Article

Australian Journal of Career Development

2019, Vol. 28(2) 112–121
Linking succession planning to employee ! Australian Council for Educational
Research 2019
performance: The mediating roles Article reuse guidelines:
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of career development and DOI: 10.1177/1038416219830419
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performance appraisal

Zulqurnain Ali
School of Management, University of Science and Technology of China, Hefei, China

Babak Mahmood
GC University Faisalabad, Faisalabad, Pakistan

Aqsa Mehreen
School of Public Affairs, University of Science and Technology of China, Hefei, China

Abstract
Drawing on social exchange theory, the objectives of the study were to examine how succession planning relates to
employee performance and assess whether career development and performance appraisal mediate this relationship.
Using survey methodology, data were collected from permanent employees at several commercial banks (N ¼ 239; 62%
male). Structural equation modeling tested the proposed model. The results suggested that succession planning had a
significant, positive relationship with employee performance, and both career development and performance appraisal
mediated the relationship. The current study extends the social exchange theory by identifying the relationship between
succession planning and employee performance in the context of the banking sector. The study suggests that if bank
management builds a pool of skilled employees through succession planning and performance management, it can
ameliorate inappropriate appointments in response to sudden vacancies and retirement of employees.

Keywords
Succession planning, performance appraisal, career development, employee performance, banking sector

Introduction individuals or employee groups for responsibilities

In the last two decades, banking conditions have
changed drastically (Khilji, 2006). Organizations are
now promoting a culture of learning and development
to improve their human resources to create a compet-
itive edge (Johnson, Pepper, Adkins, & Emejom,
2018). Succession planning is a human development
technique that can develop future leaders for the
organization and encourage employees to participate
in learning and development opportunities. Luna
(2012) defined succession planning as “a long-term
systemic process of determining goals, needs, and
roles within an organization and preparing
relative to work needed within an organization”
(p. 60). Rothwell (2010) stated that succession plan-
ning is critical to achieve core objectives of an
organization as it allows the organization to meet
expected future needs by adopting modern learning
techniques and promoting advancement for high-
potential employees.
The present study draws on social exchange
theory, which accounts for workers’ perceptions of
their social exchange relationships with their organi-
zation and can account for the argument that succes-
sion planning increases employee performance. When

Corresponding author:
Zulqurnain Ali, University of Science and Technology of China, North Campus, Building No. 22, Apartment No. 609, Shushan District, Hefei 230022,
Anhui, China.
Email: zaki.qasms.qau@gmail.com
Ali et al.
firms invest in their employees’ development, employ-
ees reciprocate and return such investment by work-
ing to achieve organizational goals. Cropanzano and
Mitchell (2005) argued that social exchange is a sig-
nificant psychological process through which firms
influence their workers.
Succession planning, career development, and per-
formance appraisal are important aspects of an
organization’s development strategy (Armstrong &
West, 2001), and can be considered as key social
exchange mechanisms (Luna, 2012). According to
social exchange theory, succession planning influences
the worker’s perception of their development as social
exchange, and it will further influence other worker
behaviors, such as employee performance. Thus, the
goal of this study was to investigate the role of career
development and performance appraisal as a social
exchange process in the relationship between succes-
sion planning and employee performance.
Succession planning is an emerging concept that
needs more research to investigate its relationship
with employee and organizational outcomes (Rezaei
& Beyerlein, 2018; Sweeney, 2013). Khilji (2006)
developed human resource management models for
the banking sector in Pakistan but did not include
the important development tool of succession plan-
ning to improve the individual’s organizational per-
formance. To our knowledge, no study has explored
the relationship between succession planning and
employee performance. Further, nobody has exam-
ined the mediation processes of career development
and performance appraisal in the relationship
between succession planning and employee perfor-
mance. To fill this gap, the present study investigated
how succession planning directly and/or indirectly
related to employee performance.
Research questions
The banking sector is one of the emerging service
sectors of Pakistan. Yet, management practices are
not as advanced as in Western countries, with staff
recruitment and development policies especially
underdone (Johnson et al., 2018). To shed light on
this issue, the study addressed the following research
questions:
1. Does succession planning relate to employee
performance?
