CU-BBA-SEM-III-Basics of Family Managed Business

parties to work on the business's future steps, address any concerns, and get behind the plan without any squabbles or secrets. Retaining Top Candidates is No. 7 on the list. If you've discovered remarkable prospects who could one day take over ownership of your company, it's probable that other businesses will see the same potential in them. In this environment, retaining top performers is a struggle for all firms, but when it comes to your company's future, it's critical to keep people who you want to lead its development one day. Offer development chances, training incentives, and mentoring to keep your future leaders happy in their objectives to fend off the competition and motivate them to stay with your project. Also, once you've decided on their function after you leave, be honest with them about it and why you chose them specifically for it. Preparing for and addressing these obstacles will tremendously improve your succession planning, ensuring that it keeps on track and is not left unfinished when it comes time to leave your company. 13.9CEO EXIT STYLES Most family-owned and controlled businesses rely on one crucial component: having a succession plan in place that specifies who will take over as CEO and when the transition will occur. Far too many business owners believe one of two things will happen one day: 1) one of their children will take over the company, or 2) a key employee will buy him out. • There are severe concerns with both of these possibilities. First and foremost, have you discussed succession with your children? Exit planning seminars are frequently attended by business owners who have been advised by their children that they have no desire to take over the reins. This brings up another point: are you confident that your child has the aptitude and/or capacity to be a CEO? Working in the mailroom is one thing; rising to the position of CEO is quite another. Not to mention the potential disrespect to important employees who have worked for you for decades if you give over the firm to your child as a succession plan. Finally, both scenarios impose a significant financial burden on the departing owner. The majority of your progeny and key workers lack the financial means to provide maximum value to your company. The third-party buyer option is significantly more financially lucrative (in most situations) and relieves you of the stress of hope that your offspring or key workers wish to replace you, as well as any worries about their ability to do so. And the chances of a family-owned business surviving past the founder are slim. “Even powerful and successful enterprises can disintegrate quickly after a generational succession, which is why so many countries have some variation of the proverb, “from shirtsleeves to shirtsleeves in three generations,” according to The Economist magazine (clogs to clogs, 201 CU IDOL SELF LEARNING MATERIAL (SLM)

kimono to kimono). A research published last month by PwC, a consulting firm, found that only 16 percent of 2,400 family businesses in 40 countries had a \"discussed and documented\" succession plan in place. The last sentence in the paragraph above has been highlighted to emphasise a critical point: Only a small percentage of family businesses have a succession plan in place. This is a startling figure. The majority of families that operate their own firms have practically all of their assets invested in the company. If the family does not devise a strategy for how and when the founder will step down, as well as who will succeed him or her, financial calamity may be on the horizon. Remember that there are six Ds that can jeopardise your company's succession: death, divorce, disability, distress (personal or business), disaster, and disagreement. If any of these (or numerous) occur in your firm before you have a succession plan in place, the financial legacy of the family could be severely harmed. All too frequently, we meet business owners who believe their company will eventually be passed down to their children but do little to make that happen. “However, sometimes offspring do not wish to join the family business, or turn out not to have inherited the founder's entrepreneurial genes,” according to The Economist. Even if the family retains some influence, it may be in the best interests of the company to have a professional operate it rather than a reluctant or incompetent scion. Allowing professionals to handle the situation makes a lot of sense. Talented executives are more inclined to join a company where they have a chance to rise to the top, or at the very least, where they will not be forced to work under a useless heir. Professionalizing their business is one of the biggest problems facing family businesses in the next five years, according to 40% of those polled by PwC. This paragraph states what many business owners are often unwilling to admit: Junior is just not talented, trained, or equipped with the leadership abilities required to run the family business. We strongly advise any family-owned firm with children who will be taking over the reins to start teaching them in all aspects of the business as soon as possible. The truth is that the youngsters won't get a sense of the overall corporation unless they understand each department and how it interacts with the others. Furthermore, they must begin to earn the trust of their coworkers, whom they will one day lead. Without this trust, no matter who you choose, your successor will struggle to lead if the employees feel that your offspring's success is due solely to good genes. Another excellent point is that most family businesses will need to “professionalise” their operations at some point, either by hiring staff or bringing in outside investors who can provide capital, connections, and talent. Several of the family-owned firms with which we deal have hit the limit of how large they can go without a cash infusion. In many cases, the family and management have excellent ideas for expanding the business, but they lack the necessary resources, both financial and otherwise, to carry them out. 202 CU IDOL SELF LEARNING MATERIAL (SLM)

