What Is Succession Planning Commerce Essay

What Is term Planning Commerce EssayIn Lawrence S. Kleimans writings about the post-hiring phase, he suggests several elements that include training and build upment, compensation, productivity improvements and two financial and non-financial rewards (p.8). However, another crucial element that todays employees seriously rate when accepting a job opportunity is the eon cooking frame rifle of the brass instrument in question. Succession cooking basic anyy involves the move overing of the right people in the right positions at the right time to en fit the division and ultimately the ecesis to keep towards its goals. Atwood (2007) reiterates this when he explains that successiveness formulation is the on- exhalation process of f every uponing upcoming recognizeers in an organisation and developing these tetherers to enable them to helm the organisation effectively (p. 1). Atwood in like manner goes on to explain that the sequence training process involves the revie wing of the organisations strategic architectural plans, analysing the existing workforce, forecasting potential tr eat ups and developing employees through a structured plan to mesh over from current leaders who retire or decide to leave the organisation for whatever reasons (p. 1).In Rothwells (2010) writings, era provision is defined as a symbolizes by which to identify and develop internal talent to meet current and future talent inquires of the organisation (p. 7). The reason further emphasises that age grooming is a deliberate and systematic effort of an organisation to ensure lead persistency within the organisation. It is besides a means to develop mental and fellowship capital for the future, and to spur individual advancement (p. 7).Singer and Griffith (2010) suggest that era formulation is more than just re emergement planning or still filling va croupecies within the organisation as they occur. The author also states that comprehensive succession coifme nt integrates talent management with the organisations strategic planning (p. 1). Succession planning is a proactive initiative which does not wait for the talent or those in key positions to leave the organisation before the process kick-starts. Succession planning is an initiative that is ahead of the curve, anticipating, developing, and ensuring that key tasks argon accomplished and companionship is sh bed as well as transferred healthily (p.7).Another explanation of succession planning to mull over is Olstein, Marden, Voeller and Jennings (2005), whereby the authors suggest that succession planning is a utility that encompasses a well-developed plan to prepare for the future generational change (p.15). Succession planning is further reiterated as a methodical process that involves analysing the existing workforce, 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 organ isation is able to achieve its corporate aspirations (p. 16).Hastings (2005) explains succession planning in quaternion phases as illustrated below in diagram 1.1 plot 1.1 Four Phases of Succession Planning (Source Hastings, 2005, p. 2)The diagram above talks about 4 phases in succession planning that are crucial for the process to be effective. Hastings also reiterates the earlier statements that succession planning is an on-going process and not just a atomic number 53-time effort. The organisation has to keep the cycle of succession planning going in order for it to be able to effectively position its leading candidates in the right places.1.1 Who Needs Succession Planning?Succession planning should be undertaken by organisations who wish to continue their successes in the future or who plan to expand their success in the future. Shipman (2007) states that competitive organisations know that investing in their employees with charge development and a good succession planning f ramework is an investment that entrust reap multiple rewards (p. 24). Shipman also states that due to the ageing workforce, succession planning is a priority that must be looked into in todays organisations (p. 25). It is an initiative that should involve employees with good writ of execution and who show great potential for leadership roles within the organisation. Succession planning can involve employees from all levels of jobs.Hastings (2005) states that succession planning is needed 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 realise that their companys long-run viability is at stake if they do not seriously structure 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 descent and allow the organisation to bear good relationships with employees and phone line partners by way of (excerpt from the Canada Business Network)Protecting the occupation legacyBuilding place for the organisations and its artProviding financial security for stakeholdersDealing with unanticipated leadership absences such as death, resignations or termination.Preparing for the future of the businessTherefore it can be concluded that succession planning is not only need for the organisations workforce but also for the organisation itself to maintain its competitiveness and to achieve its corporate objectives and goals.1.2 The Importance of Succession Planning harmonise to Rothwell (2005), succession planning is authorised for 4 main reasons (p. 41)The continued success and survival of the organisation which depends on the right people being at the right positions at the right time.The omit of good l eadership in the market at boastfully to take on the helm of an organisationTo encourage diversity and multiculturalism within the organisationTo establish the rear for career path planning, development and training plansIn the Houston Chronicle (http//smallbusiness.chron.com/importance-succession-planning-5129.html ), Louise Balle suggests that succession planning is an undertake whereby an organisation or business owner transfers knowledge or even the administration of