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Succession planning and its effects on employee career attitudes: Study of


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African Journal of Business Management Vol.5 (9), pp. 3605-3613, 4 May 2011
Available online at http://www.academicjournals.org/AJBM
ISSN 1993-823 3©2011 Academic Journals

Full Length Research Paper

Succession planning and its effects on employee


career attitudes: Study of Iranian governmental
organizations
Ali Dehghanpour Farashah, Vahid Nasehifar* and Ahmadreza Sanjari Karahrudi
Department of Management and Accounting, Allame Tabatabai University, Tehran, Iran.
Accepted 16 February, 2011

This paper evaluates effects of succession planning as an organizational level intervening program on
career attitudes as individual level variables. Best practices of succession planning are selected from
literature and compliance of succession planning system of organization to these practices is defined
as extensiveness of succession planning. A 22-item questionnaire was developed to measure the
extensiveness of succession planning. Validity and reliability of questionnaire are confirmed by
appropriate tests. For career attitudes, 3 variables of promotion satisfaction, perception of career
success, and perception of job platitude selected. Then the correlation of the succession planning
extensiveness and three career attitudes examined by empirical data gathered from 152 managers and
key personnel in 23 large Iranian governmental organizations. Significant correlation exists between
succession planning extensiveness and career success and satisfaction of promotion process.
Perception of job plateau does not show correlation with succession planning extensiveness. This
paper recognized best practices that should be considered for design of succession planning. Also the
scale for measuring succession planning extensiveness developed. It can be used to gain a better
understanding of status quo of succession planning in organizations and gap analysis which is
generally one of the early stages of every organizational development project. The literature of
succession planning was enriched by studying the effect of succession planning on individual level
variables.

Key words: Succession planning, best practice, career attitudes, measure development, Iran.

INTRODUCTION

Succession planning helps organizations manage their develop the right people to ensure that the important
talent pipeline (Guin, 2000). Its goal is to ensure that, the skills are present in the organization over the long term
quantity and quality of leaders are identified, fully (Barnet and Davis, 2008). Some business trends are in
capable, and ready to contribute to the effective favor of taking succession planning more seriously.
performance of a business in future. Although, new Demographic trend in workforce toward aging and
career concepts like boundary-less careers (Arthur and decrease in supplying workforce, tight labor markets
Rousseau, 1996) and protean careers (Hall, 1996) em- (Busine and Watt, 2005; Naris and Ukpere, 2010);
phasize individual responsibility in career development, changes in values and attitudes of new generation
no successful business can stop career management workers toward demanding more independent, and
programs like succession planning to identify and flexible job with more training and learning opportunities
(Cascio, 2006); shifting the source of competitive
advantage from tangible assets to tacit knowledge stuck
to the minds of employees (Barnet and Davis, 2008)
*Corresponding author. E-mail: vahidnasehifar@yahoo.com. which needs a mechanisms in place to avoid the risks of
Tel: +98(21)88770011. Fax: +98(21)88770017. lost valuable human resources and ensure continuity;
3606 Afr. J. Bus. Manage.