If you find yourself and your firm at a crossroads with sufficient opportunity to grow but without the means to do so, or if you have determined that your children will not be interested in succeeding you, then you need to attend a Generational Equity exit planning session. These meetings are educational in nature and are aimed to take owners who are in the 84 percent of the business population that have no departure strategies in place and offer them tools to at least get the process started. We completely understand that your family’s financial legacy is strongly interwoven with the business you are conducting. We also appreciate the fact that if your progeny are not interested in the firm, then you need to act promptly before one of the six Ds described above come across your route. 13.10SUMMARY  Succession planning is a strategy for passing on leadership duties, sometimes including corporate ownership, to an individual or group of employees. It guarantees that firms continue to run efficiently after their most essential individuals move on to new opportunities, retire, or pass away. It is also known as “replacement planning.” Succession planning can also serve as a liquidity event, allowing for the transfer of ownership in a running business to rising personnel.  Succession planning evaluates each leader’s skills, identifying potential replacements both within and outside the company and, in the case of internal replacements, training those employees so that they’re prepared to take over. Succession planning is not a one-time event; succession plans should be re-evaluated and potentially updated each year or as changes in the company dictate.  In addition, businesses might want to create both an emergency succession plan, in the event a key leader needs to be replaced unexpectedly, and a long-term succession plan, for anticipated changes in leadership.In large corporations, the board of directors, not just the CEO, will typically oversee succession planning. Also, in large corporations, succession planning impacts not just owners and employees, but shareholders as well. For small businesses and family-owned companies, succession planning often means training the next generation to take over the business. A larger business might groom mid-level employees to one day take over higher-level positions.  Succession planning is the process by which individuals are screened for the role of leadership within a company.The process ensures that business operations continue to run smoothly in the absence of key personnel who have retired, resigned, or otherwise left the company.  Succession Planning, specifically termed as Management Succession Planning, involves coaching and development of prospective successors or people within a firm 203 CU IDOL SELF LEARNING MATERIAL (SLM)

or from outside to take up key positions in an organisation through an organized process of assessment and training  There are four main stages in the succession planning process, which involve transition (movement of new role), initiation, selection, and education  In the first phase of ‘initiations’, potential candidates for the job learn about the business, more importantly about its value system, guidelines, values, vision, etc  The second phase or ‘selection’ is a complex task, where a specific candidate is chosen to be a successor among other candidates who were running for the same job  In the third phase of ‘training’ involves an exhaustive training scheduled for the successor so that he can meet the goals of the organisation as well as returns for the shareholders  In the fourth and the last phase of ‘transition,’ the business owner or the CEO retires or moves out of the organisation, and the chosen successor formally takes up the responsibility as his/her new leadership role.  Succession planning is critical for optimising the transaction structure you can enter into, the legacy you leave behind for family and staff, and, most importantly, the amount you raise on leaving.  Effective succession planning can demonstrate to buyers that a business has long-term viability. Business buyers, especially those from the Private Equity sector, are a cautious breed and any reassurances that a company’s future is secure will help boost its value in their eyes 13.11 KEYWORDS  Succession - a number of people or things of a similar kind following one after the other.  Succession planning - Succession planning is a strategy for passing on leadership roles—often the ownership of a company—to an employee or group of employees.  Continuity - the unbroken and consistent existence or operation of something over time.  Challenge - a call to someone to participate in a competitive situation or fight to decide who is superior in terms of ability or strength.  Values - the regard that something is held to deserve; the importance, worth, or usefulness of something.  CEO - Chief Executive Officer 204 CU IDOL SELF LEARNING MATERIAL (SLM)