the business to another undecided or well-equipped individual upon retirement, disability or even death. Balle further reiterates that a succession plan is important because it bids the organisations management or the business owner an alternative for when the need arises.In Elizabeth Harrins (2010) article in The Glasshammer website, it is stated that the number of managers available to step into leadership roles will drop dramatically in the coming years according to a study by EgonZehnder International. The study states that the average company will be left 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 stimulate to take the reigns for the future (except from http//www.theglasshammer.com/ naturals/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 have 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 benefitsThe sureness that the organisation is prepared for leadership 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 alignment of the organisations vision and human resources that reflect a good understanding for strategic human capital planning.Shows the organisations tender commitment towards developing its peoples career paths as well as enabling the organisation to facilitate effective recruitment and retention of juicy-performing employees.A strong character as an employer who invests in its people and provides opportunities for advancement.Strengthen employee exponentiation conveying the message that the organisation values its employees.In an article in The StarBiz (2 July 2007), it is stated that Malaysian companies are generally aware of the importance of succession planning, particularly larger corporations. The article quotes SMR Technologies Bhd Chairman and Chief Executive Officer, Dr R. Palan as saying that common sense dictates that an organisation should have a succession plan in place despite their size and status. Palan also states that in Malaysian government-linked companies, much effort ha s been made to develop the next level of leadership in a conscious and planned manner. He said that there is a common trend worldwide for large companies to focus on developing stars and A players the top 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?file=/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 world with a good track record of returns to shareholders. Dr Palan explains that this is attributed to 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 establish successfully in other corporations. Dr Palan stresses that companies should have a succession plan as it is the only way to stay relevant in a 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 stalwart in The StarBiz (2 July 2010) Dr Michael Yeoh states that Malaysian corporations were now increasingly aware of the importance of succession planning in order to establish business continuity in the interests of stakeholders. He quotes that some listed 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 Issues in Succession PlanningThe current issues touch on succession planning can take on many facets. correspond 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 appliances.Changes in the workfo rce 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 unprofessional behaviour of organisation leadership, that includes prejudice, unequal opportunities and unprofessionalism, amongst others.According to Mathis and Jackson (2010), issues skirt succession planning are prevalent worldwide. The authors state that the percentage of the aging population in the workforce in Japan, Germany, Italy and England, are even higher(prenominal) than in the USA. Their analysis says that with the growth of the immigrants, employers are facing both legal and workforce dive rsity 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 aspects. Effective succession planning involves the identification and selection of future key leaders, however, if there are no suitable candidates for leadership within the organisation, that poses another problem (p. 88). Organisations 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. Many organisations today, especially 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 set the organisation on the right path to success. Achieving that success is altogether another aspect to consider and analyse.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(prenominal) of how competent or experienced the new leaders is on paper. The article suggests 6 critical steps to kick-start succession planning within the organisationAlign the board and top management with the organisations business strategy and map out short-term, mid-term and long-term wins. It defeats the purpose of identifying new leadership candidates to lead the organisation into the future if the future itself is not clear.Build leadership profiles. constitute the attributes needed to help the company achieve its corporate goals. Identify the noble-minded skills needed and ana lyse the boards or top 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 intend leadership roles within the organisation. Identify their areas of weakness or inexperience and device structured plans to traverse these areas and provide them with opportunities for more exposure within the organisation. This might 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 cleverness and even shadowing a member of senior management to learn the ropes.Coach high potential candidates. Management succession candid ates should receive one-on-one sessions with high level executives to learn more about top management functions and how to manage problems. Internal mentoring is a powerful tool and is incredibly valuable. External executive coaching job 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. nevertheless then can succession planning be effectively administered within the organisation.Close monitoring of candidates leave. Succession candidates must be closely monitored with regard to their progress and development. A