Succession Planning Essay
According to Bratton and Bratton, (2001. p. 48), succession planning identifies specific people to fill key positions throughout the organization. It almost always involves the use of a replacement chart. It is basically a plan for identifying who is currently in post and who is available and qualified to take over in the event of retirement, voluntary leaving, dismissal or sickness. This is how Allan Moss was appointed the Chief Executive Officer and Managing Director of Macquarie Bank.
Under an optimal succession planning system, individuals are initially identified as candidates to move up after being nominated by management. Then performance appraisal data are reviewed, potential is assessed, developmental programs are formulated and career paths are mapped out. By the succession planning showing both the incumbents and potential replacements for given positions it will help the bank plan for recruitments wisely.
This is what in the past has led to Macquarie’s success as one of the biggest banks in Australia as a result of the manpower capabilities. It will ensure that selection procedures are adequate and that suitable employees are more likely to stay than the unsuitable. This will lead to a review of the current practice of employing graduates straight from the
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Commitment manpower planning is a relatively recent approach to HR planning, designed to get managers and their employees thinking about and getting involved in HRP. In addition, CMP provides a systematic approach to HRP. It generates three reports that supply information such as the supply of employees and the promotability and placement status of each, the organizations demand, arising from new positions and turnover and projected vacancies for each job title and the balance or status of supply versus demand, including the name, job and location of all those suitable for promotions.
Other tools and techniques of human resource planning include ratio analysis where two basic premises apply; first, an organization is vital in terms of its human resources to the extent that it has people with high potential who are promotable, either now or in the future and backups have been identified to replace the incumbents. Secondly, an organization is stagnant to the extent that employees are not promotable and no backups have been identified to replace the incumbents.
Key to Macquarie’s success should be a unique management style that should be intended to provide individual businesses with a balance between operating freedom, controls on risk limits and observance of professional standards. This philosophy will encourage a sense of ownership and entrepreneurial endeavor among its employees, and produce a stream of major financial innovations throughout Macquarie’s history. According to Gratton, Hope-Hailey and Stiles, (1999. p. 176), there is an integrated linkage between business and human resource plans.
Human resource and line managers work jointly to develop business plans and determine human resource needs, analyze the work force profile in terms of future business strategies, review emerging human resource issues, and develop programs to address the issues and support the business plans. Walker, (2005, p. 61) argues that such joint efforts occur when human resource planners convince corporate business planners that human resources represent a major competitive advantage and this should help Macquarie’s HRD to move towards achieving the organization’s objectives.
It has been quite effective evident from the growth of the bank’s operations, owing in a big part to the HRD. Other methods include HR demand forecasting, analyzing existing human resources and performance appraisal. Demand forecasting is the process of estimating the future number of people required and the likely skills and competence they will need. Macquarie bank has diversified into many different products other than just banking facilities and this would require estimates of the needed number of employees and skills of the anticipated growth.
If plans call for more efforts in the international market in the future, then decisions must be made regarding the utilization of the host country’s nationals. There are several things to consider when forecasting personnel needs, however. The expected demand for the bank’s product or service is paramount. These sales are generally estimated first. Then the staff required to achieve this volume of output is estimated.
Other things to consider are projected turnover in terms of resignations and terminations, quality and skills of employees in relation to the changing needs of the organization, decisions to upgrade the quality of products or services that enter into the market, technological and other changes resulting in increased productivity, and the financial resources available to the department. Top management will need to make estimates of future staff needs based primarily on past experience such as the growth rates of the bank for all the years it has been in operation.
This should be based on future workloads, which will help in deciding how many people would be needed. The forecasts should be made by one man and reviewed and agreed with departmental managers. The best way to managerial estimates would be by a set of both top-down and bottom-up processes. The two forecasts would then be reviewed by a HR planning committee and approved. Work study techniques can be used when it is possible to apply work measurement to calculate how long operations should take and the number of people required starting from a company’s production budget.
Modeling, a mathematical technique using computers and spreadsheets can help in the preparation of demand and supply forecasts. Further recommendation would be the use of computer programs to forecast personnel requirements. Hiring good people was probably the most important part of the Human Resources Department in Macquarie bank. A Macquarie employee has an inherent exceptional quality that gets them in the door. The management philosophy at Macquarie, which is called freedom within boundaries, is designed to bring out the entrepreneur in their employees while managing risk.
Key risks such as credit, market, some operations and ethical standards come under central control, but a Macquarie operative is given a fairly free hand to go for it or to be more in keeping with the bank’s tone. The model gives entrepreneurs the opportunity to do what they want to do with the back-up of Macquarie’s resources. This is the back-up that explains why so many smaller operations fail despite a damn good market idea and a highly motivated initiator.
The management philosophy has been about having a small business environment with the strengths and resources of a large organization. Although the study concentrated on three human resources planning and development methods, it gave a brief description of the others. All these methods which include skills inventory, succession planning, commitment manpower planning, human resource demand forecasting, analyzing existing human resources and performance appraisal among others are effective in meeting the bank’s organizational objectives.
Among the effectiveness would be having a reliable database of employees to enable faster transfers or placement for new start ups. Succession planning would enable replacement in case of employees who are separated from the bank. Demand and forecasting would enable adequate supply of employees for the bank’s operations while performance appraisal would create better working employees. The effectiveness of all these would work towards the bank’s achievement of its organizational objectives.