rapid changes in environment and need to quick overview of best practices of SP and their influence on
responses from inside which requires dynamic and business. Then variable of extensiveness of succession
complex leadership capability (Busine and Watt, 2005) planning defined as compliance of SP system of
are examples of these trends and consequences. organization with found best practices. For measuring the
Also, a number of papers show direct evidence of effect extensiveness, a scale has developed and validated.
of SP on return of investment. Axelrod et al. (2000) Then effect of SP extensiveness on career attitudes has
reported companies in the top quintile of talent manage- measured using empirical data. At the end, limitations of
ment practices were associated with a 22% higher return research and further research have been discussed.
to shareholders than their industries’ means. From non-
financial view, many researchers argue that succession
planning yields a return in form of internal operational Literature review
efficiency in variables like greater job satisfaction, higher
individual and departmental performance, and better Succession planning
retention of high–performing staff (Garmen and Glaw,
2004). From risk management perspective, SP is a useful Succession planning defined as “deliberate and syste-
practice to hedge against risk. In fact, organizations fare matic effort by an organization to ensure leadership
better while they immediately appoint an internal continuity in key positions, retain and develop intellectual
successor (Worrell and Davidson, 1987). Bernthal and and knowledge capital for the future and encourage
Wellins (2001) study in 14 countries showed that, succes- individual” (Rothwell, 2010). Succession planning is no
sion planning increases satisfaction of future leaders and longer limited to top managers, nowadays need to
is a prerequisite for retention. Rothwell (2010) mentioned successor for every job in the organization is evident,
succession planning as a basic tool for organizational specially with more involvement of employees to the
learning because it keeps lessons learned in the organization and distribution of decision making to
organizational memory. empowered employees across organizations. Literature
Employees are also in support of practice of SP. In a search will typically include articles that refer to
survey conducted by Bernthal and Wellins (2001), it was analogous such as: replacement planning –to plan who
found that two–third of employees indicated that they will replace which key leaders in the firm; talent manage-
would rather grow inside their present organization than ment – selection of candidates for future leadership but
leave. The study also revealed that the ultimate reason not for a specified position but for forming an acceleration
that made employees leave an organization is that they pool of appropriate candidates; and career development
are not being developed and/or they do not have –helping managers to plan their future in the organization
meaningful work. Therefore, this is evident that effective by themselves and be ready for taking responsibility.
succession planning improves the organization’s chances In general, process of succession planning demands
of retaining key personnel. In conclusion, succession three steps: 1) identifying and analyzing key jobs, 2)
planning improves ROI, processes and organizational creating and assessing candidates and 3) selecting the
behavior variables and can be considered as a critical right individuals who will fill up the key positions (Dessler,
human resource system. But effects of SP on individual 2005). Top management and human resource
level variables are less examined. Due to this department based on the firm’s strategic goals identify
inadequacy, this paper focuses on relation of succession the company’s future key position requirements;
planning with employee career attitudes. management looks into the jobs and assess candidates
Development of succession planning models consi- for these jobs. This is followed by identifying potential
dering antecedents and consequences of this plan is internal and candidates for future key positions, and
lacking (Mayrhofer et al., 2004). This paper aims at provide them with the developmental experiences they
consequences by investigating the effects of succession require to fill up the future positions. Then, these people
planning, an organizational level program on employee will be assessed and selected to fill up the key positions
career attitudes which is an individual level variable. By in the firm. The characteristics of samples in articles or
this, we try to enrich the theoretical background of SP. approaches of researchers to SP, form some streams in
The larger the firm, the more likely it is to have a formal SP literature. Many papers are case–based studies,
succession planning program in place (McConnell, 1996). involving examination of effects of SP on organizations
As the firm size increases, the number of key or critical and its characteristics in some companies thought to
positions increases, resulting in mounting pressure to have succession planning systems in place and prescribe
institute formalized procedures that plan succession universal instructions (Garman and Glaw, 2004; Ip and
processes. Therefore, it is better if we study SP in large Jacobs, 2006). Another stream include research written
organization context. Due to great share of government in usually by practitioners with various backgrounds discuss
the Iran economy, the sample of this paper includes large importance and general consideration and suggestions
Iranian governmental firms. during implementation of SP (Robinson, 2005); about
This paper at first, offers a reasonably comprehensive succession of museum managers; Dalton (2006) about a
Farashah et al. 3607