2. Is succession planning essential for solving inap-
propriate appointments to fill sudden
vacant positions?
The primary contributions of this paper are (a) to
link succession planning and employee performance
using social exchange theory; (b) to investigate the
mediating role of career development and perfor-
mance appraisal to account for the association
between succession planning and employee
113
performance of banks employees; (c) to provide prac-
tical solutions to sudden resignations in the bank
sector (e.g., by examining succession planning,
career development, and performance appraisal);
and (d) to respond to calls for more research regard-
ing the link between succession planning and perfor-
mance (Rezaei & Beyerlein, 2018; Sweeney, 2013).
Literature review, theoretical
background, and hypotheses
Social exchange theory
Social exchange theory describes the collaborative
exchanges among individuals (Cropanzano &
Mitchell, 2005) and proposes that people are encour-
aged to show positive attitudes toward those who
value them and their contributions. In this way,
strong exchange relationships will be established
when one agent assists a second agent. Social
exchange theory has been utilized widely as a theoret-
ical foundation for connecting organizational behav-
ior and employee outcomes (Chen, Eberly, Chiang,
Farh, & Cheng, 2014). Daspit, Holt, Chrisman, and
Long (2016) found that successor development, pro-
viding ground rules, and managing transitions were
the primary succession management processes in
family businesses, while Byrne, Fattoum, and
Thébaud (2018) added sex as an important factor,
as succession planning advantaged males.
Social exchange theory offers a robust foundation
for the model tested in this study. We posit that when
organizations invest in their employees, employees will
reciprocate and return such investment by focusing
their efforts to achieve organizational goals. In other
words, when organizations offer succession planning
to their employees, employees will grow within the
organization, which, in turn, will lead to better indi-
vidual and firm performance. We theorize that succes-
sion planning directly and/or indirectly relates to
individual performance as a social exchange process,
and career development and performance appraisal
account for this relationship. In this way, we contrib-
ute to the succession management and performance
literature by incorporating social exchange theory.
Succession planning and employee performance
Human capital is important for organizations to actu-
alize their long-term goals (Patidar, Gupta, Azbik, &
Weech-Maldonado, 2016). Succession planning is a
useful human capital development technique, which
identifies, recognizes, prepares, and establishes the
group of employees to serve their organization in
response to future organizational needs (Mondy,
Noe, & Premeaux, 2002). Pennell (2010) argued that
the aims of succession planning were to explore indi-
vidual efficiency and effectiveness so as to achieve
organizational goals. Succession planning creates a
114
pool of skilled people that is helpful to overcome the
issue of inappropriate selection of individuals.
Moreover, succession planning potentially generates
a competitive advantage over rivals by offering unin-
terrupted customer services when there is a sudden res-
ignation of employees (Johnson et al., 2018). Webb,
Diamond-Wells, and Jeffs (2017) stated that succession
planning improves the professional development of
employees, which in turn enhances their performance.
Ali and Mehreen (2018) investigated the association
between succession planning and turnover intentions
in banking employees and found that succession plan-
ning significantly minimized turnover intentions.
Perrenoud and Sullivan (2017) found that succession
planning improved employee satisfaction, and Munro
(2017) stated that succession planning had become a
critical driver of organizational and leader renewal.
Employee performance is defined by Williams and
Anderson (1991) as a work-related outcome or activity
that demonstrates how well these activities are accom-
plished by the individual. Patidar et al. (2016) studied
the influence of succession planning on hospital finan-
cial performance and found that the presence of suc-
cession planning positively improved financial
performance. Similarly, Rayburn, Grigsby, and
Brubaker (2016) highlighted the importance of succes-
sion planning by focusing on transparency and found
that succession planning increased sustainable organi-
zational performance, optimized talent management,
and developed individuals for leadership roles.
Ali, Mehmood, Ejaz, and Ashraf (2014) argued that
employee performance can be enhanced by succession
management practices such as training and develop-
ment. Patidar et al. (2016) highlighted that succession
planning focuses on high-potential employees to
obtain the best performance and prepare them for
future leadership roles in the organization. Rothwell
(2010) argued that succession planning builds talented
leaders by enhancing individual as well as organiza-
tional performance, and Sweeney (2013) added that
succession planning also boosts employees’ confidence
when key leaders change. From this, we predicted:
Hypothesis 1. Succession planning is related positively
to employee performance.