13.12LEARNING ACTIVITY 1. Learners are asked to propose a plan for conducting a programme as a leader. ___________________________________________________________________________ ___________________________________________________________________________ ______ 2. Learners are instructed to write an assignment on ‘Succession planning’. ___________________________________________________________________________ ___________________________________________________________________________ ______ 13.13 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Define Family Business Succession Planning. 2. Write the importance of succession planning. 3.Write the many faces of succession planning. 4. Bring out the process of continuity creation. 5. How do you do succession planning? Long Questions 1. Explain the steps involved from succession to continuity. 2. How do you develop a succession plan? 3. Describe the faces of succession planning. 4. What are the challenges of succession planning? 5. Write the styles of CEO exit. B. Multiple Choice Questions 1. Succession planning is a ______ a. Static Process b. Dynamic Process 205 CU IDOL SELF LEARNING MATERIAL (SLM)

c. Fluid Process d. Both B & C 2. To be successful Succession planning must be a part of a. HR process b. Career planning process c. Man power planning process d. Organisation planning process 3. Today’s organizations are looking for Managers who are a. Excel at collaboration and partnering b. understand and handle ambiguity c. Deal with global business d. All of the above 4. _______________ process targets specific persons instead of identifying specific positions. a. Succession Planning b. Replacement planning c. Career Planning d. Manpower planning 5. A proper succession planning must ideally first identify __________ a. Critical Position b. High talents c. Proper person to be trained d. Skills to be developed Answers 1-d, 2-a, 3-d, 4-b, 5-a 206 CU IDOL SELF LEARNING MATERIAL (SLM)

13.14 REFERENCES Reference books  CollaborativeEntrepreneurship:Howcommunitiesofnetworkedfirmsusecontinuou sinnovationtocreateeconomicwealthbyRaymond Miles, GrantMiles, and CharlesSnow(Hardcover-Jun 1, 2105)  UnravelingtheRagTrade:ImmigrantEntrepreneurshipinSevenWorldCitiesbyJan Rath(Hardcover-Feb 1, 2102)  FromConcepttoWallstreet:ACompleteGuidetoEntrepreneurshipandVentureCapi talbyOrenFuerstand UriGeiger(Paperback-Aug22, 2102). Textbook reference  Chandra,P.ProjectPreparation- AppraisalandImplementation.NewDelhi:TataMcGrawHill.  Gupta,C.B. &Srinivas,Entrepreneurial Development.NewDelhi:SultanChand&Sons.  Arora,R.andSood,S.K.FundamentalsofEntrepreneurshipandSmallBusinessMana gement. Ludhiana:Kalyani Publishers.  Desai,Vasant.Small-ScaleIndustriesandEntrepreneurship.Mumbai: HimalayanPublishing House.  Ramachandran,K.Managinga NewBusinessSuccessfully, NewDelhi: GlobalBusiness Press 207 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 14 SUCCESSION PLANNING STRUCTURE 14.0 Learning Objectives 14.1 Introduction 14.2 Succession Planning - Need 14.3 Succession Planning - Nature 14.4 Succession Planning – Purpose 14.5 Important feature of Succession Planning 14.6 Main elements of Succession Planning 14.7 Succession Planning – Guidelines 14.8 Steps in Succession Planning 14.9 Career Planning and Succession Planning 14.10 Summary 14.11 Keywords 14.12 Learning Activity 14.13 Unit End Questions 14.14 References 14.0 LEARNING OBJECTIVES After studying this lesson, you will be able to:  Grasp the need and nature of succession planning  Know the purpose of succession planning  Understand the important features of succession planning  Explain the main elements in succession planning 14.1 INTRODUCTION The process by which an organisation ensures that personnel are recruited and developed to fill each critical function within the company is known as succession planning. HR executives and non-HR executives were asked to indicate their top human capital challenge in a recent poll. Nearly a third of both leadership groups mentioned succession planning, 208 CU IDOL SELF LEARNING MATERIAL (SLM)

