SUCCESSIONPromoting Organizational

Sustainability

PLANNING

Edited by Pamela A. Gordon, Julie A. Overbey

Succession Planning

Pamela A. Gordon • Julie A. OverbeyEditors

Succession PlanningPromoting Organizational Sustainability

ISBN 978-3-319-72531-4 ISBN 978-3-319-72532-1 (eBook)https://doi.org/10.1007/978-3-319-72532-1

Library of Congress Control Number: 2017964619

© The Editor(s) (if applicable) and The Author(s) 2018This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed.The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use.The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Cover illustration: Yagi Studio / Getty Images

Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer NatureThe registered company is Springer International Publishing AGThe registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

EditorsPamela A. GordonUniversity of Phoenix Pembroke Pines, FL, USA

Julie A. OverbeyUniversity of PhoenixElkhorn, NE, USA

To Connor Anthony Gordon, the Gordon family’s succession plan. All my love.

P.A.G.

To my brother Thomas Keenan and my sister Linda Bayes. You are my heroes and I love you both.

J.A.O.

vii

“He who fails to plan is planning to fail.” This quote, and others similar to it, are attributed to Benjamin Franklin, Winston Churchill, and author Alan Lakein. Regardless of the source or version, the statement is an apt introduction to the consideration of succession planning. The lack of a sophisticated and comprehensive succession plan for an organization can lead to confusion, turmoil, and in some cases cessation of the business.

It is not only one type of business that requires careful succession plan-ning. Leaders in all types of organization including for-profit, non-profit, healthcare, governmental, and educational institutions need a clear path to select, develop, plan and promote new leaders. The authors contributing to this book have considered the many elements of succession planning, the varying environments, associated challenges, and rewards accompanying it. The examples in this book are all related to succession planning efforts within the United States of America and based upon current American business practices.

In Chap. 1, Kevin Bottomley introduces the concept of sustainable lead-ership as an interdisciplinary method to accomplish succession planning. The concept of sustainable leadership provides a framework for leaders to develop specific strategies and tactics to address the long-term needs of the organization. The chapter contains vignettes to help clarify specific points.

Irina Weisblat provides a literature review in Chap. 2 that considers theo-retical foundations, research on the topic, and best practices. This chapter also illuminates strategies and tactics for the development of future leaders.

In Chap. 3, Rick Johnson, Donna Pepper, Joan Adkins, and Alexius Emejom discuss succession planning from themes that emerged from

IntroductIon

viii INTRODUCTION

document data. Their goal was to identify succession processes and strategies that assist candidates with future succession, such as value-added competencies, specialized knowledge, leadership capabilities, and performance- based success.

Joseph Keller focuses on the implications of succession planning man-agement in Chap. 4. He emphasizes the concept that succession manage-ment includes recruiting, talent management, employee training, and employee retention. He demonstrates how management at all levels is integrated into the succession planning process.

Suzanne Richins emphasizes the critical need to support talent develop-ment of professionals in the healthcare industry in Chap. 5. She also explores how leadership training programs are used as part of a succession planning process.

In Chap. 6, Donna Kjellander examines succession planning for the small business. She analyzes the options for a family owned business for succession planning related to exploring and handling family dynamics, and whether to consider an internal or external candidate, along with rec-ommended ideas for training the future successor.

Lillie Hibbler-Britt and Anna Wheatley investigate succession planning as it relates to family-owned businesses through a review of literature and discussions with family-owned business presidents. Chapter 7 focuses on the factors that affect the ability of family-owned businesses to participate in succession planning by concentrating on a comparison across countries and gender.

In Chap. 8, Sofia Loomis presents succession planning practices in a federal agency. The author’s case study provides insight on how succession planning occurs within the Department of the Navy to adequately facili-tate the forecasted high number of retirements and retirees’ knowledge transfer between 2016 and 2021.

Luis Gallardo’s Chap. 9 reveals the impediments to succession planning caused by variables such as politics, stakeholders, intra-organization dis-juncture, demographics, and legal constraints. He offers recommenda-tions to ultimately improve public sector succession planning.

Succession planning within the business information technology (IT) arena is presented in Chap. 10 by Loyce Chithambo. A warning is expressed throughout the chapter that without proper succession plan-ning and solid data preservation strategies companies are at risk of losing the knowledge acquired by experienced business information technology individuals and teams.

ix INTRODUCTION

In Chap. 11, Tony Ray Ruffin focuses on reviewing succession plan-ning strategies for leaders in healthcare organizations. The goals of this chapter are to identify common themes and strategies for best practices in the twenty-first century to educate and assist potential, current, and future leaders in healthcare organizations using succession planning for contin-ued growth and future development.

Cheryl Anderson introduces the feminist perspective of implicit bias in succession planning in healthcare in Chap. 12. While more women work in health care than men, there is gender inequality with more men in lead-ership roles. The current systems in place tacitly endorse males rising to leadership roles supported by succession planning beliefs. The chapter explores disruptive leadership, or not following the status quo, which may be more beneficial to healthcare organizations.

In Chap. 13, Tamara Reeves considers research-based best practices and perspectives on the need for small business owners to engage in suc-cession planning within the healthcare sector from a practical perspective. The author presents known barriers for succession planning within the healthcare sector for small business owners and recommendations for overcoming them from the perspective of a small business owner.

Lili Melton’s Chap. 14 contains a rationale for kindergarten through higher education (K12–HE) succession planning research to be grouped in one educational framework, Planning, Recruiting, Empowering, Preparing, Guiding, and Off to work (PREPGO). This framework for the educational sector is an approach to assist leaders with organizational sus-tainability and to promote solutions to educational challenges.

Case studies in succession planning for K-12 school districts are pre-sented by Arfe Yucedag-Ozcan and Sharon Metcalfe in Chap. 15. Research supports the claim that strong and stable leadership is one of the funda-mental elements that influence school effectiveness and student achievement.

Vernesia Wilson’s Chap. 16 offers empirical studies that address succes-sion planning models/maps, ethical considerations, and best practices for utilizing these models within employment sectors. Results from the col-lected data may help guide organizational activities and strategies related to retaining employees while also planning for succession.

In Chap. 17, Anthony Carbo and Karin Storm promote ethics as a vital component of positive succession planning. Throughout the chapter, the authors posit that prospective leaders should be transparent about the general moral principles they believe should take priority.

x INTRODUCTION

Paul Wendee, Fiona Sussan, and Ravi Chinta provide the epilogue to succession planning in Chap. 18. The authors propose a value driver the-ory approach to understanding the enterprise/shareholder value creation process, which is an integral part of succession management. They describe succession planning as a strategic process and discuss its impact on the value creation capability of an organization.

We hope our readers find this book on succession planning informative and beneficial. The topic coverage that spans the organizational disciplines of business, education, and healthcare makes this a comprehensive tome on the subject. We hope that following the strategies, tactics, and best practices presented here help to formalize the succession planning struc-ture in your organization.

Pamela A. GordonJulie A. Overbey

xi

contents

1 Developing Sustainable Leadership Through Succession Planning 1Kevin S. Bottomley

2 Literature Review of Succession Planning Strategies and Tactics 11Irina A. Weisblat

3 Succession Planning for Large and Small Organizations: A Practical Review of Professional Business Corporations 23Rick D. Johnson, Donna Pepper, Joan Adkins, and Alexius A. Emejom

4 Succession Planning Management 41Joseph Keller

5 Succession Planning in Non-Profit Healthcare Organizations 49Suzanne Moss Richins

6 Succession Planning in the Small Business: The Good and the Bad 63Donna M. Kjellander

xii CONTENTS

7 Succession Planning in Family-Owned Businesses 75Lillie M. Hibbler-Britt and Anna Copeland Wheatley

8 Federal Agency Succession Planning 89Sofia G. Loomis

9 Promoting Public Sector Sustainability Through Participation 105Luis Gallardo

10 Succession Planning Research Within the Business/IT Arena 125Loyce Chithambo

11 Strategies for Healthcare Organizations in Succession Planning 137Tony Ray Ruffin

12 The Feminist Perspective of Implicit Bias in Succession Planning in Healthcare 155Cheryl LaFollette Anderson

13 Are You Preparing a Successor? Succession Planning in a Small, Private Practice, Healthcare Setting 165Tamara J. Reeves

14 Succession Planning Research in the Educational Sector 175Lili C. Melton

15 Case Studies in Succession Planning for K12 Districts 187Arfe Yucedag-Ozcan and Sharon K. Metcalfe

16 Succession Planning Models, Conceptual Maps: Ethical Considerations and Best Practices 199Vernesia Wilson

xiii CONTENTS

17 Preventing Negative Conflict in Leadership Succession: Ethical Considerations and Practices 213Anthony R. Carbo and Karin J. Storm

18 An Epilogue to Succession Planning: Understanding the Value of Your Enterprise 223Paul Wendee, Fiona Sussan, and Ravi Chinta

Index 239

xv

edItors and contrIbutors

the edItors

Pamela A. Gordon has a PhD in Business Administration with a special-ization in Management and three MA degrees (in Human Resource Management, from Nova Southeastern University; in Organization and Leadership, from Capella University; and an MBA with a specialization in Marketing from Nova Southeastern University). She has 22 years of experi-ence in the pharmaceutical industry at GlaxoSmithKline, 17 of which were in corporate management/leadership positions. She has more than 14 years of teaching experience and works for University of Phoenix, Arizona, foster-ing faculty development. Her research interests are in the areas of manage-ment, organizational behavior, marketing, and human resource management. She is currently a Senior Research Fellow in the Center for Global Business Research at the University of Phoenix and a member of Delta Mu Delta International Honor Society in Business Administration.

Julie A. Overbey has 20 years of experience in the contract management field as works as the Director of Contracts for NTT Security (US) Inc. In this role Julie leads the contract group. Major responsibilities include negotiation and review of corporate contracts and agreements, trademark and patent management, and corporate insurance program management. Julie retired from the US Air Force after more than 20 years of active and reserve service. During her years in the Air Force, she served as a chapel manager and had three command level assignments. She teaches courses

xvi EDITORS AND CONTRIBUTORS

in leadership and management in the School of Advanced Studies at the University of Phoenix, serves as a dissertation chair and committee member, and is affiliated with the Center for Workplace Diversity. Additionally, Julie serves as the lead faculty/area chair for the Doctorate of Management program and serves as an SME for leadership and man-agement course revisions. In 2016 Julie was named the School of Advances Studies Faculty of the Year.

contrIbutors InformatIon

Joan  Adkins is currently a faculty member at Colorado Technical University. Along with teaching, she works as an academic coach for doc-toral students in the academic discipline of business. She is also an entre-preneur teaching small businesses in her area how to grow and scale their business. Dr. Adkins also coauthored the book chapter “Project-based organizational maturity in architecture, engineering, and construction: A theoretical premise for practical purposes.”

Cheryl  LaFollette  Anderson has a BA in Physical Therapy from the College of St. Scholastica, Duluth, MN, an MBA from the University of St. Thomas, St. Paul, Minnesota, and a PhD from Walden University, Minnesota. She has been a licensed physical therapist since 1979. She has held roles as Director of Rehab for two hospital systems; Director of Operations of a national rehab agency; corporate consultant to a long- term care corporation; Medicaid health plan executive; research coordina-tor for a VA medical center; and adjunct professor.

Kevin Bottomley serves as Lead Faculty Area Chair for Research in the School of Advanced Studies at the University of Phoenix. He teaches doc-toral research methodology courses and serves as a dissertation committee chair. Dr. Bottomley received his PhD in Leadership Studies from North Carolina A&T State University. His current research focuses on sustain-able leadership, decision-making, and millennials in leadership.

Anthony R. Carbo is a deputy sheriff, gang officer, and terrorist liaison for the San Bernardino County Sheriff ’s Department in California. He manages communication among classification officers from five different correctional institutions. Dr. Carbo earned his Master’s degree from California State University, San Bernardino. He earned his PhD in Public Safety with a specialization in Criminal Justice from Capella University, Minneapolis. He is currently a Criminal Justice faculty member.

xvii EDITORS AND CONTRIBUTORS

Ravi Chinta is Chair and Professor, Management, Huizenga College of Business and Entrepreneurship, Nova Southeastern University, Florida. Professor Chinta has 39 years of (17 academia, 22 industry) work experi-ence and was involved in healthcare-related venture capital activities, and in large global firms such as IBM, Reed-Elsevier, LexisNexis, and Hillenbrand Industries. He has published more than 80 articles in journals such as Academy of Management Executive, Journal of Small Business Management, and Long Range Planning.

Loyce Chithambo has a BS degree in Computer Science from Bluefield State College West Virginia; an MA in Information Systems from City University Seattle, and a PhD in Management in Information Systems from the University of Phoenix, among other degrees. She works as a consultant in the information technology industry, and is a faculty mem-ber at the University of Phoenix. She teaches information technology/systems courses and is a content area expert in Information Technology Doctoral Research Studies at Grand Canyon University, Arizona.

Alexius Emejom is currently an Organizational Development practitioner and consultant for small businesses, medium and large businesses, and not-for-profit organizations. With his background as a mechanical engineer, he works as a business executive at an engineered and manufactured products company. Dr. Emejom is also a project management professional, and was an adjunct faculty for Colorado Technical University teaching project man-agement courses for over six years. He volunteers for the Project Management Institute, Orange County chapter in Southern California.

Luis Gallardo is a faculty member for the University of Phoenix’s College of Information Systems & Technology. Gallardo has a Master’s in Public Administration from Valdosta State University, Georgia, a Juris Doctorate from the University of Puerto Rico, and has written extensively on democ-racy in public institutions and citizen participation. He has previously managed city-level government agencies and is currently a consultant for municipal governments and non-profit organizations.

Lillie Hibbler-Britt is an accomplished scholar practitioner with over 24 years in the private sector working for Fortune 500 companies and more than six years of teaching experience. She is a Summa Cum Laude gradu-ate of Claflin University, South Carolina. She received an MBA from Bowling Green State University, Ohio, and a PhD in Organizational Behavior from Capella University, Minnesota.

xviii EDITORS AND CONTRIBUTORS

Rick  D.  Johnson is currently a faculty member at various universities including the University of Phoenix. As a practitioner, he is a design pro-fessional and management expert specializing in the architecture, engi-neering, and construction professions. Dr. Johnson also coauthored the book chapter “Project-based organizational maturity in architecture, engi-neering, and construction: A theoretical premise for practical purposes,” to be released by IGI Global in 2018.

Joseph  Keller is a full-time professor at Strayer University, Virginia. Previously, he worked as a middle-manager for various sales and manufac-turing corporations. As an entrepreneur, he has owned and sold several businesses.

Donna Kjellander spent over 20 years in the automotive industry, before switching careers to work in academia. She has been developing and edu-cating adults for over 30 years utilizing a variety of mediums from class-room and online to hybrid. She has a bachelor’s in eBusiness Management, an MBA, and is a doctoral candidate in Psychology with an emphasis on organizational leadership.

Sofia Loomis has served over 18 years for the Department of Defense in both the military and federal sectors. Her educational background includes Electronic Technician schools (Navy), a BS degree in in Political Science from the United States Naval Academy in 1999, an MS degree in Urban Planning from the University of Arizona in 2009 and DM from the University of Phoenix in 2017.

Lili C. Melton is an advocate of comprehensive approaches to teaching, learning, and leading. She has 20 years of service in kindergarten through 12th grade and higher education. Lili has earned a PhD in Education from Capella University, an MBA from the University of Phoenix, an MA in English from National University, an MA in Pupil Personnel Services from Azusa Pacific University, and an MA in Curriculum and Instruction along with credentials in school counseling and teaching from Chapman University. As a promoter of organizational sustainability, she values the educational succession planning that is showcased in Chapter 17.

Sharon K. Metcalfe has a BS degree in Biology, an ME in Secondary Education from Eastern Nazarene College, and an EdD in Educational Leadership/Curriculum and Instruction from the University of Phoenix. She has taught high school science (biology, chemistry) in public school

xix EDITORS AND CONTRIBUTORS

and an alternative high school for ten years and has been teaching in higher education/teacher preparation for more than 25 years. She is currently Associate Dean for Education Programs/Director of Teacher Education at Mount Vernon Nazarene University in Mount Vernon, Ohio.

Donna  Pepper is a faculty member at multiple universities, and is an academic alumni mentor with the University of Phoenix. Dr. Pepper coau-thored the book chapter “Project-based organizational maturity in archi-tecture, engineering, and construction: A theoretical premise for practical purposes.” Her specialization is management, and her secondary special-ization is organizational leadership and change.

Tamara  J.  Reeves is a licensed clinical psychologist in the state of Oklahoma, and is also an online instructor through the University of Phoenix. She enjoys running her own private practice conducting psycho-logical evaluations for individuals throughout the lifespan. She also volun-teers within her community through local non-profit organizations (Stop The Violence and Big Brothers and Big Sisters).

Suzanne  Richins is a leader in the healthcare industry. Her extensive background in nursing and hospital administration provides her with a unique insight into applying technology and innovation to improve the management of healthcare systems. Additionally, she was instrumental in the development of patient satisfaction standards while serving as the President of the Society for Ambulatory Care Professionals as part of the American Hospital Association and the Joint Commission Advisory and Technical Committee.

Tony Ray Ruffin has over 20 years of combined management experience and has a DBA from Argosy University. Colleges and universities to which he is affiliated include: University of Phoenix since 2012 in the School of Advanced Studies; Colorado Technical University since 2013 in the College of Business and Management; Grand Canyon University since 2017 in the College of Doctoral Studies; Ashford University since 2017 in the College of Health, Human Services, and Science; North Carolina Wesleyan College since 2017 in the Adult and Professional Studies Program.

Karin  J.  Storm is the lead Assistant Professor of Criminal Justice at Brandman University in Irvine, California. She is also a Certified Advanced Facilitator and Campus Faculty Assessment Liaison at University Phoenix where she teaches criminal justice. Dr. Storm earned her Bachelor and

xx EDITORS AND CONTRIBUTORS

Master of Science degrees in Criminal Justice from California State University, Long Beach. She earned her PhD in Educational Leadership from University of Phoenix.

Fiona Sussan is Chair for the Center for Global Business and Information Technology, School of Advanced Studies at the University of Phoenix. Her research has received awards from the American Marketing Association, Emerald, National Geospatial-Intelligence Agency, among others. Professor Sussan’s work has been published in Journal of Business Research, Small Business Economics, International Marketing Review, and Journal of Intellectual Capital, among others. Prior to her academic career, Professor Sussan worked in the finance industry.

Irina  A.  Weisblat is an Assistant Professor in the Forbes School of Business and Technology at Ashford University, California. Her academic career and professional experiences in business influenced her research interests that focus on educational effectiveness, business skills, global competencies, and innovative online instruction. Dr. Weisblat is a pub-lished author. She is a past President of the International Society of Business Education and a recipient of multiple awards for outstanding teaching and academic scholarship.

Paul  M.  Wendee is the Managing Director of Paul M.  Wendee & Associates, LLC.  Dr. Wendee has been an entrepreneur, investment banker, securities analyst, and private equity fund manager for 36 years. He publishes an award-winning investment newsletter, the Intrinsic Value Wealth Report. He is the creator of Value Driver Theory; teaches courses in business, investments, economics, entrepreneurship, and finance to uni-versity students worldwide; and founded the Value Driver Institute and Research and Educational Expedition Programs (VDI/REEP).

Anna  Copeland  Wheatley is an educator and entrepreneur with an extensive background in publishing and business. She received a PhD in English from the University of North Carolina at Greensboro.

Vernesia Wilson has been a Professor at the University of Phoenix since 2011. She is currently an Office Director in the Office of Teaching and Leading at the Mississippi Department of Education located in Jackson, Mississippi. Dr. Wilson has worked in the field of education for 15 years and public health for ten years. She has a Bachelor’s Degree in Business

xxi EDITORS AND CONTRIBUTORS

Education from Southern University, a Master’s Degree in Healthcare Administration from the University of Southern Mississippi, and a PhD in Community College Leadership from Mississippi State University.

Arfe  Yucedag-Ozcan has a BA in Educational Administration and Planning, an MS in Educational Research, and a PhD in Educational Administration/ Public School Leadership. She has taught in both ele-mentary schools and at higher education institutions for over 25 years, and has conducted research into higher education. She is currently work-ing on doctoral education programs for the School of Advanced Studies, University of Phoenix, Arizona.

xxiii

LIst of fIgures

Fig. 8.1 Retirement Key Player Communication Routing Model (Loomis, 2017) 101

Fig. 16.1 The District Management Council’s suggested succession model. This was developed as an example of succession plan development (Hanover Research, 2014) 202

Fig. 16.2 In and Out model contributions. This model indicates how internal and external components shift within succession for an organization (Sarabia et al., 2015) 203

Fig. 16.3 Six-step succession planning map. This provides a six-step process that may be conducted by leaders to examine strategies that lend to retaining employees 206

Fig. 18.1 The Theory of Value Drivers possibilities frontier and value driver chain 229

xxv

LIst of tabLes

Table 3.1 Theme response frequency and frequency percentages 33Table 14.1 Succession planning framework to promote organizational

sustainability: PREPGO 178

1© The Author(s) 2018P. A. Gordon, J. A. Overbey (eds.), Succession Planning, https://doi.org/10.1007/978-3-319-72532-1_1

CHAPTER 1

Developing Sustainable Leadership Through Succession Planning

Kevin S. Bottomley

The focus of this chapter is to discuss how to develop sustainable leadership through succession planning. The terms sustainable and sustainability are used in throughout much of the literature to describe concepts such as corporate social responsibility (CSR) and/or triple bottom line (TBL) (Smith & Sharicz, 2011; Wasdell, 2011; Wikström, 2010). However, the focus of the present chapter is to examine the concepts related to sustain-able leadership. The impact from a sustainable leader is evident even after a change in their leadership tenure (Hargreaves & Fink, 2006). In other words, the success of the organization does not rely on one charismatic leader. For simplicity, the term organization is used throughout this chap-ter to refer to a variety of businesses, corporations, governmental entities, and non-profits.

Succession planning is a long-term strategy employed by many organi-zations to promote organizational sustainability. However, organizations and their leaders are often evaluated using short-term effectiveness mea-sures such as profit margin, value to investors, or political fit, just to name a few. Because there is not one measure of leader effectiveness across the many types of industries, one must examine multiple measures of leader

K. S. Bottomley (*) School of Advanced Studies, University of Phoenix, Tempe, AZ, USA

2

effectiveness. Instead of viewing a leader as either effective or ineffective using a binary choice, one may alter this lens to examine leader effectiveness using an effectiveness continuum. Using this lens, effectiveness is examined between two poles of effective and ineffective with the leader’s perfor-mance falling at varying points on the continuum. Leader effectiveness is an important concept because it can have a direct impact on organiza-tional success. The vignette below provides an example of the effectiveness continuum in practice, where ineffectiveness in leadership can create broader issues within an organization.

Uber is an example of one type of organization that disrupted the status quo by incorporating technology, ride sharing, and independent drivers to create a global ride-sharing service. The type of business model employed by Uber proved to be effective (an example of organizational success). However, the popular press has covered leadership failures among a variety of startup companies, such as Uber, primarily because of issues related to the rise of “Bro-culture.” Bro-culture is a term used to describe negative behaviors associated with a hyper-masculine fraternity style culture. The culture has prevailed within many organizations that were founded by young males. Bro- culture has been toxic to the work environment and has been the downfall of the leader at Uber and possibly the company itself. The Bro-culture within Uber where the chief executive officer (CEO) had to resign and lawsuits have been filed provides one example of an organization publicly confronting the impact of the negative culture. The issue of Bro-culture within Uber shows that lead-ership was ineffective in terms of protecting the organization, as Uber devel-oped the corporate culture over time. While the issues at Uber provide an example of a clear failure of the leader at the top, it also indicates a clear systemic failure for the organization.

Since the 1990s there has been a warning provided across many indus-tries that baby boomers (a term used to describe those born between the years 1943 and 1960) (Strauss & Howe, 1991) will be retiring in large numbers, resulting in a leadership vacuum at all levels of the organization. These warnings are especially concerning at the top management team and C-levels within organizations. Baby boomers have not been as quick to exit the workforce as expected for a variety of reasons, such as their leader identity and the financial inability to retire owing to the Great Recession, among others. During the time when organizations were start-ing to plan for these expected retirements, the concept of succession plan-ning became popular. This was viewed as a strategic initiative to protect the organization against the unknown, similar to contingency planning.

K. S. BOTTOMLEY

3

The present chapter is segmented into five major sections: (1) sustainable leadership concepts; (2) staff training used toward leadership development; (3) leadership development used toward succession planning; (4) succession planning as part of the broader sustainable leadership concept; and (5) issues in succession planning.

SuStainable leaderShip ConCeptS

Hargreaves and Fink (2006) identified seven hallmarks of sustainable lead-ers: (1) depth—learning and integrity; (2) length—endurance and succes-sion; (3) breadth—distribution, not delegation; (4) justice—others and ourselves; (5) diversity—complexity and cohesion; (6) resourcefulness—restraint and renewal; and (7) conservation—history and legacy. Goolamally and Ahmad (2014) found five factors that school leaders needed to create sustainable leadership. These were: (1) integrity, (2) for-ward looking, (3) inspirational, (4) competence, and (5) self-efficacy. Although these concepts are examined in the field of education, the pres-ent chapter extends this work into other sectors and provides direction on how leaders can best sustain their organization long after they have left. Bottomley, Burgess, and Fox III (2014) proposed an interdisciplinary model of behaviors and skills that leaders may need to attain which could lead to sustainable leadership. While Raelin (2016) posited that “sustain-able outcomes are also shaped by sustainable practices” (p. 17), Santora, Sarros, Bozer, Esposito, and Bassi (2015) found that poor succession planning has a negative impact on the sustainability of non-profit organi-zations. The concept of sustainable leadership includes implementing pro-cesses and systems that support the culture even after a specific leader has left; sustainable leadership takes a strategic long view of the organization.

The formal positional leader is often credited for the success and/or blamed for the failure of an organization. When successful companies fall apart after the dynamic leader leaves, this indicates it is because no one was prepared to take on the mantle of leadership. The lack of those prepared to take on leadership responsibilities indicates a greater need to develop robust systems for internal staff training, leadership development, and ulti-mately succession planning.

Using the principles described by Hargreaves and Fink (2006), staff training is aligned with the principles of depth, length, and breadth. Leadership development is aligned with the principle of justice. Succession planning is aligned with the principles of diversity, resourcefulness, and

DEVELOPING SUSTAINABLE LEADERSHIP THROUGH SUCCESSION…

4

conservation. While these principles are not explicitly detailed within the chapter they are used implicitly in the following sections.

Staff Training Used Toward Leadership Development

The leadership in organizations uses a variety of staff training methods and tools to introduce employees to their new positions. While these methods and/or tools may go by varying names, such as new staff orientation and employee onboarding, the purpose is to clearly communicate the organi-zation’s culture, policies and procedures, and expectations. In addition to the onboarding process there may be other staff training events which require employee participation.

Internal staff training is one type of event that examines the knowledge, skills, and abilities (KSA) of an employee to do the immediate job. Many companies and organizations require a minimum level of each of these KSAs to enter the job, and then organization-specific KSAs are provided to staff through on-the-job training activities and/or continuing educa-tion. Those responsible for staff training are often looking for additional learning solutions to deliver training that is higher quality, more effective, and directly relates to the employees’ duties.

Once an employee is identified as having mastered the KSAs for his or her current role, organizational leaders often provide these employees with additional management training to allow for job growth and promo-tion within the organization. This type of training moves beyond the tra-ditional knowledge, skills, and abilities needed to do a specific job; instead, it becomes more general and transferable, to manage people transcending a variety of job functions. In addition to management training, employees may become exposed to leadership development activities.

Leadership Development Used Toward Succession Planning

Relational leadership theory provides a framework of leadership that goes beyond leader–follower relationships and views leadership as an emergent process (Uhl-Bien, 2006). Accordingly, Van Velsor (2008) indicated the complexity perspective on leadership development, examining leadership as emergent and moving beyond leadership simply as a person or position. One can see how leadership refers to the acts of the collective versus those of one positional leader. With this definition of leadership, one can see how developing those in the organization to take on the leadership

K. S. BOTTOMLEY

5

function may be important. Groves (2007) provided examples of success-ful companies who incorporated the leadership development process as part of their formal succession planning processes. These leadership development activities form the basis for succession planning.

One of the big differences between training and leadership develop-ment is that leadership development activities provide feedback as part of the process. By using feedback, those involved in leadership development programs can learn just as much about themselves as they can about leadership principles. Various forms of feedback are identified as part of this process including 360° evaluations, understanding individual per-sonality preferences, and developing self-awareness (Day, Fleenor, Atwater, Sturm, & McKee, 2014). Advances in peer evaluating delved into asking which coworkers one prefers to work with and why one prefers to work with them versus using a traditional rating system. This type of evaluation may say more about someone’s true performance and value to the organization.

In addition to providing feedback, leadership development activities also provide new behaviors that the new leader needs to master. These may include finding work–life balance, developing others, and getting things done through other people. These behaviors are often developed through programs that focus specifically on these issues.

Leadership development programs are commercially available through a variety of vendors that are local, regional, national, and/or international in scope. Local programs may be available through the local Chamber of Commerce (for example Leadership City Name) or via the local United Way or charitable foundations, which may host a non-profit leadership development program. Regional programs may be available through universities, centers, and other venues. Programs that are national or inter-national in scope may be provided through consulting and/or leadership development organizations (Center for Creative Leadership). These programs may target a specific level within an organization, provide opportunities for interdisciplinary learning, or even work across a variety of industries. Regardless of the type of program, it is important that there is a significant connection between leadership theory and leadership practice (Clayton, Sanzo, & Myran, 2013). There must be an impact for the learning and application of it in the real world.

John, a high-performing regional manager in a Fortune 500 company, was selected to participate in a commercially available three-day leadership development program. He introduced himself and stated he was sent to the

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program because of the way he responds to his employees. John viewed the program as a punishment at first. He spent the next few days with people from a variety of industries learning more about leadership principles, their own leadership preferences, and given individual feedback to make some changes in their own actions to be a better leader. At the end of the three-day experi-ence, John had a better understanding of how his actions impacted others and might limit his own career progression.

In the vignette, John was potentially limiting his career progression because of his actions toward his employees. While upper management liked that he was a high performer who got results, he was creating a nega-tive culture within his work team. By participating in a formal leadership development program that was outside his organization, John received the feedback that he needed to change his negative performance, which could ultimately put him back in line to take on more responsibilities and leadership roles within the organization.

Succession Planning as Part of the Broader Sustainable Leadership Concept

Succession planning is a strategy employed by many organizations to be able to recruit and promote employees into leadership roles. This pro-motes retaining organizational memory, allows continuity in strategic direction, and reinforces organizational culture (Groves, 2007). While baby boomers are staying in the workforce longer than originally antici-pated, many organizations face escalating retirements from the baby boomer generation; therefore, succession planning provides an opportu-nity for them to promote younger talent into these formal leadership roles.

In addition to being used for development, succession planning could be used as a tool to increase diversity within an organization. The organi-zation needs to take an inventory of the various types of diversity repre-sented within the organization and the areas that are missing to be able to increase the overall diversity within the leadership ranks. Then, as part of the succession planning process, the leadership team would need to become intentional on increasing diversity.

Hargreaves and Fink (2006) stated that “sustainable leaders are assertive and activist in their refusal to implement external and unsustainable agendas” (p. 268). This means that leaders must not settle for short-term interventions, but must focus on long-term efforts. Providing these long- term sustainable solutions often takes time and often a different skill set than short-term interventions.

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Sean was a leader who managed short-term goals and measured success by year over year bottom line results, with the focus to exceed the budgeted perfor-mance each year to make himself look good. He would demand more from his salaried staff by requiring them to work more hours, cut out budgeted staff development activities, and try to increase income. Ryan worked in Sean’s department, but was promoted to another department with Ann. Sean and Ann were rivals within the organization and Sean continually pushed his supervisors to give him more responsibility. Ann had a very different style and looked at both short-term goals and long-term performance. She focused on providing staff with the resources needed to do their job, and focused on staff development and work–life balance. Ryan had a lot to learn in his new role and reported to Linda. Linda exhibited a good combination of the traits of both Sean and Ann. Linda was eventually promoted to head another depart-ment and Ryan was promoted into Linda’s position. Sean left the organiza-tion for a promotion within a similar organization, and the department that he oversaw began to unravel because of the unsustainable practices he had implemented.

In the vignette, Ann was focused not only on managing the perfor-mance of the department, but also in developing people to take on positions across the organization; whereas Sean was more focused on making himself look good by demanding more out of his employees instead of developing them. While Ann was focused on developing people to become her equal in the organization, Sean was focused on advancing himself. Once Sean eventually left, it was clear to see his lack of leadership as results began to fall apart.

Issues in Succession Planning

As previously noted, baby boomers are staying in the workforce longer than expected. In some cases, they are performing a second act in the non- profit sector to use their business acumen and give back to the community in a meaningful way. In other cases, they may be staying in their position of leadership because they define themselves by their role. Whatever their reason for staying, this may derail the formal succession planning process and block younger leaders from taking on developmental opportunities and/or formal positional leadership promotions.

Another significant issue is that organizational structures have flattened (Groves, 2007) over the past few decades because of a variety of com-pounding factors such as the global financial crisis and companies needing

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to drive down costs to preserve profits for shareholders. While this is good to limit waste and increase productivity, it has also created the unintended consequence of having fewer staff to create a progressive career path within an organization. For example, in many early succession planning programs the concern was primarily replacement planning (Groves, 2007) to replace retiring C-level employees. The approach was to promote an heir apparent into a role to allow on-the-job learning while the current employee began to transition duties to the heir and transition out of the formal leadership role. This model proved to have significant issues such as not increasing diversity, the bringing along any negative baggage from his or her predecessor, and so on.

Referring to the vignette introduced at the beginning of this chapter, succession planning would not be helpful in the toxic work culture created at Uber because it would likely perpetuate similar negative behavior and continue to perpetuate the undesirable culture. Uber is looking outside the organization to hire a new CEO and is trying to reclaim the organiza-tion’s image from the issues related to Bro-culture previously described. The new CEO will have a challenge to build and sustain a new culture.

ConCluSion

The present chapter has discussed five major issues related to sustainable leadership and succession planning. One must recognize that using sus-tainable leadership principles for succession planning is a strategic decision. Prior research by Vroom (2003) has indicated that more than half of all strategic decisions are never fully implemented.

Sustainable leadership is not a new concept; however, it has not been broadly applied outside the field of education. The concept of sustainable leadership has the potential to provide a framework across a variety of industries to examine succession planning. For instance, Hargreaves and Fink (2006) state that “sustainable leaders don’t perpetuate repetitive change; instead, they build improvements on the ones that preceded them” (p. 268). Sustainable leadership and succession planning are issues that a variety of industries will continue to struggle to solve. Sustainable leadership through the succession planning framework provided in this chapter can help leaders in organizations develop specific strategies and tactics to address staff training, leadership development, and succession planning needs within the organization.

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referenCeS

Bottomley, K., Burgess, S., & Fox, M., III. (2014). Are the behaviors of transfor-mational leaders impacting organizations? A study of transformational leadership. International Management Review, 10(1), 5–9. Retrieved from: http://www.usimr.org/

Clayton, J. K., Sanzo, K. L., & Myran, S. (2013). Understanding mentoring in leadership development: Perspectives of district administrators and aspiring leaders. Journal of Research on Leadership Education, 8(1), 77–96. https://doi.org/10.1177/1942775112464959

Day, D. V., Fleenor, J. W., Atwater, L. E., Sturm, R. E., & McKee, R. A. (2014). Advances in leader and leadership development: A review of 25 years of research and theory. The Leadership Quarterly, 25(1), 63–82. https://doi.org/10.1016/j.leaqua.2013.11.004

Goolamally, N., & Ahmad, J. (2014). Attributes of school leaders towards achiev-ing sustainable leadership: A factor analysis. Journal of Education and Learning, 3(1), 122. https://doi.org/10.5539/jel.v3n1p122

Groves, K. S. (2007). Integrating leadership development and succession planning best practices. Journal of Management Development, 26(3), 239–260. https://doi.org/10.5539/jel.v3n1p12210.1108/02621710710732146

Hargreaves, A., & Fink, D. (2006). Sustainable leadership. San Francisco: Josey- Bass A Wiley Imprint.

Raelin, J.  A. (2016). Imagine there are no leaders: Reframing leadership as collaborative agency. Leadership, 12(2), 131–158. https://doi.org/10.1177/ 1742715014558076

Santora, J. C., Sarros, J. C., Bozer, G., Esposito, M., & Bassi, A. (2015). Nonprofit executive succession planning and organizational sustainability: A preliminary comparative study in Australia, Brazil, Israel, Italy, Russia, and the United States. Journal of Applied Management and Entrepreneurship, 20(4), 66. https://doi.org/10.9774/GLEAF.3709.2015.oc.00006

Smith, P. A., & Sharicz, C. (2011). The shift needed for sustainability. The Learning Organization, 18(1), 73–86. https://doi.org/10.1108/09696471111096019

Strauss, W., & Howe, N. (1991). Generations: The history of America’s future, 1584 to 2069. New York: Quill/William/Morrow.

Uhl-Bien, M. (2006). Relational leadership theory: Exploring the social processes of leadership and organizing. The Leadership Quarterly, 17, 654–676. https://doi.org/10.1016/j.leaqua.2006.10.007

Van Velsor, E. (2008). A complexity perspective on leadership development. In M.  Uhl-Bien & R.  Marion (Eds.), Complexity leadership (pp.  333–345). Charlotte, NC: Information Age.

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Vroom, V. H. (2003). Educating managers for decision making and leadership. Management Decision, 41(10), 968–978. https://doi.org/10.1108/00251740 310509490

Wasdell, D. (2011). The dynamics of climate change: A case study in organisa-tional learning. The Learning Organization, 18(1), 10–20. https://doi.org/10.1108/09696471111095966

Wikström, P. A. (2010). Sustainability and organizational activities–three approaches. Sustainable Development, 18(2), 99–107. https://doi.org/10.1002/sd.449

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CHAPTER 2

Literature Review of Succession Planning Strategies and Tactics

Irina A. Weisblat

A systematic approach to developing prospective leaders and industry captains is rare. A question arises about who will shape the future of the American economy and ensure national competitiveness throughout the world. Without meaningful succession planning, this question may remain mere rhetoric, even though many agree that leaders are made, not born (Northouse, 2014; Weiss, 2015).

Succession planning is a relatively new idea in the USA, especially in government, non-profit organizations, and educational institutions. In the past, the term has been associated mostly with the wills and testaments of family businesses. For farmers and family-owned companies, preparing their heirs to take over the business in the future was an expected duty and a normal process. Succession planning was driven by the need to transfer know-how, resources, and power to the next generation of business own-ers, who were expected to sustain the family fortune and grow its wealth. In the modern publicly owned companies, government, and non-profit organizations, succession planning began fairly recently—full of new mod-els, buzzwords, and passing trends in leadership development. The absence of structure, variances in procedures and steps documented in anecdotal

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best practices, and scarce research literature—all of these signal the lack of standardization of succession planning (Gabour Atwood, 2007; González, 2010) and a lack of understanding of its core concepts.

Definition

Succession planning is an intentional process aimed at identifying and cul-tivating employees within an organization who have the potential to lead the company and sustain its success in the long run. The most skilled, experienced, and capable are selected to replace key business leaders. Succession planning is preparation for the replacement of select decision- makers. Organizations with advanced succession planning build a clear path to success yet to come. The current strategies prepare them for an inevitable transition and reward them by having the talent available to fill key positions when required (Gabour Atwood, 2007; Rothwell, 2015).

theoretical consiDerations

Succession planning core concepts are largely based upon leadership theo-ries, most of which have evolved over the last 200 years. They include the Great Man Theory of the 1840s, the Trait Theory of the 1940s, Behavioral Theories of the 1950s, the Contingency Leadership Theory of the 1960s, and the Transactional and Transformational Leadership Theories of the 1970s (Northouse, 2014; Weiss, 2015; Yukl, 2013). These ideas all con-tributed to the modern concept of succession planning.

The old leadership theories seem to apply the principle of a French say-ing, “The more things change the more they remain the same.” One defi-ciency that most of them shared was that they described a variety of leaders’ characteristics, values, traits, attitudes, behaviors, and abilities that influ-enced and motivated their followers. They depicted static leadership con-ditions, but they did not look strategically into a dynamic leadership development process.

Avolio (2007) submitted that no old theories were “systematically explaining how such leaders and leadership develop” (p.  30). Stadler (2009) confirmed that “the actual process by which individuals develop has not been adequately studied” (p. 115). Leadership theories of the past depicted a portrait of an exemplary leader (answering the what question), but they were certainly lacking the know-how part of the process (answering the how question). Only some relatively new concepts, including Fiedler’s Contingency Model and Theory of Leadership

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Effectiveness, laid the foundation for more comprehensive succession planning and management (SPM). Leadership development practitio-ners are now inspired to incorporate some empirically tested leadership theories into the design of their leadership development programs as a part of succession planning.

succession Planning Key issues

Over 200,000 baby boomers exit the labor force each month (Pew Research, 2017). The massive ongoing number of retirements has created a situation where finding replacements for leaders and top decision-makers has become the number one priority in all organizations. Yet some human resources (HR) personnel are not very good at growing the company’s cur-rent vice-presidents (VPs) to replace those at the top. They do not seem to invest in on-the-job training, coaching, mentoring, or a practical applica-tion of knowledge of prospective successors (McKenna, 2015; Yukl, 2013).

Succession Planning Versus Replacement

In spite of the lack of structure, differences in how successors are identi-fied, who nominates and selects them, and other challenges, most succes-sion plans share common elements. Both researchers and management experts (Gabour Atwood, 2007; McKenna, 2015; Wharton, 2017) pro-mote this important idea: succession planning is not the same as replace-ment hiring, although their final goals may overlap. Focused on filling an immediate need, replacement hiring is a reactive process.

By contrast, succession planning is a deliberate and proactive process that forecasts organizational needs and addresses staffing problems before they cause a leadership crisis (Collins & Collins, 2007; Gabour Atwood, 2007; Rothwell, 2015). This is the basic difference between the two approaches to replacing upper leadership. This is becoming a matter of survival, as an increasing number of vacancies is due to plague organiza-tions in the near future.

The Need to Change a Strategy

In every crisis lies opportunity. Modern researchers insist not only that “succession planning must take the place of replacement hiring” (Gabour Atwood, 2007, p. 3), but that it must also become a modus operandi for “leadership at every level of the organization” (p. 6). Organizations should

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aspire to attract the best talent, retain the intellectual capital within their own organizations, and develop diverse groups of leadership candidates in order to remain competitive for years to come.

Traditionally, organizational leaders do not make succession planning a priority, leaving most of us to wonder “How do the wrong people so often get to the top” (Clutterbuck, 2012, p. 1). In the past, there was so little faith in organizations’ grand plans for succession planning that some career consultants in the late 1990s bluntly stated: “Corporations don’t have career plans for future presidents. You have to design the plan to get there” (Fox, 1998, p. 7). Fox (1998) strongly advised aspiring corporate executives: “Don’t expect the personnel department to plan your career” (p. vii). Many organizations find it difficult to prepare for the transfer of power.

Who Are the Successors?

