Labor Planning
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The need for succession planning
Succession plan needs to take into consideration labor planning. There is a need for timely forecasting of labor needs in any company. This workforce planning need to have strategies for acquisition, retention and efficient utilization of employees to ensure the needs of the company are met (Kingir & Mesci, 2010). The human resource needs of a company form an essential part of planning. With proper strategies, the current and future needs of the company will be looked into and appropriate measures put in place. These requirements should take into consideration the growth and development of the company now and in the future. Leadership needs will be taken care of in the succession planning strategy.
The departure of employees can be through voluntarily through retirement or involuntarily either through death or sacking ((Adewale, Abolaji & Kolade, 2011 the results of these departures are vacancies within the organization that has to be filled up. These jobs may lack personnel with adequate competence and capabilities. That calls organizations to start planning for filling of these vacancies before they are even created. When jobs are created, the company will have effective mechanisms to replace those who have exited the company. These tools will ensure that the operations of the company will not be interrupted. The transition process will be smooth since the company has already set structures that ensure the proper conduct of operations of the company despite the departure of any of its leaders.
This prior planning to fill up these positions is what is known as succession planning. Organizational survival requires a plan for succession for older employees or outgoing ones (Hazarika, 2009). There are several succession plans available for organizations to choose. However, some would be more preferred than the others would. Other may not be favorable for the business since they would require winding up the business or even selling it out to competitors. The aim of every succession should be for the progress and continuity of the business entity. Business operations should not come to a halt just because a succession phase is in place. At its establishment, a business should have an elaborate plan to ensure that the company continues its operations competitively and can adapt to the dynamics of the market. Selling out or winding up should only be considered as a last option when all the other strategies have failed to work.
Succession for Mid-sized companies
In planning for a succession plan, it is important that entrepreneurs consider business entities as separate from themselves rather than an extension of themselves as many people view them (Burke, 2016). In passing over the business to a family member, it should be understood that they should have the core competencies to run the business. Otherwise, the company may not even move on to the next generation. Burke (2016) identifies five principal stages of a succession-planning model. The first stage he refers to as business case for proactive succession planning. Now, entrepreneurs are required to develop a business case that includes a succession planning (Burke, 2016). Such a business model should have a clear vision, mission, culture and values of the company. In this regard, from the onset, the business should have elaborate structures and systems that will stand the test of time. These structures should be able to last beyond current or even successive leadership. Therefore, they should espouse a company that has self-running structures that will ensure smooth transitions that will not interfere with the operations of the company.
The second stage, Burke identifies as the identification of target roles and positions. The aim of this step is to determine critical workforce segments within the company (Burke. 2016). The determination of these posts should focus on achievement of the company's objectives in all stages rather than just filling current positions (Burke, 2016). These posts should have the ability to drive the growth of the company at all stages. Every strategic planning should be geared towards to not only meeting the company’s current needs only but also the future needs as well. The terms of service by any worker should be in line with the company's mission and vision. In this regard, it is important for every company to have a mission and vision. The mission and the vision should not only focus on the current trends of the company but should be able to forecast rising trends that are likely to affect the business operations in the future and put appropriate intervention measures to accomplish the mission of the company.
In the third stage, determination of core competencies and skills is done. The purpose of this is to determine performance gaps. That is very useful in the recruitment process where talents required meeting strategic goals and key objectives is looked at (Burke, 2016). In this case, even members of the family would have to acquire the necessary competencies that will enable them to help the company achieve its objectives. The human resource department would also be well equipped with what to look for while looking for people to fill key positions in the company. Employees training should form a core part of developing and retaining these core competencies. Employees should be trained to take up the challenges they are running to face in the day-to-day running of the company. This training should also envision the successors of the current leadership.
The fourth stage involves identifying replacements. This phase includes development and implementation of rigorous, competency-based performance management process. Succession candidates are identified within the organization, but this does not limit the company to focus only on internal candidates. A selection process for external candidates who are qualified is established (Burke, 2016). External candidates should, however, be given competent workers who know the inside working of the company so that there is a smooth transition. Injecting of fresh ideas should complement the operations of the business rather than interfere with them.
The fifth stage is leadership development. Now, leadership development programs are set. These programs had to take into consideration current and required training and development practices (Burke, 2016). Mentorship programs are part of this leadership development programs. This stage is aimed at ensuring that sufficient development opportunities availed on a regular basis (Burke, 2016). In-service training should be part of leadership development programs. These programs should identify potential successors to the command of the company and prepare them for any eventuality. Even if the company opts for an external replacement, the existing employees should be able to work with the new leadership efficiently and smoothly. They should know the daily operations of the company and be able to identify with the company.
Business owners should not take succession lightly. At the onset, there is a need to have a clear-cut exit strategy for the firm. Owners should not just assume when time is right they will sell the business entity, or their children will succeed them. This plan requires a comprehensive approach and focus on all details. That takes time. Whether one plans an internal acquisition, external acquisition or liquidation and dissolution proper, planning is essential for smooth flow of business operations during the succession periods.
Succession Plans
There are several succession plans available for business. These include internal succession, external succession, liquidation, or dissolution. Whichever method one chooses for the firm, it is important that proper strategic planning enable to find out which one is best for the business. Among these, liquidation or dissolution should only be considered as the last option. The company should be prepared to continue despite any changes that might come up in the process of the company's existence.
Under internal succession, a successor is found within the business. This plan is suitable for family owned businesses. In this plan, the replacement is well known to the owner. However, there is a need to potential successors to be scrutinized carefully so that the succession plan works perfectly and does not affect the business operations in a negative way. In such a plan, the business owner has to be careful in dealing with those members, whether employees or family members who may feel disgruntled about the succession. That may adversely affect the operations of the business and even lead to the downfall of the business. Inside tussles have a way of stalling or hurting the daily functioning of the business. They give out a weak point of the firm, which competitors can use to gain a competitive advantage over it. Therefore, it is imperative that every person, especially those who hold key positions, is satisfied with the choice of a successor.
The external succession plan looks for a replacement outside the business entity. The business owner may look for acquisition or a merger. In such a situation, third parties such as brokers or investment banks can come in handy in procuring a merger or acquisition. It is vital to check for compatibility between the two businesses so that there will be a smooth transition. The owner can decide to sell the business outright. As such, all the operations of the business go to the one who purchases the business entity. However, after the sale of the business, it may be necessary that the owner of the business stay as an employee of the business for some time.
The choice to liquidate or dissolve the business may be a better option for those who intend to retire. In this case, the business owners sell off the assets of the company, pay off any liabilities, and pocket the net proceeds from the sale of the property. That might not be without some challenges, however. That should, however, be considered as last resort. The operations of the business should outlive the owner. That should be done given the fact that a business entity is separate from its owner. They are essentially two different entities, and the exit of one should not necessarily mean the stalling of the other. They should exist as two different entities, which they are.