while only about 20% of organisations with such a strategy targeted non-management jobs. A little more than 40% of businesses did not have a plan in place. Taking a broad look at an organization's succession planning can take a variety of shapes (including no form at all). Because a rising amount of organisation’s competitive advantage is reliant on their stock of human capital and ability to manage such capital in the future, the absence of succession planning should be a red flag. Effective businesses get considerably better at developing and promoting talent from within, which is one of the main themes of being better at succession. The practise of assuring a suitable supply of successors for present and future essential jobs is known as succession planning. It is a crucial activity that focuses on individuals' career planning and management in order to meet their requirements and objectives. Studying the characteristics of succession planning will help you better understand the phrase. It is critical for an organization's existence and success to have a succession of people fill crucial positions over time. The goal of succession planning is to find and train people to take over critical roles in the event of resignations, retirements, promotions, development, expansion, or the formation of new ones. Internal succession gives individuals with possibilities to advance in their careers. Every key executive in some professionally managed organisations is frequently requested to name three or four excellent juniors who could take over his job if the necessity arises. However, relying solely on internal resources may lead to stagnation in the organisation. Similarly, complete reliance on outside talent may result in stagnation in current employees' career possibilities, which can lead to frustration. Many businesses put off succession planning until it's too late, but if you don't handle it now, your company may find itself in a situation where it's too late. Furthermore, companies that recognise the importance of managing the growth of their top performers are a step ahead of their competitors! Setting up a development programme for future leaders is important since it results in a motivated and capable group of employees who are ready to advance in the business when the time comes. 14.2SUCCESSION PLANNING - NEED 1. Ensures Business Continuity: Business continuity is ensured by succession planning. When critical roles become empty due to abrupt death, resignation, or retirement, the organisation does not cease to exist. 2. Develops Potential Employees: Succession planning is critical for grooming and developing the next probable successor's competency. The proper training aids the potential successor in enhancing his talents and overcoming his flaws. It also prepares him for numerous responsibilities and problems that he may face if he is hired for the post. 209 CU IDOL SELF LEARNING MATERIAL (SLM)

3. Identifies Next Successor: The method aids in the early identification of the next prospective successor. Identification of a successor in advance (before the person in the key role retires, resigns, or dies) allows the organisation to plan for the future. Every firm must devote resources to finding the organization's next successor. 4. Organizational Smoothness: Succession planning guarantees that the company runs smoothly. When the need arises, there is a ready supply of qualified and skilled personnel to take on the position or responsibility of key manager. As a result, the absence of a key manager, whether temporary or unexpected, has no impact on the organization's operations. 5. Lowers Organizational Costs: Organizational demand for human resources is satisfied through succession planning. It reduces the cost of the organisation by reducing the time, money, and energy required to attract employees from outside sources. 6. Creating Career Paths: Succession planning aids HR departments in developing career advancement strategies for qualified personnel. Employees' abilities and interests are assessed, which aids in the provision of appropriate training. It also aids in the selection of qualified employees for specific work roles. 7. Corporate Image: The company spends time and money identifying and grooming its workers. It also offers a variety of options for advancement inside the company. Employee job satisfaction rises as a result, resulting in improved performance and productivity. As a result, the company's reputation in the market improves, and talented employees are attracted to the company. 8. Employee Turnover Is Reduced: Employees inside the organisation gain opportunities for advancement through succession planning. It provides a variety of career opportunities in order to prepare people for future advancement. Employees feel significant and valuable because the company cares about their professional and personal development. As a result, staff turnover is reduced, and skilled employees are retained. 14.3SUCCESSION PLANNING - NATURE The nature of succession planning can be listed as follows:  Senior leaders are personally involved.  Senior leaders hold themselves responsible for growing leaders.  Employees are committed to their own self development.  Success is based on a business case for long term needs.  Succession is linked to strategic planning and investment in the future.  Workforce data and analysis inform the process. 210 CU IDOL SELF LEARNING MATERIAL (SLM)