Performance appraisal
Organizations invest in their employees to improve
human resources so as to create a competitive edge
(Ali et al., 2014). They also evaluate their human
resources to identify employee development needs
and the gray areas for performance improvement
(Lira, 2015). For achieving best performance, organ-
izations use performance appraisal or employee
assessment tools that can provide feedback for
employees and identify future development needs. It
is essential for employees to have their work
Australian Journal of Career Development 28(2)
evaluated so that they can be acknowledged and
rewarded (Levy, Silverman, & Cavanaugh, 2015).
When employees are positive about performance
appraisal, this motivates them to participate in devel-
opment activities, which can subsequently improve
individual performance (Nikpeyma, Saeedi,
Azargashb, & Majd, 2013).
Shields (2007) highlighted that it is essential for
workers to know that their performance is observed.
Performance appraisal is an organizational communi-
cation device that relates to the employee about goals,
objectives, strategies, values, and the mission and
vision of the organization, and it transforms the
firm’s procedures into individual performance criteria
(Nikpeyma et al., 2013; Rachana & Ghosh, 2012).
Nikpeyma et al. (2013) explained that managers
should integrate the organizational context in perfor-
mance appraisal so that employees would perceive the
appraisal process to be reasonable. Similarly, Rachana
and Ghosh (2012) mentioned that the appraisal pro-
cess should be acceptable to employees to ensure max-
imum results from performance appraisal. Sentiment
and unfairness in appraisal lead to disappointment and
reduced employee performance.
Employee evaluation mechanisms distinguish the
level of organizational development and clarify orga-
nizational targets (Sanyal & Biswas, 2014). Wilson
(2018) suggested that succession planning models
were essential for career development, enhancing con-
fidence, and improving individual performance at the
workplace. Wilson also emphasized that current lead-
ers should ensure that employees become leaders in
line with organizational needs, as such a strategy
leads to worker satisfaction and productivity, and
lower turnover. Similarly, Lira (2015) explained that
employees who have confidence in performance
appraisal exert effort to achieve individual as well as
organizational objectives. Dijk and Schodi (2015)
argued that transparent performance appraisal creat-
ed confidence in the appraisal system, which directly
enhances employee performance. Therefore, we
hypothesize that:
Hypothesis 2a. Succession planning is positively relat-
ed to performance appraisal.
Hypothesis 2b. Performance appraisal is positively
related to employee performance.
Hypothesis 2c. Performance appraisal mediates the
relationship between succession planning and
employee performance.
Career development
Career development is a critical element that facili-
tates individual goal achievement (Kraimer, Seibert,
Wayne, Liden, & Bravo, 2011). Career development
Ali et al.
refers to “whether people were proud of their work,
whether their superiors were satisfied with the work,
and whether people felt comfortable in their jobs”
(Van der Sluis & Poell, 2003; p. 163). Amundsen and
Martinsen (2015) argued that employees’ development
activities and development created a positive career
attitude in workers, which in turn could improve
worker performance. Career development aims to
encourage and build a career path which offers diver-
sified mobility (Heijden, Schalk, & Veldhoven, 2008).
Ahmad, Mohamed, and Manaf (2017) examined the
succession planning programs in Malaysian public
sector organizations and found that succession plan-
ning contributed to individual career development and
enhanced confidence in organization management,
which in turn improved individual as well as organiza-
tional performance. Succession planning plays a role in
retaining employees by providing career development
opportunities (Rothwell, 2010). Kraimer et al. (2011)
highlighted that career opportunities strengthen orga-
nizational support for employee development and per-
formance. Ali and Mehreen (2018) indicated that
career attitude is negatively related to employees
desire to quit the firm. Hence, succession planning cre-
ates career paths for employees which directly enhance
individual performance.