recipe for succession planning. Research on SP in SMEs done well (Diamond, 2006). Awareness and communi-
is another stream with a considerable volume. The cation is another issue in process management of SP. It
process of selecting successor for founder–CEO among seems that, the best state for both organization and
family members (Griffeth, 2006), factors behind the individual is that issue raise and discuss openly based on
selection (Tatoglu et al., 2008), and individual charac- a transparent posted process (Greer and Virick, 2008).
teristics of successor (Sharma et al., 2003) are examples Continuous evaluation is important in process manage-
of subjects of research. In general, research on process ment. Appropriate criteria for SP program include a
and operation of SP can be described as scattered. number of successors for a key position; percentage of
Succession planning process includes three main vacancies filled internally, average number of successors
components. The first component is selection of for a key position, number of key positions that have one
candidate based on previous experience and background or two developed candidate, satisfaction of successors,
among and formation of talent pool (Rothwell, 2010). By and rate of change in succession pool (Greer and Virick,
this, we make sure that each key position has alternative 2008; Fulmer and Conger, 2003).
potential successors and each talent has multiple
potential promotion paths (Byham et al., 2002). The trend
in scope of SP is expanding it to cover all the positions Concept of extensiveness of succession planning
not just top managerial positions. It has shown that
companies considering lower levels have better profita- As mentioned, in literature there are many suggestions
bility (Garmen and Glaw, 2004). In case of not including for implementation of SP process and practice in
all the organization, it is very important to identify critical organizations. Trying to consider all of them in our
positions which are essential for the organization, research, we made up variable of ‘extensiveness of
department, division, work unit, or team to achieve the succession planning’ and defined it as the degree of
necessary work results (Ibarra, 2005). Strategic plan can compliance of organization SP practice of best practices
be a guideline for this aim. Beyond identifying what skill mentioned in literature. Table 1 summarizes the best
sets and knowledge bases are required for key positions, practices for each component of SP.
it is crucial that, the succession plan provides a method
or plan for providing employees the opportunity for Career attitudes and succession planning
professional development. After selecting the talents, the
role of development of successor as a second Career is a very useful concept for connecting people
component of SP becomes clear. and organizations (Shein, 1978). Aligned with the aim of
Identifying development plan and follow–up is a this paper to measure the effect of SP on individual level,
mandatory part of process (Rothwell, 2002). The plan we considered three career attitudes as our research
should be tailored to the individual needs and interests of dependent variable. Career success is defined as
successor (Patton and Pratt, 2002). Best development “positive physical and psychological outcomes of job
methods include 360–degree feedback, executive related experiences and activities” (Greenhaus and
coaching, mentoring, networking, job assignments and Callanan, 2006). Objective career success is one
action learning (Groves, 2007). The third component of dimension and includes achievements visible to the
SP process is change management and process others like income and promotion. Another dimension of
management, including function and sub–processes like career success is subjective success and reflects the
strategic view of SP, management commitment, imple- internal satisfaction and positive emotions. Theories of
men-ation considerations etc. Succession plan makes organizational psychology and career choice focus on
sure that, organization has access to required human fitness between individual and organization
resource, quantitatively and qualitatively. This plan will characteristics which lead to job satisfaction (Seibert,
determine promotion opportunities and developmental 2006).
needs of candidates and build management commitment
(Christie, 2005). But the problem is that, while companies Hypothesis 1: In organizations with more extensive
may have SP in place, they may fall out of sync with what succession planning system including more extensive
the company needs to grow or expand into new markets. process and change management of SP (H1a), more
Therefore, it is very vital to link succession plan to extensive practices for selection of successor (H1b) and
business strategy to obtain need kind of people with the more extensive practices for development of successor
needed set of skills for the future. (H1c), employees’ perception of career success is
However, this linkage has not been achieved in real greater.
world even in organizations with best succession
planning (Karaevil and Hall, 2003). Management Satisfaction of promotion process considered as emo-
commitment like any other organizational–wide program tional and cognitive evaluation of events, plans, policies
is critical for successful implementation of SP. Without of promotion system and perception of opportunities and
the support, SP is not executable even if design phase is intensity of promotion build the satisfaction of promotion
3608 Afr. J. Bus. Manage.

Table 1. Best practices of succession planning.

Succession planning process


Best practices Source
component
Top management participation and support
Setting specific goals
Measuring real progress against goals regularly and defining correction plan
Designing SP based on internal needs assessment and external benchmarking
Centralized structure and formal approach Ley (2002); Conger and Fulmer (2003); Rothwell
Having full–time responsible person for SP (2010); Karaevli and Hall (2003); Diamond (2006);
Process and change management
Detailed SP planning including work breakdown and schedule Ibarra (2005); Waymon (2005), Jarrel et al.
Evaluation of personal development of successors (2007); Greer and Virick (2008); Wolfred (2008)
Budgeting of SP
Considering motivations and rewards for successors
Considering motivations and rewards for mentors
Linking SP to business strategy

Extend SP to all organizational levels


Identification of critical positions and prioritizing them in SP Christie (2005); Diamond (2006); Burns–Martin
Selection of successor (2002); Byham et al. (2002); Larson (2005);
Periodical evaluation of employees Diamond (2006)
Establishing performance appraisal system

Establishing a system for employees’ competency gap analysis


Establishing a system to discover employee potentials vs. current performance
Developing career and personal development plans Greer and Virick (2008);
Establishing system of identification of future job competencies Patton and Pratt (2002); Ingraham and Getha–
Development of successor
Linking SP to training plan Taylor (2004); Grove (2007); Saungweme and
Linking SP to persona interests and careers Naicker (2009)
Extensive use of on the job training
Career Workshop

process (Sanborn and Berger, 1990). Past organizational goals which lead to more more extensive process and change management
promotions and future opportunities lead to the satisfaction of promotion (Russel, 1991). of SP (H2a), more extensive practices for
evaluation (De Souza, 2002). Succession selection of successor (H2b) and more extensive
planning makes employees able to decide about Hypothesis 2: In organizations with more practices for development of successor (H2c),
their career and adjust their career goals with extensive succession planning system including employees’ satisfaction of promotion process is
Farashah et al. 3609

Table 2. Reliability of questionnaires.