 Leadership competencies are identified and used for the selection and development.  A pool of talent is identified and developed early for long term needs.  Development is based on challenging and varied job-based experience.  Senior leaders form a partnership with human resources.  Succession planning addresses challenges such as diversity, recruitment and retention. 14.4 SUCCESSION PLANNING - PURPOSE A succession of persons to occupy various vital tasks is required for an organization's survival, growth, and efficient continuing existence. The goal of succession planning is to discover, develop, and prepare people to fill higher-level jobs when they become available. Higher-level jobs become available for a variety of reasons, including retirement, resignation, promotion, death, and the creation of new positions and assignments. Succession can come from either internal or external sources. Internal employee succession is beneficial to both the organisation and the internal employees. By promoting internal personnel, an organisation can buy the employees' loyalty and devotion, as well as a shared sense of advancement with the organisation. Employees reap the rewards of the company's expansion. The organisation strives to support employee growth and development and, as a result, prefers succession from within. People' potential is assessed, training shortages are identified for future vacancies, and employees are developed for higher and more diversified roles. When a company grows consistently and personnel have the ability to take on greater responsibilities, the scope of a succession plan expands. Professionally managed firms encourage their managers to find internal personnel with potential and develop them so that they may fill open jobs when they arise. However, it is also vital to allow new blood to flow in. As a result, organisations should look for outside talent in certain situations, such as when competent internal people are unavailable, or when major expansion, diversification, and growth plans are in the works. Complete reliance on either an internal or external source is not recommended for any organisation. As a result, there should be a judicial balance between these two sources. 14.5 IMPORTANT FEATURES OF SUCCESSION PLANNING The human resource management system of a business must include succession planning. It's a procedure in which a corporation looks for potential replacements for key positions. Some crucial roles are at the managerial level, while others are key functions where the loss of an employee could put the company at risk. It could be a highly technical position or a sales 211 CU IDOL SELF LEARNING MATERIAL (SLM)

position with a high level of consumer engagement. Individuals with the potential to develop into these essential roles are identified through succession planning. The following are some of the characteristics of succession planning: 1. Systematic Process: Succession planning is the systematic process of finding candidates who best fit future management requirements. 2. Labor Supply: Succession planning ensures that the company has enough labour to meet future staffing needs. With succession planning, current manpower's skills and talents are evaluated to identify which future positions they might occupy within the organisation after other personnel leave. 3. For Higher-Level Organizational Positions: Succession planning is most commonly employed for higher-level organisational positions, such as executive positions. If a corporation anticipates that its CEO will retire in the near future, it may begin searching months or even years ahead of time to see who among its existing employees would be capable of succeeding him. 4. Internal Selection: Internal selection is used in succession planning rather to hiring personnel from outside the organisation. Internal selection allows the organisation to gain a better understanding of present employee skills and talents, making it easier to anticipate future performance than hiring from the outside. 5. Key Succession Plan: The preparation of a written succession plan is critical to succession planning. This agreement ensures that a business can continue to operate even if the owner or a key member of the management team leaves, gets terminated, retires, or dies. It explains how leadership will alter when one generation passes the baton to the next. 14.6MAIN ELEMENTS OF SUCCESSION PLANNING Many firms now use succession planning in addition to career planning. Succession refers to taking over someone else's position that has become vacant or will become vacant in the near future. Although succession planning as an organisational practise is a relatively recent method, it has long been utilised in princely nations, when an heir was nominated and attempts were made to prepare him to seize the throne. The following are the three major components of succession planning: 1. Positions where Successors are Required – The first step in succession planning is to identify which positions require successors. Some companies create a succession plan for key positions that play a strategic role in the company. These positions are sometimes segregated from senior management and referred to as the strategic management group. 2. Successor Identification - The second step in succession planning is to identify potential successors for various roles that are expected to become vacant in the future. Such successors 212 CU IDOL SELF LEARNING MATERIAL (SLM)

may come from within the company or from outside, depending on the organisational practise. 3. Successor Grooming - When successors are selected by key roles, efforts are undertaken to groom them so that they are fully prepared to take over the earmarked posts when they become available. When it comes to internal successors, this practise puts you much ahead of the game. Because succession planning is concerned with the development of future managers and leaders, it should always include them.:  Planning changes and habituating the same amongst the people  Identify the potential of the existing employees and managers and utilizing the same for their further growth and development  Ensuring continuity of leadership and executive positions  Identifying gaps in existing talent pool 14.7 SUCCESSION PLANNING - GUIDELINES The following are the criteria for succession planning: a) Capacity and Needs Assessment: I. Identify Organizational Key Positions: These include executive directors, senior management, and other staff members who would be difficult to replace due to their particular talents or level of expertise. Inquire about which positions need to be filled as soon as possible to keep the organisation running well. ii. Examine and Prioritize Current and Emerging Needs: This will entail looking at strategic and operational strategies to determine clear priorities. iii. Make a chart Identifying Key Individuals and Positions: Create a chart that lists the organization's important positions and individuals. The positions could include those indicated in step 1 as well as others that are relevant to the company. iv. Identify and List Gaps: Identify and list gaps by asking questions like: • Who is planned to or likely to leave (due to retirement, project completion, etc.) and when? • What additional positions will be needed to help implement the strategic plan? • Which positions have become or will become outdated (for example, those associated with a defunct programme)? • What skills and knowledge will be required to support a new programme, for example? v. Evaluate and Assess Staff Members in Order to Establish Goals: 213 CU IDOL SELF LEARNING MATERIAL (SLM)

