S.Vimaladevi Research Scholar, Bharathiar University, Tamilnadu, India. Dr.S.Thothadri Research supervisor, Bharathiar University, Tamilnadu, India

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1 Current Practices and Barriers in Implementing Succession Planning and Retention Strategies in IT & ITES Companies - A Study with reference to Chennai City S.Vimaladevi Research Scholar, Bharathiar University, Tamilnadu, India Dr.S.Thothadri Research supervisor, Bharathiar University, Tamilnadu, India Abstract: Effective succession planning provides enhanced and targeted employee development, which leads to improved employee morale and engagement, increased workforce productivity, and expedited goal achievement. Adequate succession plans identify high potential employees who will assume key leadership roles left vacant by departures or retirement. Successful plans not only prepare employees for those roles but also prepare them to meet the challenges of tomorrow s workplace. This paper studies about the current practices and barriers in succession planning and retention strategies of IT and ITES companies. Keywords: Succession Planning, Retention Strategies, Barriers and current practices 1. Introduction Succession planning is vitally important for ensuring the continued success of any business, in identifying and developing the talent which will fill critical roles in the future, or in times of crisis. Organisations of all sizes are now focusing on succession planning to ensure the leaders of the future are in place. Succession planning should be a consideration not just for high-level senior managerial roles, but also for technical roles requiring a great deal of expertise. Succession planning plays an important role in every business and should sit right at the heart of the organization s objectives, and is particularly prudent in a time where baby boomers are reaching retirement age taking with them years of knowledge and working relationships, which can and should be handed down before they enjoy their well-earned retirement. Effective succession planning provides enhanced and targeted employee development, which leads to improved employee morale and engagement, increased workforce productivity, and expedited goal achievement. And with so many leaders planning for retirement, proactive knowledge transfer enables organizations to identify and capture the skills and competencies of retiring employees so they can develop qualified successors and facilitate smooth transitions. The present study focuses on current practices and barriers in implementing succession planning followed by the industry. The study is based primary data collected as feedback on parameters related to succession planning practices in the across various industry organisations. In the study group, all companies had some of the other activity in the bracket of succession planning. 2. Background of the Study: Succession planning is perhaps one of the hottest topics today as a result of ethical issues, compensation, development and implementation. Global organizations faced with fast-paced change can no longer afford long, lengthy internal development of an heir apparent. However, those organizations who seek faster, external executive hires have found it no panacea as an organizational IRJBM ( Volume No XI Issue 12 December Page 1

2 culture often trumps talent and industry experience. Recent research points to those who do internal succession well, with little disruption and immediate change depend on their ability to execute plans (Charan & Colvin, 1999, 2001). A succession plan not only needs to guide the seamless continuity of services when a transition in senior leadership occurs but also needs to be pliable in the face of ever-changing times and shifting market demands. 3. Review of Literature Bossidy (2009) in the book Execution: The Discipline of Getting Things Done, points out that one of the most important parts of an executive job is to pass the knowledge he has acquired over the years to the next generation of leaders. It s how an executive gets results today and leave a legacy that the executive can take pride in when he moves on. He further discusses the importance of developing the leadership pipeline through continuous improvement, succession depth, and reducing retention risk, and a leadership assessment matrix to identify those who are ready for a more significant role vs. those who need to be replaced. Cheryl (2009) recommended some strategies for implementing deliberate and systemic succession plans in the academic environment via research in higher education institutes. These strategies include: securing executive champions; aligning the succession plan to institutional culture, mission, vision, and goals; taking an approach, not unlike strategic planning; carefully constructing communication plans to embrace talent development without inferring entitlement; and continuous evaluation of both the people and processes involved in succession planning. Motwani (2006) surveyed 368 US SMEs and found that, regardless of firm size, releasing the identity of the successor and providing him or her with training/mentoring were important planning steps. Rothwell (2005) defines succession planning as an intentional and organized effort by an organization to ensure management stability in key positions, and to keep and develop a knowledge base for the future; also, employees look for personal development or promotion. Rothwell indicated that the organizations lacking a formal succession plan would face the following issues. Key positions will not be filled promptly. Key positions can only be filled by external candidates due to the lack of development of internal candidates. There are only a few people prepared for the key position. Key positions face frequent and unpredictable turnover. The potential replacements lack the necessary skills. The most qualified talent continues to leave and look elsewhere for advancement 4. Objectives of the Study Adequate succession plans identify high potential employees who will assume key leadership roles left vacant by departures or retirement. Successful plans not only prepare employees for those roles but also prepare them to meet the challenges of tomorrow s workplace. Learning and development professionals have a crucial role in these processes and in putting success back in an organization s succession planning. IRJBM ( Volume No XI Issue 12 December Page 2