Crunbach’s
Variables Dimension
alpha
Process and change management 0.905
Extensiveness of
succession planning Selection of successor 0.705
Development of successor 0.703

Satisfaction f promotion process 0.934


Career attitudes Career success promotion 0.919
Perception of job plateau 0.914

greater. Feldman and Weitz (1988) defined perception of improvement areas, level 4 points out that best practice currently is
job plateau as the likelihood of having more responsibility in a state of implementation or exists informally/explicitly with
acceptable functionality and finally level 5 of maturity demonstrates
and more challenge in future duties. They combined perfect running of the best practice. At the end of the questionnaire,
structural and job content dimensions into one concept. a general question asked about overall maturity of SP system in the
Structural plateau occurs when it is unlikely that an organization. Questionnaires were filled in the presence of authors.
employee will receive additional hierarchical promotions They answered respondent questions and described ambiguities of
and job content plateaus arise from frustrations with more respondents. Career attitudes questionnaire adopted from Quinn
developmental aspects of jobs in that, it is the point an and Staines’ (1979) promotion satisfaction measure, Cox and
Harquail’s (1991) career success measure and Milliman’s (1992)
individual (Heilmann et al., 2008). Development compo- job content and Structural plateau measure.
nent of SP tries to create opportunities of growth and Divergent and convergent validity of measure of succession
learning, thus decrease plateau perception of both planning extensiveness were tested by checking the correlation of
dimensions (Allen et al., 1999). each question with its corresponding dimension and other dimen-
sions. The most correlated dimension for each question was its
Hypothesis 3: In organizations with more extensive proposed dimension therefore validity of questionnaire approved.
Reliability tested by Crunbach’s alpha calculation. Alpha coefficient
succession planning system, including more extensive and correction has been shown in Table 2. To have an acceptable
process and change management of SP (H3a), more alpha coefficient we deleted item 13, extend SP to all organizational
extensive practices for selection of successor (H3b) and levels, and item 20, establishing system of identification of future
more extensive practices for development of successor job competencies from the questions. Parallel technique also
(H3c), perception of job plateau among employees is confirmed reliability of extensiveness of SP. We compared the
results of extensiveness obtained from 24–item questionnaire with
less. one overall question about maturity of SP. The correlation of the
two groups of result was significant at a confidence level of 99%.
METHODOLOGY
Sample
Measures
Data gathered in 30 organizations which were subsidiaries of one of
Due to Clark and Watson (1995), at the first step to develop precise the ministries of the Iranian government. These organizations each
and detailed description of the concept of extensiveness of SP had more than 300 employees and had a strategic role in accom-
system, we examined the approaches to the concept in the plishing the mission of the ministry. Human resource managers or
literature. As mentioned earlier, majority of researchers approached organization development managers answered the succession
the SP by suggesting and prescribing best practices. Aligned with planning extensiveness questionnaire while authors were
their approach, we developed the concept of extensiveness of SP describing the best practices and were discussing the current
and defined it as compliance of organization SP system with situation of best practice in the organization, to create a common
recognized best practices. To measure this variable, a 24–item understanding of the questions and selecting the right maturity
questionnaire was developed. Each item measured the level of levels. The data from 23 organizations used for hypothesis
maturity of best practices of Table 1 in a scale of 1 to 5. Questions analysis. 152 employees from 600 key position holders in these
organized in three areas of succession process: process and organizations reported their career attitudes. The average work
change management of SP with 14 items, section of successor with experience of respondents with their current employer was 13.3
4 items and development of successor with 8 items. For content years and they had experienced 4 promotions during that period in
validation of questionnaire, three human resource instructors average.
validated the association of item to three components of SP.
State of each best practice evaluated in a 1 to 5 maturity level in
which level 1 means that best practice does not run in the Analysis
organization, level 2 means that best practice is in the stage of
need assessment and priority determination, level 3 shows that the Correlation analysis and for further support of results, stepwise
best practice is in the design process or it exists but with many linear regression analysis were used.
3610 Afr. J. Bus. Manage.

Figure 1. Histogram of SP extensiveness in 23 sample organization.