Evaluate/assess all employees with the purpose of finding individuals who have the abilities, expertise, or potential to be promoted to existing and new jobs, as well as the willingness to do so. • The evaluation can be official or informal, and it may include, but is not limited to, performance evaluations, 360-degree assessments, and informal interactions with the people being evaluated. • Every employee aspires to advance and has the ability to do so. • Use this as an opportunity to recognise and promote this objective. • Use this as an opportunity to offer younger employees a chance. Many young people enter the industry with zeal, only to depart when they realise there are little chances for promotion. Younger employees will stay engaged if you assist them in matching their interests to opportunities presented by excellent succession planning. b) Succession Plan Development and Implementation: i. Develop and Nurture Future Key Personnel: Determine the important individual one would like to cultivate and nurture for the future, the position we would like to groom them for, and the time frame required to prepare them based on the evaluation and strategic plan criteria. Consider several methods of staff growth, such as self-improvement, books/journals, mentorship programmes, and special project work. ii. Determine Key Talent's Career Pathways: Determine the career paths that the selected persons should take. Develop an action plan to tailor the path to the individual's strengths and talents. The strategy must be dynamic, allowing it to alter as the needs of the individual and the organisation change. To be effective, it must also take into account the people' distinct needs, learning styles, and personalities. iii. Formalize Coaching and Mentoring Activities: Formalize activities such as education, training, coaching, mentoring, and assessment. Timeliness and particular outcomes should be related to the mix of activities contained in the action plan. iv. Formalize Aggressive Job Rotation: If possible, shift workers around to gain experience and training before they are needed in important jobs. Allow individuals to job-shadow for an agreed-upon period of time in order to offer the successor a true feel of the responsibilities and for the business to decide whether the individual is truly suited for the new post. i. Always Update Grooming Plans: As people depart and new people take over, the plan must be updated to identify the next person to be groomed for promotion and the criteria of his or her particular action plan. The succession plan should be discussed in organisations that engage in an annual (or regular) strategic planning exercise. ii. Address the concerns of employees who were not chosen for advancement or succession plans: 214 CU IDOL SELF LEARNING MATERIAL (SLM)

Prepare to address issues such as the worries of employees who were not chosen for promotion. Ensure that alternate paths are established so that all employees who want to advance their careers can participate in some form of professional development. Formal education and training, workshops and seminars, as well as less formal learning opportunities like the chance to represent the business at a consultation, are all examples of professional development. iii. Deal with contingencies — things that might or might not happen: Recognize that no matter how well you plan, something unexpected may occur that is not addressed in the succession plan. You may, for example, have diligently trained a \"second\" just to have that individual leave. Even if no one is immediately available to fill the void, the succession plan will ensure that a procedure for filling the post is followed. 14.8STEPS IN SUCCESSION PLANNING The following steps are included in the succession planning process: Step #1: Make a plan. The first stage is to create a strategic strategy that will outline how the succession plan will be carried out. The organization's long-term vision and goals are identified, and present personnel policies and procedures are examined. It is critical to connect a succession plan with the interests and objectives of the senior employees who are being groomed for succession in order for it to be successful. Step # 2: Analyze the numerous issues that the firm is likely to face in the future, as well as the skills and competences that the CEO will need to meet them. To properly fulfil his tasks, the future CEO will require a diverse set of managerial and technical talents. The organization's present manpower supply should be examined in proportion to the expected demand. Efforts should be taken to identify the knowledge, talents, skills, and capabilities that will be needed in the future by the company. It is vital to determine the company's entire long-term talent needs, not just the needs of a specific role. Step #3: Identifying Talent Pools: In order to identify the available talent pool, present workers' competences and skill levels must be examined. Performance evaluation tools such as 360° Feedback, critical incident approaches, and rating scales can be used to assess these. Through potential appraisal approaches and psychological appraisal, it is also required to assess the employee's capacity to perform in more responsible roles in the future. Educational background, time spent with the company, as well as the employee's behaviour and attitude, should all be considered. Employee skill sets should be matched to the abilities required for key leadership jobs, with any gaps between the two being highlighted. Step #4: Development Planning: After identifying the gaps, the following step is to create development plans. Formal development methods, coaching and mentoring, specific job 215 CU IDOL SELF LEARNING MATERIAL (SLM)