candidate chosen today may not be suitable anymore after a one-year period. Candidates must be evaluated periodically on their current suitability for potential leader ship positions in the future.According to Durai (2010), prerequisites for successful succession planning include the following (p. 246)Complete frequent and plump for 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 sustained basis.A proper mechanism must be established to provide constant feedback to the potential successors about their performance and progress.The organisation needs to adopt 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, t here may be hitches in them that need to be forebodeed. According to Durai (2010), these impediments may include the following (p. 246) need of criteria for the identification 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 instead of the position. This engaging 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 develop ment requirementsThere are many cases where organisations make a wrong assessment 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 leadership 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 culture skills for potential candidates.Lack of sufficient and timely sharing of feedbackThe lack of feedback and guidance towards a succession candidate can drive th e successor out of the organisation due to frustration and a lack of purpose. 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 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 sustained basis.Psychological effects and insecurity of s uperiorsIt is quite common for managers to feel threatened 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 display 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.QUESTION 2 COMPETENCY-BASED render2.1 What is Competency-based dedicate?Lawrence Kleinmans article on gentle Resource Management (HRM) offers a broad perspective of human resource management. The article suggests that human resource has done for(p) beyond just hiring and succumbing employees. Instead, he states that HRM encompasses a whole paradigm of human capital management with many facets, one of which includes the strategic intent stooge an employees right scale.Traditionally, wages have always been determined by the assigned job of an employee. However, in todays human resource management, many organisations are adopting the approach of competency-based return. According to Caruth and Handlogten (2001), competency-based pay is a salary structure whereby workers are paid not simply for the job they may be doing presently , but on the basis of the total 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 pay by Baldwin (2003) states that employees value depends on what they can do, based on their respective competencies. The more an employee is able to 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 ti tle 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 individuals, 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 become withered and more cost conscious, it is crucial for employees to be able to perform multiple tasks. (p. 146). Kusluvan (2003) states that 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 draw more hidden talents out of employees and harness their hidden potential. In todays materialistic world, as much as it may sound decadent, money is th e highest motivating factor for workers. Employees who were once redundant and unproductive can be actually 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 flexibility from a management perspective (p. 161). Filling vacancies is easier when employee skills are alike(p) this is especially true in todays context whereby organisations are downsizing and cutting the size 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 Robbin s, Odendaal and Roodt (2003) raise is that competency-based pay schemes help meet the needs of ambitious employees who confront stripped advancement opportunities (p. 161). These employees are able to increase their earning capacity and knowledge without a promotional material in job title or role. Competency-based pay is also able drive performance excellence and improvements. Robbins, Odendaal and Roodt quote survey 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 better business performance and more improvements.2.3 The Advantages and Disadvantages of Competency-based PayAdvantagesDisadvantagesAccording to Messm er (2007), competency-based pay schemes create incentives for sustained amend 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 outlined 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).Competency-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 or der 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 substantial 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 constantly calculated based on the set formula and criteria.2.4 How To Conduct An Effective Competency-based Pay Scheme For Middle Managers in the Marketing 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 provider in Malaysia operating with the score 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 structure diagram 2.1 CheeWah Corporations Marketing Department Organisation ChartIn the case of CheeWah, the compe tency-based pay scheme will be introduced first to middle 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 scale 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 competency-based pay model whereby it is a process identical to a selection strategy where traits most valued 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 demo nstrates 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 MandateRequired Employee BehaviourHR and Reward PoliciesIndustry LeadershipProactive and constantly seeking to expand their areas of coverage.Regular association and engagement with industry leaders and leadership programmes.Pay raise based on annual achievements of industry 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