Heading into a war for talent, most company leaders placed the focus exclusively on chief executive officers (CEOs), neglecting to assure continuity of leadership outside the C-suite and below executive level. An extensive body of writing on the topic of succession planning has been dedicated exclusively to CEOs. Mid-level management has been largely ignored, although the issue is applicable to any high-level and mid-level professionals. Succession planning should include entrepre-neurs, executives at all levels—not just CEOs—and any professionals who are preparing for career transitions (Clutterbuck, 2012; Kouzes & Posner, 2017).

Regardless of the industry or organizational type, a qualified succes-sor is expected to be a well-rounded leader who is competent in a multi-tude of managerial and leadership areas. This person must be skillful in balancing budgets, HR, and overall organizational planning. While there is a critical mass of successful candidates, they often show expertise in only one area of the business (e.g. finances, marketing, engineering)—rather than broader experience in high-level managerial, decision-mak-ing, and leadership issues. The breadth of skills spans the ability to work with all stakeholders to being a spokesperson for the company who effectively communicates with media and government officials, and advocates for the company’s business (Gentry, 2016; McKenna, 2015; Studer, 2014).

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Process Versus Strategy

Although the literature noticeably encompasses three major fields—business, non-profit, and education—very little of what is written can be generalized to any of these fields. This is because the focus of most studies is narrowed to confined subsets, such as nursing institutions, financial companies, non-profit organizations, community colleges, or select pri-vate universities. Each has been examined from the perspective of a “dry, ‘check-the-boxes’ process” (Clutterbuck, 2012, p. xiv) and often without consideration of their unique mission, goals, and customers served.

One noteworthy aspect of literature on succession planning is its focus on the business side—and not on the human, behavioral side of succession strategy. Yet experts in organizational behavior (Clutterbuck, 2012; Studer, 2014) argue that successors must be capable of developing certain leadership skills. The ability to maintain key relationships is equally impor-tant in achieving positive and lasting change for their organizations, their people, and their teams (Dessler, 2017; Gentry, 2016).

The bulk of literature on succession planning contains such buzzwords as experience, background, leadership style, and people skills—all important personal qualities but not the traits of a well-rounded and effective decision- maker, or an innovative visionary at the top. These works ignore the common values of strategy, core competencies, and stakeholder interests that are the building blocks in the frame of any organization and the genetic molecules of its cultural DNA.

Described by Gabour Atwood (2007) as a practice of “having the right people in the right place at the right time” (p. 1), the purpose of succes-sion planning today is to look strategically into the future of the organiza-tion. This combination of three important dimensions—people, place, and time—is what ensures that companies move away from the reactive practice of replacement hiring into a proactive system of identifying future leaders and grooming them to assume key roles in the organization. The goal is to minimize disruption to a company’s operations and avoid a drain of its intellectual capital during the transition process.

The Cost of Not Having a Succession Plan

As reported by Samsel (2013), an Ernst & Young survey of CEOs shows that in addition to lost productivity, a lack of talent in the succession pipeline results in an inability to take advantage of new opportunities.

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Moreover, “29% of CEOs thought they had missed out on revenue opportunities due to a lack of quality and quantity of talent” (Samsel, 2013, para. 4). Identifying the next CEO is a tough business, and “succes-sion planning is not just for the C-suite” (Connerstone, 2016, p. 1). In fact, a business will become bankrupt if it loses mid-level managers.

In any organization, mid-management is the conduit between the visionary ideas of executives and the daily efforts of the front-line workers who implement these visions. Mid-managers are the ones who make it happen by delivering the results and meeting the company’s productivity and profit goals. Even companies with the best-designed succession plans hardly ever plan for roles below executive level. Yet ignoring strategies for filling vacancies in low- and mid- level roles is costly. Reportedly, “compa-nies can lose $7,000 per day” (Connerstone, 2016, p. 2) without having a pool of qualified successors available, or they can improve earnings nearly 15% (netting almost $400 million annually) by improving their talent management function.

Investing in a succession plan is wise and fiscally responsible; therefore, it should become a top priority for any organization. Smart planning should take the so-called best practices with a pinch of salt. Currently used best practices are often not good enough. Differences exist in the pro-cesses of how leadership candidates are identified and who nominates them (Clutterbuck, 2012; Gabour Atwood, 2007). Repeatedly, these pro-cesses are based solely on past performance and outdated qualifications, while failing to consider equally important leadership traits, motivation, desire to innovate, creativity, awareness of the pressing issues of the global environment, and willingness to learn and reflect.

strategies anD tactics

A good succession plan must be structured and formalized. Organiza-tional leaders and HR personnel must have a clear understanding of who will champion this strategic initiative, retain the organization’s intellectual capital, build talent from within, and ensure leadership continuity (Collins & Collins, 2007; Harrell, 2016). Several authors have suggested that succession planning cannot effectively operate in isolation—it has to be integrated into the overall organizational strat-egy and become part of the culture (Gabour Atwood, 2007; Kouzes & Posner, 2017; Rothwell, 2015).

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As a systematic, ongoing process, succession planning must be developed by team members from key functional groups who understand the organization’s vision and mission, immediate goals, and future direc-tion and opportunities. Decisions must involve input from all stakehold-ers in order to meet the true needs of the organization—not those perceived by one person or one group. Plans must be simple, easily com-municated, and easily implemented. They must include accountability, evaluation, and follow-up measures (Dessler, 2017; Gabour Atwood, 2007; Rothwell, 2015).

An effective succession plan must become a part of the overall organi-zational strategy. As such, it should include the major management func-tions of planning, organizing, directing, and controlling. A viable plan must view all entities—private and public, small family businesses, and large corporations—as socially responsible “learning organizations” capa-ble of showing exemplary leadership, continuously transforming them-selves and sustaining the ongoing process of succession planning (Bersin, 2012; Church & Rotolo, 2013; Collins, 2014; Kouzes & Posner, 2017). Each of the mentioned models embraces a three-part framework that involves leadership commitment, organizational culture and strategy, and basic SPM practices.

Leadership Commitment

Commitment of organizational leaders to succession planning is vital for continuity of leadership. Top executives should support their managers in attracting and retaining talent, promoting future leaders from within, and fostering diverse succession policies (Gabour Atwood, 2007; Harrell, 2016; Rothwell, 2015). Collins (2014) once noted that a great leader sets the company up to succeed after he or she is gone. The famed Jack Welch did just that, after deciding in 1991 that “From now on, choosing my suc-cessor is the most important decision I’ll make,” as cited in Gabour Atwood (2007, p. 9).

In recent years, some authors have repeated this phrase so often that it now sounds like a cliché: “Successful companies don’t recruit leaders. They grow their own” (Richards, 2017, para. 1). Selecting the right successor is paramount to organizational longevity. Institutions with the wrong person at the top may face public scrutiny and a range of devastating problems, from financial destruction to lack of employee morale, depressed innova-tion, and the drain of intellectual capital (Luby & Stevenson, 2016;

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McKenna, 2015; Yukl, 2013). Future leaders are often hand-picked by existing CEOs. But leaving the process solely to CEOs may not always be as smooth as a structured and deliberate team effort.

Organizational Culture

The ultimate secret of any successful company is having an organizational culture that transcends individual leaders. Effective succession planning does not happen overnight, nor in isolation. Succession planning is a team sport interrelated to organizational behaviors and larger business strate-gies. Some suggest that the process should start years, not months, before the anticipated date of the CEO’s retirement (Clutterbuck, 2012; Gabour Atwood, 2007; Rothwell, 2015).

Succession planning requires much time and effort. Time is a precious commodity for CEOs, and grooming the next generation of leaders may not immediately translate into a return on investment. Therefore, a cul-ture of excellence and competitive advantage must be ingrained in every-one in the organization, with succession planning targeting every leadership level—from the HR department to front-line supervisors (Dessler, 2017; Gabour Atwood, 2007; Rothwell, 2015).

Small organizations, however, may not have sufficient resources to allo-cate to the full scaled and long-term succession planning. Some experts rec-ommend that succession planning in smaller companies may be better managed by competent consultants on an as-needed basis, in consideration of time and cost effectiveness (Gabour Atwood, 2007; McKenna, 2015). Larger companies such as General Electric, Hewlett-Packard, Microsoft, Shell Oil, Southwest Airlines, and Wal-Mart are known for their strong cul-tures, and their success has lasted well beyond their founders’ departure.

Succession Planning Practices: Corporate Identity or a Cult Figure at the Top?

Studying companies with strong corporate culture, Wharton (2017) found that these companies remain on their path to success if the transfer of power happens seamlessly. Accountability to shareholders and customers is one measure of corporate culture and the overall health of the organization. The seamless transfer of power is another. When executed successfully, both signal the organization’s health and vitality. As Bolman

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and Deal (2013) asserted, true leadership and strength of organizational culture are tested in the absence of the influential leader. If the company continues to function as a well-oiled machine when the leader is absent, it means that the leader has achieved the highest goal of an organization’s top figure.

The most influential computer titans of our time, Bill Gates and Steve Jobs, were described as the “two orbiting superstars” (Isaacson, 2011, p. 171) in a binary system of technology. When a decision about the future direction of their companies had to be made, each had a different attitude and approach to finding their successors. Gates identified Steve Ballmer as Microsoft’s next President and CEO long before he retired from running the daily operations of the software giant. In contrast, the question of Jobs’s replacement at Apple remained unresolved for a long time, keeping shareholders and customers in the dark. Tim Cook was named Apple’s CEO in August 2011—only two months before Jobs died (Biography, 2017; Wharton, 2017).

Even though Apple had a strong team of capable executives who could succeed Jobs, they all stayed in the shadow of their iconic leader and remained unknown to investors and other stakeholders, according to Wharton’s researchers (Wharton, 2017). By contrast, Gates persistently allowed his diverse executives to shine—whether copresenting with him as keynote speakers at the COMDEX Trade Show or making other public appearances, at educational talks and workshops for example. Each instance of Microsoft employees’ engagement with customers promoted Microsoft culture.

These examples alone illustrate that Microsoft is unafraid of risks and that the company is more than just Bill Gates. As a result, the succession process was comfortable for the company, customers, and shareholders (Wharton, 2017). Lessons learned from studies of these two technology giants are important for practical implementation, and may guide other companies’ succession planning strategies and tactics.

imPlication for Practice

Based on the reviewed literature, several actions must be considered. First, a stellar organizational culture is vital for a winning succession planning. Until now, transparency has been often overlooked, although it should be adopted as the best practice in succession planning. A lack

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of transparency may affect the company’s stock behavior, investors’ con-fidence, customers’ loyalty, and the employees’ morale (Wharton, 2017; Yukl, 2013). Second, changing goals, including succession plans, must be regularly disclosed to all stakeholders in order to minimize uncer-tainty about the future of the organization. While the number of dis-closed details is open to debate, one thing is clear: transparency is key in succession planning.

Third, the process of identifying new leaders and preparing for a well- organized transition should become a priority for all organizations. Realizing that longevity is in their own hands, some organizations develop leadership training programs and create opportunities for employees to design their individual plans. Others rely on the support of professional organizations, such as the pre-CEO executive leadership program by the League for Innovation in the Community College or the Executive Leadership Academy (ELA) at the University of California, Berkeley.

Finally, one important finding of this literature review is that succession planning has not received proper attention from scholars. Practitioners from various fields have documented some anecdotal “best practices,” but research-based literature from the last decade is limited. It is important that numerous obstacles hindering succession planning in organizations are further studied.

conclusion

As leadership ranks shrink at a fast rate, organizations must start to adopt succession planning as a viable growth strategy. The goal is to be transpar-ent about the present and to demystify the future. This requires a collab-orative approach from leaders at all levels, from CEOs and HR to mid-level managers.

Organizations now realize that succession planning is not an event, it is an ongoing process. They need to look strategically at preparing future leaders, not simply filling vacant positions and risking the loss of accumu-lated knowledge. Effective succession planning ensures transfer of that valuable knowledge and promotes the culture of excellence, continuous improvement, and innovation.

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references

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Bersin, J.  (2012, January). 5 keys to building a learning organization. Forbes. Retrieved from https://www.forbes.com/sites/joshbersin/2012/01/18/ 5-keys-to-building-a-learning-organization/#497e62bb129c

Biography. (2017). Tim Cook. Retrieved from https://www.biography.com/people/tim-cook-20967297

Bolman, L. G., & Deal, T. E. (2013). Reframing organizations: Artistry, choice, and leadership (5th ed.). San Francisco: Jossey-Bass Publishers.

Church, A. H., & Rotolo, C. T. (2013). How are top companies assessing their high-potentials and senior executives? A talent management benchmark study. Consulting Psychology Journal, 65(3), 199–223. https://doi.org/10.1037/a0034381

Clutterbuck, D. (2012). The talent wave: Why succession planning fails and what to do about it. London: Kogan Page Ltd..

Collins, J. (2014). Good to great: Why some companies make the leap & others don’t. New York: HarperCollins Publishers.

Collins, S., & Collins, K. (2007, January). Succession planning and leadership development: Critical business strategies for healthcare organizations. Radiology Management, 29, 16–23. Retrieved from http://www.ahra.org/AM/Downloads/OnlineEd/2007JanuaryFebruary1.pdf

Connerstone OnDemand Company. (2016). The true cost of not having a talent management strategy. Retrieved from https://www.cornerstoneondemand.com/resources

Dessler, G. (2017). Human resource management (15th ed.). New York: Pearson.Fox, J. (1998). How to become CEO: The rules for rising to the top of any organiza-

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for Talent Development.Gentry, W. (2016). Be the boss everyone wants to work for: A guide for new leaders.

Greensboro, NC: Center for Creative Leadership.González, C. (2010). Leadership, diversity, and succession planning in academia.

Berkeley, CA: Berkeley Center for Studies in Higher Education. Retrieved from http://cshe.berkeley.edu/publications/leadership-diversity-and- succession-planning-academia

Harrell, E. (2016, December). Succession planning: What the research says. Harvard Business Review. Retrieved from https://hbr.org/2016/12/succession-planning-what-the-research-says

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Kouzes, J., & Posner, B. (2017). The leadership challenge: How to make extraordi-nary things happen in organizations (6th ed.). Hoboken, NJ: John Wiley and Sons.

Luby and Stevenson. (2016, December). 7 Tenets of a good CEO succession pro-cess. Harvard Business Review. Retrieved from https://hbr.org/2016/12/7-tenets-of-a-good-ceo-succession-process?referral=03758&cm_vc=rr_item_page.top_right

McKenna, D. (2015). The succession principle: How leaders make leaders. Eugene, OR: Cascade Books.

Northouse, P. G. (2014). Introduction to leadership: Concepts and practice (3rd ed.). Thousand Oaks, CA: Sage Publications.

Pew Research Center. (2017). Baby boomers. Retrieved from http://www.pewre-search.org/topics/baby-boomers/

Richards, T. (2017, April 20). Successful companies don’t recruit leaders. They grow their own. [Web log post]. Retrieved from http://www.impactdakota.com/blog/successful-companies-dont-recruit-leaders.-they-grow-their-own

Rothwell, W. J. (2015). Effective succession planning: Ensuring leadership continu-ity and building talent from within (5th ed.). New York: AMACOM.

Samsel, R. (2013, April 29). Hidden costs of poor talent strategy alignment. [Web log post]. Retrieved from http://www.esearchjobs.com/blog/hidden-costs- of-poor-talent-strategy-alignment

Stadler, A. (2009). Leadership emergence theory in the corporate context. International Journal of Leadership Studies, 5(1), 115–122. Retrieved from http://www.regent.edu/acad/global/publications/ijls/new/vol5iss1/IJLS_Vol5Is1_StadlerR.pdf

Studer, Q. (2014). Hardwiring excellence: Purpose, worthwhile work, making a dif-ference. Gulf Breeze, FL: Fire Starter Publishing.

The Wharton School of the University of Pennsylvania. (2017). Knowledge@Wharton Online Business Analysis Journal. Retrieved from http://knowledge.wharton.upenn.edu/?s=succession+planning

Weiss, J.  W. (2015). An introduction to leadership (2nd ed.). Retrieved from https://content.ashford.edu/

Yukl, G. A. (2013). Leadership in organizations (8th ed.). Upper Saddle River, NJ: Pearson.

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CHAPTER 3

Succession Planning for Large and Small Organizations: A Practical Review

of Professional Business Corporations

Rick D. Johnson, Donna Pepper, Joan Adkins, and Alexius A. Emejom

Succession planning in modern business organizations is a topic that may occur in various connotations. In most perspectives, it is a process that takes place in a systematic long-term fashion focusing on the organiza-tion’s future (Butler & Roche-Tarry, 2002). It encompasses several crucial areas such as the needs and overall goals of the business, unexpected retire-ment, and required intellectual capital, each applying to firms of any size. Determining such goals for the long term, as well as roles and responsibili-ties, is pertinent in succession planning. When initiated adequately, this preparation can foster organizational confidence as the firm moves into the next stage of its future (Luna, 2012). Leaders typically spend many years in their organization. A chief executive officer (CEO) or top-tier manager

R. D. Johnson (*) University of Phoenix, Tempe, AZ, USA

Lawrence Technological University, Southfield, MI, USA

Johnson Professionals, Inc, Southfield, MI, USA

D. Pepper • J. Adkins • A. A. Emejom Colorado Technical University, Colorado Springs, CO, USA

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should know all about business practices, procedures, and the daily needs of their respective firm (Butler & Roche-Tarry, 2002). What happens if this individual decides to retire or the unexpected occurs? Many compa-nies are in situations where a leader left the organization without a succes-sor in place or mind. No one is properly prepared to assume the vacant post. Having a succession plan in place determines if the organization con-tinues to thrive or will struggle over the coming months and years.

A few problems reside within succession planning. Large companies that lose top leaders are at risk of having successors who do not fully understand the business. Potential candidates are not always privy to more important corporate concerns, which affects their readiness to take a top leadership position. Small organizations struggle or even collapse without planned succession (Haworth, 2005). Succession planning helps prepare for the unexpected. Seldom does an organization expect multiple top-tier executives to leave the company, but unexpected events do occur. The bombing of the World Trade Center, natural disasters such as the tsunami in Myanmar, or the sudden death of an executive can reverberate within an organization, causing paralyzing effects for staff and leadership. Issues such as these leave the business without the needed talents to execute business plans (Butler & Roche-Tarry, 2002).

The purpose of this chapter is to highlight some of the attainable pro-cesses or strategies of initiating succession planning in professional busi-ness organizations. More specifically, these processes or strategies are relevant in helping succession candidates become better prepared when they take on their new respective roles. Often, human resources (HR) personnel and senior managers focus on hiring or training and neglect suc-cession planning, which is a key component of sustaining organizational success and completing strategic goals (Butler & Roche-Tarry, 2002). An organizational chart is no longer a dynamic piece of information as in the past. Best practice dictates the creation of a succession plan that employs essential leaders who will develop and maintain trained individuals ready to step in should the unexpected occur (Butler & Roche-Tarry, 2002). Succession planning is imperative for all entities wishing to continue in business for a substantial number of years.

It is not the norm to lose several essential leaders at one time. Having a plan-driven chain of command is central to organizational success. Intellectual capital, including human, financial, and technological, is the backbone of an organization. Having employees who possess soft and hard skills is advanta-geous if a company is to continue growing. Tara Flynn (2006), stated that

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76% of employees look for new jobs each year. Employers must recognize that their top performers may leave sooner than expected. Creating succes-sion plans is an iterative process. These plans should be developed with care and attention at predetermined times each year; this is not something that should take place only once. Successors are part of a company’s long-term organizational identity, which should evolve as a feature of strategy (Lawler & Worley, 2011). Corporate identity is a dynamic that morphs succession planning into succession development.

TheoreTical PosiTion

There are three theoretical dynamics factored into the context of this study. Organizational theory is the overarching position that is applicable in this topic together with two other relevant subtheories. Lewin’s theory of planned change is one that deals with the human attributes of change within an organization. Planned change is viewed as a strategic resource inside the firm (Shirey, 2013). Johnson (2016) stated that it is paramount for businesses to “recognize the value that principles, associates, directors, and other senior management professionals bring” (p. 63). Sustaining a professional business firm is not just about replacing one leader with another, but about thinking of the integrated practices associated with the business. A corporate social responsibility (CSR) policy is good for this type of thinking. The second subtheory, corporate governance, is factored in as well (Johnson, 2016). Company leaders should have a watchful eye on the future by showing concern for internal and external social factors within the local community. Although this study is not a literature review, the logic within existing literature shows how these theoretical concepts facilitate operative succession planning.

research QuesTion and raTionale

While looking closely at works about succession planning, the research ques-tion posited in this study asks about the processes or strategies that profes-sional business organizations, large or small, have in place to ensure succession candidates are prepared for the commission in their new roles. The rationale of this question links to the problem statement mentioned in the introduc-tion, which also happens to be the purpose of this research. Succession plan-ning tends to have a process, processes, or even systems, but not every process is the same for every company. In conjunction with the literature, the

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authors’ experiences of the factor into this question. With this understand-ing, they have bracketed their respective experiences to ensure individual and collective biases did not exist during data collection and analysis.

research MeThod

The authors critically synthesized the potential for various methods that are fitting for this study. The methodology logic is based on an informal quali-tative design with an exploratory approach. As a general qualitative inquiry, the selected method of data analysis is a key aspect of the methodological reasoning. While there is no direct formal selection such as phenomenology or grounded theory, this exploratory study is indirectly similar to an illus-trative case study with an overlap of components of an instrumental case study (Creswell, 2014). It does not use a direct case in the traditional sense. Empiricism in research is paramount, and it is inherent within the five pub-lic documents used as collected data in this investigation. It does not focus on an individual, group, or organization as in a traditional case study inquiry. It focuses instead on case study elements within the documents themselves, from the perspective of the topic of succession planning. The document analysis method is the chosen form of data analysis for this study.

currenT liTeraTure

Succession planning in contemporary organizations is a phenomenon best understood through knowledge of applicable theory and practice from past years as well as the present. The literature shows evidence of succes-sion planning rationale. The authors chose to describe associated literature through a topical hierarchy.

The Organizational Theory of Action Research

This category of the literature encompasses several areas such as diversity, change, shifting workplace, the need to remain competitive, the timing of succession planning, and growth (Pepper, 2016). The size of a company and the structures within it have an impact on CEO succession. Organizations vary in size depending on the industry. Not every business adapts to changes as quickly. Some leaders require incremental development, while others require revolutionary changes (Adkins, 2016). Action research, as a pro-gressive development theory (Jensen, Neck, & Beaulieu, 2016), is effective

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for all types of businesses. Small or large businesses need action to save their companies. If they are left without an action plan, they can decline (Schneider, 2016). Kurt Lewin created this method for developing change by putting theory together with action (Greenwood, 2015).

As a system based on theories, practices, and methods, action research creates a current cycle for change. It challenges to improve the business and assists in creating positive changes for the leaders as well (Greenwood, 2015). A practitioner assesses the business by monitoring, interviewing, and implementing applicable changes (Greenwood, 2015). It is accom-plished through multiple levels of executable stages of action and revising or improving subsequent stages of that action.

Value-Added Leadership Capabilities

Not every manager/leader has suitable qualities for top-level succession. In contrast, not every current leader in a business has the temperament for subsequent succession. It is necessary to identify the desired characteristics in each prospect. Pepper (2016) suggested that if the traits do not exist, it may be necessary to look externally. Succession planning requires a succes-sor who is competent and skilled in the leadership needs of the company (Santora & Bozer, 2015). A successful successor ensures the company is stable and is sustainable in current markets (Santora & Bozer, 2015). The organization must be committed to recognizing and developing potential leaders in both small and large firms. Cascio (2011) refers to future execu-tives needing to recognize their alignment with the mission and culture of the organization. One leadership style that is relevant and recommended is transformational leadership. This fosters trust, a shared vision, and increases commitment to the company (Muniz, 2013).

Talent Management

Competitive forward-thinking organizational leaders who develop strategies and approaches for retaining top leadership talent relish successful talent management frameworks. One such business is Costco, which boasts of its unique competitive advantage and low management turnover (Costco sets up succession plan, 2011). Leaders whose talent management strategies are effective can appreciate the benefit of retaining dynamic individuals, seeing a reduction in recruiting costs, and spending less time filling open leadership positions (Sims, 2014). A comparative US government study showed that

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61% of organizations lack qualified people for growth, 47 % had a shortage of leadership talent, and another 40% did not have staff who were capable of training employees for leadership roles (Richman & Wiggenhorn, 2005). As an organizational asset, development of talent is beneficial for both the orga-nization and the employee (Waheed & Zaim, 2015). Developing a transpar-ent, easy to understand model allows both the employer and employee to focus on organizational growth (Waheed & Zaim, 2015).

Sims (2014) described a five-strategy plan model used for measuring organizational growth. The model involves quarterly and semiannual meetings that help to ensure planned succession is progressing; continued interaction with leaders regarding turnover, competency needs, and other troubled areas that aid to achieve bench strength goals; maintaining a council to review potential replacement candidates and identify successes and failures; paying distinct attention to talent risks and plans through suc-cession strategies and retention plans; and employing leaders who are cre-ative thinkers with sharp skills, who understand the organization’s culture, who ensure the correct talent is in place, and if adjusted priorities such as budget or systems need development, are capable of this as well.

The Attribution of Assessment and Performance Reviews

One of the many challenges faced by firms in recent times is the increasing quest for survival in a dynamic marketplace. Establishments are striving to gain competitive advantage through a shortening of product development cycles and responding quickly to customers’ needs and wants (Ahmed, Yale, & Dale, 2003). A 1997 publication by the National Academy of Public Administration (NAPA) mentioned that succession planning is an ongoing process (NAPA, 1997). It includes systematically identifying and assessing both the organization and its employees. Firm principals look to develop organizational leadership to enhance performance. Making it part of a range of HR processes is a focal factor in successful leadership succession (NAPA, 1997), which helps to solidify an organization’s sustainability and survival in today’s dynamic marketplace. HR processes, as suggested by Senge (2006), are one of the characteristics of a learning organization that “continually expands its capacity to create its future and adapt to the ever-changing envi-ronment” (p.  14). As simple as this process of performance review may seem, the learning experience for any staff member is not an immediate achievement: it takes effect over time. One mechanism by which employees

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learn is by direct experience, whereby knowledge is gained through trial and error (Rojek & Smith, 2007; Senge, 2006).

Employee assessment, otherwise known as self-assessment, is accepted as a comprehensive, systematic, and regular review of organizational activ-ities (Ahmed et  al., 2003). It is one of the tools used for performance reviews that focus on employee values and opinions. The results are a source of information for helping employees make significant changes, since they are critical players in identifying their own strengths, determin-ing training needs, self-improvement, and career development that might affect succession planning (Kim, 2003; Tarí, 2010). Self-assessment exer-cises, as explained by Eskildsen, Kristensen, and Hans Jorn (2004), are attractive to private firms and have been increasingly used by, and then adapted, for public services organizations.

Tarí (2010), in the article “Self-assessment processes: The importance of follow-up for success,” pointed out that “there are more studies about self-assessment process in private organizations than in public service’s several studies” (p. 19). Eskildsen et al. (2004) took this study further by identifying some intrinsic differences between public and private compa-nies. They noted that while some private organizations have strategic free-dom and uninhibited operating leverage, most public organizations do not. It is the politicians who decide strategic goals. Despite these differ-ences, both private and public corporations apply the same holistic man-agement frameworks, and this appears to be true for self-assessment tools.

Technological Proficiency

With an ever-changing labor market and retirement predictions, succes-sion planning is now a huge priority for many companies—especially Boards of Directors—and is rapidly becoming a dynamic strategic tool for HR management (Kim, 2003). Davenport (2012) discussed advances in technology that led to more online recruiting methods. Technology assists in the proactive and strategic areas of forecasting and processing recruit-ment and succession initiatives. The planning is used to “assist with the development and implementation of organizational strategic goals as well as outline current and future staffing needs” (Davenport, 2012, p. 2). For example, in a 2007 HR Technology trends study of 182 large companies (Anonymous, 2007), findings showed that a third planned to adopt mod-ern technology solutions for succession planning in the following two years.

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Active implementation of any succession plan must be handled and coordinated at all levels of the organization, requiring sound communica-tion at all levels of management and frontline employees to ensure aware-ness of the plan and reasonably prepare employees to handle the changes (Davenport, 2012). Gregory, Meade, and Foster Thompson (2013) opined that the use of technology in the workplace has impacted all areas of employment. Technology implementation has provided significant and advantageous ways in which to enhance organizational recruitment prac-tices. The Internet is now a great tool that has proliferated online recruit-ment opportunities for organizations. Vacancies can be posted online on various websites such as Twitter, LinkedIn, and CareerBuilder.com among others. Consequently, advertising external vacancies and recruitment of talent is more cost effective than ever (Anderson, 2003; Brady, Thompson, Wuensch, & Grossnickle, 2003; Hull, 2011).

Knowledge Management and Intellectual Capital

A weak economy causes many senior leaders to postpone retirement, which may lead to an explosion in retirement when the economy rebounds. With this scenario in mind, senior leaders who possess special-ized knowledge vital to the success of their organizations could create quite a conundrum if several of them leave at the same time (Muniz, 2013). Institutional knowledge is the progression of efficiently sharing, using, retrieving, and distributing organizational informational assets (Koenig, 2012). Large organizations with diverse information users acknowledge that one of the biggest challenges is to determine what information is valid for sharing (Davenport, 1994). Business associations must continually take into consideration who controls information, while keeping in mind the unpredictable growth knowledge, sharing, and human nature (Davenport, 1994).

One approach to overcoming knowledge management issues is to keep open communication between executive level leadership and subordinates. Mutual respect and trust is essential between managers and leaders and is compulsory in order to support the sharing of sensitive organizational information (Muniz, 2013). To create environments with open communi-cation, knowledge management theorists have suggested creating a sup-portive day-to-day action strategy through succession planning, knowledge management, and transformational leadership (Muniz, 2013).

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Although many people label intellectual capital (IC) as just another term for human capital, in succession planning it refers to the full spec-trum of resources needed to fulfill long-term organizational goals through the respective economic value that each resource contributes (Secundo, Dumay, Schiuma, & Passiante, 2016). IC and knowledge management work together as a system of assets necessary for large and small organiza-tions. IC helps generate processes, procedures, and strategies encom-passed in the knowledge of key individuals and other resources, and how they consistently share that knowledge as capital. Hiring managers mea-sure certain soft skills characteristics such as performance, dependability, and appropriately used self-motivation. The measurement of hard skills such as technical proficiency, education, and experience is also present when IC is maintained as a value-added focus.

Employee Morale

Employee morale focuses on how long an employee has worked with the organization, the work that is individually produced, and the value that employees bring. One way to determine the state of morale levels in the environment is by evaluating employees through the observation of engage-ment (Florentine, 2017). Succession planning allows companies to develop employees for future leadership positions (Rogers, Rogers, & Metlay, 2002). It reduces the risk of hiring inadequate individuals for significant roles. When improper leaders are placed in positions of authority, the company may find it difficult to retain employees (McCafferty, 2017).

Succession planning provides employees with a long-term vision of the business by molding the organization’s culture and processes to the needs of the employees (Prestera, 2014). The sign of a healthy working environ-ment is when employees have high morale and add value to the organiza-tion (Taggart, 2007). One method of increasing value and security within the employee is to provide mentors who have an interest in developing future leaders (Prestera, 2014). The other way of increasing morale is to provide leaders who come from within the company (Prestera, 2014). Employees with high morale are focused and engaged, with higher effi-ciency and working more effectively (Florentine, 2017).

Intrapreneurship and morale work well together in a small or large company. In a small company, intrapreneurship encourages the building of professional relationships between employees. In a large company, the provisions of intrapreneurship are manifested through procedures that

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increase communication (Hindle, 2003). Communication is a critical fac-tor in succession planning. Ultimately, it plays a chief role in the organiza-tion’s morale as well (Succession planning, 2013).

daTa collecTion and analysis

A background look at the literature to make a topical assessment of this subject helped the authors evaluate what it is best to contribute. In an examination of the sources of data available on the topic, various docu-ments showed substantial information concerning processes and strate-gies. Data sampling is typically a point of debate when it comes to qualitative research. Since this study did not use human research partici-pants, samples of the target population arrived during the computerized coding of five public documents that were used as the primary data (Creswell, 2014; Creswell & Miller, 2000). The sampling of these five documents was representative of 20 documents evaluated as data. The authors named the documents Coding DOC1, DOC2, DOC3, DOC4, and DOC5. Their coding uncovered the themes described in Table 3.1. All five documents were collected from the public domain, which inher-ently mitigated potential biases by the authors (Berg & Lune, 2013; Bryman & Bell, 2011; Creswell, 2009, 2014; Rubin & Rubin, 2012; Smith, Flowers, & Larkin, 2009). Using the qualitative analysis program NVivo 11 (QSR International Pty LTD, 2017), four themes emerged that derived from patterns observed during textual data analysis. Table  3.1 describes the themes, response frequency, and frequency percentages in correlation to each theme.

discussion and inTerPreTaTion of findings

During data collection and analysis, it became quickly apparent that there were patterns of language used within the various data documents col-lected for this study. As stated in the previous section, the analyses of five public documents were interpreted, and select sections of the source data are extrapolated in this section. The findings described below are based on the order of the themes identified within Table 3.1. The remaining study limitations and future research sections express author recommendations for further research studies.

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Theme 1.0 Candidacy and Development for Succession: Document data shows a need for succession development as opposed to just succession planning for candidates. The development of successful succession does not appear to be placed solely on planning, but on succession develop-ment, candidate development, and competency development and strategy. Coding DOC1 addressed the idea of getting to know candidates. It spoke of candidates being tested for their ability to grow (DOC1). Also men-tioned was a need for directors to get to know leading candidates: It denotes that candidacy is a process that must be vetted by existing leaders of an organization. The authors interpret this process to apply to both large and small businesses. It is a form of case interviewing to identify the best of the best. Coding DOC2 stated:

Table 3.1 Theme response frequency and frequency percentages

Theme No.

Identified themes and descriptions Response frequency

Frequency percentages

1.0 Candidacy and Development for SuccessionDocument data shows a need for succession development as opposed to succession planning just for candidates

17/4 400.25%

2.0 Competencies and Capabilities for SuccessionDocument data shows a need for select competencies and the valued capabilities that candidates should have

6/5 100.20%

3.0 Knowledge Transfer for SuccessionDocument data shows a need for the transfer of knowledge and IC attributes

5/1 500.00%

4.0 Leadership and Sustainability for SuccessionDocument data shows a need for the organization to have leaders in place who will foster long-term sustainability

1/1 100.00%

Note. Themes 1.0 through 4.0 in Table 3.1 show a response frequency column and a frequency percentage column at the far right. The response frequency column denotes the number of times references that fall into the theme category resided in the documents. For instance, theme 1.0 shows a frequency of 17/4. The meaning of Table 3.1 is that out of the five public documents analyzed, four had 17 references in the source material relating to the applicable theme across these documents. Therefore, 17 divided by 4 provides a numerical value of 400.25 %, or more than four times the actual number of documents reviewed. It refers to the frequency of references found in the combined data from within all the collected documents. The following discussion and interpretation of findings section of this chapter discusses the authors’ representa-tive concise interpretations of the findings from this thematic outcome. Readers should not misconstrue these interpretations to be all inclusive regarding data found. It is instead a brief overview of representative data contributing to the research question, purpose, and problem that this chapter has covered

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There are a variety of ways to assess a candidate’s potential or readiness for promotion, including: 360-degree assessments of an employee’s current perfor-mance of the competencies required at the level above them, aptitude tests, lead-ership assessment tests, temporary work assignments (e.g., an employee performs their boss’s job when he or she is on vacation or sick.). (Halogen, 2015)

Theme 2.0 Competencies and Capabilities for Succession: Document data shows a need for select competencies and valued capabilities candidates should have. Coding DOC5 provided process steps and strategies through a systematic and integrated approach focusing on certain capabilities deemed retainable by skilled employees. For example, step 2 identifies capabilities for key areas and positions, and step 3 identifies interested employees and assesses them against capabilities (DOC5). DOC4 touched on using a talent pool approach to align workforce competencies parallel to phased strategic plans. A notion postulated in Coding DOC3 stated:

Prepare competency models by level on the organization chart. Use a rigorous examination of objective performance requirements. Plan for future competen-cies that are necessary to achieve future strategic goals. Ensure all competency models are clear and measurable. (Wilson, 2015)

Models of competency—as interpreted by the authors—are based on theoretical fundamentals as well as practicability. Although the topic of models is outside the scope of this chapter, they are vital to implementing robust succession processes and strategies for businesses.

Theme 4.0 Leadership and Sustainability for Succession: Document data shows a need for the organization to have leaders in place who will foster long-term sustainability. Johnson (2016) referred to charismatic leader-ship as being beneficial. Various literature speaks to this phenomenon, and it is one that has some scholars discussing how it is a quality of respectable leadership. As predictors of financial performance Waldman, Ramirez, House, and Puranam (2001) assessed the characteristics of charisma and the transactional leadership style of CEO leadership. Northouse (2013) also mentioned transformational leadership as being most effective for leaders who have good visionary abilities, as well as a charismatic trait. To sustain a long-term organization through upright succession develop-ment, leaders should be great at vision, strategy, and scaling. To do so, a leader should be influential, and charisma appears to attract followers. Coding DOC4 mentioned human capital roadblocks that take root in some corporations as follows:

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When talented people top out in leadership roles, they can prevent the next gen-eration from moving up. The best companies avoid these roadblocks by creating new positions, collaboration opportunities and stretch assignments so future leaders have room to grow. (Gale, 2013)

DOC4 also states that “succession planning isn’t part of the culture” (p. 9). For the organization to sustain its healthy existence after succession is executed, it must be monitored. New leaders should go through review processes with the Board every nine to 15 months as well as when there are other major leadership changes (DOC4). Like Theme 3.0—which is not interpreted in this chapter—quality leadership skills can be learned and passed on to new leaders to ensure organizational sustainability. Transferring learned skills through mentorship and training is paramount for a situation such as succession development, reminiscent of the ways of apprenticeship or parenthood. Doing so is where knowledge management is at its finest.

sTudy iMPlicaTions and liMiTaTions

This research is limited to document data only. Since the authors used the document analysis research method, the text was analyzed similarly to par-ticipant interview transcripts. Although these documents’ data offered reliable information, a subsequent study requires more detailed data col-lection by including diverse types of sources of data. Triangulation could then be procured, providing a follow-up study with more validity. This study still offers positive implications (e.g. how to hone successor capabili-ties), even in its brevity, for present organizations looking to learn more about the processes and strategies with potential for utility.

fuTure research recoMMendaTions

As with virtually all research, succession planning is a topic that evolves as more research is published. The authors suggest that a multiple case study allows a more in-depth analysis of succession planning for both large and small entities. A focus group method could be used in that case study approach by including middle management and executive management individuals capable of candidacy in their respective organizations. After the multiple case study, other researchers may be willing to use the findings to conduct a quantitative correlational study with hypotheses derived from

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peculiarities of the prior case study results. Identified variables would be more viable, and predictions would be grounded in the previous data from the multiple case study methodology.

conclusion

In the context of this study, organizational theory inclusive of action research is the premise for which succession planning is framed. Arranging for new leaders in large and small businesses is a process necessitating con-tinuous action. Successors who are cognizant of the community, society, and environment in which their companies serve will have insight into CSR. In conjunction with action research, CSR resides within an organi-zation’s corporate governance policy. These theoretical underpinnings support the goal of succession planning.

Evaluation of select literature aligns with the purpose of this chapter’s study, the problem within, and the research question created. Analysis of the collected document data procured themes founded on representative information. Findings show promising ways to implement practical suc-cessions with a perspective on strategic balance. The authors offered their recommendations on future research possibilities, study implications, and research method. The authors’ goal was to contribute to the body of knowledge on a topic that continues to rebuild dated knowledge with renewed intelligence.

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Pepper, D. (2016). Exploring the strategies organizational leaders need for imple-menting successful succession planning (Doctoral dissertation). Retrieved from ProQuest Dissertations & Theses Global. (Order No. 10156596)

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Prestera, G. (2014). Where is my leadership bench? 3 things executives can do to develop bench strength. Leadership Excellence Essentials, 31(7), 33. Retrieved from https://www.hr.com/en/topleaders/all_articles/where-is-my-leader-ship-bench-3-things-executives-c_i06ruysz.html

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Taggart, K. (2007). High morale key to healthy workplace. Medical Post, 43(2), 8. Retrieved from http://www.canadianhealthcarenetwork.ca/physicians/maga-zines/the-medical-post/

Tara Flynn, C. (2006). Six succession planning myths debunked. Business Credit, 108(7), 33. Retrieved from https://nacm.org/business-credit-magazine.html

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Waheed, S., & Zaim, A. H. (2015). A model for talent management and career planning. Educational Sciences: Theory & Practice, 15(5), 1205–1213. https://doi.org/10.12738/estp.2015.5.2357

Waldman, D. A., Ramirez, G. G., House, R. J., & Puranam, P. (2001). Does lead-ership matter? CEO leadership attributes and profitability under conditions of perceived environmental uncertainty. Academy of Management Journal, 44, 134–143. National Research Council (U.S.). Building Research Institute. Conferences. Washington, DC. Fall 1959.

addiTional references

(Coding Documents)[Labeled as Coding DOC4]Gale, S. F. (2013). Succession planning roadmap: How to build a robust succes-

sion planning program that aligns current talent development with future leadership need. Workforce Magazine. Retrieved from https://www.workforce.com/2013/03/11/succession-planning-roadmap/

[Labeled as Coding DOC2]Halogen. (2015). The state of succession planning: Are you doing enough to identify

and develop talent to build bench strength? Retrieved from http://cdn.halogen-software.com/uploads/learn/whitepapers-and-ebooks/the-state-of-succes-sion-planning-are-you-doing-enough-to-identify-and-develop-talent-to-build-bench-strength/state-of-succession-planning-report.pdf

[Labeled as Coding DOC1]Rothwell, W. J. (2010). Effective succession planning: Ensuring leadership continu-

ity and building talent from within (4th ed.). New York: AMACOM, A Division of American Management Association.

[Labeled as Coding DOC5]Treasury Board of Canada Secretariat. (2009). Succession planning and manage-

ment five-process. Retrieved from https://www.tbs-sct.gc.ca/gui/spgr/spg-gpgr-02eng.asp?for=hrps&sa=X&ved=0ahUKEwiuq83X8OPVAhUH54MKHek-CTAQ9QEIJjAA

[Labeled as Coding DOC3]Wilson, T. (2015). 8 steps for effective succession planning. Retrieved from http://

www.halogensoftware.com/blog/8-steps-for-effective-succession-planning

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CHAPTER 4

Succession Planning Management

Joseph Keller

Succession management is the process of identifying and developing suc-cessors for critical roles within an organization. Every organization seeks to fill critical roles with the best possible candidates in the shortest amount of time. Many organizations spend a lot of time and money implementing a succession management program as part of its ongoing talent manage-ment initiatives. Succession management relies on the talent management process that focuses on the flow of employees from onboarding to exit. The succession management process include a focus on identifying long and short term backups as well as ongoing development of qualified can-didates for permanent positions.

Succession management refers to the systematic process of determining critical roles within the organization and identifying and evaluating pos-sible successors, then developing successors for these roles (Fulmer & Conger, 2004). Succession planning programs allow the organization to identify qualified internal replacements. Candidates that are identified are then mentored through a process to prepare them for a future role.