assignments, learning projects, and other elements of the development plan will assist employees in gaining the necessary skills and experiences. The progress of the employee will be tracked against the plan. The length of the development plan will be determined by the organization's succession plan strategy. Step # 5: Putting the Succession Plan into Action: Compensation, recruitment, performance planning, workforce planning, and other HR procedures should all be linked to the succession plan. It's a long-term strategy, and the succession planning process can begin as early as the beginning of a wonderfully excellent employee's career (Jack Welch, the highly successful former CEO of GE was being groomed for senior positions from the time he started his career as a junior chemical engineer in the same company). Retention methods like as retention bonuses, promotions, and demanding work are all part of the succession plan implementation. It's critical to compare the progress of the succession plan to the organization's upcoming personnel needs to ensure that a capable employee is available to fill a prestigious position should it become vacant either expectedly (due to planned retirement) or unexpectedly (due to unforeseen circumstances) (due to death, disability, illness, etc. of the position holder). 14.9CAREER PLANNING AND SUCCESSION PLANNING Although the terms career planning and succession planning appear to be interchangeable, they are not. Career planning is for employees at all levels, whereas succession planning is for higher-level executives who must fill critical roles in the event of resignation, retirement, promotion, or death of existing higher-level executives. Succession planning is critical to an organization's survival and performance because it identifies and prepares the present workforce to replace important employees in key positions. Furthermore, succession planning allows current and potential employees to improve their careers. Every important executive is required to select three or four junior employees who have the potential to replace them when needed as part of the succession planning process. For example, a general manager who is going to leave after two years can choose from four suitable replacement candidates. In most cases, career planning is based on the succession plan of senior executives. A succession plan identifies potential openings in the future and provides guidance to potential successors. Career planning involves succession charts for a specific high-level role, such as general manager, whereas succession planning involves charts illustrating the alternative career routes for different kinds of personnel. 216 CU IDOL SELF LEARNING MATERIAL (SLM)

Distinct types of employment have different career trajectories. It illustrates an unskilled worker's career path, which leads from a semi-skilled job to a skilled job to a highly skilled job before reaching the position of foreman. A clerk's career path includes senior clerk, assistant, and section officer positions before advancing to the final post of undersecretary. To become a top manager, a supervisor must first fulfil many milestones, such as assistant manager, deputy manager, and manager. To become vice chancellor, a lecturer must first advance through the ranks of associate professor, professor, dean of faculty, and pro-vice chancellor. 14.10SUMMARY  Succession planning is more important than ever. With an aging workforce and approaching mass retirements, one part of the succession planning includes the need to capture and pass on the expertise, judgement, and insight of senior leaders before they retire.  The second aspect of succession planning relates to the identification of employees within the organization who have the potential to move into leadership positions.Succession planning identifies the needs of future employees and develops key skills and competencies among them for effective current and future leaders in the organization. These persons may replace the persons leaving the organization.  Succession planning allows leaders to focus on potential new managers who are employed by the organization but does not allow for candidates outside the company. In many cases, managers will consider only their direct reports as potential successors.  This is good in terms of career development for those inside the organization but it does not necessarily meet the company’s best interests.In some situations, it is better to replace a manager with an external candidate to bring new skills to the team. Other times there simply may not be a suitable candidate within the organization.  Succession planning is a process whereby an organization ensures that employees are recruited and developed to fill each key role within the company  Succession planning is a process of ensuring a suitable supply of successors for current and future key jobs.  It is an essential activity that focuses on planning and managing the career of individuals to optimize their needs and aspirations.  A succession of persons to fill key positions over time is essential for the survival and success of an organisation. 217 CU IDOL SELF LEARNING MATERIAL (SLM)