Holbeche (2009) noted that career development is
an individual-focused strategy that enhances individ-
uals as well as organizational performance by provid-
ing training opportunities. Similarly, Armstrong and
West (2001) found that career development enhanced
the satisfaction of bank employees, which subse-
quently improved their performance. Hall-Ellis
(2015) stated that choosing a qualified and well-
trained individual for a key leadership position is a
critical decision due to its potential influence on cur-
rent and future organizational outcomes. Moreover,
professional development opportunities reinforce suc-
cession planning strategies in the organization. From
this, we predicted that:
Hypothesis 3a. Succession planning is positively relat-
ed to career development.
Hypothesis 3b. Career development is positively relat-
ed to employee performance.
Hypothesis 3c. Career development mediates the rela-
tionship between succession planning and employee
performance.
Figure 1 illustrates the proposed relationships.
Methodology
Sample and procedure
The study recruited permanent banking employees
working in commercial bank branches located in a
115
Performance
Appraisal
H2a H2b
Succession Employee
Planning
H1 Performance
H3a H3b
Career
Development
Control Variables: Age,
Gender, Education,
Experience, and Income
Figure 1. Proposed empirical research model.
large city in Pakistan. Employees who participated
belonged to different segments (sales, operations,
insurance, and cash) of the branch banking network.
The reason for choosing the banking sector is that it is
one of the leading service sectors contributing to the
gross domestic product of the country. As per the
State Bank of Pakistan, 117 branches of five banks
were operating in the district, consisting of 585 per-
manent employees.
To collect data from respondents, the first author
contacted the branch heads by telephone, briefed
them about the study purpose and requested them
to help by distributing a questionnaire. After getting
their consent, the first author personally visited the
branches and briefed the branch staff about the core
aims of the research and assured them that their data
would not be misused. Before conducting the study,
we ran a pilot study with 40 participants, who did not
indicate any issue while answering the questions. The
questionnaire was also checked by two seasoned
bankers, a university teacher, and fellow researchers.
We distributed 500 questionnaires in January and
February 2018, and 261 were returned, 22 of which
were discarded due to being incomplete. This left 239
questionnaires (response rate 47.8%) available for
analysis. The majority of participants was male
(147; 62%), ages ranged from 26 to 35 years, with
education levels being mostly masters (144; 60%)
and bachelor degrees (95; 40%). Monthly income
averaged 30k (range ¼ 20k–40k rupees) and average
tenure was five years (range ¼ 1–10).
Measures
Succession planning: The scale of succession planning
was taken from the working of Rothwell (2010). He
measured this construct with four items (5 ¼ strongly
agree, 1 ¼ strongly disagree). The Cronbach’s alpha
value of the scale was .77. Sample items of included:
“Has your organization a clearly defined succession
planning system?” and “Has your organization iden-
tified the target group for the succession efforts?”.
Performance appraisal: The scale of performance
appraisal was adopted from the research work of
Cook and Crossman (2004). They used three items
(5 ¼ strongly agree, 1 ¼ strongly disagree). The alpha
116 Australian Journal of Career Development 28(2)

value of this scale was .98. Sample items were “Do Table 1. Descriptive statistics, correlations, and
you regularly participate in your performance factor analysis.
appraisal?” and “Promotions are strictly based on Variables 1 2 3 4
Performance Appraisal outcomes?”.
Career development: The scale of career develop- 1. Employees performance .71 .47** .29** .22**
ment was adopted from the findings of Langley, Du 2. Succession planning .48* .77 .44** .39**
3. Performance appraisal .24** .40** .89 .34**
Toit, and Herbst (1992). They measured this con-
4. Career development .23** .34** 30** .74
struct with four items (5 ¼ strongly agree, 1 ¼ strongly M 3.77 3.71 3.88 4.08
disagree). The alpha value was .83. Sample items were SD .78 .74 .73 .84
“Are you committed to actively managing your career Factor loadings (CFA) .63–.85 .69–.78 .87–.93 .72–.81
development plan?” and “I see my current organiza- Cronbach’s alpha .84 .78 .92 .83
tion as a training ground for a career move to another Composite reliability .86 .83 .92 .85
organization”. Average .51 .55 .79 .59
Employee performance: The scale of employee per- The diagonal values in bold type are the square root of the average of
formance was taken from the working of Williams each variable. Above diagonal are the bivariate-correlations; below are
and Anderson (1991). They measured this with six inter-correlations among latent variables. CFA: confirmatory factor
analysis; SD: standard deviation.
items (5¼ strongly agree, 1¼ strongly disagree). The
*p < .05; **p < .01.
alpha value scale was .84. Sample items were, “Do
you adequately complete the assigned duties,”
“Fulfills responsibilities specified in job description,” Results
and “Perform tasks that are expected of me”.
