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Succession Management Strategy Recommendations

Presented to: Stonewall Industries


October 6, 2015
Submitted by:
Group 1 Consulting Agency
Emily Bridge
Vishal Bhatia
Kendra Robert
Harpreet Sahota
Lisa Vardoulias
Tikiri Wijeratne
Elaine Young
1. Outline the major benefits of implementing a succession management process.
Succession Management is the process of ensuring that pools of skilled
employees are trained and available to meet the strategic objectives of the organization.
This process is used to ensure that leadership positions can be quickly filled to ensure
that business will continue if these key positions were to become vacant. This type of
planning focuses on the high potential candidates and ensures that they are willing and
able to step into a position if the need were to arise.
Why organizations have Succession Management Programs (Belcourt, McBey,
Hong & Yap 203):

To improve internal candidate pools


Assures business continuity and future direction
To reduce skills gaps
Retain employees. Employees are positively motivated or engaged when they
are given a chance for development
Help individuals realize their career plans within the organization
Develops leaders more quickly
Encourages the advancement of diverse groups
Improve employees ability to respond to changing environment. Flexibility allows
for changes to organizational structure
Saves time and money when external hiring is not needed as a solution
Reduces dependency on specific individuals

2. Explain the limitations inherent in a succession management process.


A succession management process is very simple to understand but can become
difficult to implement. There are several limitations within the process than can lower the

odds of success. It is important to understand the limitations of the process in order to


reduce error, cost and time.
When beginning a succession management process, the company must first
establish the companys goals. Ensuring that the company's competitive strategy is
aligned with the succession management plan is very important. It can become difficult
to train managers if the companys long and short term goals are not understood.
Without the company strategy being implemented first, they may lose sight of the goal
while training a replacement who may not take over for many years.
Finding a proper employee to train in the succession management process can
be difficult as jobs are constantly changing. Therefore, finding the right person with the
correct skill set is a challenge. With jobs continually changing, one could think they have
found the right person for the position however, when the job changes even in the
slightest, that same person could now no longer be the best fit. This can become a
bigger issue where a managers competencies list is endless and finding the perfect
person for a certain job could become impossible.
When looking for replacements, managers can find it difficult to properly rate
potential candidates skills. Often it becomes easier to hire internally where managers
find less risk in someone they have already come to know. Many managers will rate
their employees to positively. It is also often difficult to criticize someone elses opinion.
Training employees can bring up other limitations during the process such as
elitism, spotlighting, and selection bias. These limitations bring up many problems for HR
managers and need to be understood in order to reduce error, cost and time wasted
within and organization. Elitism is a large limitation in the succession management
process and occurs when management develops programs to support the training of a
select few for specific senior positions. By doing this other employees might feel as if
theyre apart of unwashed masses. Spotlighting happens when an employee is
recognized for their talents which could lead to some problems. Finally by asking senior
executives to choose the high potential candidates could lead to selection bias. This
brings up three distinct problems which ultimately lead to the senior executive to choose
a candidate that most resembles them. Firstly the criteria for selection isnt clear,
secondly the evaluation strategies could vary by department, and lastly rating errors can
occur. By keeping these limitations in mind and understanding them, HR managers
could apply the succession management process and gain the many benefits that come
with the process.

3. From what you have learned about succession management and performance
management processes, how would your group decide if an internal candidate
wasappropriate?
As discussed earlier, implementing a succession management process within an
organization can be beneficial for the organization in many different ways. Especially
when considering replacement planning for leadership positions (CEO, VPs), it is
proven that succession management processes combined with performance
management, can provide better results and yield much smoother transitions as
opposed to conducting external recruitment activities. Organizations can use
Performance Management processes such as performance appraisals, to compare the
actual performance levels of the internal candidates to the standards required. This will
allow the organization to identify the strengths and weaknesses of the candidates and
implement action plans for further development.
In the case of Stonewall, recruiting an internal candidate to replace the current
CEO could be beneficial for the organization in several ways:

By hiring an internal candidate, it will ensure that the current operations of the
company will still be effectively running without any pauses or temporary holds.

An internal candidate is familiar with the operations, culture, procedures and


other employees within the organization. This will be an advantage for Stonewall
in terms of other employees getting used to the new CEO without much hassle
and hesitation versus hiring an external candidate, where the employees may
expect to adapt to a new system.

Recruiting an internal candidate can be very cost effective for Stonewall as


opposed to hiring an external recruit. Due to the familiarity an internal candidate
possesses of the organization, Stonewall can expect to save on much training
costs. Also, the internal recruit would be ready for active duty from the start.
When considering an external candidate, the time frames would be lengthier and
costs would be much higher in the following areas:
o Getting the candidate up to speed with the current operations procedures.
o Training and Development
o External candidates may demand higher compensation packages.

This may also enable the internal recruit to shadow the existing CEO and get
hands-on experience and training with regard to CEO specific job duties whereas

this would not be possible with an external recruit. This is mainly due to the time
frame of an external recruitment process.

This would also increase the morale of the internal candidate to perform better
and will increase his/her loyalty for the company.

