta Dalal, CHEQUES AND BALANCES
  21. 21. Succession Planning @ Family run businesses  Ownership Vs. Management  Family owns the controlling shares, but inducts professional managers to run their business. Retail giant  Rob Walton - Chairman  Lee Scott - CEO "Successful business families are those who run businesses as capitalists and families as socialists." N. Srinivasan
  22. 22. Succession Planning @ India's largest pharmaceutical company  1952, Bhai Mohan Singh founded Ranbaxy  1967, Dr Parvinder Singh, Bhai Mohan Singh's son, a doctorate in pharmacy from the University of Michigan joined the company  1982, he became the company's Managing Director  1993, D.S. Brar joined as Business Development Manager, became the President (Pharmaceuticals) and a whole time Director ICFAI - Center for Management Research
  23. 23.  1997, Brar revealed his retirement plans to retire in 2002.  2003, Dr Brian Tempest (President, Pharmaceutical Division, Ranbaxy) took the reigns of Ranbaxy from Brar as CEO and MD  2006, Malvinder Singh has taken over as CEO & MD Succession Planning @ India's largest pharmaceutical company
  24. 24. Succession Planning @ Corporates Long Term Succession Planning Who is completing his term this year? Who have the skills to replace this position? Who has necessary skills & ready for a larger or a different role? Short Term Succession Planning Who needs immediate replacements? Whose professional career demands relocation? Who would like to choose other volunteer options?
  25. 25. Department (A) Key Position (1) Key Position (2) Department (B) Key Position (1) Key Position (2) Department (C) Key Position (1) Key Position (2) Current / Future Competencies and expected vacancies Assessment & Evaluation to identify Hi-Pos Profiling of Prospective Leaders Individual development plans/Job rotation/Simulation workshops Independent Assignment Assessment of individual’s competency and skill gaps Bottom - up Succession Planning
  26. 26. Understand organization's long term goals & objectives Determine Critical Positions Assess individual’s competency and identify skill gaps Identify current and future competencies for positions Identify expected vacancies Evaluate potential candidates as successor for key positions Determine the individual’s current performance & future potential Design individual’s development plans Review individual development plans to ensure needs are addressed
  27. 27. Steps of Succession Planning Follow-up • Assist with leadership transition and development • Develop & implement coaching and mentoring programs • Develop an evaluation plan for succession management • Monitor progress of succession candidates
  28. 28. Succession Planning @ (Talent Review and Planning) • Review of Business Strategy • Identification of Critical Roles • Stock of Talent Inventory • Identification of Potential Successor • Assess individual’s competency and identify skill gaps • Individual Development Plan in terms of • Job Rotation • Training • Coaching • Performance Counseling • Follow-up on individual development plans to ensure that all developmental needs are addressed Express computer online
  29. 29. Succession Planning @ (Talent Review and Planning) Lifecycle leadership development programs • New Leaders Program • Wipro Leaders Program • Business Leaders Program • Strategic Leaders Program
  30. 30. Current performance is not the sole predictor of future success Future potential is a sign of prospective results Performance V/s. Potential
  31. 31. Performance Performance is an assessment of Hi-Po’s • Past Business results • Past Performance review results Identifies mainly the areas of low performance/weakness • Build a poor image of the employee • Minimal level of performance from Hi-Pos’ leading to • Wasted resources • Low morale • Unsatisfactory performance • Higher degrees of employee turnover PotentialV/s.
  32. 32. Potential is an assessment of Hi-Po’s  Willingness to perform  Open-mindedness  Personal Accountability  Willingness to learn from successes & failures Performance V/s. Potential
  33. 33. “Future work potential is based on accumulated skills and experience as evidenced by past achievement, ability to learn new skills and willingness to tackle bigger, more complex or higher quality assignments.” Charan, Drotter & Noel, The Leadership Pipeline, Jossey-Bass, SF, 2001 Performance V/s. Potential
  34. 34. Performance V/s. Potential Criteria for deciding Performance V/s. Potential mix • Industry • Job Profile • Tenure • Learning Curve BPO, Science & Technology, IT, Media R&D, Sales, Finance, Manufacturing Entry Level, Middle Level, Sr. Managers Management Trainees, Newly Promoted Managers, New Job profile
  35. 35. How to assess pool of Hi-Pos:  Negative feedback  Change in behavior based on the feedback or …  Learning from mistakes/successes in past  Hunt for new information for self development or to improve workgroup  Learning & Demonstration of new skills  Development of Team mates Performance V/s. Potential
  36. 36. Performance V/s. Potential H L H Performance Potential Competent / Capable Needs Improvement Plan exit Long Term employee New employee Misfit in the position High Performer in current role Able to get things done Recognize the technical expertise Organize the transfer of knowledge Performance role model Lack ability to manage Determine career aspirations Assist in developing leadership skills Misses performance expectations Unorganized working Identify if unhappy in current role Create development plan Performance below expectations Rigidity in behavior Recruitment error Consider exit options Average Performer in current role Demonstrate desire to achieve Provide training & coaching inputs Recognize potential; offer support Despite competence, performing low Awareness about perf. deficit missing Counseling to understand culture Help him in setting priorities Offer challenging stretch assignments Offer opportunities to develop others Jackson leadership
  37. 37. Putting Success into Succession Planning Management succession is a process and not an event • Strong commitment of senior managers • Process is to be owned by the line management • Simple and tailored to unique organizational needs • Flexible and linked with strategic business plans • Evolved from a thorough human resources review process • Based upon objective assessment of candidates
  38. 38. Role of CEO & Senior Executives in Succession Planning  Culture of coaching and mentorship  Focus on the company's competitive advantage and sustainable growth  To withdraw from the key roles for short or even medium-term periods  To take corrective steps in case of gaps arising due to their withdrawal
  39. 39. Role of CEO & Senior executives in Succession Planning  CEO is a dispensable resource " Take a bucket and fill it with water, Put your hand in it right up to the wrist, Pull it out and the hole that's remaining  Is a measure of how you will be missed" "Indispensable Man" Bryan Hattingh
  40. 40. How to measure the effectiveness of the Succession Planning  The number of senior positions filled internally  The overall retention figure  The leadership talent created and provided to the industry
  41. 41. Succession Planning - Check list  Within x months, assessment for all key departments and positions will be completed  Within x months, developmental plan for all Hi-Pos will be completed  By year 20xx, increase in job rotation of Hi-Pos’ by x%  By year 20xx, increase in Hi-Pos’ leaders by x%  Over x years, increase in Hi-Pos’ retention by x%
  42. 42. Conclusion  Succession Planning is as critical as creating a business strategy  Succession Planning is as important as running the business profitably  While identifying successors appropriate weightage needs to be given to both performance and potential  For an effective implementation of Succession Planning involvement of CEO and line managers is a must  Measuring the effectiveness of a succession planning program is as critical as its implementation Washout visual – Courtesy TOI
  43. 43. Thank You Visual – Courtesy TOI