 The purpose of succession planning is to identify and develop people to replace current incumbents in key positions in cases of resignation, retirement, promotions, growth, expansion and creation of new positions.  Succession planning ensures business continuity. It means the organization does not cease to exist when the key positions become vacant due to sudden death, resignation or retirement.  Succession planning is important for grooming and developing competency of the next possible successor. The right training helps the potential successor to improve his strengths and overcome weaknesses.  The process helps to identify next possible successor in advance. Identification of successor in advance (before retirement/resignation/death of person on the key position) helps the organization to plan for future.  Succession planning ensures smooth functioning of the organization. There is supply of competent and skilled employees to take up the role or responsibility of key manager whenever the need arises.  Succession planning helps the HR department to set up career advancement plans for competent employees 14.11 KEYWORDS  Succession - a number of people or things of a similar kind following one after the other.  Succession planning - Succession planning is a strategy for passing on leadership roles—often the ownership of a company—to an employee or group of employees.  Purpose - the reason for which something is done or created or for which something exists.  Career - an occupation undertaken for a significant period of a person's life and with opportunities for progress.  Career Planning - Identifying what you are good at. Knowing how your skills, talents, values, and interests translate into possible jobs or careers.Matching your career goals to your financial needs. 14.12LEARNING ACTIVITY 1. Learners are advised to present a seminar on succession planning. 218 CU IDOL SELF LEARNING MATERIAL (SLM)

___________________________________________________________________________ ___________________________________________________________________________ ______ 2. Learners are explained to come with an assignment on ‘Succession Planning’. ___________________________________________________________________________ ___________________________________________________________________________ ______ 14.13 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Define - Succession Planning. 2. What are the main elements of succession planning? 3. What is the need of succession planning? 4. What is the purpose of succession planning? 5. What is the nature of succession planning? Long Questions 1. Bring out the main elements of succession planning. 2. Discuss the need and nature of succession planning. 3. Describe the importance features of succession planning. 4. Differentiate career planning and succession planning. 5. Explain the steps in succession planning. B. Multiple Choice Questions 1. A comprehensive succession planning program includes a. Components of Hard Skills b. Components of Soft Skills c. Both A & B d. Neither A nor B rather more specific skills 219 CU IDOL SELF LEARNING MATERIAL (SLM)

2. Some organizations try to attract the managers of their rivals with attractive job offers. This is known as_______________ a. Pruning b. Head Hunting c. Poaching d. Cool Hunting 3. The process of succession planning doesn’t include a. Studying current workforce b. Focusing only on talented employee c. Forecasting future trend d. Review Organisation strategic plan 4. _____ is the ongoing process of identifying the future leaders in an organization. a. Succession Planning b. Replacement planning c. Career Planning d. Manpower planning 5. _______ is a strategy for passing on leadership roles—often the ownership of a company—to an employee or group of employees. a. Succession Planning b. Replacement planning c. Career Planning d. Manpower planning Answers 1-c,2-c, 3-b, 4-a, 5-a 220 CU IDOL SELF LEARNING MATERIAL (SLM)

14.14REFERENCES Reference books  CollaborativeEntrepreneurship:Howcommunitiesofnetworkedfirmsusecontinuou sinnovationtocreateeconomicwealthbyRaymond Miles, GrantMiles, and CharlesSnow(Hardcover-Jun 1, 2105)  UnravelingtheRagTrade:ImmigrantEntrepreneurshipinSevenWorldCitiesbyJan Rath(Hardcover-Feb 1, 2102)  FromConcepttoWallstreet:ACompleteGuidetoEntrepreneurshipandVentureCapi talbyOrenFuerstand UriGeiger(Paperback-Aug22, 2102). Textbook reference  Chandra,P.ProjectPreparation- AppraisalandImplementation.NewDelhi:TataMcGrawHill.  Gupta,C.B. &Srinivas,Entrepreneurial Development.NewDelhi:SultanChand&Sons.  Arora,R.andSood,S.K.FundamentalsofEntrepreneurshipandSmallBusinessMana gement. Ludhiana:Kalyani Publishers.  Desai,Vasant.Small-ScaleIndustriesandEntrepreneurship.Mumbai: HimalayanPublishing House.  Ramachandran,K.Managinga NewBusinessSuccessfully, NewDelhi: GlobalBusiness Press 221 CU IDOL SELF LEARNING MATERIAL (SLM)