3 The main objectives of the study are To study the current practices of Succession Planning To identify the barriers in implementing succession planning in organisation To examine the relationship between current practices and barriers in implementing succession planning 5. Research Methodology Succession planning methodology of around organizations in ITES, Information Technology, Diversified Business, automobile, and other industries were studied. Reason for choosing this wide range was not to restrict to companies in one industry but to go as broad as possible and see all possible best practices and then choose which suited us as an organization. The primary data was collected through a survey. The respondents completed an online survey which probed the following areas: 6. Data Analysis & Interpretation The need of succession planning in an organization How well structured are the current succession planning procedures. Barriers in implementation of succession planning practices Objective 1 - There is no significant difference between the respondent s mean opinion towards Current practices of Succession planning and the average score Following Table 1 shows the results of t-test for variables measured under Current practices of Succession planning in organizations practicing Succession planning in Chennai based Industry and average score. Table 1 ONE SAMPLE T-TEST FOR CURRENT PRACTICES OF SUCCESSION PLANNING Statements Mean SD t-value p-value Succession planning is an issue of strategic importance-demanding the time and importance of top management Top management should take up the issue of finding a suitable and worthy successor in a proactive manner. Retention strategy is the base function of succession planning Succession and retention focuses attention on creating and stocking pools of candidates with high leadership potential. The organization identifies qualified candidates from within to fill key positions when they become vacant ** < ** < ** < ** < ** <.001 Plans, Policies and procedures are prepared in advance are followed so that emergencies can be avoided when ** <.001 IRJBM ( Volume No XI Issue 12 December Page 3

4 key employees are absent or left the organization Employee turnover is monitored to take that into account when implementing the succession planning programme ** <.001 OBJECTIVE 2- Impact of barriers in implementing succession planning on current practices of succession planning Simple regression analysis was conducted by taking current practices of succession planning as dependent variable and barriers in implementing succession planning is taken as independent variable (shown in the Table 2). Barriers in implementing succession planning do not have significant negative impact on current practices of Succession planning Table 2 REGRESSION ANALYSIS FOR IMPACT OF BARRIERS ON CURRENT PRACTICES OF SUCCESSION PLANNING Independent variable R 2 Beta F-statistics t- value Barriers in implementing Succession planning Adjusted R * It is observed from the table 2 the regression model s F value is and it is significant at 5% level, the null hypothesis: Barriers in implementing succession planning do not have a significant negative impact on current practices of Succession planning is rejected. The regression model s coefficient of determination (R2) is (20.5% of variability) which shows minimal variability. Barriers in implementing Succession planning has the significant negative impact on current practices of Succession planning, one unit increase in barriers in implementing Succession planning IRJBM ( Volume No XI Issue 12 December Page 4

5 significantly diminishes the current practices of Succession planning by units at 5% level of significance. 7. Findings of the Study The issue of Succession Planning is of strategic importance-demanding the time and importance of top management. It is clear that the role played by the HR department is vital for all industries to implement Succession planning and retention strategies. It is observed from respondent s opinions that follow up of managers for development plans and implementation of programs to develop successors for a key position in all the departments are the prime role played by the HR department. It is also noted that the framework of succession planning and initiatives were taken to the encouragement of improving and develop individuals which lead to succession planning policies are the important roles played by the HR department. Simple regression analysis discovers the relationship between barriers of succession planning and current practices of it. The result seems to be that the barriers of succession planning have a negative impact on current practices of succession planning. Multiple Regression analysis establishes the relationship current practices of succession planning and HR function. It inferred that the current practice of succession plan depends on all HR functions. 8. Suggestions Succession planning must have the support and backing of the company's senior level management and the human resources department. One meeting to identify candidates is not enough to ensure proper succession occurs. It is necessary to have an ongoing process to identify needed competencies, necessary candidates and a plan to combine the two. Ongoing work is also necessary if a potential candidate moves into another position or out of the organization. Succession planning isn t just important for when executives leave; it applies to the teams below too. If your organisation is expanding, or offering promotions, there will frequently be roles that need to be filled. Having your developed internal talent pool ready can ease the process of placing people into higher level roles. 9. Conclusion Succession planning is a process and a system, like any other human resource activities it needs to be implemented correctly in business organizations. As pointed by the researches in the review, there are benefits and returns achieved by firms that had implement successful succession planning and management. Those organizations that already have a succession planning and management program in place must focus on overcoming their exclusive obstructions to a best practice system. Those organizations which do not presently invest in succession planning and management system should perhaps consider it seriously; assessing the needs, requirements, and appropriateness of implementation. This paper could not present all researches in the area, but provides a general view of succession planning and management. Effective succession planning requires time, the assistance of outside advisors, the input of family members, and the willingness to address interpersonal conflicts that can arise during the planning process. Once completed, the succession plan will provide peace of mind for the business owner and key employees, personal satisfaction for family members, and new opportunities for the business itself. The board of directors at many organizations seeks help in fulfilling their succession-planning responsibilities, and the HR leader is in a perfect position to provide that help. Clarify the role and the responsibilities you re capable of taking on. Familiarize yourself with leadership assessment tools and bring data to the discussion. Take the initiative to turn succession planning from an episodic HR IRJBM ( Volume No XI Issue 12 December Page 5

6 scramble into a core business process. Thus the current practices of succession planning have some barriers in their implementing with various factors affecting the decision on succession planning. 10. References 1. Bossidy, L.,Ram Charan (2009). Execution: The Discipline of Getting Things Done. New York: Crown Business. 2. R. Cheryl. A new Paradigm: Strategies for Succession Planning in Higher Education. meneapolis, USA : Capella University, Doctoral Dissertation. 3. Motwani, J., Levenburg, N., Schwarz, T., and Blankson, C Succession Planning in SMEs: An Empirical Analysis. International Small Business Journal, 24(5): Rothwell, W. (2005). Effective succession planning: ensuring leadership continuity and building talent from within. (3rd ed.). New York: American Management Association. IRJBM ( Volume No XI Issue 12 December Page 6