The process of succession management includes identifying potential candidates and then developing and preparing them for specific positions (Berke, 2005). Usually, the focus is on internal employees who have been identified as candidates having the potential to rise within an organization,

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but need more experience or training to succeed. The need to determine future supply requirements is a critical function for every organization. Future employment needs within an organization must be carefully planned and managed to determine whether an organization can meet the demand for personnel replacement from current employees in the organi-zation or go outside the organization. Forecasting is the process of pre-dicting a future event based on historical data. It can include educating guessing. It is the underlying basis of all business decisions, including pro-duction, inventory, facilities, and of course labor supply. Firms use fore-casting to determine its labor supply needs.

Organizational demand for labor supply is available from two sources or a combination of these two: internal (current employees) and/or exter-nal (recruiting people from outside the organization). There are various techniques available to managers used to analyze labor supply. Organizations use management inventories and employee skills invento-ries to determine how they might meet their labor demand requirements from the current base of employees.

The purpose of implementing a succession management program is simple but important. Succession management provides a higher level of competitiveness as organizations with successful programs tend to outper-form their competitors (Berke, 2005). One way this is accomplished is through continuity of key leadership. One cannot always predict the unex-pected turnover for key leaders who quit, retire, or die. When key leader-ship roles become vacant, a succession program quickly provides capable replacements. It is natural to conclude that delays in replacing a key posi-tion result in decreasing operating performance.

It is incumbent upon human resources (HR) to lead the way for a suc-cessful succession management program. HR needs to identify key roles within the organization that need to be protected, and needs to be involved with identifying potential candidates. HR is challenged with designing specific training and mentoring programs to ensure success.

Trends in market supply indicate continued pressure on skilled labor. Effective succession planning is essential for competitive advantage and a continuous organizational function (English, 2011). A business survey indicated that less than one-third of companies have a succession manage-ment program (Career builder, 2011). Employee retention is improved if this is in place, and a succession management program can clear the way for the advancement of diverse groups as well as enabling an organization to respond to changing environmental demands (Kuswati, 2010).

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There are numerous implications for human resource management (HRM) when two disparate companies combine thousands of employees around the globe. The synergies gained naturally include internationaliza-tion as well as eliminating redundancies, which means cutting jobs. An acquisition of this size includes inherent risks. The challenge for HRM is to align HR policies and programs with corporate strategy. Therefore, HR policies and programs must support corporate strategy. This includes the strategic management of people within organizations that successfully execute a succession management strategy in parallel with HR policies and programs.

HR Policies and PRogRams

People cannot succeed with poorly formulated or poorly executed poli-cies, programs, or strategies. Senior managers are tasked with setting strat-egies within their organization to accomplish organizational goals. These may include managing costs, maintaining profitability, improving cus-tomer satisfaction, and managing employees. It is generally the responsi-bility of senior management to determine corporate strategy. Once a strategy is created and accepted, it permeates the organization. Department and divisional managers accept the strategy and develop plans to achieve the goals set forth in the strategy. This, of course, includes the HRM department, which will also design HR policies and programs according to strategy. It should be noted that the HR policies and programs natu-rally span many departments and divisions.

The management of people is considered a strategic resource that requires planning. Successful organizations place a high value on employ-ees throughout their strategic planning. The benefits and goals of this are that organizations become better positioned to meet their strategic goals. The nuts and bolts of how this is accomplished is that HRM does not only include the management of people but also provides insight and control over structure and design, communication, culture, ethics, and organiza-tional change. At many levels today, HRM is involved with recruiting, restructuring and downsizing, mergers and acquisitions, corporate social responsibility (CSR), and so on. Organizational performance is gained through HRM’s effective management of employees that is in harmony with the organization’s succession planning strategy.

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Focus and BeneFits and PuRPose

A succession management program also includes identifying and tracking external candidates as there are benefits associated with hiring from out-side an organization. However, the benefits of promotion exceed the ben-efits of hiring. Internal candidates are known quantities of skills and successes (or failures) through their annual reviews. This provides an orga-nization with the opportunity to develop internal candidates in specific areas; where the organization needs to improve in providing immediate results in their current positions as well as a future return when they advance (Rothwell, Jackson, Knight, & Lindholm, 2005).

Succession management programs help managers look to the future by preparing employees to assume leadership roles. Managers, including HR managers, are able to respond to the predictable changes in leadership and help responses to the unpredictable. Succession management programs provide continuity in times of internal and external disorder. Until recently, succession management has focused primarily on C-level management. Today, the focus has expanded to include the chief executive officer (CEO), senior management executives, and all other positions considered critical to the success of the organization. Senior leaders must adopt a long-term focus that includes succession management as a business strat-egy. Forces in the labor market such as retiring baby boomers and the increasing turnover of key management positions require a well-defined and developed succession management program (Iacono, 2016). Organizations that implement a successful succession management strat-egy increase tenure and retention of key positions, and reduce turnover (Fulmer & Conger, 2004). Employee turnover is reduced and morale improved when employees have a clear direction for their career paths. Organizations that employ a succession management strategy tend to attract better job candidates.

Managers and organizational leaders are developed in a timely manner according to the strategy of the organization. Diverse groups are offered more opportunity for advancement. Organizational efficiency is improved with a successful succession management strategy as key positions can be filled more quickly, ensuring business continuity. Employees are better equipped to respond to the challenges and changes of dynamic environ-mental demands. Strategic planning may also be influenced by the envi-ronment in which it operates. There are environmental factors that shape organizational strategy, so managers and leaders must continually monitor the environment.

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tHe PRocess oF succession management

Succession planning begins with identifying and selecting candidates with the potential to learn and assume key positions (Kuswati, 2010). The plan-ning process includes ongoing training programs to prepare candidates for advancement. This provides a continual supply of candidates ready to assume key positions as required, promoting continuity in leadership. Continuity of the organization is the key objective for any succession plan-ning strategy, followed by selecting and preparing future leaders. It is incumbent upon HR to design a succession planning strategy that includes forecasting.

HR forecasting is the ongoing process for planning future staffing needs and its effects on the business. It is about placing the right people in the right places and at the right time. This can strain an organization’s management and budgets. HR managers will project its staffing needs (the number and type of workers) based on its strategies as well as its operational requirements, all of which are correlated with expected future sales or growth but also based on attrition or downsizing, and so on. HR forecasting includes planning of administrative costs associated with add-ing or downsizing workforce. It also includes identifying and tracking external candidates, as there are benefits associated with hiring from out-side an organization. Forecasting provides an organization with the opportunity to develop internal candidates in specific areas where they need to improve by providing immediate results in their current positions as well as a future return when they advance.

HR managers will lead the way for a successful succession management program. They will identify specific roles within the organization that need to be protected. HR needs to ensure that there is an adequate train-ing and mentoring program and implement effective ways to monitor its success. The support and engagement of senior management is needed every step of the way.

Strategies may be reactive, such as when there are changes in various environments: legal, economics, political, sociocultural, competitive, and so on. Strategies may be proactive, such as when an organization enters new markets, introduces new products/services, or withdraws from com-peting within a specific industry. The strategic planning process consists of several steps that senior managers use to analyze both the internal and external environments of their organization.

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Future employment needs must be carefully planned and managed to determine whether an organization can meet the demand for personnel replacement from current employees or must go outside the organization. Forecasting is the underlying basis of all business decisions, including pro-duction, inventory, facilities, and, of course, labor supply. HR uses fore-casting to determine its labor supply needs. Organizational demand for labor supply is available from two sources or a combination of them: inter-nal (current employees) and/or external (recruiting people from outside the organization). There are various techniques available to HR manage-ment to analyze labor supply. Organizations use management inventories and employee skills inventories to determine how they might meet their labor demand requirements from their current base of employees. In addi-tion, succession planning allows the organization to identify qualified internal replacements.

Additional benefits of a succession management program include improved employee retention, as employees are provided a clear career path and the required training and support to advance. This in turn reduces skill gaps and also works to develop leaders more quickly. Such a program can clear the way for the advancement of diverse groups, and it enables an organization to respond to changing environmental demands.

It is important to align succession management with an organization’s business strategy. Succession management planning and business strategy should be connected. With a business strategy that focuses on acquisi-tions, executives need to learn the skills required for managing a diverse workforce and competitive landscape. The organization needs to train leaders to possess skills related to the strategy. Leaders engaged with acquisitions should be trained in adaptive leadership, communications, and integration. Succession management training should be designed in alignment with overall strategy.

Training programs should develop the leadership skills required to attain the organization’s strategic goals. Employee skills and competencies required can then be identified. HR can help leaders to classify employees who may already possess specific skills or possess the potential to develop the skills required to execute the business strategy. These employees are then selected to receive specific training for their new career path, focusing on the skills and competencies required for the specific roles they will be assuming. This includes basic comment methodologies, such as promotions, job rotation, coaching, mentoring, feedback, assessment sys-tems, and self-assessment.

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Training for candidates needs to include more than learning the jobs they will be performing. Succession management programs are designed to build for the future. The future for every organization is uncertain. Training needs to focus on a diversified set of skills and proficiencies to better manage the challenges the organization will face in the future. The challenge for a training program is to develop a candidate’s skills to his or her highest potential. Other challenges include the employee’s level of performance in the current job, willingness to advance, readiness for movement or promotion, and recent accomplishments.

The process of identifying employees who possess the potential for training and advancement requires input from senior managers. The ben-efit of a succession management program is that it provides for seamless transition in senior level management vacancies. This, of course, is the purpose of such a program. But an ancillary benefit is that a succession management program helps leader focus on the long-term business. The focus on the future helps leaders to assess future competencies and skill sets needed for their organization. Leaders who plan for the future can move the organization proactively. Their succession management pro-gram can begin with the recruitment and hiring process, training pro-grams, and appraisal systems.

The performance appraisal system can then help leaders and employees to focus on the future and not just the past, aiding leadership to focus on internal candidates. This results in a focus on employees, their future, and a plan for their career paths, improving tenure. The performance appraisal system then works with the succession management program, together creating a workplace where leaders look to the future and the entire direc-tion of the organizational strategy is pointed in that direction.

A point of order is needed here, because a succession management pro-gram linked to the appraisal system needs to avoid the check-box approach to completing a form. The appraisal system requires active engagement from senior leaders. This means the appraisal system should be more fre-quent than once a year: succession management planning should be con-sidered a fundamental and frequent business strategy, just like monthly forecasting of sales numbers or production data. This means the appraisal system requires specific methods and measurements for succession man-agement candidates. Leaders are then engaged with the program and pro-cesses, and held accountable for the success of their candidates.

A succession management program provides an organization with the opportunity to develop internal candidates in specific areas where they

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need to improve. Leaders can assess internal candidates in their current positions and recommend specific areas needing development. This pro-cess forces executives to interface closely with employees, providing addi-tional benefits beyond succession management. Leaders gain faster access to information through engagement with candidates. Focused training provides an immediate payoff in decision-making and productivity as employees’ skills improve. Corporate culture is enhanced and preserved.

conclusion

The purpose of succession management is to ensure that replacements are ready for key positions within an organization. Successful organizations place a high value on employees throughout strategic planning. The man-agement of people is considered a strategic resource that requires plan-ning. Succession management programs help to ensure continuity of talent, improve competitiveness, and improve organizational stability and growth.

ReFeRences

Berke, D. (2005). Succession planning and management: A guide to organizational systems and practices. Greensboro, NC: Center for Creative Leadership.

Career Builder. (2011, May). Nearly one-third of companies don’t have succession planning. Retrieved from http://www.careerbuilder.com/share/aboutus/pressreleasesdetail.aspx?ed=12%2F31%2F2011&id=pr639&sd=5%2F24%2F2011

English, F. W. (2011). The SAGE handbook of educational leadership :Advances in theory, research, and practice. Thousand Oaks, CA: Sage Publications.

Fulmer, R. M., & Conger, J. A. (2004). Growing your company’s leaders : How great organizations use succession management to sustain competitive advantage. New York: AMACOM.

Iacono, M.  V. (2016). Perianesthesia management succession. Journal of Perianesthesia Nursing, 31(6), 542–546.

Kuswati, R. (2010). Succession management: Upaya human resource planning menuju success corporate. Benefit Journal Manajemen dan Bisnis, 13(1), 45–51.

Rothwell, W. J., Jackson, R. D., Knight, S. C., & Lindholm, J. E. (2005). Career planning and succession management: Developing your organization’s talent – for today and tomorrow. Westport, CT: Praeger.

J. KELLER

49© The Author(s) 2018P. A. Gordon, J. A. Overbey (eds.), Succession Planning, https://doi.org/10.1007/978-3-319-72532-1_5

CHAPTER 5

Succession Planning in Non-Profit Healthcare Organizations

Suzanne Moss Richins

B.E. Smith’s 2016 Intelligence research results showed the most significant test for filling executive vacancies was finding qualified applicants: 53% of participants stated that their strategy involved filling openings from within the organization. Yet, only a third of them possessed a formal succession plan (Rosin, 2016).

A succession plan creates a smooth transition, stability, and comfort to employees who often want security. One that encompasses all employees creates a sense of value. Employees know that an investment in employee developments shows that individual contributions are recognized and provides hope that there will be opportunities for career development. Retention occurs when employees see a future match of individual goals with organizational opportunities. Interested and capable employees could participate or lead project teams to gain additional experience.

Presently, healthcare leaders face continuous change based on the Affordable Care Act of 2010 and the upcoming repeal or replace goal set by the new administration. Leaders confront challenges that affect the manage-ment and development of its workforce. The executive leaders and gov-erning boards are experiencing unprecedented pressures requiring a transformation of care delivery focused on growing demands for high- quality

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and cost-effective care. They need to effectively develop succession planning using a process to guide the evaluation of their current situation and identify the short- and long-term leadership needs. A study by the National Center for Healthcare Leadership (2016) on the systematic failure of healthcare organizations revealed that not nearly enough attention is being paid to suc-cession planning or talent management activities. There is a critical need to support talent development professionals in the healthcare industry.

History

In order to make sense of succession planning in healthcare, it is important to understand the subject’s history. In the beginning, physicians visited patients at home when they were in need. The only succession planning occurred when a seasoned physician took on an apprentice to pass on what he knew.

As medical knowledge advanced, there was a need to create places for the poor to receive care. Almshouses were created in the early nineteenth century. Only the poor were admitted, while the wealthy still received all care in their own homes through physicians, midwives, or others who were not formally trained for patient care. These almshouses gradually changed into hospitals as medical care advanced. They were charitable institutions owned and run by religious organizations, and were not deemed businesses: therefore, there was little attention to the business side of medical care, and they were subsidized through contributions from the Church. Often there was a physician who took charge of the overall hospital business and a nurse who had responsibility for all patient care.

The industrial revolution created a need for more formalized care and facilities to deliver the care. Individuals who moved to the cities for work often left their families in the country, which meant there was no one to care for them if they were injured or ill. This void was filled through the creation of hospitals. The industrial revolution was followed by the creation of unions to protect employees. These unions demanded healthcare for employees. Blue Cross was founded in 1930 as one of the first insurance companies. These provided more reimbursement for care, further changing these chari-table hospitals into non-profit organizations that acted more like businesses.

With the new reimbursement for care, hospitals evolved both into pub-lic institutions and private non-profit organizations. Of the 5564 hospitals in the USA in 2017, there were 2845 non-profit community hospitals (AHA, 2017).

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After the Depression, administrators were hired to oversee hospital business functions. In 1946, James A. Hamilton founded the first pro-gram specific to healthcare administration. This was initiated at the University of Minnesota and provided a master’s degree in Hospital Administration, which is more broadly focused today on all entities where care is provided and has been renamed the Master of Healthcare Administration (MHA) program. This became the standard for all subse-quent MHA programs. The degree attracted men who chose the health-care field as their profession. Over the years, most boards have required the MHA for all administrators.

The course of study includes population health, healthcare economics, health policy, organizational behavior, management of healthcare organi-zations, healthcare marketing and communication, human resource man-agement, information systems management and assessment, operations assessment and improvement, governance, leadership, statistical analysis and application, financial analysis and management, and strategy formula-tion and implementation.

Following graduation, these new graduates are placed in hospitals where they complete a fellowship by working with an executive team for hands-on experience. Most MHA programs today still match their gradu-ates to post-graduation fellowships, which begin the career track with the goal of eventually becoming the chief executive officer (CEO) of a health-care organization. Typically, the fellowship provides an opportunity to work on projects and strategic planning along with the opportunity to attend executive team and governing board meetings.

After completion of the fellowship, the individual obtains a position as a vice-president or assistant administration. The first position is normally for non-clinical departments such as housekeeping, food services, and plant operations. Next, they move into overseeing some of the clinical departments (not nursing), such as imaging, respiratory therapy, and pharmacy. Following this experience, they become chief operations officer and eventually take the chief executive position.

Besides the requirement for an MHA, most boards require certification or fellowship from the American College of Healthcare Executives (ACHE). In order to become a member, one must obtain a master’s degree (previously, the master’s program had to be an MHA), hold an executive position in a healthcare organization, or be enrolled in an MHA program. Members must complete 36 hours of continuing education every three years and pass a certification examination. During the MHA,

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student studies are counted towards this requirement. “As the profes-sional society for healthcare leaders, ACHE is committed to helping healthcare executives address important challenges to ensure the delivery of safe, high-quality care. To do that well requires a diverse profession that reflects the communities we serve and represents our clinical partners across the continuum of care—who share a commitment to providing the best care possible” (ACHE, 2017). ACHE also provides a mentorship program with a focus on helping members advance their careers by net-working with a senior individual. “ACHE’s Leadership Mentoring Network is not intended for students, nor is its intent to find employment for mentees; rather it is designed for employed healthcare professionals seeking growth as leaders. A mentoring partnership involves developing trust, investing feelings and energy and sometimes taking risks by chal-lenging a partner’s self-image. If a mentor feels valued only for the con-nections he possesses or the doors she can open the relationship probably will never develop” (ACHE, 2017).

ACHE also connects members with executive coaches. These individu-als are listed in the organization’s directory. Members engage in a contrac-tual agreement with the executive coach for themselves or members of their executive team. In addition, ACHE provides a career center where jobs are posted and members can access them.

Because ACHE members and CEOs were historically white males, there is now a concerted effort for diversity. Leadership has recognized that a “diverse healthcare workforce is best equipped to recognize and address gaps in care, we are helping to lead the way in advancing executive diversity and inclusion by forming sustainable partnerships, engaging stakeholders and offering resources to help diverse executives succeed” (ACHE, 2017).

While strides in improving diversity still show that white males domi-nate the profession. (ACHE, 2015), the results from 1409 participants were not combined but reported as male and female separately. The report states that this was done in order to determine racial and ethnic statistics. The results showed that white males comprise 51% of the CEO and chief operating officer (COO) positions with 26% minority men. They state that more men than women held these positions, with 32% of the female group being white women and 19% black women. Compensation also favored white males, with a median of $190,000. Hispanic males earned 17% less than white males and Asian men earned 25% less. White women earned 25% less than white males, with Asian men at 11% less than white women

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or 36% less than white males; Asian women earned 21% less than white women and 46% less than white males in the same positions.

Turnover of healthcare chief executive officers was 20% in 2014 and 15% in 2016. The demands of the job and the ageing of the executive healthcare workforce mean that governing boards need to understand how succession planning occurs, with a focus on optimization. ACHE found that only 52% of hospital boards conduct succession planning for the CEO position. Similarly, only 51% said they conducted succession planning for other top leadership roles (Jarousse, 2014).

CliniCal traCt to administration

Traditionally, good clinicians in healthcare were promoted through the ranks of staff to leadership positions. The majority of nurses join the reg-istered nurse ranks after earning an associate degree in nursing; for instance, registered nurses quickly become charge nurses. Charge nurse responsibilities include ensuring quality patient care, solving problems that arise during a shift, and meeting the needs of the staff assigned to the shift. When they perform this function well, they are often promoted, becoming a manager, then a director, and finally ascending to a chief nurs-ing officer or COO role. A few advance to CEO position.

This same route exists in a hospital’s other clinical departments. Until the 1990s, few clinicians earned a master’s in business administration. Yet from the time they become managers, they assume accountability for bud-geting, staffing, and many other managerial functions. Some organiza-tions provide limited management training in finance, budgeting, and quality improvement, but these are not identified specifically for advance-ment. Additionally, these individuals are not assigned a mentor to help with their career development.

The American Organization of Nurse Executives (AONE) was founded to address the lack of training for competencies required of managers and executives. It provides “leadership, professional development, advocacy and research to advance nursing practice and patient care, promote nursing lead-ership excellence, and shape public policy for health care nationwide. AONE is a subsidiary of the American Hospital Association” (AONE, 2017).

AONE provides workshops and certificates for training of the early careerist, with workshops on emerging nurse leadership skills. According to AONE: The early careerist shares equal responsibility and accountabil-ity for his or her own professional development by:

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• Promoting an environment which keeps the focus on the patient.• Sharing expertise and time to contribute to and support the organi-

zation’s mission.• Developing and openly sharing career and personal goals, and aspira-

tions with direct supervisor.• Leveraging resources provided by the organization to help achieve

personal and career goals.• Recognizing that emotional intelligence is central to effective

leadership.• Understanding cross generational attributes; including one’s own

cohort group (2017).

As nursing leaders move up the chain of command assuming more responsibility, AONE provides more training opportunities. The second level of training is entitled mid-careerist. Certified Nurse Manager and Leader (CNML) includes an examination based on the five practice areas of financial management, human resource management, performance improvement, strategic management, and technology, all of which provide a solid understanding of these competencies.

The final level prepares nurses for a position on the executive leadership team. AONE Nurse Executive Competencies detail the skills knowledge and abilities that guide the practice of nurse leaders in executive practice regardless of the individual’s educational level, title, or setting. These competencies were captured in a model developed in 2004 by the Healthcare Leadership Alliance. They identified the common core set of competency domains for healthcare leadership: communication and rela-tionship management, knowledge of the healthcare environment, leader-ship, professionalism, and business skills and principles (AONE, 2017).

AONE also provides mentoring by matching members who need more skills with those who have already obtained them. “The Leader2Leader Member Community connects AONE members from across the country for nursing leadership skill development through mentoring and personal relationships. Mentorship gives experienced nurse leaders an opportunity to help develop the next generation. It gives mentees guidance and resources for leadership as they are growing in their career” (AONE, 2017).

The development of resilient leaders requires organizational commit-ment to provide opportunities for growth and competency in leadership skills. AONE encourages current leaders to commit to mentoring others

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by sharing their experience and knowledge, followed by specific advice for the mentee. (Gerardi, 2017).

Following the enactment of the Affordable Care Act in 2010, the Robert Wood Johnson Foundation funded an Institute of Medicine (IOM) study of nursing, which culminated in a recognition that “nurses have great potential to lead innovative strategies to improve the health care system” (IOM, 2011). The report furthered identified the need for nurse executives to serve on governing boards. While there are 3 mil-lion registered nurses in the USA, only 4% serve on governing boards (Knowlton, 2014).

PHysiCian leadersHiP

A few healthcare organizations in the USA were developed by physicians; they include Mayo Clinic, Cleveland Clinic (1921), Kaiser, and Virginia Mason. Since physicians founded them, they have always included physi-cian leadership. In all of the others, there were parallel leadership tracks, one for the medical staff and the other for governors of the organization’s business. The physicians often took turns as president of the medical staff. In the 1950s, hospitals began to see the need for a paid medical director, making administration a triad between the administrator, the director of nursing, and the medical director.

The first professional organization for physician leaders originated in 1975 as the American Academy of Medical Directors (AAMD), founded by Roger Schenke, MBA. It morphed through a couple of iterations and is now the American Association for Physician Leadership (AAPL). Most organizations require medical director certification as a physician execu-tive (CPE) through the AAPL (AAPL, n.d.).

When a physician extends his or her influence and reach beyond clinical acu-men to anticipating changes in the industry, setting the vision and tone for an organization, leading the charge in setting and achieving objectives, mentoring and motivating others, improving outcomes and contributing to the advancement of his or her organization and health care in general, that physician has become a physician leader. Since 1975, the American Association for Physician Leadership has helped physicians develop their leadership skills through education, career development, thought leadership and community building. (AAPL, n.d.)

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Just like ACHE and AONE, the AAPL offers certification courses, con-tinuing education, and tailored leadership assessments, training, coaching, and consulting pertinent to healthcare delivery systems. Assessment, coaching, and training focus on communication, change management, physician engagement and integration, behavior, and performance, along with strategic planning. The requirements for being a Certified Physician Leader include attaining the level of Certified Physician Executive, being a licensed physician with one year of leadership experience, 150 hours of tested management education, or a graduate management degree, and being board certified in a clinical specialty with three years’ experience after residency and fellowship. CPE candidates must pass the three-and-a- half day Certifying Commission in Medical Management Certification Program. (AAPL, n.d.).

During the 1980s, process improvement activity was initiated in hospi-tals to improve the quality of care amid declining reimbursement. It was soon evident that process improvement could not occur without the assis-tance and contributions of the medical staff. They were invited as critical members of the process improvement.

Menaker and Bahn (2008) found that physician leaders excel in balanc-ing the needs of various stakeholders. These leaders’ accountabilities include the provision of strategic vision and direction, evaluation of pro-grams and development of new programs, and policy and procedure development and enforcement, ensuring quality of care, recruitment, and retention of the medical staff. These researchers forge relationships with physicians by coaching and spending time with them as individuals, assess-ing their abilities, needs, and aspirations, and mentoring them in each of these areas.

With the advent of the Affordable Care Act in 2010, physician integra-tion into leadership became a requirement. Prior to the ACA, most physi-cians were independent practitioners. After the implementation, hospitals began to hire physicians as they worked toward meeting the requirements for Accountable Care Organizations.

Annually, U.S. News & World Report publishes the ranking of hospitals across the USA. In 2016–2017, the top five were listed in the following order: Mayo Clinic, Cleveland, Clinic, Massachusetts General Hospital, Johns Hopkins Hospital, and UCLA Medical Center. All are physician led. The quality of care in cancer, digestive disorders, and heart care are all higher in physician-led hospitals; however, in 2014 only 5% of hospitals were physician led. (Belieu, 2017).

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suCCession Planning researCH in HealtHCare organizations

The National Center for Healthcare Leadership (NCHL) (2010) con-ducted research determining the systematic failure of succession planning in healthcare organizations. The researchers noted that little attention was focused on succession planning or talent management activities. In addi-tion, a high turnover in both the chief executive office and the chief nurs-ing office created instability in organizations coupled with an inadequate leadership plan for succession, which created a systemic failure to provide these leaders with the capabilities to replace departing executives.

The NCHL conducted case studies on the best practices used by well- known healthcare systems. One of them took place at North Shore University Hospital. The senior leaders in the hospital system were asked four questions:

1. Who are your top performers? 2. Who are your middle performers? 3. Who are your bottom performers? 4. Who is your replacement? (2010).

These questions were used to identify those people who needed more training to successfully perform their jobs, as well as those who could ascend to a higher level of leadership in the organization. Within five years, leadership instituted software solutions that supported innovative approaches for identifying, selecting, assessing, and developing talent in the organization. One of the methods used to create a pipeline for leader-ship was the High Potentials Program, which provides training to acceler-ate the development of potential leaders in order to augment existing talent pools. Once these changes became part of the organization’s strat-egy, the succession planning system, processes, and tools evolved and improved. Besides providing a richer pool for subsequent openings in the organization, the return on investment was demonstrated through lower turnover across the board, and was estimated at $7.7 million (2010, p. 8).

The three organizations used in this original research were used to develop the NCHL Health Leadership Competency Model™ (NCHL, 2017). This provides the healthcare industry “with a comprehensive, vali-dated competency model that will be suitable as the foundation for a breadth of leadership assessment and development applications. To ensure relevance

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to leaders from across disciplines, the Model was developed and validated utilizing interdisciplinary subject matter experts, and was refined in collabo-ration with industrial and educational psychologists. The resulting model has been adapted for use extensively in healthcare settings, and is now the leading model in use by accredited graduate programs in healthcare manage-ment, according to research conducted by CAHME” (Commission on Accreditation of Healthcare Management Education).

The American Hospital Association and the American Society for Healthcare Human Resources Administration (ASHHRA) provide a tem-plate for use in succession planning. They have issued the following joint statement: “Succession planning is the proactive identification of leader-ship needs through leadership workforce analysis, leadership career plan-ning, and development. Every organization needs a succession plan. Be transparent with new hires, especially about their potential trajectory if they meet competencies, training, and job requirements” (2017).

suCCession Planning aCross multi-disCiPlines

Healthcare mentoring functions across mentoring and training by profes-sional organizations, and there is one scheme that provides training across disciplines. This is the Institute for Healthcare Improvement (IHI) initi-ated by Don Berwick, a pediatrician who was an early proponent for qual-ity improvement. He espoused the idea that it takes a multidisciplinary team to accomplish true process improvement in healthcare (2017).

IHI conducts research and training and shares ideas globally about how to improve care and at the same time reduce costs. During the 1990s, IHI focused on identifying best practices and sharing them freely with others. This collaboration of experience helped to foster improvement through-out the industry.

Beginning in 2000, the focus expanded to include research, which was also freely shared with any and all interested parties. This initiative identi-fied some best practices that could prevent untoward incidents and save lives. It resulted in the 100,000 lives campaign, where the 5000 US hos-pitals were asked to join and adopt these best practices. Following the enactment of the Affordable Care Act in 2010, IHI started the Triple Aim program, which focuses both on the health of the population and the cost of providing care to ensure their health. This program focuses on health through prevention rather than diagnosis and treatment, which was the previous paradigm.

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tHe governing Board resPonsiBility in suCCession Planning

First, the board needs to determine the level of formal succession plan-ning needed in the organization. Most consider succession planning as beginning with the executive members, CEO, COO, Chief Financial Officer, Chief Nursing Officer, Human Resource Officer, and those in directorial and managerial positions. Any key positions deemed difficult to recruit should be identified. They often include directors and managers for the laboratory, diagnostic imaging, perioperative services, pharmacy, and information technology.

Creation of a matrix focused on these positions could include identifi-cation of individuals in the organization who could fill these roles, along with any expected dates for retirement. Then more focused plans for inter-nal advancement preparation could take place. Both retirement and turn-over precipitate the need for succession planning. A shortage of leadership-ready staff accentuates the need for training of current staff. Many organizations have failed to develop a culture of internal succession planning.

In order to commence succession planning, the human resource officer should conduct an internal assessment to present to the board. This should contain the current workforce demographics internally and the workforce market in general. It should include age, current turnover rates, and any union considerations that could affect succession planning. Subsequently, this information should be updated and presented to the board. In order to ensure leadership-ready employees, the organization should provide opportunities for development in areas where skills and experience are lacking.

This identification could start with the annual performance review. This is a good time for the immediate superior of every employee to determine the employee’s career goals. This information can be used as part of the succession plan, in which employee career goals are matched with organi-zational needs. In health systems, there is a need to plan for both ambula-tory and acute care.

Succession planning should include the use of analytics focused on both the needs for future leadership along with the ability to match skills, edu-cation, and experience with needs. Predictive analytics can identify candi-dates with the most potential for success based on the annual performance review, leadership assessments, and evaluations.

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ConClusion

During this transition from episodic care payments to value-based reim-bursement (ACA goal) based on population, it will take strong leadership to ensure financial viability as well as engaged physicians and employees. In healthcare, succession planning depends on professional organizations.

Nursing leadership and the non-clinical leadership in the executive suite relies on the professional organizations to provide both leadership training and mentoring. Executive level members volunteer to mentor other mem-bers in formal mentoring relationships. Healthcare organizations encour-age membership of these organizations.

The literature review shows that a study of hospital organizations and their leaders’ philosophy about succession planning could reveal differ-ences and best practices. The identification of informal and formal pro-cesses could provide information relevant to improvement in succession planning. Executives and boards would find this information valuable in their strategic planning.

referenCes

American Association for Physician Leadership. (n.d.). Physician leaders defined. Retrieved from http://www.physicianleaders.org/about/

American College of Healthcare Executives. (2015). Report: A racial/ethnic com-parison of career attainments in healthcare management. Retrieved from https://www.ache.org/pubs/research/2014-Race-Ethnicity-Report.pdf

American College of Healthcare Executives. (2017). 2017 Annual Report. Retrieved from www.ache.org/annualreport

American Hospital Association (AHA). (2017). Fast facts on US hospitals. Retrieved from http://www.aha.org/research/rc/stat-studies/fast-facts.shtml

American Organization of Nurse Executives. (2017). About AONE. Retrieved from http://www.aone.org/about/overview.shtml

Belieu, D. (2017). Clinicians in the C. Suite. Retrieved from http://www.health-leadersmedia.com/physician-leaders/clinicians-c-suite?spMailingID=11010255&spUserID=MTY3ODg4NjM2NDQyS0&spJobID=1161055546&spReportId=MTE2MTA1NTU0NgS2

Gerardi, D. (2017). Using coaches and mentors to develop resilient nurse leaders in complex environments. Retrieved from http://www.aone.org/resources/member/publications/voice-july-2017.pdf#_ga=2.226494036.830286069. 1504393296-391490453.1503618632

Institute for Healthcare Improvement. (2017). Overview. Retrieved from http://www.ihi.org/education/ihiopenschool/overview/Pages/default.aspx

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Institute of Medicine. (2011). The future of nursing: leading change, advancing health. Retrieved from https://www.nap.edu/read/12956/chapter/1

Jarousse, L. A. (2014). Succession planning: Building leaders. Retrieved from http://www.trusteemag.com/articles/777-succession-planning-building-leaders

Knowlton, D. L. (2014). Hospitals must recruit nurses to their leadership boards. Retrieved from http://www.rwjf.org/en/culture-of-health/2014/10/hospi-tals_must_recru.html

Menaker, R., & Bahn, R. (2008). How perceived physician leadership behavior affects physician satisfaction. Retrieved from https://www.ncbi.nlm.nih.gov/pubmed/18775197

National Center for Healthcare Leadership. (2010). Best practices in health leader-ship talent management and succession planning: Case studies. Retrieved from www.nhcl.org

National Center for Healthcare Leadership. (2016). Best practices in health leader-ship talent management and succession planning: Case studies. Retrieved from http://www.nchl.org/Documents/Ctrl_Hyperlink/doccopy5800_uid6102014456192.pdf

National Center for Healthcare Leadership. (2017). NCHL Health Leadership Competency Model™. Retrieved from http://nchl.org/static.asp?path= 2852,3238

Rosin, T. (2016). 6 common pitfalls of succession planning and how to prevent them. Retrieved from http://www.beckershospitalreview.com/hospital-manage-ment-administration/6-common-pitfalls-of-succession-planning-and-how-to-prevent-them.html

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CHAPTER 6

Succession Planning in the Small Business: The Good and the Bad

Donna M. Kjellander

The Small Business Administration (SBA) defines a small business as a company that employs 0–500 employees (Small Business Administration, n.d.). The first automatic assumption about a small business is that it is owned and operated by one individual or a family, but there are many ways to start and set up a small business that is not a family affair. While many may begin as a family-owned business, joint venture, partnerships, franchi-sees, licensees, and small corporations, a substantial number grow into large corporations. An example is Sam Walton’s Walmart (Walmart Corporate, n.d.). Every business owner or leader of a small business, regardless of its size, should consider succession planning in order to keep the company going in the future. Possible situations that family-owned businesses may face when selecting a future leader include there being no children or family, no children or family interested in the business, or a battle between two siblings, cousins, or other family members. As leaders plan imminent retirement or prepare for this event in the more distant future, they must decide who their successors will be and ensure they are prepared to run the organization. With baby boomers aging, the expecta-tion is that over the next ten years many families will begin to transfer businesses from the principal owner to the next generation (Koffi, Guihur,

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Morris, & Fillion, 2014). This chapter explores the good and bad of succession planning in small businesses that are family owned when the selection is being made from the family, from within the organization, or when external candidates are being considered.

Why Small BuSineSSeS avoid or Fail at SucceSSion Planning

In a family business, 85% of the time a family member is chosen to be the next successor of the company, and this is the time when 35% of family- owned businesses also fail (Baldner, 2005; Wolosky, 2003). Typically, this occurs under the leadership of a second-generation family member owing to poor or no succession planning, lack of training and development, or poor selection. Some small business owners procrastinate, do not provide training, or make no plans at all for their successor. Failing to consider the fact that the chief executive officer (CEO) might become severely ill, unable to work, or may even suddenly pass away is another reason that small business owners fail at succession planning. This is critical for small businesses: for a family business it is not just about the business, but family dynamics as well.

As well as addressing these family dynamics, the founder of the com-pany also has to be willing to step down and let the new leader take charge. Leaders who will not step down or continue to micro-manage their suc-cessor, saying such things as “this is how I would handle it” are setting up their succession plan to fail (Dattner & Chammorro-Premuzic, 2016). When the family leader is selecting a successor, a few considerations among many are whether one child should be favored over another, whether the child with the college degree should automatically be the successor, whether a college degree is a requirement, and how to manage those chil-dren who have no interest in the family business.

Most parents in a family-owned business want to treat their children equally and fairly; the challenge is achieving this. If not all the family mem-bers are actively working in the business, this creates problems within busi-ness and family alike. Transferring shares to children who are not active in the business and do not want to be part of it is a challenge that has to be considered (Giarmarco, 2012). Dividing the business equally among chil-dren may not be fair if one child takes no active role in the company but others are actively involved: a situation like this can create animosity (Nawrocki, 2005). Non-active children may be dealt with by transferring

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wealth to them or by consideration of an external candidate and/or selling the business (Giarmarco, 2012; Nawrocki, 2005).

One of the primary reasons why a successor fails is being unprepared for the role (Sims, 2014). Whether the current leadership selects a family member, external candidate, or an internal candidate, a particular skill set is necessary (Sims, 2014). In the event that there is an only child, the assumption might be automatic selection as the successor, regardless of the required skill set for future success. Small businesses have a small pool of successors, which has an impact on whether candidates are properly prepared (Bagby, 2004). When it comes to selecting any successor, the recommended requirements are business experience in the company, busi-ness experience with other companies, and a good education (Brown & Coverley, 1999). The family successor needs to be willing to take over the business, along with “commitment to the family, the maturity of the suc-cessor, and successor’s degree of responsibility” (Zahrani, Nikmaram, & Latifi, 2014, p. 234).

In a family-owned business, succession planning should begin early rather than waiting until the need arises. There are a wide variety of situ-ations involving financial, operational, staffing, training, and interper-sonal issues, and more, that have to be addressed (Baldner, 2005). Succession planning is not just about selecting the right individual; there are financial implications as well. Small business owners cannot retire tomorrow without encountering major financial obstacles for all involved, which is why succession planning is so important in a family organization. The financial implications do not just involve simple accounting issues or the transferring of names on bank accounts. In the USA, the Securities and Exchange Commission (SEC) has specific guidelines, as does the Internal Revenue Service (IRS) (Barrett, 2016). Transferring ownership of a business could have a negative impact because of fees, estate taxes, and more (Giarmarco, 2012).

Avoidance is another reason why succession planning fails in a small business. Some CEOs are afraid about what they will do with their free time, unsure of how to occupy their time with their spouse, fear learning they can be replaced, or feel they risk losing their identity, since the busi-ness has defined them (Dattner & Chammorro-Premuzic, 2016). First- generation family-owned business leaders fear giving up control of the business that was their dream, with the expectation of entrusting the busi-ness to a successor and then determining what to do with their free time (Dattner & Chammorro-Premuzic, 2016). Today, businesses leaders may

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not want to deal with the term retirement (Dattner & Chammorro- Premuzic, 2016); more people than ever are working well into retirement years (Dattner & Chammorro-Premuzic, 2016). For many business own-ers, their identity and powers are tied to the family business (Dattner & Chammorro-Premuzic, 2016).

SucceSSion Planning oPtionS

Before exploring the options regarding the next CEO/leader of the family organization, several things need to be considered. First is what retirement means to the CEO who is taking retirement (Baldner, 2005): the amount of involvement in the company of a previous CEO after retirement will have an impact on the successor (Baldner, 2005). For example, a small business owner decided to plan for retirement from his business, promot-ing his youngest son to become CEO of the company. This plan was cre-ated early, allowing the founder to spend time training his son, with the aim of a smooth transition. There was a clear vision in the succession plan-ning along with clearly defined responsibilities; this prevented employees from attempting to go over the son’s head to his father. This succession planning was a success. The same business is now preparing the third gen-eration for its leadership role, having spent over 25 years involved in suc-cession planning process and training.

Alternatively, if the CEO intends to remain involved in the business, there can be confusion for employees (Hodes, 2014). CEOs who turn over the business to the next generation but then step back into the busi-ness, giving employees directions that differ from those of the new leader, can create confusion among employees, customers, and everyone else involved in the organization (Hodes, 2014). The same thing can occur in family-owned businesses, where one sibling has been chosen to be the suc-cessor but other siblings feel they deserved the role. Having clearly defined roles for these others is important in order to prevent confusion among stakeholders. Open discussions with family members, including spouses, grandchildren, cousins, and any family members with current or future involvement in the business are vital for healthy decision-making and maintaining the company’s success in the future (Hodes, 2014). A family- owned business is a family affair, which means that a different set of emo-tions is involved than in a large corporation (Bagby, 2004).

Other succession planning techniques that small family-owned busi-nesses may consider range from uncertainty to doing nothing. In a recent

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conversation with the owner of a small business who was uncertain about the correct technique to be used to select a successor, it became clear that the initial thinking involved selling the business or making one child the successor. Uncertainty, no succession plan, or deliberate avoidance of planning are common practices. Every family-owned business has a dif-ferent perspective on succession planning and plans for the future, and the avoidance of a succession plan denies the reality that the business can succeed without the current leadership team (Dattner & Chammorro- Premuzic, 2016).

Family Member Leader

The first consideration for a family-owned business is to determine whether to select a family member or to look for an external candidate. For many family-owned businesses, the individual selected is fresh out of college with no work experience other than working for the family business (Wolosky, 2003). One recommendation is to require family members to obtain employment outside the family organization, which creates more well-rounded leaders (Wolosky, 2003). Transferring ownership to the next generation is not just about giving them the keys and making them the CEO; employee reactions, loyalty towards, and trust of the successor should be considered (Giarmarco, 2012). The new leader will need the support of key managers, other siblings, other family members, and the employees (Giarmarco, 2012; Nawrocki, 2005). On many occasions, fam-ily members will be required to hold several jobs within the organization to learn about the business. Creating copresidents is an option that may be considered when more than one sibling or family member is involved (Ghee, Ibrahim, & Abdul-Halim, 2015). When considering a family member as a successor, it is important to consider that trust, loyalty, com-mitment, communication, jealousy, sibling rivalry, resentment, beliefs, and values will have an impact on other family members and employees (Ghee et al., 2015). The reaction to and acceptance of a successor by other family members and employees should be addressed in the succession plan so as to not create problems for the business in the future (Ghee et al., 2015). A family succession plan should involve positive family relations, commu-nications, and respect in order to prevent hurt feelings, egos, and family drama (Zahrani et al., 2014). The checklist that follows identifies the pos-sible concerns that need to be addressed when it comes to selecting a fam-ily member as a successor:

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• Trust between family members• An authoritarian leadership style• Lack of experience in the business or industry• Family member or dedicated employee• Lack of working knowledge of the business• Inequity/equity of rewards among family members• Communication challenges within the family unit• Lack of interest• Lack of training• Lack of education• Reluctance to let go of power or control• Preferential treatment given to one gender over another• Different leadership styles between owner and successor• Vision and goals are not aligned between owner and successor• Lack of trust between family members• Lack of work experience• Lack of trust and commitment from existing and long-term employ-

ees (Ghee et al., 2015, p. 110)

The complexity of family dynamics plays an intricate role, and a family member is successful as a successor in just one-third of cases (Ghee et al., 2015). Small family businesses whose succession transitions are successful have “strong family member relationships, work and family values, succes-sor training and experiences” (Ghee et al., 2015, p. 122). The key to a successful transition is consideration of all the possible concerns in the quoted checklist in terms of family dynamics (Ghee et  al., 2015). Proactively implementing succession planning rather than waiting is a crit-ical element of success.