An internal hire would also lower the turnover rates for Stonewall and increase
employee retention and satisfaction.
As a group, when considering all the factors mentioned above, we decided that it

is beneficial for Stonewall from a business and an organizational standpoint, to recruit an


internal candidate for the replacement of the CEO.
4. Describe an effective succession management process that could be
implemented in Stonewall.
Stonewall has now realized the value of succession management planning and in
an effort to be prepared for the unexpected going forward, is willing to implement a
succession management process. To do this effectively, Stonewall must be prepared to
dedicate time and resources to talent management issues. In doing so, Stonewall will
not only protect itself from being in this position again, but it will also serve to secure the
perception of equity amongst its employees and gain a competitive advantage in the
marketplace, both of which will contribute to the companys long-term success and
bottom line.
As previously stated, a key component of a successful succession management
process, is to align those plans with the organizations strategy. Organizations must start
with the business plan and strategies. By systematically monitoring trends which affect
the organization (a process called environmental scanning, management can attempt
to predict where the organization will be in the coming years (Belcourt, McBey, Hong &
Yap 59).
The next step in the process, would be to identify the skills and competencies
needed by its management, to meet the aforementioned strategic objectives. There are
two approaches to identifying the characteristics of successful managers: the job-based
approach and the competency based approach. The job-based approach looks at
various skills the employee has already acquired in their current job and how they would
transfer over to a managerial role. The limitation of this approach is obvious: jobs are
constantly changing. The competency based approach looks at the measurable

attributes of employee behaviours (competencies) as a means of differentiating


successful employees from unsuccessful ones.
Competencies include both hard skills (more technical, such as being proficient
in HRIS) and soft skills (more behavioural, such as being a good motivator). The
development of employee competencies is the cornerstone of succession management
and is critical to the organization's success. There are several types of competencies:
core competencies (such as thinking skills) which are generally expected by all
employees of an organization; role or specific competencies (such as business
knowledge) which are functions that are shared by multiple individuals within an
organization; and unique or distinctive competencies (such as occupational health and
safety expertise) which only apply to certain positions or jobs within the company. By
focusing in on competencies, Stonewall will be able to measure an employee (or
candidates) potential future effectiveness, capability, potential and performance, thereby
enabling Stonewall to build and grow their talent pool.
Once the competencies have been identified, the next step in the process would
be to identify high-potential employees. There are several approaches to identifying
managerial talent, including: temporary replacements; replacement charts; strategic
replacement; and talent management culture. The first three approaches are all geared
toward the selection of internal candidates. The last approach involves scanning the
environment and continually searching for talent, primarily externally. Though there are
many benefits to hiring internally, going forward, Stonewall should consider the benefits
of hiring externally as a means of bringing fresh perspectives and approaches into the
organization.
Another key step in the succession management process, is for the organization
to provide ongoing developmental opportunities and experiences. Peter Drucker states
that Most managers are made, not born. There has to be systematic work on the supply,
the development, and the skills of tomorrows management. It cannot be left to chance
(Belcourt, McBey, Hong & Yap 213). There are many ways in which an organization can
grow its talent: through the use of promotions; job rotations; special assignments; formal
training and development; and lastly, through the use of mentoring and coaching. An
example of how developmental opportunities could prove to be of great value in the case
of Stonewall Industries, would have been through mentorship. Perhaps as part of the
succession management process, the owners could approach Jim Pender to continue to
work with the new company in a mentorship role, so he does not retire and leave the

organization without passing along some of his 40 years worth of exceptionally valuable
tacit knowledge.
The last step required when implementing an effective succession management
process would be to monitor the effectiveness of the process. This could be done in a
number of ways such as viewing engagement scores, the participation rates in
developmental activities or perhaps the retention rates of key talent. In this situation, it
would be ideal to measure aspects such as employee behaviours and the contribution to
goals. Did the organization do what it was intended to do? Did the employees adapt
well to the change? We believe that these would be key questions when deciding
whether or not the succession management process was effective. When bringing in
new leadership it would be important for employees voices to be heard and recognized.
Another way to measure the effectiveness could be to monitor retention rates.
Did employees leave the organization after new leadership was brought in? If so, what
are the reasons for this situation? Having employees quit is costly to replace so keeping
key talent within the organization would be an effective way to measure the succession
management process. The big picture however, would be to ask if the position was filled
according to plan or any plans in place to fill any vacant position. We could ask
questions such as how long was the position open? What the cost of the new hire?
How long did it it take for the new employee to become acclimated? These questions
can then relay whether or not the implemented succession plan was effective and if it will
continue to be effective as new position become available.
Additional recommendations for an effective succession management plan at
Stonewall Industries:
Implementation of a performance evaluation program
Stonewall is having such a difficult time filling the shoes of Stonewalls current
President and CEO, largely in part because they are coming in new and have nothing
documented which outlines the skills, knowledge, abilities and competencies of the five
VPs who are being considered as potential candidates. If the new owners had more
background information such as past performance records, it would likely help them
short-list their prospective candidates (at the very least). We recommend Stonewall
carefully consider the use of 360 Feedback for its top level executives going forward, as
a means of fairly rating employee performance and in order to assess and critique
leadership attributes, skills and traits.

The creation of a Succession Management Review Committee, who will:

Review the strategic goals of the organization


Provide information regarding the key competencies or skill sets required by
leaders in the organization (in this case, direct line management experience in
the manufacture of gypsum wallboard would be a key skill required to replace
Jim Pender)
Set key performance criteria for those aspiring to leadership positions
Approve performance related policy and key development initiatives
Review management recommendations for individuals and their leadership
development strategies
We recommend that the companys former CEO and President Pender, be

invited to participate in this review committee. We feel he would be a valuable


committee member due to his extensive knowledge of both the organization as a whole,
and its existing employees.
We also recommend that Byer, VP of Human Resources, should sit on this
committee as well. HR should be well versed in succession management best practices
and in order to mitigate the risks of falling into this situation again, it is advised that Byer,
as the VP of HR, be an active participant in promoting a culture of talent management by
leading the Succession Management Review Committee at Stonewall Industries.

Works Cited
Belcourt, Monica, Kenneth McBey, Ying Hong, and Margaret Yap. Strategic
Human Resources Planning. 5th ed. Toronto: Nelson Education, 2013. Print.

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