Table 1 reports descriptive statistics and inter-
Control variables: Gender, age, education, experi-
correlations. As expected, succession planning posi-
ence, and income of employees were collected as
tively correlated with employee performance
potential control variables.
(r ¼ .47), career development (r ¼ .40), and perfor-
mance appraisal (r ¼ .44). Similarly, career develop-
Measurement validity ment (r ¼ .22) and performance appraisal (r ¼ .29)
To examine response bias, late and earlier respond- positively correlated with employee performance.
ents (n ¼ 40) were compared using t tests, which All findings provide initial support for the pro-
revealed no differences. For common method bias, posed hypotheses.
we follow guidelines by Podsakoff, Mackenzie, Lee,
and Podsakaff (2003) and linked a common latent Measurement model
factor to the measurement model using confirmatory
To test the measurement model fitness, CFA was con-
factor analysis (CFA; AMOS). With the common
ducted using AMOS 24. The four constructs (succes-
latent factor, there was no significant drop in factor
sion planning, performance appraisal, career
loadings and all loadings remained significant, there-
development, and employee performance) were
by indicating that common method bias was unlikely
tested in a baseline four-factor model against five
to influence the findings of the study. Additional sup-
alternative models (these models are available from
port was that there were no high correlations
the first author on request). We then compared the
(Table 1) among constructs (Pavlou & El Sawy,
models using the chi-square difference test to assess
2006). Thus, Common Method Bias was not consid-
which model was the best fit to the data. The findings
ered to be an issue in the study.
supported the baseline four-factor model, which was
Convergent validity was examined through factor
accepted, v2 ¼ 2.39, p < .05, goodness-of-fit index
loadings, Cronbach’s alpha, composite reliability, and
(GFI) ¼ .93, comparative fit index (CFI) ¼ .95, and
average variance extracted (Fornell & Larcker, 1981;
root mean square error of approximation
Hair, Black, Babin, Anderson, & Tatham, 2010).
(RMSEA) ¼ .06 (Hair et al., 2010).
Factor loadings, Cronbach’s alpha, composite reli-
ability, and average variance extracted achieved the
cut-off criteria of .60, .70, .60, and .50, respectively for Structural model
the measures (Table 1). Thus, all values supported The structural model indices achieved the cut-off cri-
validity of the measures. Discriminant validity was teria of model acceptance suggested by Hair et al.
computed by comparing the square root of average (2010): v2 ¼ 1.91, p < .05, GFI ¼ .90, CFI ¼ .92, and
variance extracted for each construct with the inter- RMSEA ¼ .06. All estimated path coefficients were
construct correlations (Fornell & Larcker, 1981). positive and significant (see Figure 2). Results
Table 1 shows that the value of square root average showed that succession planning (b ¼ .66, t ¼ 11.15,
for each variable is higher than the value of all inter- p < .001) was related positively to employee perfor-
construct correlations, which supports discriminant mance (Hypothesis 1 was accepted). Succession plan-
validity of the scales. ning (b ¼ .18, t ¼ 3.05, p < .001) was related positively
Ali et al.
Figure 2. Confirmatory factor analysis.
to performance appraisal (Hypothesis 2a was accept-
ed). Performance appraisal (b ¼ .23, t ¼ 4.80, p < .001)
was related positively to employee performance
(Hypothesis 2b was accepted). Similarly, succession
planning (b ¼ .61, t ¼ 6.52, p < .001) was related pos-
itively to career development (Hypothesis 3a was
accepted), and career development (b ¼ .30, t ¼ 2.90,
p < .01) was related positively to employee perfor-
mance (Hypothesis 3b accepted). The model
explained 38% of the variance in career development,
25% in performance appraisal, and 58% in employee
performance. None of the control variables had a sig-
nificant relationship with employee performance (see
Figure 3).