Internal Candidate Leader

Selecting an internal candidate means identifying potential successors early in order to allow sufficient time to create seasoned candidates (Charan, 2009). Selecting a good manager as a successor is one technique, or alter-natively human resources (HR) might identify potential successors (Charan, 2009). Internal candidates are familiar with the business and its employees, which can promote loyalty (Lauterbach, Vu, & Weisberg, 1999). In addition, employees are more loyal to an internal candidate than an external candidate (Lauterbach et al., 1999). A possible disadvantage of

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an internal candidate is the lack of new ideas for adaption or growth of the business, both of which are more likely from external candidates (Lauterbach et al., 1999). Many companies abandon the selection of an internal candidate with the belief that an external candidate will have the required skill set to lead the business immediately, versus the possibility that an internal candidate will develop new skills (Charan, 2009). In addi-tion, smaller businesses may face challenges regarding the number of high- quality internal candidates unlike larger businesses with more employees (Lauterbach et al., 1999).

One of the more well-known successful internal candidates in a small business is John Yokoyama of Pike’s Fish Market (Pike’s Fish Market, n.d.-a, b). John Yokoyama began working at Pike’s Fish Market in 1960 and was given the offer to buy in 1965 (Pike’s Fish Market, n.d.-a, b). This is an example where the internal candidate was able to improve and grow the business so that it is not just a place of business but a tourist attraction as well (Pike’s Fish Market, n.d.-a, b). Internal candidates can be very suc-cessful; their success depends upon planning, vision, goals, objectives, training, skill sets, and family dynamics.

External Candidate Leader

When no other options are available, a small business owner may decide that his or her only option is to hire an external candidate or to sell the business (Baldner, 2005). First, the owner should consider is their retire-ment plan, whether to stay on as a consultant working part time and assisting the successor, or whether to sell the business completely and give full control to the successor (Baldner, 2005). Internal candidates tend to be bound to the company’s previous policies, while an external candidate might bring new ideas to the company, which is considered an advantage (Lauterbach et al., 1999). External candidates tend to be change agents with innovative ideas (Lauterbach et al., 1999). Commitment is one of the most important traits that an external candidate needs to keep a fam-ily business going in the future (Baldner, 2005). External candidates need to be aligned with the mission statement, vision, organizational values, and culture (Baldner, 2005). When it comes to hiring an external candi-date, the recommendation is for this to be a last resort as internal candi-dates are more successful in sustaining the company over the long term (Charan, 2009).

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training and develoPment

Many companies have leadership programs designed to develop leaders for succession. Many colleges and universities have leadership programs that focus on leadership development, the challenge being that “the true devel-opment happens on the job, not in a classroom” (Charan, 2009, p. 75). Many company leaders believe their leadership training is the same as suc-cession training and development. In some leadership programs the can-didates do not work in a department long enough to see the short-term and long-term consequences of their decisions (Charan, 2009). How long a candidate or family member works in each area of the business is key to their overall success; and succession candidates should be exposed to every department in order to ensure training that encompasses every aspect of the company. For example, if the successor is not exposed to all depart-ments, the learned information from marketing does not mean they will understand a profit and loss (P&L) statement (Charan, 2009). Whether the company uses a formal training program, an informal training pro-gram, or special projects, the fact is that a successful succession takes years when properly executed (Nawrocki, 2005). Companies that are successful in overcoming the challenges of succession planning are those that blend leadership development programs with succession planning processes in order to identify, develop, and place the best leadership talent for company growth (Groves, 2007).

concluSion

Succession planning fails for many reasons, the most common being the failure to create a succession plan. Whether one decides on a family mem-ber, internal candidate, or external candidate, without proper planning the chance of the company being successful is lower than when time is dedi-cated to succession planning. Whether the successor is family, internal, or external, what matters is whether the successor has the knowledge, skills, ability, and business record to be successful. Successors should not be selected because of their gender, or because they are the favorite child or favorite family member, but because of their abilities. The successor’s edu-cation, managerial and leadership skills, and entrepreneurial capabilities all work towards the creation of a successful succession plan.

Family dynamics must be considered when selecting a family member as a successor, in order to maintain family continuity and harmony.

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Traditionally the assumption has been that sons will take over the business, though today more females are becoming owners of family-owned busi-nesses. Gender should not play a role as much as family dynamics, in order to prevent role confusion for those children active in the business and to maintain familial harmony. Family dynamics, family relationships, and keeping the peace can be achieved through proper communication and discussions with all family members.

This chapter illustrates the research on why small business owners fail to create a succession plan, along with presenting examples of real small business owners who have created a plan that has worked using family members and internal candidates. There are many reasons why small fam-ily business owners fail at succession planning; the fact remains that the main one is failure to create a plan or to allow the appropriate time for training, development, and the creation of leadership skills. With proper planning, which allows years to train and prepare the next successor, small family businesses can continue throughout several generations with great success. The key to succession planning is creating a plan, implementing that plan, and giving the plan appropriate timelines. As a manager stated to me years ago, “pre-planning prevents poor performance” (R. Parr, per-sonal communication, July 1989) This statement holds true for succession planning in family businesses.

reFerenceS

Bagby, R. T. (2004). Enhancing succession research in the family firm: A com-mentary on “Toward an integrative model of effective FOB succession”. Entrepreneurship Theory and Practice, 28(4), 329–333. https://doi.org/10.1111/j.1540-6520.2004.00048.x

Baldner, G. (2005). Effective succession planning: Should you keep leadership in the family? Franchising World, 37(2), 79–80. Retrieved from https://search.proquest.com/docview/208932943?accountid=32521

Barrett, A. (2016). Study: Does CEO succession planning disclosure matter? The Corporate Governance Advisor, 24(3), 20–23. Retrieved from https://search.proquest.com/docview/1788576213?accountid=32521

Brown, B., & Coverley, R. (1999). Succession planning in family businesses: A study from East Anglia, U.K. Journal of Small Business Management, 37(1), 93–97. Retrieved from http://web.a.ebscohost.com.proxy-campuslibrary.rockies.edu/ehost/pdfviewer/pdfviewer?vid=0&sid=4896d370-6c62-4135-8e1e-a8886f2ea92d%40sessionmgr4007

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Charan, R. (2009). Ending the CEO succession crisis. Harvard Business Review, 83(2), 72–81. Retrieved from http://web.b.ebscohost.com.proxy-library.ash-ford.edu/ehost/pdfviewer/pdfviewer?vid=0&sid=7777f633-1584-4ac6-8832-71d2302f00b3%40sessionmgr104

Dattner, B., & Chammorro-Premuzic, T. (2016, September 15). A CEO’s person-ality can undermine succession planning. Harvard Business Review, 2–5. Retrieved from http://web.b.ebscohost.com.proxy-library.ashford.edu/ehost/pdfviewer/pdfviewer?vid=0&sid=50e79b79-bb2a-479e-af34-20dffda52ac6%40sessionmgr101

Ghee, W. Y., Ibrahim, M. D., & Abdul-Halim, H. (2015). Family business succes-sion planning: Unleashing the key factor of business performance. Asian Academy of Management Journal, 20(2), 103–126. Retrieved from https://search.proquest.com/docview/1765625924?accountid=32521

Giarmarco, J. (2012, March). The three levels of family business succession plan-ning. Journal of Financial Service Professionals, 66(2), 59–69. Retrieved from http://web.b.ebscohost.com.proxy-campuslibrary.rockies.edu/ehost/pdfviewer/pdfviewer?vid=0&sid=620a599c-7177-48e5-b716-a0f639a84764%40sessionmgr120

Groves, K. S. (2007). Integrating leadership development and succession planning best practices. Journal of Management Development, 26(3), 239–260. https://doi.org/10.1108/02621710732146

Hodes, B. (2014). That dog don’t hunt. Leadership Excellence Essentials, 35–36. Retrieved from http://web.b.ebscohost.com.proxy-library.ashford.edu/ehost/pdfviewer/pdfviewer?vid=0&sid=6d7ba7b5-5834-46d7-aa9c-e2c3eee8d9ca%40sessionmgr101

Koffi, V., Guihur, I., Morris, T., & Fillion, G. (2014). Family business suc-cession: How men and women predecessors can bring credibility to their successors? Entrepreneurial Executive, 19, 67–85. Retrieved from http://web.a.ebscohost.com.proxy-campuslibrary.rockies.edu/ehost/pdfviewer/pdfviewer?vid=11&sid=67e249ae-f09c-4ac6-afe7-c71b45354732%40sessionmgr4007

Lauterbach, B., Vu, J., & Weisberg, J. (1999). Internal vs. external succession and their effect on firm performance. Human Relations, 52(12), 1485–1504. https://doi.org/10.1177/001872679905201201

Nawrocki, T. (2005). Family affair: The emotional issues of succession plan-ning. Journal of Financial Planning, 34–39. Retrieved from http://web.a.ebscohost.com.proxy-campuslibrary.rockies.edu/ehost/pdfviewer/pdfviewer?vid=16&sid=67e249ae-f09c-4ac6-afe7-c71b45354732%40sessionmgr4007

Pike’s Fish Market. (n.d.-a). https://www.pikeplacefish.com/blogs/meet-the-mongers/john-yokoyama

Pike’s Fish Market. (n.d.-b). https://www.pikeplacefish.com/pages/mission

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Sims, D. M. (2014, August). 5 ways to increase success in succession planning. Training and Development, 68(8), 60–65. Retrieved from http://web.a.ebscohost.com.proxy-campuslibrary.rockies.edu/ehost/pdfviewer/pdfviewer?vid=0&sid=1eaec5b4-1971-4382-a50d-eda491a09068%40sessionmgr4006

Small Business Administration. (n.d.). www.sba.govWalmart Corporate. (n.d.). http://corporate.walmart.com/our-story/our-historyWolosky, H.  W. (2003, May). Succession planning: Can a family mem-

ber cut it? Practical Accountant, 36(5), 38–40. Retrieved from http://web.a.ebscohost.com.proxy-campuslibrary.rockies.edu/ehost/pdfviewer/pdfviewer?vid=0&sid=4269c317-bae7-4ca9-8384-32c05d49dab9%40sessionmgr4007

Zahrani, M. A., Nikmaram, S., & Latifi, M. (2014, July). Impact of family business characteristics on succession planning: A case study in Tehran industrial towns. Iranian Journal of Management Studies, 7(2), 229–243. Retrieved from http://web.a.ebscohost.com.proxy-campuslibrary.rockies.edu/ehost/pdfviewer/pdfviewer?vid=0&sid=3c2fcbe3-e3b0-4990-a8c3-e026e0a37558%40sessionmgr4010

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CHAPTER 7

Succession Planning in Family-Owned Businesses

Lillie M. Hibbler-Britt and Anna Copeland Wheatley

Family-owned businesses are prevalent, persistent, and a primary source of economic development, not only in the USA but worldwide. The numbers are staggering: family-owned businesses comprise 80–90% of all businesses in North America (Sonfield, Lussier, & Fahed-Sreih, 2016). Globally, fam-ily firms account for two-thirds of all businesses, representing an estimated 70–90% of global gross domestic product (GDP) annually (the Family Firm Institute, www.ffi.org). Recent data from the Global Family Index, which comprises 500 of the world’s largest family-owned companies by revenue, show that these firms account for a combined $6.5 trillion in annual sales. A recent article in Forbes magazine covering these findings noted that the figure is “enough to be the third-largest economy in the world (bested only by the U.S. and China) and employs nearly 21 million people, about 42,000 people per company on average” (Peterson-Withorn, 2015).

The growth in the number of family-owned businesses may, however, be offset by the fact that approximately 40% of business owners are expected to retire (Panson et al., 2017), making it imperative that these enterprises participate in succession planning. The process of succession planning for family-owned businesses is harder than that associated with large corporations owing to the limited talent pool from which to select

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candidates. Major corporations can use talent acquisition companies and leverage resources to attract the best candidate, but this is not the case with some family-owned businesses. Family-owned businesses may be confined to hiring family members (Mokhber et al., 2017), and thus may struggle to find a successor who can move the company forward. According to the PWC Global Family Business Survey 2016, 43% of family-owned businesses do not have a succession plan in place. To investigate how family- owned businesses might address this succession gap, this study will use resource-based theory to compare the cultural impact of family-owned businesses in Canada, India, China, and Mexico, in order to examine the factors that affect the ability of family-owned businesses to participate in succession planning.

Family-Owned Business deFined

Family-owned businesses encompass organizations that are sole propri-etorships to large multinational companies, including Michelin, Armani, Walmart, Home Depot, IKEA, Volkswagen, Berkshire Hathaway, and EXOR in Italy, owned by the Agnelli family. How family-owned busi-nesses strategize and plan for succession varies based on organizational structure, culture, and family member involvement in the operation of the business. Family-owned businesses also vary in whether they are publicly or privately held entities, and whether they have ownership shares that have been allotted outside of the family. These characteristics lead to mul-tiple definitions of what constitutes a family-owned business.

There are numerous definitions for family-owned businesses. In fact, the definition varies by country, with a wide range of terms and conditions including “family-owned,” “family-managed,” “family involvement,” and “generational transfer,” to name just a few. PricewaterhouseCoopers (PwC) offers the following comprehensive definition of a family-owned business:

A family business is defined as one in which (1) the majority of votes are held by the person who established or acquired the company (or by their spouses, parents, child, or child’s direct heirs) and (2) at least one representative of the family is involved in the management or administration of the business (Panson et al., 2017).

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steps in the successiOn prOcess

Succession planning for any business is a process and not an event (Saxena, 2013). A study that tracked 3500 wealthy families over a 20-year period identifies four key areas that parallel the challenges facing family-owned businesses, offering insight that is applicable to succession transition in family-owned businesses. Breakdown of communication and trust within the family unit accounted for 60% of failures; inadequately prepared heirs accounted for 25%; absence of a clear vision or mission to align family members accounted for 12%; and failure by professional advisors to cor-rectly interpret (or anticipate) taxation, governance, and wealth preserva-tion issues accounted for less than 3% (Williams & Preisser, 2003).

There are several general steps to be undertaken in order for the succes-sion planning process to be successful. These include:

1. selecting the successor; 2. developing or training the successor in the family business and busi-

ness in general; 3. developing a strategic plan for when the incumbent leaves the

organization; 4. ensuring a strategic plan is detailed and goal-oriented; 5. defining the role of the outgoing incumbent; 6. disclosing the successor to organizational stakeholders; 7. ensuring successor takes leadership responsibility in the organization; 8. implementing organizational strategic plan; 9. providing mentoring to the successor, by the incumbent if possible.

Guidelines may differ according to specific situations but should repre-sent a range of strategies in order to increase the probability of a successful transition from one generation to the next and to increase the chances of the organization’s survival. Successful leaders “tend to be those who have successfully graduated from the role of entrepreneur-as-streetfighter to that of entrepreneur-as-manager” (Ward, 2011, p. 9). The move to the managerial role provides a framework for planning for the future, which includes creating separate plans for family participation, successors’ leader-ship development, and a strategic family plan (Ward, 2011).

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FactOrs aFFecting successiOn planning in Family- Owned Businesses

In the 2017 US Family-Owned Business Survey, PwC determined the need for family-owned businesses to participate in strategic planning as it relates to succession planning. PwC coined the term missing middle to define the gap that exists in the medium-term strategic planning that is needed to help ensure a family business thrives in the future (Panson et al., 2017). The drive for success and the day-to-day operational needs of the organi-zation may impact a manager’s ability to devote adequate time to prepar-ing for a transition from one family member to the next.

Mokhber et al. (2017) argued that succession planning needs to aggre-gate and assess the skills of potential successors to determine who has the best chance of driving the success of the organization. Succession planning requires time and a process that will strategically work toward the selec-tion of the most appropriate individual to move the company’s mission and vision forward while achieving the organizational goals. In the con-text of family-owned businesses, the players who participate in the strate-gic process must also take into consideration the emotional profile and personality traits of the current leader as they select the next leader of the business (Mokhber et al., 2017).

An important emotional influence related to succession planning within family-owned businesses is the concept of ownership lifecycle. In this final stage, the owner relinquishes control of the family business (Mokhber et al., 2017). Ownership lifecycle requires the current head of the organi-zation to acknowledge her own mortality and inability to continue leading the company for ever. At the same time, the owner must provide adequate economic and social capital to ensure that the organization can succeed under a new leader.

A further hindrance regarding the positioning of the organization once a successor is in place is that the successor may be more likely to over- identify with the family system (Mokhber et al., 2017). This desire to con-tinue in the family footsteps may lead to a lack of innovation and creativity, causing the company to lose its strategic place in the market. Jain and Jain (2014) stated that the “business owners failure to carry-out succession planning in a timely manner is a major reason why the life-span of Micro, small and medium family owned business enterprises (MSM-FOBE) only last the life-span of the owner-manager.”

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the rOle OF resOurce-Based theOry in Family- Owned Business successiOn

Tatoglu, Kula, and Glaister (2008), defined succession planning within family-owned businesses as the transfer of management control from one family member to another. In some cultures, this may present a problem if the successor is viewed as lacking the social resources of the current manager. Transitioning top management in family-based firms offers challenges that are less likely to affect family-independent companies. Statistically, only three out of ten family-owned businesses survive the second generation and a mere 3% survive the third generation transfer (Tatoglu et al., 2008). One reason for this is the lack of viable options in choosing a successor and/or a lack of interest among those successors who might be qualified.

This lack of potential family members to succeed the current manager is a function of resource-base theory. Barrales-Molina, Montes, and Gutierrez-Gutierrez (2015) argued that non-substitutable resources are the primary source of an organization’s competitive advantage. In the case of family-owned businesses, a viable successor is a non-substitutable resource. The looming concern is whether there is an heir apparent or suc-cessor who possesses the resource capital that meets or exceeds that of the current chief executive officer (CEO).

Even when a company identifies a qualified successor, there is no guar-antee that the individual identified will be willing to take the position. McMullen and Warnick (2015) determined that the relationship between a parent founder and child successor is of particular importance as an indi-cation of the successor’s motivation and commitment to the family-owned business. Succession is not a one-sided decision by the parent founder; the child successor must also agree to accept the leadership role (McMullen & Warnick, 2015). The acceptance of this new role offers a better likelihood that the organization will continue to meet both financial and non- financial goals that were originally determined by the company’s founder/CEO (McMullen & Warnick, 2015). Some of the non-financial goals that the founder may desire include securing the family dynasty, perpetuation the family social capital, and demonstrating altruism towards family mem-bers (McMullen & Warnick, 2015).

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cultural perspective OF successiOn planning: canada, india, china, and mexicO

In addition to the internal challenges surrounding succession planning for family-owned businesses, there is an increasing threat from external fac-tors. Patel, Pieper, and Hair (2016) made a strong case for the imperative for family-owned businesses to go global or languish in their home mar-ket. Reflecting on the findings of several recent studies about the need to be competitive internationally, the authors concluded:

survival for many companies will likely depend on their ability to substan-tially increase revenues and profits from overseas ventures. Facing survival or demise undoubtedly creates urgency for family businesses to consider, or perhaps reconsider, entering the global marketplace. Thus, going global may no longer be optional. (Patel et al., 2016)

The pressure increases because the same marketplace reality holds true in most countries. The challenges of succession planning may vary, but the need to have a system in place to identify and train successors does not. A review of succession planning in Canada, India, China, and Mexico demonstrates the competitive strengths and weaknesses that can impact both the global research of family-owned businesses and the need for leadership that will embrace broader markets. In all four countries family-owned businesses play a major role in national economic stability. However, each country does possess unique characteristics that impact succession planning.

Koffi, Guihur, Morris, and Fillion (2014) found that approximately 50% of family-owned businesses in Canada will succeed to the second gen-eration, which is above the average found by Tatoglu et al. (2008), where roughly one-third of businesses make it past the transition to the second- generation manager and only 3% survive into a third generation. Within the context of human resources, approximately 98% of Canadian small and medium enterprises (SMEs) employ less than 100 employees; therefore, they are not required to have a formal human resources management sys-tem. This complicates the success of management transition within family- owned businesses.

Owing to the size and potential economic impact of successful transi-tion of owner and management in Canadian firms, Koffi et  al. (2014) investigated the variance between male and female business owners as it

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relates to establishing the credibility of their successor. The study found that in family-owned businesses in which a female was the incumbent, the motherly leadership style was effective in helping the successor to be per-ceived as credible and competent to run the business. Women incumbents tended to allow their future successors to take the lead in managing key activities within the company without oversight, prior to their transition to CEO or leader.

Humphreys (2013) recorded that in situations where the paternal par-ent is the chief business leader and their daughters are joining the family- owned business, the father is more likely to share responsibility with the daughter as she develops in the organization, but with continuous moni-toring. Humphreys’s study of 14 daughter successors revealed that men-toring by the incumbent was used as the primary means of establishing credibility, and thus the transfer of business leadership.

In India, businesses are more commonly known as business houses (Saxena, 2013). Their culture is embedded within caste and linguistic communities. These provide credit, insurance, and business connections to the members, not just in India but throughout the world (Saxena, 2013). Gupta (2012) stated that approximately 90% of businesses in India are family owned. These survive owing to high self-discipline and self- governance (Gupta, 2012). Conversely, some challenges to family-owned businesses in India are patriarchal control, lack of professional manage-ment, poor communications among family members, no written policies for handling conflict, and quality assurance issues.

A 2013 survey conducted by PwC into issues faced by Indian family- owned businesses defined them as innovation, talent retention, efficient succession planning, and acquisition of new technology (PwC, 2013). While Indian entrepreneurship is high, succession rates vary. A 2012–2013 PwC Family Business Survey found that one-third of Indian family busi-nesses planned to pass on the ownership but not the management to the next generation, because of uncertainty regarding the next generation’s executive skills. Only 4% indicated that they would sell their interest (PwC, 2013). Impressively, the report found that 78% of the respondents had procedures in place to deal with family conflicts.

Another factor affecting succession planning in India is the family members who live abroad and inherit assets, thereby creating taxation issues. With wealth accumulation comes the need to preserve that wealth. When distributing assets that are held in other countries, other countries’ laws and requirements must also be taken into consideration (Gupta,

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2012). Other key factors affecting family-owned businesses in India are family conflicts and the ability to raise capital. As younger family members enter the business there is a generation gap that the business needs to adopt. Bringing talent in from outside the family is also problematic, as these individuals may not gain the same freedom that they would find at non-family-owned businesses (Panson et al., 2017).

In China, a distinguishing feature of family-owned businesses, as in all cultures, is that social capital is important as it relates to conducting busi-ness. However, the concept of social capital and legitimacy of business leadership is especially high in Chinese cultures. The term Guanxi relates to the system of social networks that impacts business owners’ relation-ships and influences their business operations and dealings, referring to the social capital of a specific person (Deng, 2015). Succession in China is not only determined by the owners’ will, but also the institutional envi-ronment (Zhou, Hu, Yao, & Qin, 2016). The authors point out that suc-cessors who are perceived as legitimate are “more effective in acquiring resources and minimizing transactional costs” (Zhou et al., 2016, p. 711).

To facilitate the perception of a successor’s legitimacy, owners must develop a detailed succession plan. This plan serves multiple purposes, but the primary goal is to reduce ambiguity and conflict after the incumbent retires. Zhou et al. stated that power confrontation may diminish when key relatives and top managers know in advance about the apparent suc-cessor. A plan allows the successor to prepare for her new role in the family business; she can begin to cultivate social capital, which adds to her legitimacy.

Companies in China follow three modes of ownership control transi-tion: family succession of both ownership and management, family owner-ship with professional management, and the family exiting the business. When transitioning from one family member to the next, Bennedsen, Fan, Jian, and Yeh (2015) found that companies often lose value one year before the successor takes control. This reduction is possibly caused by a lack of legitimacy, and can be circumvented by the introduction of the successor early in the succession process, education, training, family mem-ber support, stakeholder support, and the successor’s development of his or her own social capital.

For politically connected families in China, Xu, Yuan, Jiang, and Chan (2015) discovered that Chinese companies are more likely to have second generations in their firms. This allows the family to preserve their political connections. However, Deng (2015) reported that sons and especially

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daughters found it took time to transfer these connections. In fact, some of them might be lost owing to generational differences (Deng, 2015).

Increasingly, women in Chinese family-owned businesses are accepted as the successor (Deng, 2015). This is partially owing to the one child per family policy of the late 1970s. Often families may have only a daughter to be the successor; consequently, daughters in China are being educated and groomed to take over family businesses (Deng, 2015). Although they are being prepared, females still face hurdles such as the transfer of social capital.

As in China and India, family-owned businesses in Mexico have a sig-nificant impact on the country’s economy. It is estimated that 95% of companies in Mexico are family owned (Calzada, Moheno, & Hernandez, 2015). Avila and Preiss (2015) showed that SMEs represent approxi-mately 50% of the country’s GDP and employ 70% of the population. Avila and Preiss (2015) Mexico also ranks fifth in the world in the number of family-owned businesses. It is worth noting, however, that 75% of these businesses do not survive two years. Avila and Preiss (2015).

The North American Free Trade Agreement (NAFTA) created new opportunities for SMEs to export to the USA. However, small business owners have been unable to take advantage of this owing to a “lack of strategic planning, lack of professional management, lack of financial resources, obsolete business techniques and a lack of relevant literature” (Avila & Preiss, 2015, p. 67). The authors also noted, though, that in 2013–2014 the Mexican government instituted “significant changes in the country’s economic structure to create a global growth mindset” (Avila & Preiss, 2015, p. 68).

Viable data regarding family-owned businesses in Mexico are more dif-ficult to gather; subsequently, limited information is available. Despite the lack of information, Aguilo and Aguilo (2012) found that within Mexican family-owned businesses there is a large amount of ownership concentra-tion, meaning the same owners are involved in multiple holdings. Moreover, many family firms are controlled by large conglomerates, which are typically run by a company’s dominant shareholder through either pyramids, crossholdings, or dual class shares (Aguilo & Aguilo, 2012). An example of the impact of this is seen as it relates to Carlos Slim, named by Forbes magazine in 2013 as the wealthiest man in the world (Aceves, 2013). The combination of his holdings in various companies equates to approximately 43% of the Mexican stock market (Aceves, 2013).

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Calzada et al. (2015) report that the primary challenges faced by family- owned businesses in Mexico are reorganization, recruitment, developing new products, technology, cash flow, and the lack of governance structure. Even with these issues and the potential short life span of their businesses, 87.3% of family-owned business founders want business continuity and for a family member to take over upon their departure (Calzada et al., 2015). Unfortunately, the statistics are not in favor of continuity, with only three out of ten family-owned businesses surviving transfer to a successor. Consequently, proper succession is a priority for the survival of the com-pany (Maciel, Ramos, Aguilar, & Reyna, 2015).

Family-Owned Business successiOn planning and gender

Most families consist of male and female members, and studies showed that males and females think differently and react to challenges differently; they also process information and make decisions differently (Byrne & Worthy, 2015). The relationships that parents have with their children have implications for organizational dynamics in family-owned businesses (Nelson & Constantinidis, 2017).

There is a bias against females when it comes to succession planning, especially when there is a male child and the industry is typically male dominated (Glover, 2014). Research also shows that daughters are only considered as potential successors if they are an only child or all the chil-dren are female (Glover, 2014). One deterrent to women rising to power within a family-owned business is skepticism about their capabilities, which may come from other family members or stakeholders both internal and external (Glover, 2014). In situations in which there are non-family male employees, there is the potential for the father to have a paternalistic atti-tude towards them. Gender-biased paternalism may make succession dif-ficult for a daughter (Glover, 2014).

Even with the perceived bias against females as it relates to succession planning, there are changes about how women are perceived in the board-room as leaders of corporations are being challenged from the top down and the bottom up. For instance, cultural changes in primarily Islamic countries, along with political forces in China, have aided the increase in female successors in family-owned businesses (Nelson & Constantinidis, 2017). Attitudes are changing, and families no longer take for granted the role that female children will play in a family business.

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cOnclusiOn

Succession planning is a critical factor in the survival and growth of multi-generational family-owned businesses. Although defined in various ways, succession planning is a process that must be completed effectively to con-tinue the family legacy. With the majority of working adults employed by family-owned businesses and the contribution of family-owned businesses to world GDP, it is imperative that organizations understand the proper implementation of a succession plan. To engage in succession, the incum-bent must take all stakeholders into consideration and prepare a strategic plan to integrate the successor into the organization. If possible, the suc-cessor should gain experience both inside and outside the company, they must develop their own social capital, and also build upon the social capi-tal of the incumbent.

The changes that are taking place with regard to gender roles and responsibilities, as well as political and cultural changes, have all impacted family-owned business succession planning. These changes have opened the boardroom door, allowing more women to take the reins of their father’s company and to be successful.

reFerences

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Aguilo, T.  I., & Aguilo, N.  F. (2012). Family business performance: Evidence from Mexico. Cuadernos de Administración Bogota, 25(44), 39–61.

Avila, F.  J., & Preiss, A. (2015). Strategic management: A survival need for Mexican SMEs. Business Management and Strategy, 6(1), 65–73.

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Bennedsen, M., Fan, J. P., Jian, M., & Yeh, Y. H. (2015). The family business map: Framework, selective survey, and evidence from Chinese family firm suc-cession. Journal of Corporate Finance, 33, 212–226.

Byrne, K. A., & Worthy, D. A. (2015). Gender differences in reward sensitivity and information processing during decision-making. Journal of Risk Uncertain, 50(1), 55–71.

Calzada, M. A., Moheno, J. M., & Hernandez, B. C. (2015). Exploring family- owned businesses in the state of Hidalago, Mexico. European Scientific Journal, 11, 1857–7881.

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Deng, X. (2015). Father-daughter succession in China: Facilitators and challenges. Journal of Family Business Management, 5(1), 38–54.

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Maciel, A. S., Ramos, M. I., Aguilar, J. L., & Reyna, J. M. (2015). The influence of family relationships in the succession: A factorial analysis of Mexican enter-prises. Journal of Family Business Management, 5(2), 238–256.

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Nelson, T., & Constantinidis, C. (2017). Sex and gender in family business succes-sion research: A review and forward agenda from a social construction perspec-tive. Family Business Review, 30(3), 219–241.

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Patel, V. K., Pieper, T. M., & Hair, J. F. (2016). Opportunities and challenges for family businesses pursuing global markets. In K. Plangger (Ed.), Thriving in a New World Economy. Developments in Marketing Science: Proceedings of the Academy of Marketing Science. Cham: Springer. doi: https://doi.org/10.1007/978-3-319-24148-7_10.

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Saxena, A. (2013). Transgenerational succession in business groups in India. Asian Pacific Journal of Management, 30(3), 769–789.

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Tatoglu, E., Kula, V., & Glaister, K. W. (2008). Succession planning in family- owned businesses: Evidence from Turkey. International Small Business Journal, 26, 155–180.

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CHAPTER 8

Federal Agency Succession Planning

Sofia G. Loomis

This qualitative explanatory single case study was conducted to explore succession planning practices in a federal agency. It was comprised of interviews with one of the Department of the Navy federal agency’s senior civilian leaders and managers, direct observation, reviewing federal exit surveys, and retirement claim data. The sample population were federal employees who were GS-13 and above and had a minimum of two years of managerial experience working in the Washington Metro Area. There were six resultant themes identified in the explanatory case study. The case study provided insights into how succession planning occurs within the Department of the Navy to adequately facilitate the forecasted high num-ber of retirements and retirees’ knowledge transfer from 2016 to 2021.

Background

Federal Employee Retirement Systems

There are two federal retirement systems within the federal government: Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS) (Office of Personnel Management, 2017). Civilian employees who joined after January 1, 1987 were automatically

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enrolled into the FERS program. The focus of this explanatory single case study was on personnel in the FERS system (Loomis, 2017).

Each federal employee is eligible to retire based on time in service, age, and other additional criteria determined by the federal government’s retirement office (Office of Personnel Management, 2017). When a pro-spective employee wishes to retire, he or she contacts the Office of Personnel Management Retirement Office directly to begin the retire-ment process. Office of Personnel Management retirement benefit per-sonnel review each federal employee’s service record independently to assess retirement eligibility and then communicate directly with the pro-spective retiree.

Federal employees do not have a minimum retirement notice require-ment (Jones, 2010). In addition, the Office of Personnel Management Retirement Office personnel will only interface with the retiree in process-ing his or her retirement claim. There is no additional communication with the retiree’s leaders and/or his or her place of employment.

The only notification offered to the retiree’s workplace leadership is when the retiree chooses to provide notification. The lack of notification to the retiree’s leader will not trigger the hiring process to backfill the retiree’s position. The retiree’s leader is able to solicit for a replacement employee once there is formal notification from a retiree (Jones, 2010). Solicitation timeline and process may vary according to different com-mands and the job type.

Problem

There is a lack of federal succession planning in US federal agencies (Kaplan, 2013). In 2013, with 75% of the federal workforce being retire-ment eligible and no mandatory requirement to provide retirement notice, leaders were unable to plan for a retiree’s departure or replacement, or to adequately capture the retiree’s corporate knowledge (Kaplan, 2013). The remaining 25% of the federal workforce were non-retirement eligible and had less than five years’ experience within the federal government (Office of Personnel Management, 2013). In addition, the retirement of the highly experienced 75% retirement-eligible employees is highly unpredict-able yet inevitable (Cho & Lewis, 2012).

If there is no replacement, the retiree’s workload will not be completed or it may be assigned to other personnel. The retiree and the retiree’s lead-ers were unable to strategically plan knowledge transfer prior to a retiree

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leaving. Kaplan (2013) stated the federal government is “losing its minds” (p. 28). Inevitably, a knowledge gap could occur if turnover is not per-formed or an adequate transfer of knowledge is not performed prior to the retiree leaving the workplace. The knowledge disappears with the retiree. In addition, the existing workforce may not want the additional workload and may look for other employment opportunities, which also increases the loss of corporate knowledge.

case study Findings

The purpose of the explanatory single case study was to evaluate succes-sion planning within a Department of the Navy federal agency. Nineteen volunteer participants who were federal employees at General Schedule 13 (GS-13) and above with at least two years of managerial experience were interviewed within the Washington DC Metro area. Twelve out of the 19 volunteer participants had over ten years of managerial experience within a federal organization.

Purposive sampling and snowball sampling were utilized when select-ing the interview participants. The researcher directly contacted 14 par-ticipants who volunteered, and the volunteers solicited five additional participants. All of the participants’ personal information was removed and safeguarded from research to keep the participants’ identity anony-mous. Two research questions were:

1. What measures are in place to ensure proper performance of succes-sion planning within the Department of the Navy?

2. What are the most effective methods of transferring knowledge from federal agency’s retiring employees prior to their departure?

The first research question explored how the federal agency conducted succession planning within the Department of the Navy. The second research question investigated how retirees transfer knowledge and experi-ence prior to their departure from the federal organization. The research questions provided the over-arching focus to answer what managers and leaders perceived as succession planning processes and policies within their Navy organization.

Ten related interview questions were formulated to collect data to answer the two research questions. Each of the interview responses was organized and coded into NVivo 11, a qualitative software program, and

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Microsoft Excel spreadsheets. Six resultant themes were generated after negative content analysis was performed.

Theme 1: No Formal Succession Planning Guidance and Processes;Theme 2: Succession Planning Backfill Deficiency for Knowledge Transfer;Theme 3: Continuity of Operations through Formal Succession Planning;Theme 4: Employee Dependency for Organizational Succession Planning;Theme 5: Generational Employee Differences in Succession Planning;Theme 6: Lack of Formal and Linked Retirement Notice Tracking and

Policy for Succession Planning.

To ensure data comparison and triangulation, the interview data was compared to three additional data sources: field notes taken from direct observation of each interview participant, Senior Executive Service Exit Survey Results April 2015, and Office of Personnel Management’s Claims Processed and Inventory report. All of the data had similar results when triangulated. The emerging themes aligned with the other sources of data.

Theme 1: No Formal Succession Planning Guidance and Processes

Theme 1 was the highest ranked theme amongst the six resultant themes. Overall, each participant had familiarity and understanding of the meaning of succession planning. Thirteen out of the 19 interview participants believed no formal succession planning process existed within the organi-zation. The remaining six interview participants were not aware of any formal succession planning guidance or process.

All participants assumed the organization’s higher level leaders were familiar with succession planning guidance. Senior leaders were believed to be in a capacity to know more than non-leadership role employees about policy and organizational processes. Leaders generally did not nec-essarily communicate directly with employees other than job-specific information.

One of the interview questions asked participants for their perspective on succession planning for the next five years in the organization. None of the participants was able to provide a response to planning for the next five years. One participant stated that planning for five years was not possible since organizational planning occurs on a yearly basis. The interview par-ticipants also stated that planning was short term because it was driven by funding and annual requirements.

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Theme 2: Succession Planning Backfill Deficiency for Knowledge Transfer

The consensus among eight out of the 19 participants was that knowledge transfer was not properly completed because a backfill was rarely available prior to a retiree’s departure. Without a replacement for the vacant posi-tion, effective knowledge transfer may not be achievable.

The interviewed participants posited that knowledge transfer process was completed once it was clear that the recipient had received and acknowledged understanding the information received from the retiring employee. The retiree’s replacement benefited from interfacing with the retiree to understand the decades of knowledge being conveyed to him or her. The replacement gained insight from the onsite turnover of informa-tion because he or she could ask for clarification directly from the retiring employee.

It may be hard for a retiree to gather and store the knowledge that is essential for a future replacement who has not been identified or hired. An interviewed participant described the high volume of information gener-ated and delivered through emails in just one day. The process required to compile and store daily email data was overwhelming. Long-term knowl-edge gathering and the storage of several decades of information was an even greater individual task.

Fourteen participants stated the availability of a knowledge transfer method to retain information. Although, a knowledge transfer policy is not present at the Navy federal agency, retirees were encouraged to leave valuable information for their replacement or whoever would need the knowledge. The methods for storing this knowledge were: inputting information into available databases, face-to-face transfers, shared drive, and a written turnover document. The most cited method utilized for transfer of knowledge was face-to-face turnover.

Theme 3: Continuity of Operations Through Formal Succession Planning

Continuity of operations had two different meanings for the volunteer participants: continuity of the organization’s mission and continuity of organizational knowledge. Continuity of the organization’s mission was the expectation that personnel coverage was adequate to maintain and sustain military operations. Continuity of organizational knowledge was

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the transferring and retention of corporate knowledge to maintain a seam-less operation. These two types of continuity required a formal succession planning process so they were sustainable.

The organization’s military members have an obligation to continue despite any organizational issues and/or deficiencies. The Navy organiza-tion’s mission, stated on its website, was to serve Navy and Marine Corps service members located on United States’ military facilities and forwarded to deployed global locations (NAVFAC, 2017). An interviewed partici-pant stated that military and civilian personnel who work for the organiza-tion were obliged to respond to and support the military’s needs. The participant described the difference between a military and civilian employee. A military member works 24/7 with a set salary. Civilian employees work an eight-, nine-, or ten-hour day on weekdays. A civilian employee had a limited timeframe to meet the military’s mission request.

A shortage of personnel was not an excuse to not complete the required work. The increase in retirements and the hiring of new personnel who had minimal federal agency work experience was disconcerting to leaders and managers. Regardless of the demographics and experience level of the federal employees, military operations have to continue.

Owing to the rise of inexperienced and younger employees within the Navy organization, the interviewed participants believed there was a lack of opportunity for retirees to mentor and/or train others. A formalized training program could maintain the organization’s mission. The newer employees would know what and how to complete their work if aided by a retiree who had been at the organization for at least 20 years. A formal succession planning process, which includes mentor training, would rein-force the retiree’s knowledge. One participant believed a retiree was will-ing to provide the face-to-face turnover to share the adequate information to continue the operational mission of the organization.

Lastly, employees who have been at the organization for over 30 years were identified to be instrumental, and to be the anchor of the steadfast continuity of the organization. The experienced retirement-eligible employees have the historical content to provide background about an installation and its associated projects. Leaders and managers benefited from individuals who remained in one military location and retained the history of their work. The anchor employees provided context for the documents and notes left behind by other departing employees.

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Theme 4: Employee Dependency for Organizational Succession Planning

The organization’s employees were identified as the initiators to retire, hire, and provide knowledge transfer. All these succession planning actions were activated by employees. If a retiring employee chooses to retire, he or she submits a retirement claim in order to start the retirement process. The retiree could also halt the retirement process if he or she felt it was not the right time after all.

Retiring was a self-initiated process which was managed by the retiree and facilitated by the Office of Personnel Management. An interviewed participant stated that there was no link from the Office of Personnel Management Retirement office to the retiree’s command. The retiree could start and finish the retirement process without providing notice to his or her command.

A participant stated that a retiree might not wish to give notice for fear of being mistreated or negatively viewed. Retiring was not perceived as a positive career move by the retiree. If an employee notified his or her employer, leaders and coworkers were known to make comments, which made the retiring employee feel emotional about leaving. The negative emotions discouraged the perspective retirees from submitting their retire-ment notice.

Another consideration by a retiree when deciding to provide retirement notice was the employee’s relationship with his or her immediate supervi-sor or leaders. A participant stated a retiree would not provide a retire-ment notice if he or she had a bad relationship with the supervisor. A retiring employee would rather be silent on his or her retirement and leave without notice.

When a retirement eligible employee elects to provide retirement notice, a leader and/or manager from a command is able to request a new hire. The hiring process begins once a vacancy is identified and there is a requirement for the position. If a retirement notice is not provided, the employee’s leaders cannot justify to the higher chain of command a cause for hiring a new person. The retirement notice is the trigger to hire for the position. Workforce planning is conducted as individual employees depart their job positions.

Lastly, knowledge transfer was dependent on the employee providing the information. The interviewed participants were unaware of a policy requiring employees to create, transfer, and/or store their organizational

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knowledge. If employees are not directed or given guidance on how to store knowledge, it may not be performed. In addition, a participant described how some employees might not have adequate documentation skills to capture their knowledge. Overall, an employee’s supervisor and/or higher level leaders could influence how an employee may or may not share their knowledge.

Theme 5: Generational Employee Differences in Succession Planning

Six interviewed participants believed generational differences existed in the workplace and should be considered when performing succession planning. Every generation has unique characteristics which affect work performance. The younger generations, to include millennials, were con-sidered technically superior to the older generations. Millennials and other younger generations were known for their ability to navigate easily using technological tools.

The older generation might not have technological expertise, but offered work experience and organizational commitment. The older fed-eral employees stayed at their jobs for a considerable amount of time. The younger generations were described as employees who sought work–life balance and would not stay more than five years in the same workplace. Moving to a different geographical location was highly probable for a younger employee. Younger generations were described as having more family commitments and less organizational commitment. A greater prob-ability of leaving for another organization existed among the younger generations.