RESULTS relationship between succession planning and career


success is significant (r = 0.26, p < 0.05) but SP
The extensiveness of SP in 23 organizations has been extensiveness describes only about 7% of variance in
shown in Figure 1. The majority of organizations have career success. Results of correlation and regression
extensiveness between 2 to 3 in the scale of 1 to 5. The analysis partially support H1. Linear stepwise forward
least level of maturity of practice in sample belonged to regression analyses results shows that, only relationship
practices of linking SP to the strategy, budgeting of SP, between SP process and change management and
career workshop for guiding personal development and satisfaction of promotion process is significant (r=0.19, p<
career choice and considering motivations and rewards 0.05) and supports H2c.
for successors. Practices of appraisal system, involve-
ment and support of top level managers, usage of on the
job training and prioritizing positions for implementation of DISCUSSION
SP had greatest level of maturity. To analyze the
hypothesis, we checked the significance of correlation As outcome of this research, we offer practitioners some
between dimensions of succession planning extensive- useful tools. For implementation of succession planning
ness and career attitudes, Table 3 shows the results. we recognized best practices that should be considered
Table 3 shows a significant correlation between SP in design phase of succession planning. Also, the scale
extensive and its dimensions of process and change of SP succession planning developed and validated. It
management and development of successor with three can be used to gain a better understanding of status quo
career attitudes. Perception of job plateau does not show of SP in organizations and gap analysis which is
any correlation with SP extensiveness. Career success generally one of the early stages of every organizational
correlates to only one dimension of SP extensiveness, development project. The effects of succession planning
development of successor. Therefore, we have empirical on career attitudes as the main aim of research have
evidence for supporting hypothesis H1c, H2, H2a, and been shown in Figure 2. Job plateau is not correlated
H2c and refuting other hypotheses. The relation between with succession planning. This means developing a
variables has been demonstrated in Figure 2. To further process for managing progress and movement of
support the relation found in the correlation, we used employees between jobs does not necessarily lead to
multiple linear regression analysis. Results are shown in perception of challenge in the work. It seems content and
Tables 4 and 5. Regression analysis shows that, the characteristics of the job and techniques like job
Farashah et al. 3611

Table 3. Correlation between SP extensiveness and career attitudes.

Perception of career Satisfaction of Perception of job


Correlation
success promotion process plateau
*
Correlation coefficient 0.090 0.166 0.074
Succession planning extensiveness Sig. (1–tailed) 0.135 0.021 0.184
N 152 152 152

* *
Correlation coefficient 0.135 0.190 0.113
Process and change management Sig. (1–tailed) 0.049 0.009 0.083
N 152 152 152

*
Correlation Coefficient 0.041 0.156 0.070
Selection of successor
Sig. (1–tailed) 0.309 0.028 0.196
N 152 152 152

* *
Correlation coefficient 0.162 0.210 0.002
Development of successor
Sig. (1–tailed) 0.023 0.005 0.492
N 152 152 152
**Correlation is significant at the 0.01 level (1–tailed). *Correlation is significant at the 0.05 level (1–tailed).

Figure 2. Effects of succession planning on career attitudes.

enrichment and employee empowerment are more sense because being a candidate for future promotions
effective for less perception of career and job plateau. does not guarantee promotion and consequent
For a better understanding of this result, considering satisfaction according to expectancy theory. To satisfy
structural dimension of job plateau separate from job employees, candidates should be supported and deve-
content dimension in further research and considering loped according to their career interests and exploited in
fitness between strategy and SP and fit between people real positions. Career success is correlated with more
and job was suggested. Relationship between satis- extensive successor development. According to the
faction of promotion and extensiveness of SP and its two definition of career success, positive outcomes of job
dimensions can be justified by concept of procedural related experiences and activities (Greenhaus and
justice. Callanan, 2006), we conclude that personal development
An extensive succession planning practice with and learning is a valuable reward for employees. By
establishing formal procedure and open communication founding and planning situations that personal
persuade employees that limited resources, here, attrac- development can help organizations perform better, both
tive positions and job distribute fairly. Lack of relation organization and employees mutually can benefit.
between selection of successor and satisfaction makes According to Ingraham and Getha–Taylor (2004) who
3612 Afr. J. Bus. Manage.

Table 4. Results of regression of SP extensiveness and career success.

Adjusted Std. error of Change statistics


Model R R Square
R square the estimate R Square change F Change df1 df2 Sig. F change
1 0.258 0.067 0.041 1.354 0.067 2.623 4 147 0.037
Predictors: (Constant), SPExtensiveness, SPDevelop, SPSelection, SPPrc and ChangeManag; Dependent variable: Career success.

Table 5. Results of regression of SP extensiveness and satisfaction of promotion process.

Adjusted Std. error of Change statistics


Model R R Square
R square the estimate R Square change F Change df1 df2 Sig. F change
1 0.189 0.036 0.029 1.359 0.036 5.529 1 150 0.020
Predictors: (Constant), SPDevelop, Dependent variable: Satisfaction of promotion process.

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