To test the mediation hypotheses of 2c and 3c, we
used the bias-corrected bootstrapping approach
(Hayes & Preacher, 2010) to calculate the 95th per-
cent confidence interval (CI) using AMOS 24 to assess
the indirect effects. The indirect association between
succession planning and employee performance
117
through performance appraisal was significant
(b ¼ .04, CI: .03 to .07). Thus, Hypothesis 2c was
accepted. Similarly, the indirect relationship between
succession planning through career development was
significant (b ¼ .18, CI: .01 to .13). Hypothesis 3c
was accepted.
Discussion
The purpose of this research was to examine how
succession planning directly or indirectly related to
employee performance, and how career development
and performance appraisal mediated this relationship.
We addressed the questions as follows: “How does
succession planning improve employee perform-
ance?” and “Does succession planning solve the
issue of inappropriate appointment of employees in
sudden vacant positions?” As expected, the results
indicated that succession planning was positively
related to employee performance, and career
118
Performance
Appraisal
R2=.25
E=.23
E=.18
(t=3.08) (t=4.80)
Succession E=.66
Planning (t=11.15)
E=.61
E=.30
(t=6.52)
(t=2.90)
Career
Development
R2=.38
Figure 3. Structural equation modeling: path analysis diagram.
development and performance appraisal positively
mediated this association. Thus, these results support
past studies on employee performance, which showed
that influences on performance included not only
technical aspects but also employee behavioral
aspects (Ali et al., 2014; Rothwell, 2010). Overall,
the study tested five hypotheses, and all
were supported.
Succession planning was related to employee per-
formance. This outcome suggests that succession
planning is a primary predictor of branch banking
employee performance. This outcome is consistent
with the research work of Ahmad et al. (2017).
They examined the association between succession
planning and individual career development and
found that succession planning improved individual
performance through career development. Moreover,
Shields (2007) and Nikpeyma et al. (2013) argued that
succession planning will be effective in determining
employee performance after the adoption of career
development and performance appraisal processes.
Similarly, succession planning was positively relat-
ed to career development and performance appraisal.
This is consistent with the findings of Amundsen
(2003), who studied employee development activities
including succession planning and found that devel-
opment activities created positive career attitudes,
which led to improved individual as well as organiza-
tional performance. Dijk and Schodi (2015) expressed
that firms should provide a collaborative learning
environment and opportunities, including succession
planning, to ensure the participation of employees in
appraisal and to retain skilled workers for the smooth
functioning of organizational operations.
Career development and performance appraisal
were significantly related to employee performance.
This is consistent with the finding of Hoekstra
(2011) who explained that career development is an
intuitive advancement of employee personality which
improves individual as well as organizational perfor-
mance. Our study also complements the research
work of Ali et al. (2014). They studied the employee
development process in the banking sector and
Australian Journal of Career Development 28(2)
reported that performance appraisal was significantly
related to worker productivity.
The findings of the present study responded to the
research question that succession planning is related
Employee
to the performance of bank employees. Further, suc-
Performance cession planning is likely to be helpful in solving the
R2=.58
issue of inappropriate selection or appointment of
employees in the branch banking sector due to the
availability of skilled internal staff, which also
should contribute to smooth leadership transitions
and undisrupted service to bank customers. The cur-
rent study offers rigorous theoretical, empirical, and
realistic support to the corporate leaders of the bank-
ing sector in Pakistan. Thus, banking sector decision
makers should adopt a focused approach toward suc-
cession planning practices while designing, managing,
and executing a succession planning system to realize
better employee performance.
Theoretical implications
The primary contribution of this paper is to link suc-
cession planning and employee performance by
employing social exchange theory. Although, much
attention has been given to family business succession
(Bizri, 2016), research on the association between suc-
cession planning and employee performance has been
largely ignored in the corporate sector (e.g., banks).