Another factor which could drive a younger employee to another loca-tion or agency was an increase in workload. Participants felt younger employees were not willing to work longer hours to finish a heavier work-load. With the departure of retirees and no replacements available to fill the positions, the existing workforce was being tasked to take on additional workload. Older employees were more willing to stay longer hours to complete additional work. The younger generational employees were completing no more than their working hours even if the work was not completed.

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Theme 6: Lack of Formal and Linked Retirement Notice Tracking and Policy for Succession Planning

Theme 6 was comprised of two parts: the lack of formal and linked retire-ment notice tracking and the lack of policy for succession planning. The lack of formal and linked retirement notice tracking represented how par-ticipants could not identify a formal requirement to provide retirement notice. The retirement notice tracking was informal and not linked to the other entities that were part of the retirement claims process. The belief that a lack of formal policy to provide retirement notice existed at the Navy organization was prevalent. Since a succession planning policy was not available, employees were not obliged to provide retirement notice.

Sixteen out of the 19 interviewed participants stated that a retirement notice was not a requirement at their Navy organization. A retiring employee was not obliged to inform his or her supervisor or leaders of his or her intended departure. The remaining three participants thought employees provided retirement notice so the retirement claim could be processed. The three participants were unaware of a policy, but they thought it was part of a mandatory process.

Participants recalled incidents in which retirees did not show up for work. The absent and retired employee had not informed his or her super-visor but had officially retired. The retiree’s supervisor and leaders were unaware the employee was leaving the organization. The Office of Personnel Management had not communicated with the retiree’s command.

In addition, the retired employee who provided no notice to his super-visor or command was able to file retirement claim paperwork with another human resource department located in another state. The human resource representative at the retiree’s command was also unaware of the employ-ee’s retirement. It appeared the human resources departments within the agency were not very communicative.

It was important to note that 12 interview participants stated the human resource department tracked all retirements within the command. The majority of the participants made the assumption that human resource department representatives were knowledgeable about all personnel actions, including knowing who was retiring from the organization. The human resource department was described as in charge of all paperwork related to employees.

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Yet retirement tracking was informally provided at individual com-mands independently. On some occasions it wasn’t known when employ-ees were retiring unless an internal system was in place and the retiring employee provided notice. Two participants described two tracking sys-tems at the Navy organization: Personnel Requirement Tool (PRT) and Employee Benefits Information System (EBIS). Both systems were uti-lized, but it did not appear the systems were linked to the Office of Personnel Management Retirement Services or with any other entity involved with retirements.

Owing to the lack of policy to provide a retirement notice, leaders and managers were unable to plan for their future workforce. Despite cases in which employees did provide retirement notice, leaders were unable to trust the notification until the employee physically retired. A retiring employee had the ability to rescind his or her retirement claim and return to normal status. It was then customary for higher level leaders to wait until the employee left before starting the hiring for a new replacement. Sometimes leaders asked if anyone was intending to retire. Yet without an official date and documentation to substantiate the retirement, leaders could not use this information to request a new hire.

An interviewed participant stated that the Office of Personnel Management Retirement Services typically started processing a retirement package no earlier than six months from the intended retirement date. Owing to this timeline, a retiring employee was unable to officially provide much notice to his or her command. If retirement notice was provided, the six-month window was the maximum amount of time allotted to lead-ers to request, solicit, and hire a new replacement employee. According to participants, this was not enough time to plan, but was better than not having time or notice.

responses to research Questions

Two research questions were created to determine succession planning in the Department of Navy organization regarding the impending departure of retirement-eligible federal employees. The data responses retrieved from the interviews and the three other additional data sources were used to answer these research questions. The responses were a snapshot of the current phenomenon.

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1. What measures are in place to ensure proper performance of succession planning within the Department of the Navy?In response to Research Question 1, no formal measures for succession planning were identified by 68% of the research participants. An Office of  Personnel Management Senior Executive Leader Exit Survey (2015a) showed that about 60% of federal senior executive leaders confirmed no formal succession planning was existent in their respective federal organiza-tions. Both sets of research participants interviewed between 2015 and 2016 did not believe formal succession planning existed at their federal agencies.

The retiring employee initiated the retirement process. An Office of Personnel Management (2015b) CSRS/FERS Claim processing report indicated an estimated 13,000 claims a month were in the queue for pro-cessing. The retirement services representatives were unable to process a claim unless it was six months from the desired retirement date. A retiree worked with a retirement services representative from the start of the retirement claim’s process to his or her retirement date.

It was stated by 84% of the participants that no requirement was identi-fied to provide retirement notice. A retiree could retire without informing his or her supervisor. In addition, knowledge transfer was limited or non- existent, depending on whether the retiree was able to leave with a hando-ver. Since a formal succession planning process was not present in the Navy organization, Research Question 1 encompassed the informal prac-tices and the noted deficiencies relayed by the interviewed participants as well as the Office of Personnel reports related to succession planning.

2. What are the most effective methods of transferring knowledge from federal agency’s retiring employees prior to their departure?The most effective methods of transferring knowledge were placing infor-mation on a shared drive or a web-based database system, conducting a face-to-face turnover, and/or leaving a written handover document. Fourteen participants were able to identify at least one method by which knowledge transfer could be performed. The remaining five participants did not mention a method when asked about knowledge transfer.

Among the fourteen participants, the preferred method was leaving notes on a shared drive or a web-based database for a replacement employee to use if needed. The designated employee who reviewed the notes had access at any time if the information was left on a computer

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system or storage location. The drawback to computer-based systems or a shared drive was that the recipient of information had to have access to the computer system in order to retrieve the knowledge.

The second most popular method among interviewed participants was face-to-face turnover. The supervisor generally managed this. Since on multiple occasions a replacement employee was not identified, the super-visor was the intermediary recipient of the information until a new employee was hired.

All named methods were informal and performed by the majority of the interviewed participants. A formal knowledge transfer process was not identified, but employees were leaving some type of knowledge transfer prior to their departure. The substance of the knowledge transfer was dependent on the retiree’s ability to convey his or her knowledge for future and historical use.

Leadership recommendations

Five recommendations were proposed for leadership consideration when initiating and conducting succession planning in the Navy organization: linking key players to retirement succession planning, establishing timeline and communication plan for retirement notice, including constant review of required job positions, establishing formal policy for knowledge trans-fer of retiring and/or departing employees, and providing adequate and effective notice of the organization’s succession plan to all employees.

The first recommendation was the identification and linking of key players in the retirement succession planning process. For the Navy orga-nization, the key players/entities identified for succession planning were the retiree, retiree’s leadership, Human Resources Agency, and Office of Personnel Management Retirement Services agency. When the explana-tory case study was conducted, the only agency and/or entities coordinat-ing the retirement notice were the Office of Personnel Management Retirement Services and the retiree (Fig. 8.1).

For a very important career and personnel transaction, the human resources agency and the retiree’s leaders should be notified of the impend-ing personnel change of status. When all links are established, all leaders and managers from the key player’s agencies should comprehend the com-munication plan to properly inform their employees of the plan. If all the key players are linked, a collective communication plan is developed for effective communication for the retirement process.

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The second recommendation was to establish a timeline to convey retirement notice. Since retirement claim processing starts six months before the retirement date, a leader should consider at least a six-month retirement notification. Within those six months, a replacement employee could be hired and the retiree could perform an effective knowledge trans-fer. Another consideration is to develop a joint retirement notice timeline with leaders of the other key agencies involved in the retirement process.

The third recommendation was to perform a continuous review of required job positions. In the interim, while waiting for the retirement of so many federal employees, organizational leaders could evaluate if existing positions are essential to perform and sustain the mission. When a position becomes available, the requirement to keep or not keep it would be com-pleted and the hiring process could be initiated with zero to minimal delay.

The fourth recommendation was to establish a formal policy for knowl-edge transfer by retiring and/or departing employees. Leaders can develop a policy which specifies what an employee is required to provide prior to leaving the organization or relocating to another job position. The knowl-edge transfer storage location can be identified for each job type. Knowledge transfer and sharing can be practiced on a continuous basis and not just when an employee is departing.

Fig. 8.1 Retirement Key Player Communication Routing Model (Loomis, 2017)

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The fifth recommendation was to provide adequate and effective notice of the organization’s succession plan to all employees. A formal succession plan should be developed amongst all retirement key players. This would capture all information. Each employee would have access to it, and it would not be a closely guarded secret. The formal succession plan could be a tool for other federal agencies to reference. Ideally, the Office of Personnel Management would approve the plan since it is the lead agency, which provides guidance on succession planning.

concLusion

This chapter is an overview of an explanatory single case study performed with 19 volunteer participants within a federal agency in Washington DC Metro Area. The explanatory case study shows the succession planning process and organizational knowledge transfer methods within a specific federal agency in the Department of the Navy. Succession planning is defined as workforce planning of both key leadership and employee positions.

A brief background of the two federal retirement systems and existing retirement conditions was described. The identified problem led to two research questions. Six resultant themes emerged from the data collected from the designated ten interview questions, direct participant observa-tion, and public federal reports. The case study conclusion incorporated the six resultant themes. Lastly, five recommendations were proposed to federal organizational leaders to assist in building future succession plan-ning policies and practices. Reevaluating existing policy frameworks and revising them with all key players involved is a start to developing sustain-able organizational policy and processes.

reFerences

Cho, Y.  J., & Lewis, G. B. (2012). Turnover intention and turnover behavior. Public Personnel Administration, 32(1), 4–23. http://dx.doi.org.content-proxy.phoenix.edu/10.1177/0734371X11408701

Jones, R. (2010). When to give notice. Federal Times Retirement. Retrieved from http://retirement.federaltimes.com

Kaplan, B. (2013). Capturing, retaining, and leveraging federal agency workforce knowledge. Public Manager, 42(3), 27–29. Retrieved from http://www.astd.org

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Loomis, S. G. (2017). Federal employee retirement: An explanatory case study on succession planning in the department of the navy (Dissertation). Retrieved from ProQuest Dissertations and Theses database. (UMI No. 10599954).

NAVFAC. (2017). Naval Facilities Engineering Command. Retrieved from www.navfac.navy.mil

Office of Personnel Management. (2013). Common characteristics of the govern-ment (CCOG). Retrieved from http://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/common-charac-teristics-of-the-government/ccog2013.pdf

Office of Personnel Management. (2015a). Senior executive service exit survey results April 2015. Retrieved from https://www.opm.gov/policy-data-over-sight/senior-executive-service/reference-materials/ses-exit-survey-resultspdf.pdf

Office of Personnel Management. (2015b). Projected/actual CSRS/FERS new claims, processed, and inventory. Retrieved from https://www.opm.gov/about-us/budget-performance/strategic-plans/retirement-processing-status.pdf

Office of Personnel Management. (2017). CSRS information. Retrieved from http://www.opm.gov/retirement-services/csrs-information/

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CHAPTER 9

Promoting Public Sector Sustainability Through Participation

Luis Gallardo

The public sector is monolithic, omnipresent in almost every aspect of everyday life. From the collection of taxes, street paving, electricity, build-ing codes, healthcare, and security, it is nearly impossible to avoid the reach of the state. Even in the hypothetical case where as many city ser-vices as possible are privatized, there will still be state and federal govern-ments overseeing the concession of public contracts, business licenses, conflict resolution, and elections. However, public administration does not exist in a vacuum. Public interests formulate public opinion, then use electoral processes to manifest into public policy. As Shields (1998) stated, “Public Administration deals with the stewardship and implementation of the products of a living democracy” (p. 199). Public administration, in turn, is the actual execution of those policies, elevating democracy from mere philosophy to a tangible way of life.

Not only does succession planning assist with the continuation of these services in an effective and efficient manner (Leland, Cerman, & Swartz, 2012), but the public sector’s sheer size and structure also indicate that it merits urgent attention. The public sector represented 19% of the total workforce in 2013, with the federal government alone being the nation’s largest employer (Mayer, 2014; Partnership for Public Service, 2009).

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The importance of succession planning is widely recognized by public managers, as is the need for it to be spread across different government levels and types (McKinsey & Company, 2013). For example, one 2014 survey of local and state governments revealed that almost 80% catego-rized succession planning as important for their organization (Center for State & Local Government Excellence, 2014). Nevertheless, most public organizations lack a succession plan.

It is no secret that the public sector tends to engage in less planning than the private sector (Leland et al., 2012; Partnership for Public Service, 2009; Reeves, 2010). Even then, only 11% of human resource managers (Center for State & Local Government Excellence, 2016) and 2% of city and county managers (Nelson & Stenberg, 2017) reported that their orga-nizations had a formal succession plan process in place. Most plans also react to turnover as opposed to being permanent (Kerlin, McGaw, & Wolf, 2008). Research on succession planning for the public sector is also mini-mal (Andrews & Esteve, 2015; Boyne & Walker, 2010; Leland et al., 2012; Ruccucci, 2011), with most of today’s writings echoing the very same warnings as those from a decade ago (Jarrell & Pewitt, 2007; Lynn, 2001; Waters Consulting Group, 2007). Prior research and writings are even more alarming, with the public sector only reflected in five of 130 succes-sion plan studies from 1980 to 1993 (Kesner & Sebora, 1994). Whatever the explanation for the shortage of material on the matter, modern public administration is still ill prepared for the current and coming realities.

The economic and fiscal crisis of recent years was turbulent for govern-ments, having surpassed the projections and warnings made by succession planning proponents of previous decades. With personnel expenditures representing such a large portion of government budgets, staff reduction is a sort of low-hanging fruit for decision-makers when considering where to make adjustments (Fredericksen, 2010). Additional agency cuts, hiring and pay freezes, and negative perceptions of civil service have also ensued, all of which contribute to the increasing difficulty of retaining and filling essential positions (Center for State & Local Government Excellence, 2014; Davidson, 2013; Feintzeig, 2014; Mazmanian, 2013; McKinsey & Company, 2013; Western Carolina University Public Policy Institute, 2014). These trends have led to knowledge flight, skill loss, and decreas-ing performance in organizations of all sizes (Ibarra, 2016), which in turn weakens the foundations and reduces the quality and performance of pub-lic services (Boyne & Walker, 2010; Government Accountability Office, 2013; Leland et  al., 2012). The scope and effect of these cuts have

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occurred rather quickly, with researchers still unsure of their exact impact (Schmidt, Groeneveld, & Van de Walle, 2017). Nevertheless, when con-sidering the loss of institutional knowledge, some of these savings are being offset by brain drain in the long term (Fredericksen, 2010; Organisation for Economic Co-operation and Development, 2012).

Variables

Though many of the challenges to public sector succession planning are also present in the private sector, these are intensified by politics, stake-holder demands, structural realities, and workforce composition. These organizations operate with preset budgets, little creative leeway, and a general lack of motivation for efficiency gains. Though many private sec-tor succession tactics can in fact be employed by the public sector, this chapter will emphasize those variables that require particular attention for the public realm.

Politics

The public sector operates within a highly politicized environment where ideology plays a crucial role in the offering of public programs and ser-vices. Public administration’s subjugation to election cycles and ensuing policy changes also ensures that (Leland et al., 2012; Jurisch, Ikas, Wolf, & Kremar, 2013; Milakovich & Gordon, 2013; Ostroff, 2006). New may-ors, city councils, governors, and presidents will usher in agency heads, managers, and other political appointees who are to their liking. Up to 23% of senior executive service leaders in some federal agencies, for exam-ple, are political instead of career appointees (Partnership for Public Service, 2009). Even when a public organization’s leadership and man-agement remains more or less static, changes in policy may lead to shifts in institutional priorities, program composition, and service offerings.

Term limits mean a countdown in days. Top-level managers are fully aware that they have a limited amount of time to execute the policies and preferences established by their political superiors. The average tenure for a political appointee in the federal government, for example, is effectively 18–24 months (Ostroff, 2006), with the average for public sector agency heads in general being two years (Rothwell, 2010). Political appointees also tend to be less experienced when compared to careerists of similar posi-tions, representing further challenges to the organization (Lewis, 2008).

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Politicians and administrators have interdependent roles, with the line between the two growing increasingly blurry (Demeter & Tapardel, 2013; Gailmard, 2010; Liguori, Sicilia, & Steccolini, 2012; Peters, 2015). Some have argued that public administration is returning to a modified political patronage system (Batchelder & Alexander, 2009). This highly politicized environment was also noted as one of the reasons why public sector lead-ers failed to implement succession plans (Lavigna, 2014; Leland et  al., 2012; Rothwell, 2010; Tizard, 2012). In fact, research demonstrated that public sector performance decreases with the increased politicization of organizations (Fernandez, Cho, & Perry, 2010; Lewis, 2008).

Public Sector Stakeholders

Public administration does not abide by the same customer-driven strate-gies as the private sector. The success and strategies of managers are not dictated by sales or market tendencies. Instead, they are steered by laws and guidelines established by political processes (Jurisch et  al., 2013; Smith & Otto, 2011; Van de Walle, 2015). City, county, and state govern-ments do not merely disappear as unsuccessful businesses do, even if their customers are unhappy with the products and services being offered. In the worst case, failure or insolvency would lead to restructuring, consoli-dation, or, in the case of some cities, annexation into another public orga-nization. Public organizations are, for the most part, perpetual.

Many public leaders must therefore carefully maneuver through a minefield of interests while remaining professional and, at least in theory, neutral. These internal and external stakeholders are diverse and form part of complex accountability chains. Interested parties may include citizens, watchdog groups, media, unions, political superiors (both elected and appointed), political parties, bureaucratic authorities, oversight groups, judiciary, legislators, lobbyists, regulators, and even opposition party spokespersons (Milakovich & Gordon, 2013; Rothwell, 2010; Schillemans, 2015; Smith & Otto, 2011; Van der Voet, Kuipers, & Groeneveld, 2015; Van Helden & Reichard, 2016). A city manager, for example, responds not only to a mayor but also a city council, each member of which may represent different ideological tendencies. Those public officials, in turn, are each selected by the majority of their districts’ constituents, each with their own political tendencies as well. This complicated web of sometimes conflicting demands must be taken into account when drafting long-term plans for public organizations.

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The Intra-Organization Disjuncture

The internal and external workings of public organizations give way to different layers of management, including careerists, appointees, and everyone else in between (Fredericksen, 2010). On one hand, political nominations, their immediate appointees, and their trusted managers are more receptive to political and policy changes and are concerned with the managing of the day-to-day or here and now of their organization. Government also tends to focus more on short-term rather than on long- term planning (Rothwell, 2010; Ruccucci, 2011; Van Keer & Bogaert, 2009), further placing succession planning on the back burner. When questioned as to why their organization lacked a formal succession plan, 37% of human resource managers responded that it was because it was not a leadership priority (Center for State & Local Government Excellence, 2016).

There are also career managers and staff who mostly form a permanent part of the bureaucratic apparatus. Even among non-unionized staff, pub-lic employees enjoy higher job protection than private employees (Ferguson, Ronayne, & Rybacki, 2016; Lavigna, 2014), which may in turn create a false sense of stability for more tenured leaders who might perceive succession as a matter of replacing oneself (Leland et al., 2012; Lynn, 2001; Rothwell, 2010). Even seemingly non-political and neutral public organizations “have policy ideas, commitments to clients, and established routines all of which they may want to defend against pressures for change” (Peters, 2015, p. 224). They are likely to commit to the status quo, with staff increasingly less enamored by the frequency of public pol-icy change (Peters, 2015; Rothwell, 2010; Smith & Otto, 2011). With only 18% of formal succession plans involving individual employees and only 12% involving employee group representatives, the divide between upper management and lower-level employees is even more evident (Center for State & Local Government Excellence, 2016).

Demographics

Though the so-called “silver tsunami” of baby boomer retirements impacted private organizations, the public sector features larger proportions of near-retirement workers. The numbers are quite disproportionate, with 51.7% of full-time public workers being between the ages of 45 and 64, compared with 42.4% of full-time private workers (Mayer, 2014). The

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majority of senior staff either could retire today or are eligible soon (Henderson & Wood, 2012). State and local government employees are typically five to seven years older than private sector employees (Kellar, 2010). That workforce is also better educated, with 53.6% of public work-ers holding a bachelor’s, advanced, or professional degree, compared to 34.9% for the private sector (Mayer, 2014). More than two-thirds of local government employees require formal training or education to execute their jobs, compared with only one-third for the private sector (Kellar, 2010). These older workers have more experience, institutional level, memory, and expertise, drastically affecting organization performance on various levels upon their departure (Leland et al., 2012; Lewis & Cho, 2011; Wolf & Amirkhanyan, 2010).

Though the recession of past years staved off retirements (Center for State and Local Government Excellence, 2010; Taylor & Kochhar, 2009), public sector demographics still represent a crisis for effective succession, with 22% of public sector workers in 2012, for example, accelerating their retirement date (Leland et al., 2012). That same year, a majority of city and council managers reported their wish to leave their positions within the following five years (Leland et al., 2012). Nearly two-thirds of federal senior executive service members in 2013 were also eligible to retire within five years (McKinsey & Company, 2013). In addition, between 2010 and 2013, local, state, and federal governments lost 521,000, 129,000, and 211,000 jobs respectively (Mayer, 2014). A wave of 1970s and 1990s austerity considerably limited the entry of younger workers, contributing to age gaps within public employee demographics (Lewis & Cho, 2011; Wolf & Amirkhanyan, 2010). The most recent wave of austerity also resulted in a damaged perception of government work, continuing to push away millennial workers (Risher, 2017).

Legal Constraints

Succession planning in the public sector has its legal constraints, with most senior leaders more focused on monitoring rules and procedures, and feel-ing less freedom to manage (Van Keer & Bogaert, 2009). Hiring processes in the public sector are also more tedious, with stakeholders demanding more accountability than in the private sector. Onerous and complicated processes not only dissuade potential talent but may lengthen the time it takes for successful succession (Barrett & Greene, 2016; Kerlin et  al., 2008; Lavigna, 2014; Partnership for Public Service, 2009). In the private

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sector, executive placement includes open and competitive hiring as well as the early recognition of potential managers. The targeting of potential candidates in the public sector can give the impression of preselection, taboo for an organizational culture constructed on merit principles (Partnership for Public Service, 2009). Antiquated public organization rules governing procurement, personnel, and budgeting that were origi-nally adopted to prevent wrongdoing have now created workplaces that are less flexible than their private counterparts (Barrett & Greene, 2016; Ostroff, 2006).

Unions are predominant in the public sector, representing 37% of pub-lic employees, compared with 6.9% of private employees; a fourfold increase since 1960 (Bureau of Labor Statistics, 2016; Theodore, 2012). Union numbers fluctuate among states and cities, with New York at 70% of public sector employees (Calio, Frohlich, & Hess, 2014) and the City of Minneapolis at 90% with a total of 23 collective bargaining agreements being the most unionized (Lavigna, 2014). Public unions operate in a less competitive environment than private unions, with collective bargaining processes very status quo orientated (Theodore, 2012).

Many public organizations have had to implement deep austerity mea-sures in recent years owing to the fiscal recession, with total state revenues plummeting by a record 30.8% in 2009 alone (Cooper, 2011). This has led to local and state governments approving hiring freezes (65%), pay freezes (62%), layoffs (40%), and furloughs (30%) (Center for State and Local Government Excellence, 2010; Theodore, 2012). Considering the stronger job protections for public employees even without unions (Lavigna, 2014), as well as the hiring controls that result from collective agreements and new cost-cutting legislation, public sector leaders must maneuver through a minefield of structural challenges when contemplat-ing succession plans.

strategies

Although there exists an abundance of general succession planning tools—many of which with principles and methods applicable to even public organizations—public sector planning has its own particularities that must be considered. The following principles are built upon strategies outlined by previous writers (Jarrell & Pewitt, 2007; Lynn, 2001; Pynes, 2004), with a heightened emphasis on challenges specific or predominant in pub-lic administration. These strategies are not limited to top-level manage-

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ment, but also include middle and lower levels of public organizations. They are structure-wide efforts that seek to strengthen democratic institu-tions despite political changes, as well as internal and external constraints to succession planning and organizational sustainability.

Institutionalization

Senior leaders and political appointees in particular may have to face com-peting demands, time constraints, and difficult policy issues, often dele-gating talent-related duties and decisions to human resources staff (McKinsey & Company, 2013). These human resources staff, in turn, tend to busy themselves with the managing of daily operations, citing the lack of support from above as the primary cause for failing to succession plan (Leland et al., 2012; Partnership for Public Service, 2009). Especially for top-level, temporary management, it may be difficult to discuss succes-sion. New administrations, for example, often launch their terms with excitement, city branding, new letterheads, and office remodeling; pro-cesses that may occur again and again with each new mayor or governor who takes charge. Succession planning may not only be discouraging for some, but might also be outright uncomfortable. Nevertheless, the first step to authentic, honest succession planning is more philosophical than tangible and represents a break from politics and self-preservation. One must internalize the need for succession planning, recognize its urgency, and proceed to push for an organization-wide plan.

Nor can succession planning processes be limited to groups of top-rank leaders or human resource managers; it must contemplate and measure a wide range of variables as well as incorporating the various layers of orga-nization leadership and personnel. The process should not only be one of assuring rapid hiring or replacement of executives, but a holistic one that guarantees the continued ability of an organization to effectively execute public policy. Whether it is the short-term view of political appointees and upper management or the organizational immortality of careerist leaders and general staff, parties must look beyond their own particular needs and contemplate organization-wide and public well-being. It is necessary to foster within an organization’s ranks a mindset of serving the public good as opposed to its own purpose (Lynn, 2001). Public succession planning, in turn, requires cultural change for the organization in question (Ibarra,

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2016), and must be institutionalized. A proper succession-orientated mindset should be reflected through as many aspects of the organization as possible, including hiring procedures, internal processes, regulations, staff distribution, knowledge management, and—if possible—legislation.

Retaining Institutional Knowledge

One of the most immediate effects felt after succession in any public orga-nization is institutional knowledge loss (McKinsey & Company, 2013; Reeves, 2010; Ruccucci, 2011). Older employees who are eligible for retirement tend to be subject matter experts in their organization, con-tributing greatly to its overall sustainability. Local governments also need higher educated and higher skilled employees than in the private sector, with two-thirds of their employees being knowledge workers compared to only one-third in the private sector. Despite the demand, knowledge workers in state and local governments earn less than 20% and 25% respec-tively than their private counterparts (Greenfield, 2011). Considering the public sector need for such employees, the limited resources available, the immortality of public organizations, and the harsher impact in comparison to the private sector, knowledge management must form a crucial compo-nent of any succession plan. Unfortunately, few have treated the matter with the urgency that it deserves, as only 6% of public organizations have a formal knowledge management program (Center for State & Local Government Excellence, 2016).

Some governments have addressed this by utilizing a number of meth-ods, with the most popular being mentorship programs (Fulla, 2013; McKinsey & Company, 2013; Reeves, 2010; Risher, 2017). Defining for-mal mentoring and coach roles facilitate the sharing of knowledge to younger workers and assists in smoother succession. The creation of groups that include both older and younger employees to exchange ideas, address organizational problems, or act as organizational instructors may also serve as an effective mechanism for knowledge preservation. Other methods to fortify institutional knowledge may include offering older workers opportunities to use portions of their work week to develop pro-posals and improve the results of their respective departments, or even the creation of groups of retired workers to serve as informal and external consultants.

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Leadership Development

The public sector has a larger share of workers employed in management, professional, and related occupations than the private sector (standing at 56.2% and 37.8% respectively) (Mayer, 2014). As Fredericksen (2010) noted, “public decision makers should not presume that some mystical cluster of managers and specialists waits in the private sector to be tapped for government positions [...]” (p. 57). These leaders are of a different breed, requiring different leadership styles and cultures, as well as increased access to unique knowledge and skills. They also display stronger thought leadership (Van Keer & Bogaert, 2009) and have more job complexity than private sector managers (Anderson, 2010). According to research, managing and motivating subordinates is also more important for public sector than private sector leaders (Ferguson et al., 2016). Public organiza-tion leaders have unique skills that are difficult to displace unless potential leaders are properly developed (Barry, 2010; Davidson, 2013; Government Accountability Office, 2013; Leland et al., 2012; Partnership for Public Service, 2009).

Public organizations must construct an internal pipeline for the devel-opment and recruitment of future leaders (Leland et  al., 2012; Kerlin et al., 2008; McKinsey & Company, 2013; Partnership for Public Service, 2009). Public leaders must be largely produced internally, not only owing to the particularities that public sector leadership demands, but also as a way to fortify institutional knowledge and communication. A formal lead-ership development initiative should include an all-inclusive approach, incorporating for example the usage of internships as a way to foster lead-ership and incorporate future talent (Taylor & Kochhar, 2009). This type of approach assists in bridging a drastic gap, where leaders under the age of 40 represent only 10% of senior public leaders compared with 30% for the private sector (Van Keer & Bogaert, 2009).

Leadership development initiatives should consistently assess the orga-nization’s future needs, through mechanisms such as the monitoring of nearby retirements as well as the identification of key position competences and skills (Barrett & Greene, 2016; Demeter & Tapardel, 2013; McKinsey & Company, 2013). Employees should be encouraged to create self-devel-opment plans, identifying opportunities to change roles, moves to new locations, or taking part in special projects. Action-learning projects, rota-tion assignments, and non-linear advancements may assist in fortifying knowledge exchange and widening future leaders’ overall understanding

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of the organization (Demeter & Tapardel, 2013; Kerlin et  al., 2008; McKinsey & Company, 2013). The Internal Revenue Service, for example, implemented many of these measures, identifying three candidates for every frontline manager vacancy, ten candidates for every department manager position, and five candidates for every senior manager position (McKinsey & Company, 2013).

At a future point in time, internships, training, mentorships, and other efforts can be adjusted accordingly or even temporarily suspended. These efforts can easily adjust to changes in policy needs, keeping staff and man-agement relevant even in the fact of reform. Such efforts should be part of an ongoing systematic approach. Effective succession plans and leadership programs are not one-shot efforts and are part of the organization’s over-all culture, as previously mentioned. Middle managers tend to be prepared to take on increased leadership responsibilities (Van Keer & Bogaert, 2009); it is simply up to organizations to institutionalize leadership capac-ity and opportunities for mobility.

Internal Participation

Not only are public organizations more hierarchal than those in the pri-vate sector (Demeter & Tapardel, 2013), but the fiscal crisis of recent years has also led to the further centralization of management (Barry, 2010; Raudla Douglas, Randma-Liiv, & Savi, 2015; Schmidt et al., 2017; Van der Voet et al., 2015). Such top-down models make it relatively easy for public organizations experiencing change to sidestep the various layers of the organization’s bureaucracy; this is calamitous considering how careerists and appointees alike are already dissuaded from succession plan-ning. Unfortunately, most public succession plans marginalize lower-level staff into merely passive roles, as seen by the tiny portion of individual workers and employee groups that participate in such plans (Center for State & Local Government Excellence, 2016).

Succession planning is not only the responsibility of an organization’s leaders, but also of individual employees (Hall, Salamone, & Standley, 2009; Rothwell, 2010). The empowerment of lower-level employees and their incorporation into decision-making over program priorities and improvement has assisted local government in coping with transition (Packard, Patti, Daly, Tucker-Tatlow, & Ferrell, 2008). Participation not only creates psychological ownership, but it promotes knowledge exchange, builds a heightened commitment to change (Packard et  al., 2008;

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Rothwell, 2010; Schmidt et al., 2017; Van der Voet, Kuipers, & Groeneveld, 2016; Van Wart, 2013), and increases the overall innovation and perfor-mance of the agency (Fernandez, Cho, & Perry, 2010; Fernandez & Moldogaziev, 2013). It is necessary, once again, to emphasize the institu-tionalization of succession efforts, as employees and managers of all levels should participate actively in the execution of organization programs. Even with the advent of changes in top-level appointees, horizontal and participatory leadership fortifies the continuity of the organization.

External Participation

Although it may seem odd for an organization type accustomed to limit-ing succession planning to a small group of top-level or human resources leaders, support must also be built among its numerous stakeholders. Fostering external support is successful in succession planning (Rothwell, 2010) as well handling and undertaking change (Hawkins & Wang, 2012; Packard et al., 2008; Tizard, 2012). Types of participation may include involvement from unions, program recipients, volunteer organizations, and the community in general.

During the 1980s, the limitations of traditional provider-centric models of governance became more and more apparent, leading to a market- like emphasis on improved customer service and increasing competition through privatization (Bovaird, 2007). One alternative that gained renewed popu-larity within academic writings in recent years is known as coproduction, defined by John Clayton Thomas (2013) as “when governments partner with nongovernmental entities, including members of the public to jointly produce services that governments previously produced on their own” (p. 788). Coproduction and similar collaborations with the general public may include city planning, the creation of city advisory committees, com-munity-wide health programs, energy planning, faith- based social services, neighborhood watch programs, community music and sports programs, sustainability projects, recycling, land trusts, tenant- managed housing, and even the subcontracting of community groups for housing project mainte-nance (Bovaird, 2007; Hawkins & Wang, 2012; Thomas, 2013).

Such efforts may seem time-exhaustive and challenging for public organizations, but they provide long-term benefits to strategic planning (Poister, 2010). Decentralizing decision-making to the community level as well as involving stakeholders in development recommendations may assist in identifying those services in which community partners can

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collaborate. As political cycles usher in changes for organizations, ample participation from external partners as well as their heightened ability to handle change will assist in smooth succession. In effect, organizations preserve the capacity to execute current and adapt to future policies. Citizen and stakeholder participation in governance secures wider polit-ical support for initiatives, which in turn makes them resistant to hasty succession (Bovaird, 2007; Tizard, 2012).

ConClusion

Public sector succession planning is unique in the sense that it is frequently and eternally subject to periodical elections and stakeholder scrutiny. Though political parties and voters will handle succession among elected offices, it is often up to political appointees and their top-level managers to oversee the general sustainability of the organization. When consider-ing the short tenure of these leaders, this presents challenges for the entire organization, which in turn rarely engages in formal succession planning. Even in the few cases where formal strategies are adopted, they tend to be exclusionary, hierarchal, and reactive.

The implications of ignoring the political, external, internal, demo-graphic, and legal realities of modern public administration are consider-able. Now more than ever, the public sector is endangering its ability to effectively provide programs and services to the general public. The ero-sion of governments’ knowledge base, future leadership, and organiza-tional capacity threatens the effectiveness of the very public policy that citizens vote for. Avoiding this requires an organization-wide succession plan with elements of strategic and workforce planning as well as knowl-edge and change management. Most importantly, these strategies need to follow proven horizontal, inclusive, and participatory principles. For any democratic society, public administration’s capacity to execute policy is the very backbone of that democracy.

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Barrett, K., & Greene, R. (2016, February). Can government hiring get out of the Stone Age? Governing. Retrieved from http://www.governing.com/topics/mgmt/gov-government-hiring-best-practices.html

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CHAPTER 10

Succession Planning Research Within the Business/IT Arena

Loyce Chithambo

Data preservation and knowledge transfer are critical to succession plan-ning for Business Information Technology (Business IT) areas: without these components, organizations are at risk of losing valuable legacy information and the history of the organization’s Business IT. Additionally, succession planning has been tied to employee reten-tion and improved morale. The purpose of this chapter is to investigate how information is preserved in the Business IT departments of five Fortune 500 companies within 100 miles of the Dallas Metroplex. The industries studied include energy, telecommunication, healthcare, air-line, and finance. This exploratory qualitative meta-analysis research consists of a systematic review of previous research to answer the follow-ing central question: in what ways do Business IT leaders preserve the information which was created by the legacy professional? The investiga-tion includes an extensive review of existing literature from local librar-ies, remote online libraries, and coded data extraction. Potential benefits of this study include evidence to reinforce with organizations the impor-tance of improving knowledge preservation of legacy information, and

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the importance of continuously training workers in all organizations across generations for future planning in Business IT departments.

The problem with succession planning within the Business IT industry is that information that has developed over the past five decades may not be correctly preserved. Businesses are encouraged to ensure that legacy workers work side by side with those who have arrived in the workforce more recently, so as to help them understand the significance of organiza-tions’ business technology origins and to ensure that legacy systems are preserved. To know how Business IT is processed, workers must under-stand how the current systems operate, based on the old systems. VanVactor (2010) stresses that good succession planning reduces the negative impacts of brain drain, leadership gaps, and pipeline management problems from corporate and government institutions, which could be created owing to a lack of enough new talent available to do the retirees’ jobs. Within the next 20 years, approximately 50 million baby boomers will depart the US labor force as they reach retirement eligibility age, leaving the subsequent generations—Generations X and Y—to replace baby boomers in senior and other management roles (VanVactor, 2010).

Both VanVactor (2010) and McDermott and Marshall (2016) agree that many organizations are challenged by the fact that up to 10,000 baby boomers will turn 65 and retire over the next two decades. Companies are encouraged to have good succession planning to reduce any negative impacts that might occur because of this departing skilled workforce. McDermott and Marshall describe succession planning as a deliberate and systematic effort to identify and develop potential leaders within an orga-nization. The following are among the steps that organizations could include in their strategic planning to implement succession planning: clar-ity, determination, defining future talent requirements, conducting a tal-ent review, developing and retaining talent, and measuring results.

Background of the ProBlem

Many organizations are challenged by the fact that the graying skilled worker born between 1946 and 1964 will leave the workforce within the next 20 years. The absence of baby boomers will impact leadership gaps and pipeline management problems, because once the skilled worker retires a talent shortfall will occur, which in turn will impact overall business per-formance. VanVactor continues to report that approximately 600,000 healthcare organizations in the USA lack succession planning, even though in this industry organizations must emphasize succession planning.

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historical overview and review of the literature

Some organizations, including the healthcare industry, show distress because of the fear that without succession planning senior roles will be jeopardized, because a retiring health worker is a potential threat to an organization. A senior position will be vacant when succession planning is not practiced each day; therefore it must be part of an organization’s stra-tegic planning. Succession planning is vital to continue business opera-tions (Fibuch & Van Way, 2012). Most research shows this. Research also shows that among healthcare industry professionals, approximately 322,000 of 798,000 physicians practicing within the USA are 55 and older (about 40%). Additionally, approximately 50% of professional nurses are approaching retirement age (American Association of Colleges of Nursing, 2014; Association of American Medical Colleges, 2010; Rich, 2014). Succession planning is an important part of an organization’s stra-tegic planning, because in addition to legacy workers leaving the work-force within the next 20 years, workforce turnovers are inevitable within any organization and can negatively impact organizations’ economic sta-tus, also resulting in reduced employee satisfaction and productivity (Knudson, 2014). Corporate governance is a good foundation for effec-tive succession management and planning, and should be based on stress-ing the organizational mission and strategic objectives (Dowton, 2014). Recurring themes in succession planning include:

1. Organizations must have a program to aid smooth transitions among key roles to allow for higher levels of continued productivity (Kim, 2012).

2. Organizational leaders must know the capabilities that currently exist throughout the organization and decide how to correctly pre-serve them. These may include company resources, assets, and resources such as human capital distribution, intellectual capital, and material for foreseeable future needs (Blakesely, 2011). The impor-tance of succession planning is vital, since legacy workers will con-tinue to retire. In the farming industry, the average age of the American farmer has increased from 57.1 to 58.3 years (USDA, 2014; A. Edward Staehr, 2015).

Succession planning must forecast the organization’s needs and develop the internal workforce for leadership roles. Additionally, succession plan-ning must be considered a key strategic process of passing organizational

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responsibility from older to newer generation leaders. In addition to turn-over, some factors that can contribute to unexpected departure of leader-ship include family emergencies, poor health, or accidents that can negatively impact the organization’s operations when there is no succes-sion planning. Organizations should consider succession planning as a major part of a comprehensive organizational strategic process for all criti-cal positions, and include it as part of workforce development. In doing so, new generation workers will be encouraged to become involved in leader-ship positions in order to maintain leadership continuity in key positions within the department. Succession planning can contribute to the promo-tion and encouragement of career advancement at all levels in order to retain good talent. A lack of succession planning can impede leadership advancement and negatively impact on an organization’s economic status.

According to Fibuch and Van Way (2012), building a strong pipeline within an organization is important. Leaders must partake in rigorous suc-cession planning that aligns with the organization’s strategy. Most research shows that good succession planning must include strategic components, including the identification of existing skills and the ability of an organiza-tion to identify those skills that must be maintained for the foreseeable future. Senior leaders are encouraged to have a solid understanding of the organization’s main market competition. The vision for the future must include a clear succession plan for the foreseeable future of all departments and key positions within the organization. IT succession planning must exist, with emphasis on embedding it in all organizational processes. Leaders of organizations are encouraged to invest a lot of time in ensuring that all departmental leaders within the organization engage in continu-ous training. Leaders must mandate the succession planning as part of the organizational goals required and be accountable for all processes. Succession planning must be a transparent, institutionalized, and fair pro-cess within the organization.

Among the advantages of succession planning include employee satisfac-tion and improved performance. Among the goals of an organization must be to set a clear path for all employees during and after retirement to ben-efit both the employee and the organization. Those employees who fill jobs must be secure and the organization must have long-term resources avail-able. All departmental leaders within each organization are encouraged to have a plan for replacement for key positions. Most research shows that departmental and team-based processes for succession planning affirm employees’ employment security, sets employees’ career paths, and improves

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their performance. Other research suggests including succession planning in the organization’s training program, incorporating key skills and knowl-edge areas that align with future leadership (Fibuch & Van Way, 2012).

Without good planning, organizations are subject to an increase in turnover rates owing to job uncertainties among employees, and when this occurs in management it could negatively impact the vital communi-cation channel related to organizational strategy, planning, and implemen-tation (McKinney et al., 2013). McKinney adds that in some industries, such as healthcare, good management is important in all forms of business operations, contributes to employee morale, and could contribute to reduced turnover costs. Poor dissemination of information results in poor communication within an organization (Belasen, 2014). Most research discusses the importance of enforcing succession planning thorough poli-cies, procedures, and company guidelines (Morris & Upchurch, 2012), which can appropriately be applied through good management channels (Dance, 2011). Most research emphasizes the importance of healthcare middle management roles in good succession planning, as these can con-tribute to a reduction in burnout. Perrott (2015) confirms the importance of succession planning in sustaining an organization. According to Perrott, creating and maintaining sustainable organizations must begin with top management and be a high priority for companies’ strategic planning, helping organizations to withstand any challenges or unpredictable oper-ating environments that might negatively impact business operations, with regard to cost, competition, employee satisfaction, and morale. Succession planning must be embedded and enforced in the organization’s value, policies, strategic planning, and processes that sustain the organization’s future. Leadership is encouraged, and is responsible for determining how the company culture continues and how organizational changes sustain the core values of a company, including policies and procedures (Bonn & Fisher, 2011, p. 11).

Continuous staff training and development is important in succession planning, stress Kaehr and Borzillo (2013) and Hall-Ellis (2015). Good succession planning must start from the top, and managers are the key to good succession planning. Because legacy workers continue to retire, organizations are encouraged to have a well-crafted succession planning and good coordinated succession plan that includes leadership involve-ment in identifying replacements as individuals leave the organization. A well-thought-out succession plan will reduce the challenges of role transi-tion. Companies are encouraged to embed succession planning into the

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organizational culture. Literature related to succession planning in Business IT is limited, and even more limited are empirical studies focused on the subject. The research available does not specifically discuss Business IT or succession planning as it pertains to this area. Most businesses focus on succession planning but not necessarily as it pertains to Business IT. The literature reviewed in this research describes succession planning and in what way companies are implementing it, if at all.

challenges of having no succession Planning within an organization

Little is known about how succession planning is actively used, although literature shows that it has always been a part of the corporate world (Rothwell, 2010; Spanier, 2010), even if paid little attention by many organizations. Various and multiple reasons have been cited as to why academic institutions have not adopted succession planning. Leadership’s role in succession planning is important for the continuity of operations (Bozer, Kuna, & Santora, 2015).

Tae (2012) stresses that effective succession planning must be encour-aged as part of leadership development. Companies must have successors ready to fill out key positions in the organization. This improves opera-tional conditions and could give competitive advantage in the market. According to Tae, leadership succession planning could be defined as the deliberate use of mentoring, coaching, and grooming of individuals inside the organization identified as having the potential to continue with work when legacy workers leave the organization, whether volun-tarily or not. Succession planning should be practiced at all levels to help maintain and improve business. Most research indicates that it contrib-utes to increased motivation and productivity. A survey conducted by Tae shows that as of 2008, AHA survey data identified hospitals practic-ing succession planning: out of 1501 acute care hospitals surveyed, 72.6% had no succession planning. However, 567 or about 27% had a plan in place. Kippist stresses that practicing succession planning will help organizations properly transfer skills and knowledge to continue smooth running of the organization, and in the long run reduce costs and improve performance.

Leadership is at the center of succession planning. Leadership develop-ment programs embedded in the organization’s strategy are critical to the foreseeable future and opportunities for any organization. Leaders must

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develop, expand, and transfer the leadership potential for all critical posi-tions within the organization, and give opportunities to employees, thereby ensuring smooth leadership continuity and transition. Leaders must make sure that high-potential employees are given the opportunity to advance within the organization. Significant turnover among senior leadership may be expected in all organizations, and succession planning is among the key factors that ensure an organization’s success and competi-tiveness, as proper leadership roles are sustained for the future (Klein & Salk, 2013). The perceived leadership crisis is further compounded owing to technology changes in all organizations. The ways in which companies do business have changed to accommodate new technology. Application processes have changed, and old systems are often replaced without accounting for the importance of preserving legacy systems and workers alike. Organizational leaders are quick to remove legacy workers and sys-tems, in the cause of remaining competitive.

defining succession Planning

Succession planning can be traced back to the nineteenth century. According to Henri Fayol (1841–1925), organizations are responsible for creating a stable environment; therefore it is vital for succession planning to be enforced and acted on, for instance by making sure that critical orga-nization roles are filled (as cited in Rothwell, 2010). According to Charan, Drotter, and Noel (2001) succession planning is “perpetuating the enter-prise by filling the pipeline with high-performing people to assure that every leadership level has an abundance of these performers to draw from, as ongoing and in the future” (p.  167). Axelrod (2002) gives another description of succession planning:

Succession planning is an ongoing, systematic process that works well, with the proactiveness of the organization leaders, executives, to help enhance an envi-ronment for all leaders to succeed from the start of their jobs to the finish and the process must be repeated throughout the organizations life cycle. (p. 2)

Negra (2008) stresses that the process of succession planning includes a calculated continuation of business. Its main goal must include the iden-tification and preparation of suitable individuals to fill major positions when people retire, transfer, or find new opportunities outside an organi-zation. Additionally, an important point put forward by the Society for

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Human Resource Management (SHRM) is that succession planning is about preparation and not preselection. In another discussion about suc-cession planning, the SHRM described a business-oriented challenge in which several important elements are addressed (“Engaging in Succession Planning,” 2009), specifically that succession planning includes the impor-tance of understanding that while an organization may exist for a long time, individuals will not. According to Biggs (2004), loyalty toward an organization is the “exception rather than the rule” (p. 105). Organizations are encouraged to use succession planning as both a strategic planning tool to address the issues created by individuals’ departure and a bridge across the knowledge gap created by others leaving the organization.

succession Planning in Business itMuch research shows that succession planning does not exist in many organizations. Lapovsky (2006) notes additionally that not much is writ-ten about succession planning in Business IT. According to Lapovsky, it is inevitable that baby boomers are leaving the workforce every day, and that in 20 years the new generation will take on leadership in all organizations. Senior executives and all leaders are subject to leaving an organization any time in part owing to market demand, retirement, or for other reasons. Companies must take succession as a priority—a continuous part of orga-nizational strategy and an everyday task. The way in which companies do business is changing, and technology is modifying business processes to remain competitive in the market. Succession plans must include IT and the business, and both must exist in parallel through training and mentor-ing by legacy workers alongside the new generation of workers.

Most research shows that Business IT succession planning does not exist in most organizations. Companies can only feel comfortable and safe if they pass on their assets with proper training to the new generation. The skilled worker who has been working with the organization for many years must not leave without passing on the knowledge gained to the new gen-eration. It is evident that a company risks losing good organizational pro-cesses if a skilled worker leaves the organization, whether on good or bad terms. The best protection is good succession planning. However, one reason that some organizations do not have succession planning in place is a lack of financial resources. Collins (2013) indicates that planning begins in small areas within the organization and escalates to departments within the organization, and eventually throughout the company. It is very

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important for organizations to make succession part of their daily activi-ties. Some aspects of the steps taken in seeking to achieve small-scale poli-cies could contribute to large-scale policy goals that include succession planning. Adding succession planning to the overall organizational strat-egy is vital. The concept of departmental frameworks for succession plan-ning could produce a complex adaptive framework that can be used to develop planning systems for an entire organization. As described by Leland, Carman, and Swartz (2012), because they hold key positions within the organization, managers are the key to making succession plan-ning work well for the entire organization.

According to Moradi (2014), organizations are influenced by economic competition and have realized their economic, social, and environmental responsibilities; human resource development and training are important and should be part of continuing organizational training and develop-ment. Moradi stresses that organizations will need more competent, tal-ented, professional, knowledgeable, and qualified managers in the coming years. Because of the constant change in technology, organizations are challenged to keep up with new ways of doing business. Succession plan-ning in libraries is one example of how the model has been used with a library research and experimental approach. Moradi discusses the issue of managers’ succession planning for human capital development in a learning- oriented company. The Succession Pyramid Model is described as a process of evaluating and identifying qualified staff for management. This model can be applied to all organizations. Most qualification indica-tors show that managers of each organization must be good mentors for empowerment and training of future managers. Leaders must identify and develop internal capacities in learning oriented programs that are geared towards the succession planning approach within the organization. Among the advantages are staff motivation, human resource maintenance, pro-moting learning attitudes among staff, improving staff accountability, and a reduction in recruitment costs for human resources.

conclusion

Inevitably, the legacy worker will retire within the next two decades. The new generation must continuously work side by side with legacy staff and systems to preserve a company’s organizational resources and processes, ultimately helping business operations. Research shows that energy, tele-communication, healthcare, airline, and finance industries all show that

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succession planning is vital. IT, which is at the core of all business pro-cesses, must continuously be updated to suit organizational current and future needs. The legacy worker working side by side with the new genera-tion are the key elements to a well-crafted succession plan. The benefits of good succession planning include a sustainable organization that can with-stand any challenges of business turbulence, such as unexpected changes to business operations and employee turnover. Additionally, good succession planning reduces negative impact challenges for business costs and market competition. Good succession planning improves employee and com-pany morale, and contributes to positive foreseeable organizational futures (Perrot, 2015). According to Fibuch and Van Way (2012), building a strong pipeline within an organization is important. Insufficient organiza-tion planning contributes to the two main strategic components of a suc-cession planning process. First, it is important for organizations to develop their strategy with an emphasis on unique skills. Second, it is important for an organization to have the ability to view existing skill sets as part of the future. Senior leaders are encouraged to have a solid understanding of the organization’s main and market competition. The vision for the future must include a clear succession plan for the foreseeable future, including for all departments and key positions. There must be an emphasis on embedding succession planning in all organizational processes. Leaders of organizations, including chief executive officers, must invest a lot of time in continuous training for departmental leadership at all levels. They must mandate succession planning as part of the organization’s required pro-cesses and accountability goals. Succession planning must be open, trans-parent, and institutionalized, but must also be open and fair. Among its advantages are employee satisfaction and improved performance.

references

Bozer, G., Kuna, S., & Santora, J. C. (2015). The role of leadership development in enhancing succession planning in the Israeli nonprofit sector. Human Service Organizations: Management, Leadership & Governance, 39(5), 492–508.

Collins, M. (2013). Local solutions for national challenges? Exploring local solu-tions through the case of a national succession planning strategy. Educational Management and Leadership, 41(5), 658–673.

Dowton, B. (2014). Governance in healthcare – Linkages, boundaries and the prob-lems between corporate and clinical governance. Retrieved from www.dowton.com/journal/2011/06/governance-in-healthcare-%E2%80%93-linkages- boundaries-and-the-problems-betweencorporate-and-clinical-governance/

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Fibuch, E., & Van Way, C. W. I. I. I. (2012). Succession planning in health care organizations. Physician Executive Journal, 38(5), 44–47.

Klein, M. F., & Salk, R. J. (2013). Presidential succession planning: A qualitative study in private higher education. Journal of Leadership & Organizational Studies, 20(3), 335–345.

McDermott, D., & Marshall, S. (2016). Look to the future with succession plan-ning. Chemical Engineering Progress, 112(12), 23–29.

Moradi, M. (2014). Managers’ succession planning for human capital develop-ment. Retrieved from https://www.researchgate.net/publication/2912546 02_Managers_succession_planning_for_human_capital_development

Rich, M.  D. (2014). How to avert a doctor shortage. RAND Review, 38(1), 33–34.

VanVactor, J. D. (2010). Collaborative communications: A case study within the US Army Medical Logistics community. Saarbrucken, Germany: VDM Verlag Dr. Muller Aktiensgesellschaft & Co.

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CHAPTER 11

Strategies for Healthcare Organizations in Succession Planning

Tony Ray Ruffin

Succession planning helps leaders to recognize current talent in an organi-zation for future direction within healthcare organizations (HCOs) (Yukl, 2013). Higher skills are needed to implement a succession plan and to count on potential candidates as having the proper skills to implement designated key processes in organizations (Yukl, 2013). Administrators must consider current and future work details for competency require-ments in health plans (Leigh, 2010). Analyzing existing gaps between core competencies and skills for any position need to be completed at the top levels of the organization (Leigh, 2010). Supporting the concept pro-vides the critical assurance of succession and human capital, which leads to HCOs’ success (Yukl, 2013).

Succession planning and management (SP&M) are processes that sup-port the constancy of tenured leadership or any methods intended to

T. R. Ruffin (*) University of Phoenix, Tempe, AZ, USA

Colorado Technical University, Colorado Springs, CO, USA

Grand Canyon University, Phoenix, AZ, USA

Ashford University, San Diego, CA, USA

North Carolina Wesleyan College, Goldsboro, NC, USA

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maintain the effective performance of HCOs. Leigh (2010) posited the initiation of improving, supporting, and planning application of leadership through various stages at particular times. Succession planning is a way of detecting trends, negative leadership, culture, and organizational posi-tioning to recognize precarious leadership positions (Rothwell, 2010). Similarly, SP&M refers to leadership positions providing concentrated elasticity in lateral leadership transfers.

StrategieS in LeaderShip and SucceSSion pLanning

Menaker (2016) proposed leadership starts by leading through self- learning, leading others through relationships, leading organizations by achieving organizational effectiveness, and developing synergy in a healthy work–life integration. When leading a complex environment by self- leadership, leaders confront situations steeped in anger, anxiety, and frus-tration instead of practicing humility, patience, resilience, and remaining confident for succession planning. When leading others through relation-ships, diversity plays a major role in sustaining priorities and values. When leading through relationships, there is often a lot of leadership involve-ment with subordinates and provision of opportunities to learn from oth-ers. Leaders need to have empathy, the ability to face negative challenges, and have to remain calm as they provide a meaningful approach (Menaker, 2016). Succession planning uses synergy as a best practice for organiza-tions to employ personal sustainability, work–life balance, and reduction of emotional distress. The goal for synergy is to minimize damages and loss, and to obtain personal health and wealth in a leadership journey through succession planning (Menaker, 2016).

When top management is involved in implementing SP&M in health-care, its involvement leads to organizational success. Effective communi-cation and continuous engagement with leaders and employees are essential elements for a clear understanding and the commitment to imple-ment succession planning (Rosen, 2015). There can be challenges, but executing change must come from top down to make an effective change. HCOs must remain flexible, honest, and consider the pros and cons for strategic planning and the implementation of succession planning, and reconfigure threats as opportunities. Leaders in healthcare organizations must accept accountability and learn from daily challenges, as well as mini-mizing risk. Congruently, the leaders should take risks in changing the culture of HCOs to allow for succession planning (Hagel & Wong, 2014).

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competitive advantage in hcoS

HCOs must possess a unique competitive advantage if they are to survive in the new business era, and they must be open to change when creating succession planning strategies (Luqman, Abimbola, & Olabode, 2015). Leaders have to focus on innovating and developing new cultural ideas to create a positive impact, for both employees and the organization, to achieve their mission and goals (Rosen, 2015). Ensuring individuals achieve their goals will increase their seniority and broaden management skills (Rothwell, 2010). In succession planning, the key is to generalize projects to complete objectives, rather than generalizing departmental objectives to alleviate silos (Luqman et al., 2015).

Seven-Step modeL to SucceSSfuL SucceSSion pLanning

Luqman et al. (2015) posited seven steps to inform HCO leaders in imple-menting and branding a unique business model for succession planning. The steps are as follows:

1. differentiation; 2. focus; 3. thinking globally; 4. perpetual spirit of innovation; 5. sensitive radar system; 6. retention of talent; 7. social and environmental responsibility (Luqman et al., 2015).

When implementing succession planning, it is important to create a unique culture and image that attracts a younger population in HCO lead-ership positions (Grewal, 2016). Recognizing the implications of the new hire contracts can create success for HCOs (Grewal, 2016). The most critical part of their succession planning is to have a focus, clearly defining values, and positive decision-making, thereby creating high-performance teams and holding followers accountable for errors and achievements (Patrick, 2011). For succession planning to be effective, HCO leaders must emphasize core organizational values and create strategic directions for employees to follow.

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chaLLengeS in the twenty-firSt century for SucceSSion pLanning

Hisrich and Kearney (2013) proposed two challenges as we head into the next century. One is to develop innovation to create growth; the other to build revenues, businesses, and shareholder value, including succession planning as part of this. HCOs have worked for many years to cut expenses, reengineer, and downsize. Reorganization plans have taken place in most HCOs to successfully create a flourishing environment for succession planning (Hisrich & Kearney, 2013). Leadership needs to create an effi-cient conversion from the industrial age into the information age in suc-cession planning (Rosen, 2015).

defining SucceSSion pLan in LeaderShip

McDermott and Marshall’s (2016) empirical research confirmed by 2036 about 10,000 baby boomers will become 65 every year. As soon as baby boomers retire, there will be more job vacancies. These will occur because there are fewer people to replace the retiring baby boomers. Additionally, job seekers will not have the requisite skills to assume the positions. If an organization is experiencing a high turnover among its skilled employees, a succession plan must be considered to minimize the future impact of their retirement or absence, in order to assure stability and the long-term retention of organizational endeavors. There are six steps to consider for an effective succession plan:

1. determine scope of the succession plan; 2. clarify the strategic organizational goals; 3. define current and future requirements; 4. determine own scope of succession planning; 5. develop and retain talent; 6. conduct review alert (Hickman, 2016).

Star programs (high performance, high potential) accelerate the career development opportunities for these employees to prepare them for new roles and responsibilities (McDermott & Marshall, 2016). Developmental succession plans must be defined and identified before a problem occurs. Career planning and development need to be scientific, theoretical, prac-ticed, and create an interchangeable design that promotes talent (Patidar,

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Gupta, Azbik, Weech-Maldonado, & John, 2016). Career development can be mistaken for succession planning when career development is not a process of HCO succession planning or the business itself (Yukl, 2013). Leaders are specifically to provide economic incentives, often professional development, to employees who remain within an organization for a long period of time (Zhou, 2013). Mentorship is a distinct type of leadership development that uses psychological methods, Emotional Intelligence (EI) and developing relationships, where mentors provide vocational or personal guidance to study the internal and external locus of mentees (Patidar et al., 2016).

innovation

Pavel, O’Sullivan, Stephen, and Alastair (2014) proposed innovation in succession planning as an alternative form for governed organizations. The purpose was to add more value and quality, and to minimize risk in health plans. Policymakers must remain active, making sure organizations abide by governmental requirements. However, there is minimal empirical evidence regarding implementation and collaboration in terms of govern-mental preparedness. Methods from national studies of Health Innovation and Education Clusters (HIECs), which provide understandable empiri-cal evidence regarding the implementation of governance collaboration across the healthcare sector, are being implemented in organizations (Pavel et al., 2014).

Pavel et al. (2014) performed a mix-methods approach in which both qualitative and quantitative data collection were employed. The sample population included seven HIEC executives and 15 in-depth interviews with executives and chairs. Pavel et al. (2014) provided results of a descrip-tion analysis for local responses of central government that were mandated to establish HIECs, “The latter represent cross-sector health networks characterized by a vague mandate with the provision of a small amount of new resources” (Pavel et al., 2014, p. 1). Innovation is the answer for the survival of most HCOs, while some HCOs felt their current status of busi-ness was successful (Wang & Wang, 2017). HCO innovation must aim for change, and implement succession planning strategies for long-term suc-cess (Hickman, 2016).

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empLoyee retention and StrategieS pLanning SucceSS

Chaturvedi (2016) posited that talent is an inadequate source when refer-encing competition and shifting generalizations in leadership. Inadequate sources have made it difficult for organizations to find the quality and quantity of leaders required to approach a successful goal. In succession planning, leaders need to support their followers while implementing development and socials skills, and promoting professionalism and social relationships in order to become successful (Levi, 2014). Moreover, lead-ers need to understand values, innovation in technology, and skills to demonstrate morals, and also flourish so their positive future expectations are fulfilled (Olli-Pekka, 2012). HCO leaders must think critically to apply decision-making that is related to the organization’s competencies (Elkington, 2015).

Organizations need to be prepared to implement new retention strate-gies in the marketplace to prepare for the future and to avoid losses. A careful succession planning implementation will ensure that organizations are more likely to survive, and to sustain leaders and followers. The work-force reflects the roles, goals, and achievements of the organization. Sustaining talented leaders, managers, supervisors, and followers exempli-fies effectiveness and a transparent succession plan (Chaturvedi, 2016). The task of SP&M often falls under the human resources management (HRM) department or under workplace learning and performance (WLP) for professionals (Weeks, 2013).

Retention of the best and most talented employees is critical because replacing leaders can become expensive (Weeks, 2013). HRM concen-trates on attrition rates and creates better managerial interventions that minimize employee turnover (Hagel & Wong, 2014). Creating responsi-bility and focusing on retention and engagement helps HCOs perform effectively (Weeks, 2013). As a result, employees improve organizational culture. This should make the HCO employees feel as though everyone is integral to the success or failure of the organization (Weeks, 2013). Employees become more committed, better aligned to goals, and contrib-ute to organizational growth (Hagel & Wong, 2014).

The ability to lead and direct achievements by top managers means creating and operating a planned succession program and avoiding suc-cession emergencies (Patrick & Kumar, 2012). Top managers recognize that HRM fills an important proactive role in succession planning (Rosenthal & Levy, 2012). HRM’s responsibility is to ensure that SP&M

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is not forgotten amid daily operational emergencies, and HRM maintains employee evaluations and conducts yearly performance reviews (Weeks, 2013). HRM must reward employees, and possibly provide them with higher stock options to improve employee retention (Luqman et  al., 2015). Beneficial tools are provided for employees to help them gain competitive advantages, such as wiki sites, repository boxes, and shared drives for data collection, all of which help subordinates perform better (Weeks, 2013).

When using a competitive edge approach, HCOs can provide better benefit packets and employee appraisals will lead to higher profits. HRMs have the ability to work with management to develop the desired orga-nizational culture (David & David, 2017). Every employee, team mem-ber, supervisor, or leader needs to be vested in and have a commitment to the organization for succession planning to be successful (David & David, 2017). For HCOs to achieve long-term success in SP&M, HCOs must hold employees accountable for all pros and cons in the business (Weeks, 2013).

The competitive edge approach supports knowledgeable employees, managerial grids, communicating effectively, and decision-making. HCOs need to have knowledgeable employees who have the ability to impact succession planning strategies. Managerial grid help in recognizing, allow-ing, and providing potential leaders with the vision to see how supervisory styles can shape the HCO’s operations (Hickman, 2016). HCOs that are focused on succession planning communicate effectively, collaborate, and align priorities (Hickman, 2016). Careful planning is one of the factors required for succession planning to work and to meet the HCO’s future goals (Hickman, 2016). Decision-making involves chief executive officers (CEOs) and the whole leadership team in order to minimize arbitrary judgments (Mollick, 2012). Succession planning for millennials, also known as Generation Y, can become increasingly complex, as millennials are more educated and expect more from organizations and higher job functions (David & David, 2017).

Millennials do not appreciate manipulation (Muoio, 2015), but moti-vation works for employee buy-in. HCOs should take advantage of a diversity of millennials in order to achieve goals with fresh minds (Muoio, 2015). They want structure, need responsibilities to be precisely defined, and require new opportunities for promotion at prescribed points in their careers (Muoio, 2015). Having proper team engagement, communica-tion, decision-making, and the ability to resolve issues together can bring

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positive outcomes to succession planning (Rosenthal & Levy, 2012). Succession planning is built on the premise that groups of people in organizations function effectively and efficiently. Consequently, a team needs to have a balance to avoid any inefficiencies, such as bottlenecks (Hickman, 2016).

A leader should be cognizant of the HCO’s daily routines and be pre-pared to be screened for success daily (Luqman et al., 2015). Motivating three different generations can be difficult for HCOs (Muoio, 2015). Motivation in leadership is better than manipulation, and when confronted with a corrupt situation the leadership goal is to solve organizational issues (Steele & Derven, 2015). Otherwise, employees will leave the organiza-tion and will stop producing (Hamel, 2017). If enough employees are having problems, filing a complaint and being ignored could lead to a transfer to another department or resignation; a major loss of skilled employees is caused by not listening to followers (David & David, 2017). Incidents like this cause inefficiencies within an organization, hampering the effectiveness of succession planning.

A leader’s job is to be a change agent by implementing rational rules, regulations, and policies to minimize high turnover among employees (Nahavandi, 2015). Continuous efforts mean the organization has key people to fill the positions that are listed for succession planning strategy (Drouin & Bourgault, 2013). HCOs confronted with inconsistent work-force planning discover a significant deficiency in operational succession planning stratagems and strategies, for executives as well as middle man-agement (Wang & Wang, 2017). Succession planning needs to start from top leaders and move on to the supervisory level, while leadership skills start with a vibrant vision and a tactical strategy (Drouin & Bourgault, 2013).

tacticaL StrategieS for SucceSS pLanning

Renata, Poels, and Manceski (2015) found tactical strategies for succes-sion planning in management are critical in any organization, not just in the healthcare sector. Tactics are important in order to capture value and determine the amount of value that is created by organizations. Planning in management is highly critical, exploring and defining every detail associated with creating value for organizations. As well as strategic, project management, and operational leadership, synergy must remain mutual to maintain organizational efficiency and identify dependencies.

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Running a tactical job is not an easy task, as leaders need to coordinate, align, translate, and operate strategic details.

Leaders provide summaries to everyone in the organization, starting with top management and including employees, vendors, and clients. Tactical management may influence the success of an organization over time, specifically standardization of the leader and company as a whole (Renata et al., 2015). Currently, practitioners and researchers are accom-modated by “standardization (such as ISO 38500—the International Standard for Corporate Governance of IT, ISO 31000—for Risk Management)” (Renata et al., 2015, p. 1). ISO 38500 and IS O 3100 for risk contribute to effective business practices and accurate solutions. However, the connection points are spread when using ISO 38500 and ISO 3100, and the whole organization and stakeholder structure is observed by the regulators (Renata et al., 2015).

HCOs need to use preemptive methodologies in order to provide for a brighter future, with talent needs projected and accounted for at all levels. The application of designated programs ensures that the right individuals need to be available for the best jobs in the correct places and at the right times to obtain organizational requirements (Patidar et  al., 2016). The process includes development and coaching of employees to meet new proficiencies (Drouin & Bourgault, 2013). For instance, plans can be:

1. anecdotal (case by case, e.g. specific jobs, specific problem areas); 2. periodical (analysis of an individual component of a succession plan

at different times); 3. programmatical (in-depth, objective analysis of the whole process),

in the absence of a consensus (Hickman, 2016).

Leaders need to make choices on how assessments are required to be implemented in HCOs to ensure optimal succession planning (Drouin & Bourgault, 2013).

Six Sigma is used as an evaluation tool to provide for HCOs from the lowest to the highest range in order to achieve a positive result (Santana & Marly, 2016). This is a commonly used tool that shows obligations, team collaboration, project design, results delivery, and final product. HCO leadership needs be aware of unforeseen challenges (Santana & Marly, 2016). Leaders need to consider a plan B for obstacles that arise during strategic planning (Hickman, 2016). Other staffing considerations that have to be addressed in change include the role of the implementer, inven-tor, and developer (Motwani, Levenburg, Schwarz, & Blankson, 2006).

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Using public job listings and personal evaluations for human capital is a potential success factor for strategies in succession planning that will adopt the desired decisions (Weeks, 2013). These desired decisions are divided into traditional and alternative methods. The former include moving cur-rent employees into new situations when necessary, while the latter include job cycles (employees who are developing themselves take up several posi-tions for short periods to increase their experience), talent pools (assigning several employees across more positions), and outsourcing (Mollick, 2012). These provide examples of how formal evaluation studies can be carried out with employees and within organizations (Blouin, McDonagh, Neistadt, & Helfand, 2006). Business Strategic Planning (BSP) and SP&M need training, evaluating, and the translation of current HRM evaluation methods, leading to general and formal assessment procedures (Hickman, 2016).

A color-blind strategy to allow diversity of employee promotion means that candidates are selected based on education, threshold languages, and management comments on performance reviews in order to achieve best results (Elkington, 2015). Social and environmental responsibility leads to ethical behavior governed by law, and individuals make a free choice. HCOs do not want to appear to be unethical (Luqman et  al., 2015). Leaders can accomplish every goal by engaging with followers, delivering transparency, vision casting, and skills for people orientation (Hamel, 2017). Sociometric techniques are another strategy worthy of attention, referred to in succession literature as 180- and 360-degree feedback (Grewal, 2016).

This technique can involve individuals within a particular group recom-mending and assessing employees in a HCO group. The strength of this is that any HCO can perform evaluations of internal contenders who are considered by the entire HCO to be the best successors based on selection criteria (Grewal, 2016). This reduces the risk of subjective decisions when a few key individuals make choices. A similar approach is designated spe-cifically for family firms, where the parent and child assess each other to help decide the readiness of potential successors to undertake leadership (Leigh, 2010).

In the medical arena, honesty and integrity create an image of the orga-nization. Additionally, ethical duties must be considered by the evaluator (Baldrige, 2017). Organizations must support ethical conduct standards, policies, and federal/governmental regulations, owing to the nature of the business. The ethical conduct must be followed by evaluators, managers,

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and leaders. HCOs must convey the reasons why some employees were selected and others excluded from the hiring and promotion process (Baldrige, 2017).

SeLection for SucceSSion pLanning

The National Association of Insurance Commissioners (NAIC) has adopted Own Risk and Solvency Assessment (ORSA), and health plans must follow their requirements for succession planning concerning leader-ship, employees, and organizations (Siegler, 2017). The following criteria need to be performed in all health plans:

1. Risk Identification: insurers need to identify risk and must include a management process and considerations of the ORSA process and emerging risks.

2. Enterprise Risk Management (ERM) Policies: not a require-ment, but providing them will help ORSA solve any problems faster.

3. Group Assessment of Risk Capital and Prospective Solvency Assessment: groups are to be formed by the organization. Leaders need to determine whether to use a qualitative or quantitative mea-surement of the risk exposure to determine risk, and capital resources are a requirement (Siegler, 2017). The organization may hire Baldrige to perform the risk solvency assessments; however, leader-ship involvement is required (Siegler, 2017). In the United States, organizations wanting to improve organizational performance or business excellence programs use the Baldrige Framework and Criteria to help strengthen their competitiveness (Baldrige, 2017).

Baldrige plays a most important role in developing, evaluating, and understanding employees’ performance and leadership (Baldrige, 2017). Baldrige is apprehensive about organizations following the correct steps of: integrity, competence, honesty, respect for people, and the welfare of employees (Baldrige, 2017). Proving the equality of all employees by acknowledging problems and persuading leaders to interact with staff demonstrates diversity in any sector (Baldrige, 2017). Diversity practice is a significant feature of Baldrige.

Examples of succession planning include dual leadership, relay succes-sion, and prototype and style preference. Dual leadership involves diverse individuals holding the chair of the board and CEO positions (Motwani

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et  al., 2006). The method supports reduced expense and accelerated orderly succession (Mollick, 2012). Relay succession comprises discover-ing a successor in advance (Lattuch & Young, 2011). Selection to a senior position and mentoring by the incumbent proprietor/CEO is important in promoting a more regular and constant transfer (Lattuch & Young, 2011). Consider prototypes and style preference make SP&M planning work effectively, providing organizational value for HCOs (Elkington, 2015). BSP for HCOs through building innovation and rep-resenting SP&M planning in order to reach future success (Lattuch & Young, 2011).

Each of these considerations gives succession planning greater innova-tion and better processes (Motwani et al., 2006). HCOs must consider internal and external environments to conduct a successful business model based on horizontal and vertical innovative steps. Succession planning cannot be implemented immediately and will require time. Leaders will become creative and innovate for growth throughout the organization. Hisrich and Kearney (2013) have emphasized learning how to apply con-cepts such as BSP and SP&M planning in the work environment.

Innovation covers the how, why, and when to apply a concept appropri-ately. Hisrich and Kearney (2013) taught leaders to build ideas, which create future perspectives in developing communication plans, business plans, succession planning, and methodology. The concepts from Hisrich and Kearney (2013) are as follows:

1. People to become creative, and be able to take risks. 2. To manage the weaknesses of life opportunities. 3. To deliver the concepts of the mission, value, and vision as clearly as

possible. 4. To provide accountability for all daily tasks. 5. Create a positive environment and develop employees for better

innovation.

While applying these steps, HCOs must contemplate the mission, vision, objectives, and goals of succession planning (Hisrich & Kearney, 2013). The mission, vision, objectives, and goals provide the differences between the social and corporate entrepreneurship and the discipline, along with the idea. When leaders are working in a bureaucratic environ-ment to meet the HCO goals and succeed when applying the concepts (Hisrich & Kearney, 2013).

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Decision-making strategies and retaining growth and development within HCOs should be major concerns (Drouin & Bourgault, 2013). This should give the ability to encourage predecessors and successors to participate in the assessment process, in order to ensure BSP and SP&M address stakeholder needs (Lattuch & Young, 2011). Implementing a suc-cessful succession planning framework will ensure that HCOs survive leadership changes as efficiently as possible, supporting organizational goals and the opportunity for employees to develop their potential (Hickman, 2016). SP&M resourcefulness, comprising recruitment, train-ing initiatives, assessments, development, and retention programs are ever more critical to the success of HCOs (Wang & Wang 2017).

concLuSion

Succession planning is critical for HCOs wanting to recognize current talent roles for their future direction. Higher skills are needed to imple-ment a succession plan and count on potential candidates who possess those skills to implement designated key processes in organizations. Analyzing the gaps between core competencies and skills for any posi-tions needs to be completed at the top levels of the organization. SP&M are the processes that support the constancy of tenured leadership or any methods that are intended to maintain the effective performance of HCOs. Succession planning is a methodology that recognizes precarious leadership positions.

Leaders must concentrate on innovating, and on developing new cul-tural ideas to create a positive impact so that both employees and the organization can achieve its mission and goals. Organizations and leaders need to consider two challenges as they head into the twenty-first century: the first is to develop innovation to create growth; the second is to build revenues, businesses, and shareholder value. Developmental succession plans must be defined and identified before a problem occurs. Career plan-ning and development need to be scientific, theoretical, practiced, and create an interchangeable design that promotes talent.

Leaders need to support followers, while implementing development and social skills, and promoting professionalism and social relationships to become successful. Leaders need to understand values, innovation in technology, skills to demonstrate morals, and flourish to allow organiza-tions’ future expectations to be fulfilled. Motivation in leadership is better than manipulating, and when confronted with a corrupt situation a

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leadership goal is to resolve unforeseen problems. A leader’s job is to implement rational rules, regulation, and policies to minimize high turn-over among employees. An organization needs a key person to fill any positions for succession. Next, an alternative view needs to be taken of job cycles (with employees developing themselves, as they thrive when taking on several positions for short periods in order to increase their experi-ence), talent pools (assigning several employees across more positions), and outsourcing. Each of these considerations strengthens succession planning to allow higher innovation and better processes. Succession planning needs to be considered as examining the internal and external organizational environment.

referenceS

Baldrige. (2017). Baldrige excellence framework (Education). Retrieved from https://www.nist.gov/baldrige/publications/baldrige-excellence-frame-work/education

Blouin, A. S., McDonagh, K. J., Neistadt, A. M., & Helfand, B. (2006). Leading tomorrow’s healthcare organizations: Strategies and tactics for effective succes-sion planning. Journal of Nursing Administration, 36(6), 325–330.

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CHAPTER 12

The Feminist Perspective of Implicit Bias in Succession Planning in Healthcare

Cheryl LaFollette Anderson

Succession planning is seen as a leadership success story for most indus-tries. The basic premise for succession planning is to identify the best and brightest employees within the organization to groom for higher power positions (Keilers, 2016). This method of internal development is well sup-ported by peer-reviewed literature along with practice in the field (Fibuch & Van Way, 2012; Nadler-Moodie & Croce, 2012; Patidar, Gupta, Azbik, Weech-Maldonado, & Finan, 2016). Succession planning is generally viewed as a positive method used by forward thinking organizations.

Succession planning in healthcare organizations has been adopted by many organizations and various credentialing programs. For example, Magnet Hospital Designation is based on the idea of creating a career path for registered nurses along with helping them to develop leadership skill sets (Summers & Summers, 2015). The Joint Commission (TJC), one of the major accrediting organizations for hospital settings, endorses leader-ship identification and training in several required standards for accredita-tion (Patidar et al., 2016). Standards related to patient safety and leading clinical expertise specifically point out the need to identify and retain new leaders (Martorella, 2015). Succession planning is tacitly endorsed by the industry-leading organizations.

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The American College of Health Care Executives (ACHE) is widely quoted as revealing turnover rates for top executives in major healthcare organizations. Turnover rates for CEOs exceeded 20% in 2013 (Diamond, 2015; Keilers, 2016). To address the turnover rates of top executives, suc-cession planning was the purported best solution recommended by the ACHE and related organizations (Keilers, 2016). A white paper published by the ACHE provided strong points to hospitals’ governance boards to consider internal hiring with succession plans in place for all top leadership roles (Improving leadership, 2013). The results from the white paper noted that healthcare lagged behind business and industry with regard to using succession planning to groom leaders for the top echelons of the organization (Improving leadership, 2013). However, the paper’s authors did not specifically state that succession planning includes diversity or females. The implications were to recommend creating a legacy of similar viewpoints groomed from within.

Succession planning in terms of clinician resources is mentioned in healthcare literature. This type of succession planning is more about staff-ing clinical areas through the efforts of cross training, hiring part-time staff, and considering temporary staffing agencies (Raftery, 2015). Succession planning for determining future healthcare leadership is decid-edly different from the small view of healthcare succession planning that is offered in clinical publications. Focusing narrowly on clinical staffing shortages negates the larger picture of focusing on leadership shortages (clinician and non-clinician).

Feminist Viewpoint

Strategic planning and visioning for the future are based on strong leader-ship and continuity of leadership. Succession planning literature notes the positive effects of ensuring continuity of leadership, preventing chaotic power vacuums, and keeping the organization aligned with planned strat-egies and current visions (Improving leadership, 2013). Little in the litera-ture considers the possible negative consequences related to planned succession methods.

Few articles focus on the actual negative aspects of succession planning. With the literature published mainly in the endorsing view, few have ven-tured into the topic that succession planning is decidedly helpful for males in healthcare. While 80% of the overall healthcare workforce is female

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(Diamond, 2015), the actual numbers of women in higher leadership roles is 14.6% (Cracking the glass, 2016). In the push to ensure that lead-ers have a legacy and impact upon the future, a focus on succession plan-ning also endorses a “just like me” method for seeking successors who are similar to the current leader in aptitude, thoughts, and likely demographic characteristics (Diamond, 2015). Succession planning may be observed to be a built-environment method to quell the advancement of women to the highest leadership roles.

Proactive succession planning seeks to transfer the organization’s eth-ics, culture, values, and traditions along with the business (Ganu & Boateng, 2012). Governance boards may see the continuance of these organizations’ underpinnings as best represented by an internal male who has been groomed by the current leader (Finney, MacDougall, & O’Neill, 2012). From a feminist viewpoint, healthcare succession planning is the arbitrary glass ceiling that prevents worthy women from entering the C-Suite—the pinnacle of leadership success.

DisruptiVe innoVation

A companion viewpoint considers if succession planning squashes innova-tion and entrepreneurism within the organization. If succession planning’s main goal is to promote continuity (Ganu & Boateng, 2012), then the possible excitement or innovation that comes from new leadership and new ideas is minimized. Healthcare, of all fields, needs disruptive innova-tion in leadership. The changing dynamics of healthcare from diagnosis and treatment, and regulation to reimbursement, demand new perspec-tives and possibly new leadership.

Disruptive leadership creates excitement and an opportunity for new thought leaders to emerge in any sector. With more women seeking advanced graduate degrees in healthcare administration (Allied health, 2016), the idea of disruptive leadership offers another perspective in help-ing steer a healthcare organization to a new direction in service delivery, reimbursement change, and application of evidence-based leadership ideas. Ryan (2016) noted that women were particularly well suited to consider an innovative or different approach to leadership, finding that success is disrupting the current status quo within an organization. Hiring boards would need to consider seeking new leadership that looks different from the current leaders.

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impact oF the equal employment opportunity act

The Equal Employment Opportunity Act of 1972 (EEOC) provided the basis on which workplace discrimination could be prevented (Equal Employment Opportunity, n.d.). The Department of Labor, a US federal agency, is tasked with oversight of the EEOC criteria. Specific to gender inequity, Title VII of the Civil Rights Act of 1964 prohibits discrimination that includes hiring based on an applicant’s sex (Equal Opportunity, n.d.). Though specific legislation exists, the EEOC has done little to support the rise of women into leadership positions.

In 2011, the EEOC created a women’s work group to address signifi-cant disparities in the hire and pay of women who are equal to men across all businesses and industries (EEOC Women’s, 2012). Multiple partners dialogued with the work group, coming to similar conclusions to the lit-erature. Women are challenged with the need for flexible hours for provid-ing for family needs; lack of mentoring opportunities; that current leaders are groomed by predecessors who look to carry on their own personal legacies; and insufficient training (EEOC Women’s). While acknowledg-ing these challenges, little progress was made in creating new policy by the EEOC to specifically consider ways in which a fair chance for women to seek leadership roles could be mandated.

In healthcare, EEOC mandates are met for hiring women and minori-ties (EEOC, n.d.). Women tend to be employees who work on the lowest rungs of the organizational structure (Tecco, 2015). The EEOC is silent on encouraging women and diversity in leadership roles. Without forceful legislation, the EEOC may be viewed as another stumbling block creating implicit bias through the use of statistics that include all wage categories. There is not a category or break-out of statistics that demonstrates the actual gap experienced by women in leadership roles in healthcare.

succession planning Versus mentoring

Succession planning is an internal organizational plan to develop talent. Much of the planning toward succession is based on mentoring models that encourage younger or less experienced clinicians to have the ability to improve their skill sets through work with an organizational mentor (Finney et al., 2012). Mentoring is routinely endorsed as a method that retains and grooms internal employees toward positions of increased responsibility or higher skill level (Health Care News, n.d.). Mentoring

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may provide organizational insights into the aptitude and abilities of cur-rent employees.

As a succession tool, mentoring has value for healthcare organizations. After all, many healthcare middle managers are educated as clinicians (Finney et al., 2012). Few clinical programs include management, leader-ship, or human resources curricula (Ganu & Boateng, 2012). Clinical mentoring to middle management makes sense for most organizations. The idea of promoting from within and working with the current talent pool is a wise application of human resources principles for recruitment and retention of staff.

There are limits to the value of internal mentoring. Seldom will a non- management employee have the ability to be mentored by the top leaders of a healthcare organization (Kippist, 2013). Top executives seldom have the time or inclination to mentor many who think they would like to be the chief executive officer (CEO) one day. Mentoring does work well for building clinical skills and likely grooming employees to take on clinical supervisory roles in the organization (Tweet of the week, 2016). However, the leap to the top has to traverse a large gap from clinical middle manager to the C-Suite of any organization. This gap of ability and knowledge requires more than mentoring.

Succession planning for healthcare middle managers is a self-fulfilling prophecy. Most healthcare middle managers are women (All Allied, 2016). Most healthcare direct care clinicians are women (Catalyst, 2016). Therefore, the majority of clinical mentoring is female to female, leading to talent development up to middle management. At this point, most women have likely reached the highest rung of the leadership hierarchy for most organizations.

A clinical view to succession planning may not be helpful for true leader-ship development. The nursing literature endorses the idea that nurses should always perform at least one shift per month or pay period directly on the nursing floor to never be too far away from the clinical realm which they supervise (Dyess, Sherman, Pratt, & Chiang-Hanisko, 2016). This type of suppression means that the clinicians are not being routinely encour-aged to pursue higher level leadership roles beyond department manager.

Formal education may be a way for some women to make headway in the volatile area of healthcare leaders into the C-suite of large healthcare organizations. Masters of Health Care Administration (MHA) and Doctorate of Health Care Administration (DHA) programs boast large enrollments, with 80.2% of the student body being female (Perry, 2014).

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While the EEOC Women’s Work Group noted a need for more training (EEOC Women’s, 2012), the facts related to actual education do not support that federal agency’s findings. Women are seeking training and advanced degrees at higher and faster paces than their male counterparts.

Women are outpacing men in pursuing education in all levels of health-care. Graduate programs focused on healthcare leadership are starting to supply a large group of predominantly women with greater ethnic diver-sity (Perry, 2014). This highly educated group will soon be hard to ignore. Succession planning may take a back seat when open leadership positions have multiple hiring choices that may be from outside the organization.

physicians anD leaDers

The literature is replete with a need to create more physicians who are also leaders. The idea of leadership succession planning for doctors is also strongly wrapped in the mentoring model (Kippist, 2013). While highly educated in the management of clinical diagnosis and treatment, many physicians desire to move out of full-time patient care, moving into a leadership role. The cur-rent mentoring models seem to focus on creating internal excellence in clini-cal care (Finney et al., 2012). The current mentoring models do not address the possible goal of moving to the C-Suite of organizational leadership.

Indeed, there are power struggles between organizational leadership and physician clinical leadership, calling for increased physician engage-ment in management practices without actually having physicians as the actual organization leader (Fibuch & VanWay, 2012). The push and pull of clinical expertise versus management expertise versus actual educational requirements may supersede the entire conversation about succession planning. There are many with a strong viewpoint on how healthcare organizations should be organized and led.

experience Versus Degree

In the class of 2013–2014 (the most current statistics in 2017), women earned more degrees than men. Women have earned more master’s degrees than men since 1987 and more doctorate degrees since 2006 (Catalyst, 2016). Since 2015 across all industries, women held 51.5% of all management positions (Catalyst). However, when looking at top leadership roles, women continue to lag behind men, holding about 5% of all top positions (Catalyst). The numbers are skewed further in healthcare.