The current research supports the fabric of social
exchange theory, with its focus on a reciprocal mech-
anism of strong exchange relationships. We theorized
that when organizations invested in their employees
for learning and development, employees would
reciprocate and return such investment by working
to achieve individual and firm goals as a social
exchange process. In other words, when organizations
offer succession planning to their employees, employ-
ees are stimulated to grow within an organization,
and, in turn, generate higher individual and firm per-
formance. In this way, we are contributing to succes-
sion management and performance literature by
integrating social exchange theory. This theory pro-
motes a culture of learning and development at the
organizational level which encourages employees to
participate in development opportunities when organ-
izations offer them. To our knowledge, the present
study is the first research which successfully investi-
gated the relationship between succession planning
and employee performance at the individual level.
Therefore, this study enhances our understanding of
the relationship between succession planning and
employee performance among banks employees.
A second contribution is the recognition of two
significant development processes (career develop-
ment and performance appraisal) that strengthen
the relationship between succession planning and
employee performance. As Blau (1964) stated, social
exchange theory is a significant perspective by which
organizations can influence employee performance.
Ali et al.
Along with this, we found career development and
performance appraisal to be intervening constructs
in the succession planning-employee performance
relationship. Therefore, we contributed to the succes-
sion planning literature by recognizing career devel-
opment and performance appraisal as potential
mechanisms that can strengthen the association
between succession planning and employee perfor-
mance as a social exchange process (Chen et al.,
2014). Hence, this research echoes past studies
which have used social exchange theory as a theoret-
ical base linking leadership development and perfor-
mance (Chen et al., 2014).
Third, this study addressed prior calls for the study
of developmental processes that connect succession
planning to employee outcomes (Rezaei &
Beyerlein, 2018; Sweeney, 2013). Sweeney (2013), as
a result of an extensive literature review on succession
planning, called for future research to investigate suc-
cession planning at the level of individual in-role per-
formance. Similarly, Rezaei and Beyerlein (2018)
conducted a literature review on talent management
interventions and firm outcomes and called for
research to investigate the relationship between
talent management dimensions, including succession
planning, at an individual and group level.
Practical implications
First, the present study provides a meaningful solu-
tion to the sudden resignation of bank employees by
developing a pool of skilled employees through suc-
cession planning for ensuring the smooth functioning
of branch banking operations.
Second, given that succession planning is potential-
ly an important factor for improving employee per-
formance, banks should prepare employees by
developing a formal succession system to meet the
needs of future leadership; that is, an employee
talent development mechanism should be imple-
mented to identify successors.
Third, the findings of the study identified a positive
relationship between succession planning and
employee performance which operated via career
development and performance appraisal. Thus,
improving employee performance by providing work-
ers with a sense of personal growth (career develop-
ment opportunities) and involvement in decision
making (participation of employees in performance
appraisal) should be helpful. Career development
opportunities and performance appraisal activities
can be enhanced by timely or regularly providing
rapid communications in the organization and build-
ing career attitudes that will support the firm–employ-
ees relationship. With career development and
performance appraisal activities, employees are
likely to enhance their efforts, thereby improving
individual and organizational performance. Thus,
banks should develop and maintain good relations
119
with employees, which will increase employee as
well as bank performance.
Fourth, to provide the best customer service to cli-
ents and potentially increase revenue, bank manage-
ment should adopt a well-managed, cohesive,
proactive, and organized succession system. This
will mean that, if somebody leaves the bank, the
human resource department will be able to appoint
a skilled employee from the pool of talented employ-
ees without disrupting customer service. In this way,
customers will be better served and new customers
can be attracted, to the bank’s advantage. When cus-
tomers face inconvenience, they develop a perception
about banks that can adversely affect revenue.
Limitations and future research
This study has certain limitations. First, the study
focused solely on a district in Pakistan, which affects
generalizability of the results. Second, the study is
based on cross-sectional data, which is not able to
test causality, and future studies need to be longitu-
dinal to confirm any change in performance over
time. In addition, future studies can investigate
other factors that might influence performance after
succession planning. In this study, we tested two con-
structs as mediators; however, other mediators and
moderators (e.g., trust, training and development,
employee citizenship behavior) potentially influence
employee performance.
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with
respect to the research, authorship, and/or publication of
this article.
Funding
The author(s) received no financial support for the research,
authorship, and/or publication of this article.
ORCID iD
Zulqurnain Ali http://orcid.org/0000-0002-2133-7409
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