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In healthcare, 78.4% of the workforce is women (All Allied, 2016). Women hold 14.6% of executive offices in healthcare and 12.4% of the board seats. Women earn more graduate degrees in healthcare administration and hold fewer top leadership positions (“Cracking the glass,” 2016). This means that there will be many well-trained women to take over leadership roles to fill the gaps that are increasing owing to the retirement of baby boomers.

Despite the fact that more women have earned graduate degrees in healthcare management, men continue to outpace women in being hired. Women attained leadership roles at half the rate of men and only 26% of CEOs overseeing hospitals were women (“Cracking the glass,” 2016). There are many reasons given for this persistent disparity.

The common excuses are that women need flexible work schedules; women have the inability to break into informal networks that help with promotion opportunities; lack of female mentors; gender stereotypes; and communication differences (“Cracking the glass,” 2016). Of 400 women surveyed about disparity challenges in healthcare, 96% believe that the lack of leadership opportunities is due to rampant gender discrimination (Tecco, 2015). The problem is real.

conclusion

Solving the gender and pay gap in healthcare leadership will take work. Acknowledging the need for healthcare leadership to include women will be a paradigm change for the industry. The status quo of latching onto the succession planning solution will continue to promote men versus women.

From a feminist perspective, implicit bias is an integral part of organiza-tional succession planning. Perhaps healthcare organizations would be best served by outside leadership, new ideas, and new visions. Succession planning may serve to be the barrier blocking new thought processes, innovation, and leadership ideals. Succession planning is not the panacea that will solve open leadership positions for many healthcare organiza-tions. It is time to be more forward thinking.

reFerences

All Allied Health Schools. (2016). Women in health care. Retrieved from http://www.allalliedhealthschools.com/women-in-healthcare/

Catalyst. (2016). Women in the workforce. Retrieved from http://www.catalyst.org/knowledge/women-workforce-united-states

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Diamond, D. (2015). Women make up 80% of health care workers – But just 40% are executives. Retrieved from https://www.advisory.com/daily-briefing/blog/2014/08/women-in-leadership

Dyess, S. M., Sherman, R. O., Pratt, B. A., & Chiang-Hanisko, L. (2016). Growing nurse leaders: Their perspectives on nursing leadership and todays’ practice environment. The Online Journal of Issues in Nursing, 21(1). https://doi.org/10.3912/OJIN.Vol21No01PPT04.

Fibuch, E., & Van Way, C. W. (2012). Succession planning in health care organi-zations. Physician Executive, 38(5), 44. Retrieved from https://www.ncbi.nlm.nih.gov/labs/journals/physician-exec/

Finney, S., MacDougall, J., & O’Neill, M. L. (2012). A rapid matrix mentoring pilot. Leadership in Health Services, 25(3), 170–185. https://doi.org/10.1108/17511871211247624

Ganu, J., & Boateng, P.  A. (2012). Creating a culture of enterprising women through succession planning. American Journal of Management, 12(2), 69–80. Retrieved from http://www.na-businesspress.com/ajmopen.html

Health Care News. (n.d.). Leadership succession planning is essential to health care today. AMN Health Care. Retrieved from https://www.amnhealthcare.com/amnnews/

Improving leadership stability in health care organizations. (2013). White paper. American College of Health Care Executives. Retrieved from https://www.ache.org/pubs/research/pdf/CEO-White-Paper-2011.pdf

Keilers, L. W. (2016). Leadership, succession planning, and transitions: How do we balance them. Rural Health Innovations & the National Rural Health Resource Center. Power Point. Retrieved from https://www.ruralcenter.org/sites/default/.../Succession%20Planning%202016%20LK....

Kippist, L. (2013). Bridges or barriers? Succession planning for doctor managers. International Employment Relations Review, 19(2), 24–37. Retrieved from http://iera.net.au/journals_5.html

Martorella, C. (2015). The Joint Commission’s new patient safety systems chapter: A clarion call for leaders. Compass. Retrieved from https://hospital-accredita-tion.compass-clinical.com/2015/06/04/tjc-patient-safety-systems-chapter/

Milken Institute of Public Health. (2016). Cracking the glass (hospital ceiling): Gender diversity in health care. Retrieved from http://www.allalliedhealth-schools.com/women-in-healthcare/

Nadler-Moodie, M., & Croce, N. (2012). Succession planning. Journal of the American Psychiatric Nurses Association, 18(6), 357–358. https://doi.org/10.1177/1078390312468034

Patidar, N., Gupta, S., Azbik, G., Weech-Maldonado, R., & Finan, J. J. (2016). Succession planning and financial performance: Does competition matter? Practitioner application. Journal of Healthcare Management, 61(3), 215–229. Retrieved from https://www.ache.org/pubs/jhm/jhm_index.cfm

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Perry, M. (2014). Women earned the majority of doctoral degrees in 2014 for 6th straight year, and outnumber men 136 to 100. AEI. Retrieved from http://www.aei.org/

Raftery, C. (2015). Succession planning for nurse practitioners. The Journal for Nurse Practitioners, 11(2), 269. https://doi.org/10.1016/j.nurpra.2015.01.005

Ryan, C. N. (2016). Disruptive leadership: A grounded theory study of how three Kentucky women are leading change (Order No. 10599830). Available from ProQuest Dissertations & Theses Global. (1926754928).

Summers, S., & Summers, H.  J. (2015). Magnet status: The nursing process should be the floor, not a ceiling. Advance Healthcare Network. Retrieved from http://nursing.advanceweb.com

Tecco, H. (2015). The state of women in health care: Update. Rock Health. Retrieved from https://rockhealth.com/state-women-healthcare-update/

Tweets of the week. (2016). Nursing Standard (2014+), 30(27), 33. doi:https://doi.org/10.7748/ns.30.27.33.s42

U.S. Equal Opportunity Commission. (2012). EEOC women’s workgroup report. Retrieved from https://www.eeoc.gov/federal/reports/women_workgroup_report.cfm

US Department of Labor. (n.d.). Equal employment opportunity. Retrieved from https://www.dol.gov/general/topic/discrimination

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CHAPTER 13

Are You Preparing a Successor? Succession Planning in a Small, Private Practice,

Healthcare Setting

Tamara J. Reeves

Succession planning in small, healthcare practices is a topic that does not regularly occur in conversation or during professional development training. However, it is vital, as many small businesses thrive because of their ability to fulfill specific needs/niches within their surrounding communities. In general, small businesses are a vital source of income for the USA, as “28 million small businesses account for 54% of all U.S. sales” (Small Business Association, 2017). Although this number indicates the strength of small businesses, the Small Business Association also indicates that the number of small businesses has increased since 1982, as has as the number of jobs pro-vided by them, while the small business failure rate has declined. This means that not only do small businesses continue to develop in the USA, but they are profitable. Unfortunately, without a succession plan in place, many such businesses will die with the retirement of their owners. This likelihood increases in small healthcare practices, where a high percentage of practice owners do not have an identified successor or a successor plan in place.

To gain a measure of the use of succession planning principles in the current author’s network of healthcare professionals across the USA, 45

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professionals were polled through LinkedIn. A response of 20% was obtained. Respondents indicated that 33% worked in small healthcare facilities and 89% worked in urban areas. The healthcare fields represented included emergency services, private practices, educational positions, health and nutrition, hospitals, clinics, mental health, and geriatrics. Of those that responded, 33% indicated that there was no succession plan in place, and that the obstacles to putting one in place included financial bar-riers, legal barriers, the absence of a mentorship model, and frequent turn-over. These statistics mirror the findings from recent research studies discussed below, which focus on succession planning in small healthcare practices. To help professionals begin to challenge these barriers within smaller healthcare practices and to increase the percentage of individuals who utilize succession planning as a regular practice, this chapter will dis-cuss the process of succession planning for small healthcare practices, bar-riers to starting succession planning within such companies, and ways in which to overcome these barriers.

Barriers to succession Planning in small HealtHcare Practices

There are many factors to consider during succession planning, and key factors include the procedures necessary for a successful transfer, legal and financial considerations, psychological factors, leadership development for the successor, and exit strategies (Barry & Jacobs, 2006). While this cre-ates numerous hurdles for a small business owner, there are benefits, as succession planning ultimately plays an integral role in the longevity of the company and also serves as an underlying force to strengthen the compa-ny’s reach (Gadene, 1998). The bulk of succession planning research has been conducted in medium and large companies, which means small busi-nesses have to adapt these strategies to a smaller structure. But once the barriers are understood, the leadership can develop a solid plan that fits the company’s long-term needs.

The Successful Transfer

In family-owned businesses, succession planning can help to provide a long-term leadership plan to help the business sustain a presence within the community (Tatoglu, Kula, & Glaister, 2008). Of course, a successful

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transition is dependent on the identification of a family member who is knowledgeable about the business and possesses the skills needed to con-tinue the company’s success. The utilization of a family member within the succession plan also means that this family member has to be willing to take over. While family members are usually the first choice for many small businesses, there are instances when this opportunity is declined. In these situations, small, family-owned businesses often have a hard time finding a successor who is willing to take on the responsibility (Barry & Jacobs, 2006), which creates additional barriers for a successful leadership transi-tion. Leadership teams can continue the succession plan, but will be faced with the fear that placing a non-family member in the role of the successor may change the culture of the business, or could change the company’s direction.

Leadership Development

The development of leaders who are ready to move into successor roles starts within general leadership training. However, many professional schools do not actively incorporate such models into their general curricu-lum (Van Amburgh et al., 2010). This initial barrier prevents these early conversations from occurring in professional development training and discussions. And unfortunately, many leadership teams do not start con-versations until reviews of their current staff reflect that a large percentage will soon retire (Weisman Babich, Umble, & Baker, 2016). This creates another barrier in the initial steps of the process. With gaps looming ahead, steps in the succession planning process are often overlooked, and so the plan is not as effective as it could be.

There are also concerns about choosing an identified leader:

The two conditions, which are crucial for the succession to proceed as intended, are the successor’s willingness to demonstrate a long-term com-mitment to the business and his or her ability to gain the necessary knowl-edge, skills, and competencies required to manage within the finite time span leading up to the retirement of the incumbent. (Fox et al., 1996, in Tatoglu et al., 2008)

This perspective continues to be seen in recent articles, such as the one published by Seymour (2015), which encourage members of health- focused organizations, such as nursing managers, to take a proactive role

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in developing and maintaining a succession plan. Such initiatives often start with increasing awareness within the leadership team. This puts the team in a stronger position to evaluate previous trends concerning reten-tion of former leaders, areas of weakness regarding the retention of leaders in key positions, and how the goals of the company might be tied to a targeted succession role.

After awareness of the need for a succession plan has been raised through training and initial planning, there are a number of barriers that may persist. When considering small healthcare practices specifically, lead-ership teams must consider changes in community climate, development of effective succession plans, hiring effective leaders, changes in personal barriers, and changes in healthcare reform (Van Amburgh et  al., 2010; Barry & Jacobs, 2006; Cole & Harbour, 2015). These variables need to be considered for an effective initial plan to be developed. This often means working with the company leadership, community partners, and community leaders, as well as community stakeholders, in order to ensure the plan’s success.

Legal and Financial Hurdles

Another major hurdle for the company is working to ensure the legal con-tinuity of the business in relation to community relationships and contract agreements (Barry & Jacobs, 2006). If we consider the length of a succes-sion plan alone, research indicates it may take 12–18 months for a succes-sor to begin to demonstrate productivity in a new role (Barry & Jacobs, 2006). This means that the business has to have enough financial strength to sustain itself through this period, given that a significant portion of the current leader’s time will be dedicated to identifying and training a succes-sor. There is also a general cost associated with succession planning, with regard to training, changes needed for leadership, and the needs of the new leader (Trepanier & Crenshaw, 2013). This is a significant barrier for some companies, as the cost involves training the new individual, and those who are training this person are less productive during the interim.

Psychological and Cultural Factors

There are a number of psychological factors that can arise during succes-sion planning in small companies. There is often an emotional tie to the community being served for the person who created the company. As a

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result, there is a general fear of losing overall control, as well as a fear that the goals and vision that led to the development of the company will change. An initial barrier that has to be worked through is in relation to the predecessor’s fear of losing control within the company as the succes-sor is trained (Tatoglu et al., 2008).

In some cultures, the successor pool for a family-owned business is also limited by gender (Tatoglu et al., 2008), with preference being given to male family members. Gender barriers have also been highlighted by other authors (e.g. Wang, 2010), who indicate that the exclusion of daughters during the succession planning process can prevent the use within the company of the skills and abilities that they possess. Often this is not believed to be due to gender discrimination, but to a cultural expectation that the son will take over and continue to lead the family.

There are also times when a family member is identified who is unable to take the reins due to stage of life factors. For instance, additional barri-ers as outlined by Barry and Jacobs (2006) include difficulties in succeed-ing owing to parental responsibilities, and/or children holding negative perceptions of the business or the owner being without biological children/heirs. Caring for an older and/or ailing member may be another barrier. In these cases, the identified family member may be qualified and willing, but unable to move into the position.

Given the number of barriers that can occur when trying to locate a familial successor, some small companies choose to identify a successor through a community search instead. However, this is considered to be a last resort by some companies, as they fear that engaging in a succes-sion plan that includes a search outside family members may bring to light weaknesses in and negative aspects of the company’s organizational culture (Barry & Jacobs, 2006). In such situations, these companies may need to work with an objective consultant to target and develop plans for resolving problem areas before beginning the succession planning pro-cess. This step is only taken if the company has insight into its weak-nesses. When overlooked, organizational/cultural barriers can create significant factors that are hard to overcome when actively attempting to move from the development of a succession plan to the hiring and train-ing of a new successor.

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creating Bridges for tHe small HealtHcare Practice for succession Planning

Overcoming barriers in any plan begins with taking action. Succession planning is no exception. The percentage of businesses who indicate hav-ing a succession plan in place is growing; for example, in 2008 it was esti-mated that 10% of small and medium-sized businesses had a plan in place. But for this trend to continue, businesses need specific goals to target and methods for implementing key factors. Here, information is identified to help with overcoming barriers and actively developing the planning stage.

Overcoming Barriers

Fortunately, past research has provided some guidelines for understanding barriers to succession planning in small healthcare companies, as well as methods through which to overcome them, using middle management, structural planning, and long-term retention strategies (Belasen & Belasen, 2016; Trepanier & Crenshaw, 2013). In generating a pool of successors, there are many options to consider inside and outside the firm. Based on recent literature that is specific to healthcare practices, here are some fac-tors to consider during this initial step:

1. The company should seek to identify positions that fit within the timetable of an ongoing review for succession and establish a mentor for these roles within other leadership positions (Van Amburgh et al., 2010). This step indicates an ongoing process, instead of one that results from an immediate need, and so takes a more proactive approach.

2. It is also recommended that during the initial steps the company should consider methods for setting a succession timeline, as well as a review process for its effectiveness at each stage (Van Amburgh et al., 2010). Often these plans create a needed feedback loop that helps to inform current decisions as well as future practices. This is important for roles in which succession planning takes place on an ongoing basis.

3. In the initial stages, companies should also seek to determine if there are executive positions that can be identified as successor roles for which women can be trained. Taking this step can create a stronger gender balance among executives (Ganu & Boateng, 2012; Wang, 2010). It also provides a mechanism for challenging the perspective that only male heirs can take on such roles, and instead encourages a push towards the use of skills and abilities from the whole family unit.

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Planning Stage

During the active planning stage, consideration should continue to be given to the length of the plan, the predecessor, and the identified can-didates. The leadership team within the company should also continue to keep in mind the psychological barriers that tend to create addi-tional barriers. With this in mind, predecessors are often more confi-dent about training a successor when they are sure the company will be successful in his/her absence, clear about the long-term business strat-egy, sure the successor will be supported by key employees of the com-pany, and positive that the post-succession role in the company is well defined (Tatoglu et  al., 2008). During the planning stage, it is also important to consider specific factors to help screen the applicant pool. Some of these are as follows:

1. Obtaining recommendations from executives and others in leader-ship roles (National Center for Healthcare Leadership, 2010).

2. Taking steps to consider high performers within the company, and those who excel regarding respect, service, quality, and operational/financial issues (National Center for Healthcare Leadership, 2010).

3. Identifying candidates who are not only open to career growth, but who demonstrate an interest in their own development (Trepanier & Crenshaw, 2013).

4. Asking the board of directors (if in place) to screen the initial appli-cant pool, and monitor the candidate even after the appointment. This helps to identify weaknesses in the succession process, and is also critical to leadership roles that have a fundraising component in the core job requirements (Berns & Klarner, 2017).

5. Evaluating where candidates fall in relation to core performance fac-tors for the company, and whether middle performers might increase their productivity with the support that comes from a leadership role (Belasen & Belasen, 2016).

6. Identifying applicants who more closely align with established com-petencies, organizational mission, use research-based practices, and have been open to feedback, utilizing it for continued improvement (National Center for Healthcare Leadership, 2010).

7. Taking steps to actively develop key people who are believed to have the potential for advancement (Gray, 2014).

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8. Creating opportunities for a long-term mentoring relationship to develop and remain in place throughout the succession process (Cross, 2009). This should continue, increasing the likelihood that key leadership will remain mindful of the need to prepare future suc-cessors (Franchise World, 2014).

Practical Approaches

Effective succession planning is actively reviewed within the nursing indus-try. For example, barriers are effectively overcome when small businesses are willing to take on new graduates (Jones et  al., 2017). Taking this approach prevents the company from taking on a seasoned professional, but does provide an opportunity to train a new hire in the core principles and strategies that are important for the company. Such an approach is effective, according to Jones et al. (2017), when these principles are devel-oped into an active training approach that also includes weekly debriefing and active simulation opportunities to allow for practice and continued growth. Another example is when active steps are taken early on to iden-tify areas of weakness within the company, looking for areas where there are frequent vacancies and/or turnover rates, making role expectations clear, and identifying internal talent (Titzer & Evans, 2016). This ensures that information shared during training continues over time, while also making sure that critical leadership roles remain filled.

Depending on the size of the company, and the length of time available for succession, there are also different models that can be used. Berns and Klarner (2017) identified two primary options: Relay and Horse Race. In Relay CEO succession, the candidate is identified and there is a period of time when they receive oversight from the person who is in the current role. Their formal appointment comes later through a promotion. In a Horse Race succession, the board or company leaders set up a race of qualified candidates who then compete with one another. The best candi-date is appointed at the end of the period. While this provides an oppor-tunity to see which candidate may be best suited for the role, it has disadvantages: the company could risk losing the candidate who is not chosen if they were being promoted from inside the company (Berns & Klarner, 2017).

A final practice example is seen in an article by Cole and Harbour (2015). In this example, they provide the steps taken by a rural public health department during the succession planning process. This provides

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a model for smaller companies and those that offer lower pay scales for successors owing to demographic considerations. Given that the example was a qualitative design, it also provides quotes from those directly involved in the succession process, and their perceptions of barriers to filling the position adequately. This example is also promising, as the succession plan did not follow a formal process but still led to the identification of a suc-cessful candidate.

conclusion

Small healthcare practices meet with several barriers as they begin the pro-cess of acknowledging the need for succession planning. However, with specific tools in place, and the utilization of resources inside and outside the company, even small companies can be successful in such endeavors. As noted, the benefits may not only ensure the longevity of the company in the long run, but also maintain key leadership positions in stressful industries.

references

Barry, L. P., & Jacobs, G. (2006). Business succession planning: A review of the evidence. Journal of Small Business and Enterprise Development, 13, 326–350. https://doi.org/10.1108/14626000610680235

Belasen, A., & Belasen, A. (2016). Value in the middle: Cultivating middle manag-ers in healthcare organizations. Journal of Management Development, 35, 1149–1162.

Berns, K. V. D., & Klarner, P. (2017). Review of the CEO succession literature and a future research program. Academy of Management Perspectives, 31, 83–108.

Cole, S. L., & Harbour, C. P. (2015). Succession planning activities at a rural public health department. The Qualitative Report, 20, 148–164. Retrieved from http://www.nova.edu/sss/QE/QR20/1/cole8.pdf

Cross, S. (2009). Succession planning in healthcare organizations (Published mas-ter’s thesis). Old Dominion University. Retrieved from http://digitalcommons.odu.edu/cgi/viewcontent.cgi?article=1058&context=ots_masters_projects

Gadene, D. (1998). Critical success factors for small business: An inter-industry comparison. International Small Business Journal, 17, 36–56.

Ganu, J., & Boateng, P.  A. (2012). Creating a culture of enterprising women through succession planning. American Journal or Management, 12, 69–80.

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Gray, D. (2014, March). Succession planning 101. Professional Safety, 35.Jones, S., Deckers, C. M., Strand, D., Bissmeyer, H., Bowman, W., & Mathe,

D. G. (2017). Succession planning: Creating a case for hiring new graduates. Nursing Economics, 35, 64–69.

National Center for Healthcare Leadership. (2010). Best practices in health leader-ship talent management and succession planning: Case studies. Published by the National Center for Healthcare Leadership. Retrieved from http://www.nchl.org/Documents/Ctrl_Hyperlink/doccopy5800_uid6102014456192.pdf

Q & A: Succession planning for an ongoing venture. (2014). Franchising World, 46(4), 30. Retrieved from https://search.proquest.com/docview/ 1541347142

Seymour, C. (2015). For nurse managers, it’s time to embrace succession planning. Retrieved August 25, 2017, from http://onlinenursing.wilkes.edu/nurse- managers-succession-planning/

Small Business Association. Small business trends. Retrieved August 1, 2017 from https://www.sba.gov/managing-business/running-business/energy-efficiency/sustainable-business-practices/small-business-trends

Tatoglu, E., Kula, V., & Glaister, K. W. (2008). Succession planning in family- owned businesses. International Small Business Journal, 26(2), 155–180. https://doi.org/10.1177/0266242607086572

Titzer, J. L., & Evans, T. (2016). Three first steps for effective succession plan-ning. American Nurse Today, 11, 36–40.

Trepanier, S., & Crenshaw, J. T. (2013). Succession planning: A call to action for nurse executives. Journal of Nursing Management, 21, 980–985.

Van Amburgh, J., Surratt, C. K., Green, J. S., Gallucci, R. M., Colbert, J., Zatopek, S. L., & Blouin, R. A. (2010). Succession planning in US pharmacy schools. American Journal of Pharmaceutical Education, 74(5), 1–7.

Wang, C. (2010). Daughter exclusion in family business succession: A review of the literature. Journal of Family Economic Issues, 31, 475–484.

Weisman, J., Babich, S., Umble, K., & Baker, E. (2016). Succession planning and management practice in Washington state local public health agencies. Journal of Public Health Management & Practice, 22, 512–519.

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CHAPTER 14

Succession Planning Research in the Educational Sector

Lili C. Melton

Sustainability is vital to education, particularly with the demands outlined in the U.S. Department of Education’s Strategic Plan for 2014–2018. This states that students need a well-rounded and excellent education so they thrive in college, in careers, and in a competitive society. Within the educational sys-tem, there is a need for a comprehensive change to assist students from cradle to career (2013). Sustainability in educational organizations, such as that pro-vided by the K12 and HE systems, is necessary to ensure ongoing progress, particularly for schools that are improving, are low-performing, are plateau-ing, or are reforming (Lee, 2015). Organizational stability is also important because student cognitive growth and development are vital in educational settings, and intellectual progress occurs with enduring institutions and effec-tive leadership (Hofmeyer, Sheingold, Klopper, & Warland, 2015).

SucceSSion Planning to Promote SuStainability

Succession planning is a practice commonly used in business environments to promote organizational sustainability. As Reeves (2010) affirmed, suc-cession planning in modern government and business is necessary for

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developing individuals’ skill sets for future organizational needs. Similar to the business and government definition of succession planning, Calareso (2013), in the journal Planning for Higher Education, defined it as a con-tinued procedure to identify, develop, train, promote, and maintain cur-rent employees for future leadership roles. Based on these identifiers noted by Calareso for the replacement of business leaders, succession planning has become the preferred approach for encouraging long-term organiza-tional sustainability (Calareso, 2013; Gonzalez, 2010; Rothwell, 2011). The Witt/Kieffer 2008 Search Firm’s study further confirmed the promo-tion of organizational sustainability, and adoption of business practices of succession planning in higher education (HE). Calareso (2013) and Long, Johnson, Faught, and Street (2013) verified that educational succession planning is an effective method for reaching desired outcomes, promoting organizational sustainability, and encouraging local solutions to national challenges. The benefits of succession planning in education are numerous for employees, including stability, leadership continuity, and the creation of a diverse talent pool. Further advantages include building morale, low-ering institutional expenses, increasing employee skills, eliminating confu-sion, and maintaining a competitive edge over other schools, colleges, and universities (Calareso, 2013). Therefore, succession planning assists with sustainability in education because the promotion of growth and develop-ment in areas such as student achievement and school and teacher perfor-mance occur when prospective employees are prepared to transition to leadership roles (Zepeda, Bengtson, & Parylo, 2012).

rationale for PrePgo framework

Leadership requires a clear destination and a road map to meet educa-tional demands, and succession planning provides the clarity educational leaders need (Calareso, 2013). However, research into succession plan-ning in education is limited (Zepeda et al., 2012) and an all-encompassing succession planning model does not exist in education (“Effective prac-tices for succession planning in higher education,” 2010). Succession planning models are also not formally or entirely used by institutions (Zepeda et  al., 2012). For example, Rothwell (2011) recommended replacement planning or the identification of anticipated openings and the location of viable employee replacements. Zepeda et al. (2012) discovered that leadership in K12 fosters a need for practices relying on collaborative partnerships with outside organizations and mentoring through succession

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planning. The Dynamic Leadership Succession model emphasizes that leaders must forecast leadership needs, mentor current leaders to provide ongoing support, and plan organizational leadership succession (Peters-Hawkins, Reed, & Kingsberry, 2017).

PREPGO

Promoting organizational sustainability in K12–HE systems is essential and achievable with proven researched succession planning methods and strategies gathered from the literature and described in six comprehensive phases: Planning, Recruiting, Empowering, Preparing, Guiding, and Off to work (PREPGO). The succession planning PREPGO framework is an approach that assists leaders with organizational sustainability and in pro-moting solutions to educational challenges. Table 14.1 is provided for an initial overview and understanding of PREPGO.

PREPGO: K12 – HE Research in Succession-Planning

Succession planning works when institutional leaders appreciate, promote, and use effective strategies for succession planning, specifically to encour-age local solutions for national challenges (Collins, 2013). The subse-quent research section answers the following questions. What is the K12–HE PREPGO framework? What strategies should leaders use to implement succession planning?

Planning

Succession planning requires leaders to plan proactively, focusing on cur-rent and future positions and level of employee potential. Leaders must also assess the diversity of employees, development of the institution and the programs, and available and needed resources and budgets (Pina- Ramìrez & Dàvila, 2015). Timely transitions are additional planning fac-tors and aid smooth changeovers, particularly because school leaders are cornerstones for school improvement (Peters-Hawkins et  al., 2017). Because of these leadership demands, planning proactively is the first and most important step to succession planning. A goal of succession planning is the use of proactive measures to begin the process early, in order to have the right talent ready to transition into leadership positions at appropriate times (Class et al., 2014; Flynn, 2014; Rothwell, 2011).

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Table 14.1 Succession planning framework to promote organizational sustain-ability: PREPGO

Definitions Strategies

P: Planning Proactive measures to begin succession planning early on and to have the right talent ready to move into short-term or long-term leadership positions,a aiding in smooth transitions as leaders leave and new leaders take over.b

Plan preemptively and develop through talent management and recruitment strategies that are focused on bringing in successors who have the necessary talent;c consider the number of and types of positions needed for future leadership positions;d prepare for training if no qualified staff members exist in the organization;d examine current staff or conduct a talent study.e

R: Recruiting

Leaders promoting and preparing for the needs of their institution,f by searching for replacements who can cope with high levels of stress, make positive impacts on student achievements, have strong emotional intelligence, and be able to handle politically sensitive situations.b

Promote and prepare for the needs of the institutionf by encouraging, facilitating, and attracting long-term employees,g who are committed to the organization and educational improvement.g

E: Empowering

Retaining and promoting employees to boost morale.h

Search for employees who are rising stars, driven, ambitious, desire growth, want to be part of the team,c and understand the trajectory of the school.h Current leaders must share plans.i

P: Preparing Training and coaching employees to lead positive and sustained programs designed to promote the organization and to progress the institution to greater heights.j

Build relationships and foster change through motivational and supportive means;h team prospective leaders with successful, seasoned employees;c create and use internal leadership programs.k

G: Guiding Pairing skilled and experienced employees,l and mentees mentoring staff for leadership positions to assist with retention of employees.m

Ensure the mentor and mentee share a common background; make certain appropriate expectations are in place;n set mentor and mentee goals; make certain mentors share real-world knowledge; arrange for career support in the organization and between K-12, HE, and business institutions.m

(continued)

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Table 14.1 (continued)

Definitions Strategies

O: Off to work

New leaders smoothly transition into their leadership role.

New leaders continue the succession planning steps in PREPGO ensuring recruitment, empowerment, preparation, and guidance of future leaders. Leaders also teach succession planning to staff. j

Note:aClass, Sobocinski, Harding, Sobocinski, and Peterson (2014); Flynn (2014); Rothwell (2011)bPeter-Hawkins, Reed, and Kingsberry (2017)cFlynn (2014)dRothwell (2011)eHall-Ellis (2015); Rothwell (2011)fVirick and Greer (2012)gGawlik (2015)hLee (2015)iBrumm and Drury (2013)jLong et al. (2013)kCalareso (2013)lMavrinac (2005); Murray (2001)mJakubik, Eliades, Weese, and Huth (2016)nHacker, Subramanian, and Schnapp (2013)

Strategies to Plan

In 2014, Hanover Research published findings that revealed succession planning to be a method that required district administrators to anticipate needs, clearly outline plans with measurable objectives, and create set stan-dardized evaluative measures (“Best practices in succession planning,” 2014). Planning, therefore, must be preemptive and developed through talent management and recruitment strategies that are focused on bringing in successors who have the necessary skills (Flynn, 2014). Leaders must consider the number of staff members who can prepare for leadership. If no qualified employees exist within the institution, leaders may need to plan and prepare for coaching and training to ensure the preparation of replacements (Rothwell, 2011). To have the right people ready for leader-ship positions, examination of staff or a talent study within the organization must occur to assess if there are individuals capable of meeting the demands of leadership positions (Hall-Ellis, 2015; Rothwell, 2011).

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Consider CostsDuring the succession planning stages and to save future costs, assessment of prospective leaders occurs to project who may or may not perform adequately in various leadership positions (Calareso, 2013). Galbraith, Smith, and Walker’s (2012) study is an example of retaining employees for future leadership positions as a cost-saving measure. Their research pro-vided evidence that showed internal employees are already loyal to the institution, are familiar with the goals and objectives, and have skills and strengths already identified by the current leadership (2012).

Consider ChallengesLeadership transition challenges are heightened in charter schools because these institutions require leaders as a source of stability who fit the aca-demic mission and culture (Gawlik, 2015) and who espouse a particular vision of the future (Sarason, 1972). In public school systems, shortages of principals, quality leaders, and the sustainability of leadership are chal-lenges, specifically with rising concerns about student achievement, teacher performance, and school conditions (Zepeda et al., 2012). Private HE institutions offer additional unique challenges to leadership succession (Klein & Salk, 2013). Leaders in colleges and universities need to satisfy stakeholders’ requirements, have shared governance and philosophical val-ues, and need to meet changing educational needs (2013). Educational leaders not only have business institutional challenges, but administrators also have national, educational requirements to meet the USA’s education goals. Arne Duncan, US Secretary of Education from 2009 to 2015, noted in the U.S. Department of Education’s Strategic Plan for 2014–2018 that students need a well-rounded and excellent education to thrive in careers, college, and competitive society (2013).

recruiting

Promoting individuals with leadership abilities is the definition of recruit-ing in the PREPGO framework. Craig (2015) emphasized that positive impacts occur for organizations when talented employees are promoted from within the organization to fill critical positions. Research in succes-sion planning shows that there are long-term benefits in academia when trained and skilled employees transition to open positions (Collins, 2013). Recruiting from within the organization is assistive because leaders can

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search for employees who possess essential leadership qualities. When ini-tially hiring from outside the organization, leaders must attract and recruit appropriate talent that is based on qualities and characteristics leaders need to have in order to work for the establishment (Craig, 2015). Leaders must also search for replacements with necessary leadership qualities, such as those who can cope with high levels of stress, can make positive impacts on student achievements, have strong emotional intelligence, and are able to endure complex and politically sensitive situations (Peters-Hawkins et al., 2017).

Strategies to Recruit

Leaders must promote and prepare for institutional needs, such as assess-ing gender diversity (Virick & Greer, 2012). For example, leaders realize that leadership changes, with for example increasing minority popula-tions, including bilingual peers and ethnic minorities. Leaders can then begin to hire in entry-level positions so there are potential frontrunners in place for those future positions. With proactive planning, the organiza-tion has qualified, minority populations who are already working for the establishment, promoting diversity (Virick & Greer, 2012), and making positive changes at all stages and levels of the institution. Lee (2015) highlighted that leaders should retain employees who understand the tra-jectory of the school. Recruiting and selecting aids sustainability and can be accomplished by encouraging, facilitating, and attracting long-term employees who remain with the company and improve the organization (Gawlik, 2015).

emPowering

Brumm and Drury (2013) defined empowering as enabling or creating circumstances for power and information sharing between the leader and the employees. Retaining employees boosts morale because the future leader is prepared, understands the intended trajectory of the school, and will encounter less resistance from staff members, leading to employee empowerment (Lee, 2015). The members of the institution are also empowered because they have a sense of stability and are confident the new administrator will lead the school without significance gaps from the previous administration (2015).

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Strategies to Empower

Flynn (2014) emphasized that leaders should search for employees who are rising stars, driven, ambitious, desire growth, and want to be part of a team, because collaborating with rising stars is appealing, motivational, and empowering to employees (2014). Aspiring leaders are inspired and empowered by school leaders who exhibit their passion in leadership (Drew & Ehrich, 2010; Zepeda et al., 2012). Leaders must share their plan for the future of the organization to empower and assist future lead-ers in remaining positive and seeing a vision for the future (Brumm & Drury, 2013).

PreParing

Once the positioning of prospective candidates occurs, training and coach-ing must begin to prepare the prospective leader. Coaching is a means for leaders to add value to and improve the skills of employees (Bommelje, 2015). Employee enrichment leads to positive and sustained programs designed to promote the organization and leads the institution to greater heights (Long et al., 2013). For example, DeFrank-Cole, Latimer, Reed, and Wheatly (2014) research demonstrated that coaching of females for future leadership roles on the campus was a positive experience that led to sound results.

Strategies to Prepare

Lee (2015) suggested that new leaders should build relationships and fos-ter change through motivational and supportive means. These proactive approaches occur early in the preparation phase, especially because new leaders were staff members before advancing to the leadership position (2015). Recruits desiring to be leaders can undergo preparation for future leadership positions through teaming with successful seasoned employees (Flynn, 2014). Nurturing of potential leaders should occur through inner leadership programs, such as internal and external cultural and community building and technical training (Calareso, 2013).

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guiding

Guiding for this phase of PREPGO is mentoring. This is a means of pair-ing skilled and experienced employees with less qualified individuals to assist the latter in growing workplace competencies (Mavrinac, 2005; Murray, 2001). Mentoring is a positive experience for the academic com-munity (Klein & Salk, 2013) because mentoring staff for leadership posi-tions is a means to retain employees (Jakubik et  al., 2016). Mentees experience more job satisfaction and benefit by career advancement, pro-fessionalism, and psychosocial well-being (Mavrinac, 2005). Clayton, Sanzo, and Myran (2013) found that mentoring of aspiring leaders by current leaders leads to high levels of achievement because current leaders have the opportunity to share, reflect, and participate in a positive and assistive relationship with mentees.

Strategies to Guide

The effective means of guiding and mentoring ensures mentors and men-tees share common backgrounds (Hacker et al., 2013) because the men-toring process is successful when attention is placed on the pairing of individuals (Clayton et al., 2013). In addition to shared common experi-ences, appropriate expectations need to be in place (2013). Goal setting is the next step, such as SMART goal setting (Jakubik et al., 2016). Mentees must then share real-world knowledge, provide means for organic knowl-edge sharing, and arrange for career support (2016) across the organiza-tion and between educational and business institutions.

off to work

Transitioning occurs at the next stage of the succession-planning phase. When possible, an overlap of leadership should occur to ensure responsi-bilities are fluid and more efficient (“Best practices in succession plan-ning,” 2014). Once new leaders transition, they must teach succession planning to staff and future leaders (Long et al., 2013). The teaching of succession planning leads to sustainability because educational procedures occur smoothly and leaders have the necessary training in succession plan-ning to continue the process (2013). Off to work occurs when new leaders continue the succession planning efforts, ensuring the recruitment, empowerment, preparation, and guidance of future leaders.

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concluSion

The succession planning framework PREPGO (Planning, Recruiting, Empowering, Preparing, Guiding, and Off to work) is an approach to assist leaders with organizational sustainability and to promote solutions to edu-cational challenges. Promoting organizational sustainability in K12–HE learning sectors is important and is achievable with the proven and researched succession-planning methods and strategies gathered from the literature and described in the comprehensive six-phase PREPGO framework.

referenceS

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Bommelje, R. (2015). New directions for adult and continuing education. Managerial Coaching, 2015(148), 69–77. https://doi.org/10.1002/ace.20153

Brumm, C. A., & Drury, S. (2013). Leadership that empowers: How strategic planning relates to followership. Engineering Management Journal, 25(4), 17–32. https://doi.org/10.1080/10429247.2013.11431992

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CHAPTER 15

Case Studies in Succession Planning for K12 Districts

Arfe Yucedag-Ozcan and Sharon K. Metcalfe

Research supports the claim that strong and stable leadership is one of the fundamental elements that influence school effectiveness and student achievement (Bengston, Zepeda, & Parylo, 2013; Cantu, Rocha, & Martinez, 2016; Gawlik, 2015; Sanzo & Scribner, 2015). Research is also clear that while teachers are the most important internal school variable to affect student learning, school administrators are the most influential on the teachers by selecting, recruiting, and retaining highly qualified teach-ers who in turn, influence student achievement (Bengtson et al., 2013; Fuller, Young, & Baker, 2011). As the instructional leader, the school principal has a strong influence over student achievement, teacher perfor-mance, and school conditions focused on teaching and learning to improve student achievement (Lee, 2015; Myung, Loeb, & Horng, 2011; Wood, Finch, & Mirecki, 2013; Zepeda, Bengtson, & Parylo, 2012). Due to the importance of the school leader for the stable functioning of the school, times of leadership transition or turnover place the school and teachers in an uncertain and unstable state. Leadership transition in schools makes the

A. Yucedag-Ozcan (*) University of Phoenix, Tempe, AZ, USA

S. K. Metcalfe Mount Vernon Nazarene University, Mount Vernon, OH, USA

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schools vulnerable and increases the difficulty of maintaining successful programs and initiatives (Gawlik, 2015; Peters, 2011; Versland, 2013; Wood et al., 2013).

This instability can cause the best of programs to malfunction and can limit the long-run potential of any initiative (Lee, 2015; Peters-Hawkins, Reed, & Kingsberry, 2017). Versland (2013) stated that principal turn-over tends to occur every three to four years, more so for charter schools than traditional schools (Ni, Sun, & Rorrer, 2015), while research esti-mates that when a new principal transfers to a new school, it takes approxi-mately five years to improve instruction and fully implement new policies and procedures to positively impact student achievement (Wood et  al., 2013). Ni et al. (2015) found that charter school principals had higher turnover rates than principals in traditional schools. While charter school principals generally left the principalship for other professions, principals in traditional schools left for positions at other schools (Young, Reiner, &Young, 2010). A study of the relationship between relative pay satisfac-tion and principals’ intention to leave indicated that principals who were not satisfied with their relative pay tended to show high inclination to turnover (Tran, 2017), exacerbating the problem of high attrition rates for districts where paying higher wages to principals and teachers may be challenging (Goldring & Taie, 2014).

Sanzo and Scribner (2015) stressed agreement that the role of the school leader is critical, but stated that there is concern that not enough is being done to effectively prepare leaders for their jobs. “School leadership succession planning can be understood as a deliberate process undertaken within the organization to ensure a smooth transition as leaders come and go” (Peters-Hawkins et al., 2017, p. 2). Effective succession planning can improve student achievement by reducing both principal and teacher turnover through providing professional learning opportunities and keep-ing teachers and principals informed regarding organizational opportuni-ties. Through effective succession planning, districts can save cost and manage staff knowledge and experience. (Peters-Hawkins et al., 2017).

Zepeda et al. (2012) acknowledged the lack of research studies examin-ing how school systems plan for and manage leadership succession. Russell and Sabina (2014, p.  625) developed a three-tier succession planning framework in which the first tier is the top management team that cham-pions the efforts and allocates the resources. The second tier consists of two groups, principals and middle managers, who identify and develop potential candidates, and human resource departments, where personnel

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policies are aligned and programs are evaluated for continuous improve-ment. The third tier is structured as identification and development, and leads to a positive outcome of the intended succession plan. Within this framework, the expected outcomes are a high-quality pool of principals who can advance the district goals while ensuring high-quality teaching and learning.

The following is a compilation of several case studies of various school district administrators who are attempting to manage the leadership suc-cession in their schools. It is clear that a one-size-fits-all method or pro-gram for recruiting, sustaining, or retaining quality leadership will not work. Leadership succession plans will vary according to context and type of districts. Cases are from large urban, small to mid-size urban, rural, and suburban public schools as well as charter schools.

SucceSSion Planning for educational leaderShiP

K12 schools experience shortages of qualified principals for various rea-sons, such as retirement, high principal turnover, and growing student body. During the 2012–2013 school year, 78% of principals remained at the same school, 6% moved to a different school, and 12% left the profes-sion. Of those who left the profession, 38% of public school principals and 30% of private school principals left the profession due to retirement (Goldring & Taie, 2014). In addition, the student body is growing year by year, adding to the principal shortage (US Department of Education, 2016).

No Child Left Behind (NLBC) was signed into law in 2002 by President Bush, and is an update to the Elementary and Secondary Education Act of 1965. The school and district are evaluated based on student test scores and link the principal’s instructional leadership skills to academic achieve-ment. NLBC’s signature modification of creating a direct linkage between principals and students’ academic achievement raised the stakes for recruit-ing and retaining the right leaders, who not only have a vision for success but are able to implement that vision (Wood et al., 2013). Although there is a supposed shortage of principal candidates, there are actually many who possess administrator credentials. The problem is a shortage of qualified candidates who are effective leaders and will stay long enough to effect change. Myung et al. (2011) recognized there are also many who possess the credentials but choose not to pursue a leadership position for a variety of reasons.

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Reasons cited to explain the shortage of qualified candidates include an aging current leadership heading towards retirement, the need for higher- performing leaders with adequate competencies, the downsizing that occurred in the 1990s, competition among hiring districts, growing reform pressures, and stress due to increased accountability pressures (Peters, 2011). Shortages also exist in schools with a high proportion of non-White, poor, and non-English speaking students as well as in middle and high schools (Myung et al., 2011). Principals leave the profession for a variety of reasons, such as accountability pressures, complexity and inten-sity of the job, lack of support from central office, and low compensation. Zepeda et al. (2012) posited that this shrinking pool of qualified principals means that districts need to be proactive and plan ahead to fill both planned and unplanned vacancies.

Young et al. (2010) investigated whether or not the neediest middle schools were served by the least qualified principals as well as the effect of human capital endowment. The neediest schools were defined by per cent minority, per cent English Language learner, and per cent receiving free meals. Human capital endowment of middle school principals was defined as education (bachelor, master’s, and doctorate) and years of experience. After the analysis using structural equational modeling, the neediest schools were served equally but not better when it came to human capital endowment. Young et al. (2010) argued that since these schools were the neediest, it was not enough for them to be served equally but that they should be served better, suggesting additional incentives, including pay, to attract the most qualified principals.

Brief overview of School leaderShiP ProgramS

The case studies reviewed represented both large and small, urban, rural, and suburban public schools, as well as a charter school. According to Quinn as cited in Versland (2013), the leadership shortage statistics are as follows: Rural = 52%, Suburban = 45%, Urban = 47%, Middle schools = 55%, and High schools = 55%. There were a wide variety of ways in which candidates were hired into school leadership positions, including self- selection within a school, selection by an administrator based on leader-ship competencies, selection by an administrator or colleagues based on non-leadership-related effectiveness such as charisma, seniority, or simply willingness to do the job (Gurley, Anast-May, & Lee, 2015; Versland, 2013; Myung et al., 2011). Some of these programs were successful and

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some were not. Some districts had effective plans in place and some had no plans for leadership succession. It was apparent that a one-size-fits-all model is not appropriate for every school or school leader. The context, setting, and degree of district affluence all have a large impact on the sup-port and development needs of school leaders (Fink, 2011; Sanzo & Scribner, 2015).

Quality leaderShiP SucceSSion characteriSticS

New school leaders were either procured to maintain the existing mission, knowledge, and strategies or to completely change the direction of the school (Bengtson et al., 2013). Some of the common issues faced by new principals were increased accountability for student achievement, role as instructional leader, the need to earn the staff ’s cooperation and respect, insufficient preparation and training, and instructional, political, and pub-lic relations issues. Not only did the principal face these general challenges but also those that were shaped by the particular context of the school (Bengtson et al., 2013, Fink, 2011; Lee, 2015). On many occasions the decisions were based on the need for a quick fix to satisfy a reform demand (Peters, 2011).

A good preparation program should include ways to build a candidate’s self-efficacy; pedagogy, organizational, programmatic, and cultural fea-tures; mentoring experiences; socialization training; succession planning; and program delivery (Bengtson et al., 2013; Enomoto, 2012; Lee, 2015; Peters, 2011; Versland, 2013). Training should be ongoing in order to assist new principals as they work through the early stages of shock, the need to survive, and personal insecurity as well as trying to define their roles and gain control and authority within the school (Lee, 2015). General themes that emerged from the literature regarding required pro-gram features in school leadership preparation included selective recruit-ment, mentoring and coaching, and building partnerships and collaborative alliances with outside organizations (Sanzo & Scribner, 2015; Zepeda et al., 2012).

Even in districts with programs in place, there was inconsistency between what was thought to be happening and reality (Cantu et  al., 2016). There was no scaffolding or agreement on the basic fundamentals of leader development. Riggio as cited in Hartman, Allen, and Miguel (2015) stated: “There are now nearly 1,000 recognized leadership devel-opment programs in institutions of higher education and little standard-

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ization exists within these programs on how to develop students into leaders as each uses a variety of different leader development techniques” (p. 458). These aspiring leaders need to learn about and practice how to develop mission and goals, work with teachers to develop and implement curriculum and instruction, promote a positive school climate conducive to teaching and learning, and develop a supportive work environment (Gurley et al., 2015).

characteriSticS SPecific to urBan leaderShiP SucceSSion

Selecting the right school leader is not a straightforward process but is contextual and complex (Peters-Hawkins et  al., 2017). Research shows that urban districts possess similar qualities in leadership succession strate-gies (Garza, Murakami-Ramalho, & Mercant, 2011; Myung et al., 2011; Peters, 2011; Peters-Hawkins et al., 2017; Sanzo & Scribner, 2015). For example, urban districts had a larger pipeline of prospective leader candi-dates than rural or suburban districts. Urban districts tended to have more support because there were more people and administrators within the district to serve as support or as mentors in formal mentoring programs. Principals were also expected to conform to unwritten rules and expecta-tions (Bengtson et al., 2013; Peters-Hawkins et al., 2017).

Open principal positions in urban settings were more difficult to fill in schools with more non-White, poor students, English Language learners, middle schools, and high schools even though the pay was usually higher than in rural districts. Principals in urban contexts often led a large variety of differently abled students, supported teachers who lacked the cultural knowledge necessary to teach urban youth, and operated despite low parental and community involvement (Peters-Hawkins et  al., 2017). Other negative issues involved with urban school leadership contexts were high turnover, lack of leadership consistency, lack of leadership succession planning and unplanned transitions, poor communication between dis-trict office and school, lack of effective mentoring, little to no in-service training or support, and stress from high-stakes testing and accountability expectations (Garza et  al., 2011; Peters, 2011; Peters-Hawkins et  al., 2017). Race and gender also played a role in urban district leadership suc-cession (Myung et al., 2011).

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Successful principals possessed not only the right credentials, but also possessed self-efficacy and professional support (Peters, 2011). They attempted to know the families of the students, became involved in the community, and helped organize events at the school (Garza et al., 2011). Establishing partnerships between the school and parents, universities, national level organizations, and non-profits was also seen as critically important for the success of the school (Sanzo & Scribner, 2015). All interviewed principals also stated that mentoring and support were critical to their success (Garza et  al., 2011; Myung et  al., 2011; Peters, 2011; Peters-Hawkins et al., 2017; Sanzo & Scribner, 2015).

characteriSticS SPecific to rural leaderShiP SucceSSion

There were some differences between urban and rural leadership succes-sion. For example, in rural contexts the leader must wear multiple hats and manage multiple responsibilities and interruptions because there is no middle management to share the responsibilities, salaries tend to be lower, and benefits packages were reduced when compared with more affluent urban or suburban districts. Rural districts are physically isolated and this makes networking and colleague support and communication difficult. Professional learning opportunities are more difficult owing to geographic isolation, small staffs, and tight budgets (Enomoto, 2012; Versland, 2013; Wood et al., 2013). The rural schools must also contend with the same issues found in urban settings, such as poverty, underemployment, and social problems (Enomoto, 2012; Wood et al., 2013), as well as pressures associated with school closing and consolidations, and a declining eco-nomic base within their communities (Enomoto, 2012; Versland, 2013). All of these pressures lead to high job turnover and burnout (Versland, 2013).

Owing to the smaller number of qualified candidates in the pipeline, rural districts frequently utilize “grow-your-own” leadership selection. If not well planned, this can result in new principals with little or no admin-istrative experience, as well as minimal or no support, a lack of content knowledge, no models to learn from due to limited resources, geographi-cal isolation, technological challenges, and lack of qualified mentors (Versland, 2013).

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Rural district administrators who were successful in leadership planning and succession had programs with common features such as partnerships with universities to present preparation programs that delivered not only standards based curricula in instructional leadership based on the tenets of adult learning theory, but also had faculty with relevant practitioner experi-ence to assist and mentor principals in training (Versland, 2013). Retention strategies included creating a positive school culture, investing in profes-sional development opportunities, using technology for mentoring and pro-fessional development, partnering with geographically close urban districts, a positive work environment, training from within or grow-your-own, and creating collectives as regional groups to train, support, and mentor rural leaders (Bengtson et al., 2013; Versland, 2013; Wood et al., 2013).

continuouS imProvement

There is some value to applying principles of succession planning from business models to education, but more research is needed. There are many practices and characteristics that are unique to public schools as well as the type of district (rural/urban, large, small, suburban) (Zepeda et al., 2012).

If school leadership is second only to classroom teaching as an influence on pupil learning and few things in education succeed less than leadership suc-cession then it is important to find ways to support school systems in their attempts to implement practices that nurture effective succession and social-ization of school leaders. (Bengtson et al., 2013, p. 160)

Based on the studies reviewed, the following recommendations are suggested for successful leadership planning, recruitment, training, and retention. First, leadership success needs to be understood as a dynamic, non-linear process that involves forecasting or trying to determine future leadership needs, sustaining, and planning at both the district and school levels while recognizing that there is not a one-size-fits-all model (Peters, 2011; Sanzo & Scribner, 2015). Second, teacher leaders need to be recruited not based on charisma or personal traits, but on leadership com-petencies as specifically defined by each district. This can be accomplished with authentic in-service training for current teacher leaders within the school and with school administrators (Bengtson et  al., 2013; Gawlik, 2015; Hartman et al., 2015; Myung et al., 2011; Versland, 2013; Peters-

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Hawking et al., 2017; Wood et al., 2013). These grow-your-own candi-dates should exhibit the following characteristics: prior leadership experience in chairing committees, leading teams, or developing pro-grams, the ability to collaborate and work with others to solve problems, the ability to build relationships and foster change through motivation and support, and proven intellectual capacity for self-reflection and critical thinking (Lee, 2015; Versland, 2013).

Third, successful programs should possess a strong mentoring program and support network, either formal or informal, that will coach the new principal throughout the first year. If qualified mentors are not available within the school or district, the school board should hire an expert prin-cipal or intern from a neighboring district (Garza et al., 2011; Versland, 2013). Regardless of type (formal or informal), mentorship could serve principals’ success on five different levels: recruitment, socialization, sup-port, professional development, and reciprocal learning. Mentoring could be a strategy to identify future principal candidates and build the pipeline, to help new principals become socialized into the profession, to support new and current principals, to be a professional development tool, and to create a learning environment where everyone can enrich their learning, including the mentors (Parylo, Zepeda, & Benstson, 2012).

Fourth is the use of technology for collaboration, ongoing training, and networking with colleagues (Gurley et al., 2015; Wood et al., 2013). Fifth, pipelines need to be strengthened by partnering with universities to provide candidates with twenty-first-century knowledge, skills, and atti-tudes as well as context-specific strategies to be successful in each particu-lar school or district (Bengtson et  al., 2013; Gurley et  al., 2015; Peters-Hawkins et al., 2017; Sanzo & Scribner, 2015). Sixth is the need to develop leadership capacity.

The final recommendation is the ability for the candidate to be able to share decision-making among the building staff or distributed leadership where there is a team approach rather than one person in charge (Fink, 2011; Garza et al., 2011). Successful leadership succession depends on care-ful, proactive planning; the employment of leadership knowledge; limiting the number of succession events or leader turnover as well as the intensity of outside pressures; and maintaining successful leadership and the unique features of each school’s context (Fink, 2011; Gawlik, 2015). The future of an innovative school to maintain its innovative power and the hope of a low-performing school to be transformed into a high- performing school depends on how the schools effectively manage their succession planning.

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concluSion

Effective and stable school leadership is a fundamental element that strongly influences school effectiveness and student achievement. Effective succession planning is critical to curb the negative influences of shortages and high turnover rates of principals in K12 schools. Factors that affect the quality and stability of school leadership include a shortage of qualified candidates owing to retirements, inadequate competencies, district down-sizing, reform pressures, competition among districts, stress owing to increased accountability, lack of district administrative support, low com-pensation, and stress caused by contextual issues in high need areas such as urban and rural schools.

Lee (2015) clearly stated that “Whether an innovative school is able to sustain its progress or a low-performing school is able to transform hinges critically on whether the succession process is adequately managed” (p. 280). The context, setting, and degree of district affluence all have a large impact on the support and development needs of school leaders. Recommendations include recruiting potential leaders based on district identified competencies, in-house leadership training, a strong mentoring and coaching program, the use of technology to increase participation and networking with colleagues, partnerships with universities, and learning and practicing a team-based leadership approach or distributed leadership within the building.

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Russell J. L. & Sabina, L. L. (2014, July). Planning for principal succession: A conceptual framework for research and practice. Journal of School Leadership, 24. 599–539. ISSN: ISSN-1052-6846.

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Tran, H. (2017). The impact of pay satisfaction and school achievement on high school principals’ turnover intentions. Educational Management Administration and Leadership, 45(4), 621–638. https://doi.org/10.1177/1741143216636115

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CHAPTER 16

Succession Planning Models, Conceptual Maps: Ethical Considerations and Best

Practices

Vernesia Wilson

Organizations sometime grapple with how to ensure that they consistently have qualified employees and leaders. With a decreasing pool of applicants and a retiring workforce, it is possible that the organization’s succession processes may be at risk. Solutions for issues related to succession are var-ied based on the type of entity. For example, many organizations have their own stand-alone human resources (HR) division. In many cases, the responsibilities of HR include hiring practices that may not be directly related to managing the organization’s talent pools. To eliminate the iso-lation, it is imperative that HR works in conjunction with subordinate divisions to assist with talent management. To accomplish this task, col-laboration may be incorporated by building systems that are capable of comprehensively tracking employees before, during, and after they are hired. Other collaboration may include HR becoming more involved with the entire succession planning process, which revolves around the organi-zation’s mission and vision. It is critical that this is instituted to prevent senior leaders from spotting high-potential talent when using just their own internal models for staffing and succession (Church, 2014). The

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leaders must identify employees who are going to retire and when, and examine the existing talent pipeline that exists for future needs (Sohn, 2017). However, talent management strategies still need to be driven from the metrics they are trying to achieve (Newhall, 2017), while also starting the planning process to staunch the anticipated loss of the organi-zation’s top talent (Leonard, 2010). Strategies related to exit interviews may also prove useful for gathering talent management information if an employee decides to leave the organization. Results from data collected for this purpose may help guide an organization’s activities and strategies related to retaining employees while also planning for succession. This chapter examines the empirical studies that address succession planning models/maps, ethical considerations, and best practices for utilizing these models within employment sectors.

SucceSSion Planning ModelS

To be maximally and fully effective at succession planning, leaders must ensure that their processes are relevant, robust, realistic, and can be fully executed (Church, 2014). For effectiveness overall, there are three main approaches that employers use to manage succession: short-term planning or emergency replacements, long-term planning or managing talent, and a combination approach (Stadler, 2011). Each of these results in what may be most cost effective or necessary at the time for the organization. It is not ideal for an organization to target short-term or emergency replace-ments; however, this approach may and can lead to longevity based on the candidates’ skills and experiences. In turn, the organization’s succession plan will not be trumped, but rather enhanced by using short-term replace-ments that progress to permanent replacements. The goal of any organiza-tion should be to prevent brain drain and constantly prepare for the future workforce. Succession planning is perceived as a strategic plan with a tar-geted goal to provide an organization with the staff required to meet cur-rent and future operating needs (Ganu & Boateng, 2012). The chief executive officer (CEO) and senior management or leaders should dynam-ically build out the organization’s capabilities to the specifications of the strategic plan, thus closing the gap between the company’s current reality and its desired future outcomes (Winum & Saporito, 2012).

Succession strategy management processes are key to ensuring that mechanisms are in place to control the unknown in relation to planning for the future of the organization. Succession planning should follow a

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systematic approach of anticipating leadership needs and ensuring that well-prepared leaders are available when the need arises (Redman, 2006). The planning phase calls for organizations to strategically develop and/or find models that best fit its environment and culture. Concurrently, much of the communication of succession plans depends on corporate culture, whereas more employers are choosing to let people know they were iden-tified as one of several employees selected for a particular role, simultane-ously communicating to workers that their leadership skills were identified and valued, but that the future position is in no way ensured (Leonard, 2010). The viability of a succession planning model requires commitment from the highest level of the organization, which usually includes the CEO and board of directors (Shirey, 2008). However, if top leadership succession is the issue, organizations may lack the opportunity to focus on maintaining the mission and day-to-day business until a replacement has been identified (Sammer, 2015).

Starting with an outline is probably the most efficient way to develop a model that fits the organization. As indicated in Fig. 16.1, the District Management Council’s (DMC) model was developed by Hanover Research (2014) in response to succession modeling. In this example, there are eight steps that align with the mission and vision of the organiza-tion while also ensuring that administrative transitions do not cost the district resources (Hanover Research, 2014).

Even though DMC’s model was developed for a school district, it may be applied to any organization. For example, the first stage suggests that organizations should over-invest internally to avoid later roadblocks. Organizations can set up structures to preplan for unintended conse-quences. As these occur, organizations may be able to better control events if a plan is already in place. Some consequences relating to succes-sion that may occur includes, but are not limited to, unexpected competi-tion, mass illnesses within the workforce, and/or rapid layoffs owing to budgetary constraints.

Another model, the IN&OUT Succession Model (Sarabia, Obeso, & Philpott, 2015) outlines succession in relation to family businesses but can be used in corporations and partnerships as well. As indicated in Fig. 16.2, the model outlines the variations of succession at individual and organiza-tional levels. In particular, the components affiliated with the organization set up the inclusiveness for the individual who is to lead using the qualities associated with the model.

SUCCESSION PLANNING MODELS, CONCEPTUAL MAPS: ETHICAL…

STEP DESCRIPTION

1. Set the Stage

In beginning a succession planning process, it is worth

“overinvesting” in setting the stage internally to avoid later

road blocks. Contemplate the purpose, goals, and expectations of the

succession planning process. Recognize the expansive reach of

succession planning – the avoidance of leadership crises, the potential

cost savings in hiring new leaders, and the cultivation of a leadership

culture. Use this information to write a mission statement that

captures the urgency of succession planning for your district.

2. Plan for the Future

Districts should use succession planning as a process for reflecting on

the district’s future. In this step, districts should take into account

both endogenous factors (organizational changes, board priorities,

curricular approaches, decentralization, etc.) and exogenous factors

(demographics, economy, state and federal legislature, etc.) to

identify future needs for an evolving organization.

3. Assess Current

Landscape

Requirements

Having charted a vision for the district’s future, examine the role of

leadership in realizing the vision. Assess the characteristics

necessary for leadership in the district. Build a “leadership code” that

explains leadership characteristics and behaviors that drive success

in the district.

4. Conduct Effective

Evaluations

Perhaps the single most significant factor underlying effective

leadership development is open and honest feedback about an

emerging leader’s performance. Without honest discourse about an

individual’s strengths and weaknesses, proactive development

opportunities cannot be deliberately pursued. A district should

evaluate its current and emerging leaders against its leadership

code through development and use of a formal evaluation rubric.

Fig. 16.1 The District Management Council’s suggested succession model. This was developed as an example of succession plan development (Hanover Research, 2014)

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The model presents a step-by-step process where the successor receives from the founder and from the business (IN) and the successor contrib-utes to the group and to the organization (OUT), creating a dynamic loop of biographical leadership (Sarabia et al., 2015).

Other conceptual maps relevant to succession planning were also cre-ated. One popular model, the STRIVE Model, was developed by the University of California at San Diego to address succession planning and proactively encourage the development of future leaders and managers by providing participants with intensive and accelerated professional and career development opportunities, as well as mentorships (Business and Financial Services, 2016). Taking all the effects of succession planning on management into consideration, there is reason to believe that there is a correlation between succession planning and overall organizational devel-opment (Nieh & McLean, 2011). Successful succession plans not only prepare employees for those roles but also prepare them to meet the chal-lenges of tomorrow’s workplace (Leonard, 2010).

Internal

Group level

EXPLICIT

Flexible

External

Stable

TACITOrganization

EXPLICITOrganization

Individual

Involvement

Externalization

Secondary

Consistency

Socialization

Primary

Adaptability

Combination

Secondary

Mission

Internalization

Organizationallevel

Secondary

IndividualTACIT

Fig. 16.2 In and Out model contributions. This model indicates how internal and external components shift within succession for an organization (Sarabia et al., 2015)

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concePtual SucceSSion MaPPing

Succession management is a comprehensive process that starts by defining business requirements and talent capabilities for the future success of the organization (Stadler, 2011). Leadership is a key component in ensuring that succession planning is effective. For the plan to truly be effective, leaders must also have a succession process in place for potential and future leaders. It is evident that turnover is inevitable owing to economic compe-tition and migratory workforces, especially among those honing multiple skill levels. There is also restlessness amongst a new generation of younger workers to gain varied skills and experiences, whilst they also take a more lateral view of career progression (Top Employers, 2015). Organizational leaders tend to gravitate to organizations that are very diverse and have the character and skills needed to lead the organization. As leaders like this leave the organization, replacement is necessary to ensure that the organi-zation continues with little to no deviation. One philosophy, known as the Opponent Process Theory of Leadership Succession (Hollenbeck, DeRue, & Nahrgang, 2015), suggests that the impact of leadership on current outcomes can be fully appreciated only by complementing the under-standing of the current leader’s behaviors and the style of his or her pre-decessor. In accepting this particular theory, organization heads may choose to consider leadership succession with a heterogeneous or homo-geneous impact (Hollenbeck et al., 2015).

Organizations may focus on varied levels of mapping out their future productivity plans. Even though many manufacturing organizations place more emphasis on strategic productions, other career fields should also note that mapping out the skills needed for the organization to continu-ously prosper is important. For example, leaders and HR personnel across the USA may or may not be able to predict their personnel needs past one or two years. This is because of the ever-changing organizational culture, economy, and/or constant changes in leadership and the workforce as a whole. The objective for succession mapping not only includes employees, but must also be inclusive of administrators, managers, and supervisors. Upper management may initiate the succession planning process by estab-lishing measurable objective metrics for each individual’s job goals or job performance (McDermott & Marshall, 2016); however, all subordinates should have a voice at the table to ensure their succession views are heard.

For newly hired and existing employees, succession mapping may be embedded within other models such as Herzberg, Mausner and Snyderman

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(1959) and Locke (1976), which both underpin employee productivity by factors of motivation and satisfaction. These motivational behaviors pro-mote team members who exert continued effort and include reward and recognition of performance as well as behaviors that ensure the needs and values of members are met through the provision of support for individu-als and their efforts (Burke et al., 2006). Intrinsic motivation makes more salient the pursuit of social good over self-interest during the succession process and therefore facilitates effective succession (Hayek, Williams Jr., Taneja, & Salem, 2015). Furthermore, attitudes towards pay, working conditions, coworkers, managers, career prospects, and intrinsic aspects of the job may influence the level of an employee’s satisfaction with the orga-nization (Dugguh & Dennis, 2014), and could possibly lead to adverse succession efforts.

McDermott and Associates (McDermott & Marshall, 2016) developed a six-step planning map that assists organizations in developing a success-ful plan. As indicated in Fig. 16.3, this includes strategic activities that can allow for the continual review of efficiency as indicated in an organiza-tion’s vision, mission, and goals.

This six-step planning process metabolizes the growth which organiza-tions may need in relation to their workforce. This model’s structure works well for those companies who may be at risk of their most skilled and experienced employees leaving the organization—it could be imple-mented for sustainability (McDermott & Marshall, 2016).

Conceptual maps are tools that can be utilized as a guide to ensure that strategies and activities are carried out in an organization. Leaders and subordinates alike should be aware that everyone has a role to play in ensuring the viability of the workforce, HR, and capital. Some activities and strategies that may be conceptually mapped include, but are not lim-ited to, providing mentoring, coaching, shadowing experiences, positive role modeling, developmental assignments, and nurturing (Roddy, 2004). In relation to succession, mentoring and coaching are most probably the two strategies that have shown the most promise. Coaching is different from mentoring in that it typically involves less personal investment and a shorter time period of involvement (Shirey, 2008). At the other end of the spectrum, mentoring relationships would benefit not only those involved in the mentor–mentee dyad but also others, because of the natural out-come of the process (Thomka, 2007).

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ethical conSideration in SucceSSion Planning

Ethics is considered to be one of the most organic features of any organi-zation. The purpose behind the existence of an organization is its vision and mission. Ethical leaders usually define the vision of the company before hiring new employees and then give the tasks to employees to move forward as a mission (Turab, Kashan, & Asif, 2012). Some organi-zations offer ethics trainings during orientation or throughout the employees’ tenure. Ethics may be conferred within various focal areas that are of importance throughout the organization. In particular, organiza-tional ethics are somewhat embedded, and are the nucleus that ensures productivity is not trumped in any way. At the same time, organizations should select ethical employees—which can be more important than

ClarifyStrategic

GoalsDetermine

theScope

DefineTalent

Requirements

Conduct aTalentReview

Develop andRetain Talent

MeasureResults

6

1

2

3

4

5

Fig. 16.3 Six-step succession planning map. This provides a six-step process that may be conducted by leaders to examine strategies that lend to retaining employees

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focusing only on high-performing employees—because they will become decision- makers in the future, directly and indirectly influencing organiza-tional competitiveness and development (Nieh & Mclean, 2011).

Some employers have a challenge hiring employees whom leaders sense may fit the mission and goal(s) of the organization. In April 2017, the USA reported having 6 million open jobs, which was a record high, but a population of 6.8 million Americans who were unemployed (Gillespie, 2017). Mis-matches in hiring such as these are somewhat evident in that skill levels may not always match the needs. For some organizations this may be problematic, and may cause concerns that could possibly jeopar-dize the productivity of the organization. Several strategies exist for employers seeking to hire individuals whose skills may not fit the open position or vacancy. Russell (2016) suggests that there are three strategies for overcoming these types of skills gaps. These are:

1. social sourcing and pipelining; 2. referral bonus programs; 3. digital advertising.

Even though some employers do not gather interviewee data involving their soft skills, they realize that this may be one strategy in attempting to provide a widened cultural fit, thus decreasing the level of turnover [pos-sibly]. This culture fit lends to an increase in the likelihood that the employee will fit and be able to adapt to the core beliefs, attitudes, and behaviors that make up the organization (Bouton, 2015). In this regard, the organization needs to take into account the comparison of hiring for cultural fit versus soft and hard skills. Ideally, the organization would need to target all three; however, to have a well-rounded employee may initiate a multilevel hiring process and could involve recruiting outside talent management agencies to assist with the process. This methodology allows leaders within the organization to focus on managing the current talent while also employing a succession plan based on current personnel.

BeSt PracticeS in SucceSSion ManageMent and Planning

One of the most critical challenges facing companies today is preparing a new generation of leaders who will extend the strategic reach of the organi-zations (Winum & Saporito, 2012). The type of leadership an organization’s

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leader(s) possesses is another key factor in the success of an organization. A comprehensive research study published in the Harvard Business Review (Goleman, 2000) indicated that the majority of leaders have a collection of distinct leadership styles including authoritative, democratic, affiliative, and coaching. In reference to succession planning, these types of leadership styles can advance the process; however, it may be more operational for the organization to build the leader organically, as this may be more cost effec-tive (Aon Hewitt, 2012). Furthermore, managers or leaders enhance their trust in the organization if they are selected from within the organization and will more likely have more positive and persuasive authority than those hired from outside (Nieh & McLean, 2011). Adding a change to the CEO’s functional and educational background in successions that have more than the usual amount of change will come with a price in the form of declining performance and an increasing probability of bankruptcy for that organization (Elsaid, 2014). Other impediments to succession plan-ning cover a wide range of issues, from other work/time demands and a need for performance management, to reluctance to provoke organiza-tional politics, to inadequate awareness, or even basic foot dragging on the part of top management and/or the board of directors (Ganu & Boateng, 2012). To control these impediments, the Talent Intelligence Company (2013) suggests that there are three success planning best practices: bench-marking, looking to the future, and keeping it dynamic.

Leaders who are proactive in their succession planning would more than likely be prepared for unintended consequences that could arise within their talent pools. They should develop a talent pool macrocosm within the entity to ensure that return on investments are equated in their succession strategies. If succession plans or strategies are not a part of the organization, it is possible that unintended consequences or other crisis situations may lead to suboptimal operation and a drop in accountability in many facets of the organization (Stephens, 2016). This could trickle down to an adverse employment effect that may quickly permeate through the organization if not controlled.

concluSion

It can be determined by an organization’s environmental culture how well (or not) the leadership is succeeding and if employees are contented. When planning for succession, leaders should consider the types of employees which they currently have in conjunction against those that are

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needed within the organization. Strategies such as ensuring that employ-ees are satisfied may lead to more productivity and less turnover.

Each organization is inheritably different in that they all have unique features comprising their employees. The best strategy for succession plan-ning anticipates the organization’s future talent needs and puts a plan in place to manage those needs as they arise (Sohn, 2017). Even though organizations may incorporate various succession strategies into their overall managerial strategy, there is a need to include evaluative measures and/or metrics to track progress. Model succession management pro-grams use a variety of outcome measures to evaluate the effectiveness of their succession planning processes. Regardless of the types of metrics that organizations use, the key factor in succession planning is to make sure the process is utilized for its intended purpose—talent sustainability.

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Bouton, K. (2015, July 17). Recruiting for cultural fit. Harvard Business Review. Brighton, MA: Harvard Business Publishing.

Burke, S. C., Stagl, K. C., Klein, C., Goodwin, G. F., Salas, E., & Halpin, S. M. (2006). What type of leadership behaviors are functional in teams? A meta- analysis. The Leadership Quarterly, 17(3), 288–307. https://doi.org/10.1016/j.leaqua.2006.02.007

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213© The Author(s) 2018P. A. Gordon, J. A. Overbey (eds.), Succession Planning, https://doi.org/10.1007/978-3-319-72532-1_17

CHAPTER 17

Preventing Negative Conflict in Leadership Succession: Ethical Considerations

and Practices

Anthony R. Carbo and Karin J. Storm

An analysis of the literature reveals some applicable standards for compe-tent and influential leaders. For example, an influential leader has the will and ability to identify and accomplish goals and encourage followers to meet those goals (Ejimabo, 2015). Leaders who can spot problems and establish appropriate objectives help predispose followers to take on pro-ductive mental and physical workplace activities. A good leader possesses guidance skills. Leadership is a trainable set of abilities or competences demonstrated during interactions by leaders who practice influencing fol-lowers to achieve objectives (Yeager & Callahan, 2016). Successors should be prepared to interact and influence followers in an effective manner.

There are various ways to manage and define succession planning (Church, 2014; Gray, 2014; Hargreaves & Harris, 2015). The American Psychiatric Nurses Association, for example, follows a clear succession plan using a spe-cific approach. The American Psychiatric Nurses Association defined succes-sion planning as a process of identifying and developing people who have the potential to fill key positions in an organization (Nadler-Moodle & Croce, 2012). A clearly identified and developed plan is beneficial.

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There are many approaches to succession planning. Succession plan-ning concentrations range from developing policies that maintain current leadership standing to encouraging leaders to remain actively engaged through emeritus status. Concentrations may also involve shaping the suc-cession planning procedures for a new direction. This planning may require creating a group of prospective leaders prepared to accept critical leadership roles temporarily in the case of unanticipated openings (Peters- Hawkins, Reed, & Kingsberry, 2017). Theory-driven succession planning processes consist of discrete undertakings including communicating to stakeholders about succession plans, defining the role of departing leaders, developing strategic plans or vision, and selecting and training successors (Boyd, Botero, & Fediuk, 2014). The intricacy of succession planning causes some leaders to use computer software capable of storing the gen-eral education requirements, competencies, and job histories of prospec-tive leaders (Antes & Schuelke, 2011). A planner’s focus dictates his or her processes and tactics.

In this work, ethical leadership is the focus. Some factors facilitate effec-tive and ethical leadership. These factors include having leaders who are trustworthy, just, honest, and encouraging (Shaw, Erickson, & Nasirzadeh, 2015). The importance of ethics in workplace leadership is decidedly rec-ognized (Resick, Hargis, Shao, & Dust, 2013). Ethics is important for positive succession planning.

A prospective successor accepts a leadership or quasi-leadership posi-tion. The following plan is appropriate for heirs who work closely with others and who are likely to influence the behavior of coworkers or team members. With some modifications, the selection plan provided in this work may also apply to the selection of successors who will work alone from time to time. Even when leaders work alone, they must lead them-selves. Self-development and self-leadership are fundamental to various leadership conceptions (Chavez, Gomez, Valenzuela, & Perera, 2017). The forthcoming plan is versatile.

A Good StArtinG Point

The theory of planned behavior (Ajzen, 2011) posits that a successor’s behavior is dependent upon his or her intentions. A successor’s unethical intentions lead to unethical behavior (Kiriakidis, 2015). There is a theoretical relationship between a successor’s attitude and intentions and his or her behavior. Leaders should avoid the darker side of leadership,

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such as bullying, toxic leadership, abusive supervision, and narcissistic management. Successors who use unethical leadership can be destructive (Shaw et al., 2015). Ethics, consequently, is a quality a leader should pos-sess (Frisch & Huppenbauer, 2014). Leaders with unethical leadership styles are more likely to encourage negative conflicts. Disastrous leader-ship comes from leaders who possess the wrong intentions.

Ethical considerations become the foundation for all decisions made by successors. Prospective leaders establish what unethical behavior may entail and are equipped to address such behavior with followers and with themselves. Unethical behavior includes conduct that violates ethical stan-dards (Kouzes & Posner, 2017). While these may vary, standards incorpo-rate principles that followers can recognize, understand, and apply to workplace undertakings (Pollock, 2017; Souryal, 2014). Ethical standards are broad enough that employees can implement the standards in various workplace scenarios. For example, prospective leaders do not stifle unethi-cal behavior with a vast number of rules (Souryal, 2014). Excessive rules often mask the overriding purpose of having ethical standards and unin-tentionally challenge employees to seek loopholes (Pollock, 2017; Souryal, 2014). Moral standards, or standards of right conduct, are the focus of ethical theories.

Three popular ethical theories underscore ethical standards. One moral outlook is virtue ethics. This requires that one should seek good character, good judgment, and moral conclusions (Albanese, 2016). Four moral vir-tues guide virtue ethics. Namely, these attributes include justice, wisdom, courage, and temperance. With respect to succession planning, a replace-ment leader, in addition to possessing proper skills and abilities, should exhibit these moral virtues (Frisch & Huppenbauer, 2014). Successors should be just, wise, brave, and temperate.

A second ethical theory is formalism. Immanuel Kant (Albanese, 2016) argued, in support of formalism, that universal moral principles should be the basis of our decisions. Examples of universal principles include do not harm and do not lie. In formalism, a good result of an action does not justify violating a universal law to complete the activity (Albanese, 2016). With deference to succession planning, a replacement leader, in addition to possessing moral virtues, should exhibit an understanding of commonly accepted moral principles. Subordinates will expect a new leader to have this understanding. Successors should be unsurprisingly dependable and honest.

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A third ethical theory is utilitarianism. In support of this, successors must be able to weigh the various social consequences of their actions. In the utilitarian view, behavior that promotes happiness, often for the most people, and avoids creating discomfort, also for the greatest number, tends to be good behavior (Albanese, 2016). In utilitarian thinking, a good result of an action may occasionally justify violating a universal principle to complete the activity. A future leader, in addition to possessing moral vir-tues and an affinity for commonly accepted moral principles, should be able to consider the needs of subordinates in a holistic yet practical way. A successor must consider the desires and needs of each individual and the needs and wants of the entire group.

Successors should exhibit a pattern of avoiding unethical behavior. Based on a synthesis of the more commonly known ethical theories, unethical behavior is any behavior that tends to violate one or more of the principles of virtue ethics, formalism, and utilitarianism. Regardless of the leadership position, a successor in an organization should be as ethical, or more so, than the current leader. Replacement leaders should be transpar-ent about the moral principles they believe should take priority. Succession committees should ask successors about their moral principles.

If a new leader subscribes to a less universally known ethical theory, the successor should be transparent about his or her ideology. Successors should be able to articulate what they expect from their followers (Albanese, 2016). A successor must determine the priority assigned to ethical principles based on mutual engagement with subordinates and an understanding of common group objectives, shared goals, and the wants, needs, and concerns of followers.

Successors should have an ethical starting point. Decision-makers should consider the commonly known moral philosophies provided here. Together, the presented theories support a quest for successors who are just, wise, brave, and temperate. Successors should also be clearly depend-able and honest. A replacement should consider the desires and needs of individuals and the entire group. Prospective leaders should be clear about the moral principles they believe should take priority. To ensure a succes-sor meets these requirements, planners should ask a candidate about his or her moral principles and strategies for dealing with potential ethical diffi-culties, then carefully review the candidate’s ethical decision-making record.

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the next SteP

Since moral leadership does not require a specific personality type, the various standards in succession planning should not include the personal-ity of a prospective leader. A successor’s sense of humor (Tremblay & Gibson, 2016) and gender (Schulz & Enslin, 2014) are not valid consid-erations when evaluating ethical standards. Successors need only demon-strate caring and productive virtues and actions that correspond to universal principles and functional outcomes. A suitable successor is one who supports the current code of ethics or similar value statements, recip-rocally engages followers, and respects individual needs (Kouzes & Posner, 2017; Northouse, 2016). Succession planners need to cultivate ethical leaders, and these standards offer reasonable guidelines.

Successors Should Support the Code of Ethics

A succession committee, or succession planners, should ensure that a suc-cessor understands the organization’s current code of ethics. Codes of ethics are statements of ethical policies and principles that guide individu-als to uphold high standards of behavior (Mahajan & Mahajan, 2016). One may refer to codes of ethics as mission statements, ethical objectives, or codes of professional conduct (Adelstein & Clegg, 2016). New leaders should be able to address unethical behavior, and a code of ethics and a mission statement can assist them in doing so (Adelstein & Clegg, 2016). When a successor’s actions and deeds are congruent to codes of conduct and mission statements, he or she strengthens his or her ethical foundation and reputation.

Although a code of ethics is a source of understanding for appropriate ethical behaviors and beliefs, it is only a marginally significant source of learning (Mahajan & Mahajan, 2016). The mere existence of a code of ethics cannot guarantee ethical decisions, especially if a leader does not possess a moral foundation. Useful codes of ethics depend on the succes-sor’s behavior and guidance. It is also important for top management to make a commitment to adhere to codes of conduct and set precedents for others to observe and follow (Mahajan & Mahajan, 2016). The effective implementation and leadership demonstration of the values is crucial.

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Successors Should Reciprocally Engage Followers

Succession planners, or an appropriate board or committee, should ensure that a replacement supports shared concerns of his or her followers. Leaders should encourage and assist coworkers or subordinates in identi-fying challenges and proposing realistic solutions. Problem identification inclines the new leader to further brainstorm with his or her followers (Kang & Sung, 2017; Kouzes & Posner, 2017). Cooperative brainstorms require enlisting the help of others, which may aid leaders in making potential improvements in the workplace and may encourage a positive group vision for the organization.

By examining a prospective successor’s work history, a succession team can ensure that the prospective successor reciprocally engages his or her followers. As supported by leader–follower and interactions-centered the-ories (Ejimabo, 2015; Northouse, 2016), a successor should communally engage with his or her groups. When leaders and followers share values and ideas, they develop a positive symbiotic relationship.

Successors Should Respect Individual Needs

A succession committee, or board, should ensure that a prospective leader respects personal needs and requirements of other people. The psychody-namic approach and transformational theory of leadership support these standards (Ejimabo, 2015; Greyvenstein, & Cilliers, 2012). The psycho-dynamic approach asserts that leaders are more effective if they understand the psychological makeup of themselves and their followers. Succession planning requires a focus on the leader as a person (Boyne, John, James, & Petrovsky, 2011). An important function of a leader is to ascertain per-sonal and individual needs (Schulz & Enslin, 2014). A line employee, for example, may simply need to feel recognized by a supervisor. Leaders may also motivate line employees by providing a level of optimism and hope.

Successors who demonstrate an inclination to focus on individual needs will encourage people to concentrate on organizational challenges. Each employee holds a unique view of internal structural factors and situations. These insights might have otherwise gone unnoticed, giving rise to the overlooking of some innovative solutions (Antes & Schuelke, 2011). Every person has the potential to share distinctive and valuable insights.

The prospective replacement values the code of ethics and similar values. He or she involves others in some decision-making policies and routinely

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cooperates. Finally, the successor acknowledges personal needs and the needs of other individuals. These criteria can help a prospective leader avoid negative conflict once he or she officially takes a new position.

how to Avoid neGAtive ConfliCt with ethiCAl leAderShiP

Positive conflict is necessary, constructive, or helpful. Negative conflict is unnecessary, destructive, or unhelpful. Although leaders should neither avoid nor diminish positive conflict, when a successor practices the stan-dards of ethical leadership he or she is likely to avert negative conflict. Although it is beyond the scope of this chapter to provide all or most of the potential negative conflicts, a few examples are provided of how simple and certain ethical principles can make a transition to a successor less prob-lematic. Sample conflicts include the following: not knowing the succes-sor’s motivation, misjudging the reasons for a change, and perceiving a disharmony with moral standards.

Not Knowing the Successor’s Ethical Motivation

A successor will act in a way that is somewhat different from the previous leader. Negative conflict may occur because line personnel may feel ani-mosity toward a successor who fails to explain his or her moral motivation. When leaders reciprocally engage subordinates with deference to the fol-lowers’ needs and concerns, negative conflict may be avoided (Kouzes & Posner, 2017). The open exchange of information initiated by the new leader may diminish enmity and bitterness.

Misjudging the Reasons for Change

New leaders often need to develop policies. When a successor forms new plans, negative conflict can occur. Unnecessary conflict may be due to unfamiliarity with the successor; line staff members may believe that the implemented policies are due to the new leader’s personal distrusts or related biases (Kouzes & Posner, 2017). If there are biases, a successor can prevent negative conflict by practicing introspection and identification of his or her personal predispositions, prejudices, and preferences. A leader should identify, investigate, engage, and even protect potential voices of dissent within the organization: a person in charge should not prevent this

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positive conflict. If bias or prejudice does not exist, the new leader may prevent unnecessary conflict by actively identifying how his or her follow-ers incorrectly interpreted the new policies.

Perceiving a Disharmony with Moral Standards

Negative conflict may occur because line personnel believe a newly assigned leader will not adequately support good outcomes. A successor can avoid this negative conflict by ensuring he or she uses a recognized and transparent value system (Kouzes & Posner, 2017). With such a value structure, line employees are better able to understand the new leader’s rationale and operational priorities. While ethical standards are not always concrete, leaders should use principles that line personnel will be able to comprehend and conscientiously follow.

ConCluSion

Successors should have ethical ideals and practices. Newly appointed lead-ers should establish what unethical behavior may involve and should be ready to address such behavior with themselves and others. Successors entering a leadership position are likely to influence others in the work-place and pass on good habits.

A leader’s ethics should incorporate standards that followers recognize, understand, and apply in the workplace. In addition to possessing moral virtues and an affinity for generally accepted moral principles, successors should consider the needs of subordinates in a balanced and real-world way. Although there are many ethical systems, three of the more common ethical theories that provide guidance are virtue ethics, formalism, and utilitarianism.

As part of succession planning, developers should seek a successor who considers the desires and needs of individuals. Planners can ensure good successors by asking a succession candidate about his or her moral strate-gies and principles and reviewing the candidate’s decision-making history. Planners should find replacements that have a history of contemplating the desires and needs of team members. A successor’s ethics should be transparent and comprehensible. A prospective leader should support the current code of ethics, reciprocally engage followers, and respect personal and individual needs. Negative conflict diminishes as successors follow ethical leadership practices.

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Ajzen, I. (2011). The theory of planned behavior: Reactions and reflections. Psychology & Health, 26(9), 113–127. https://doi.org/10.1080/08870446.2011.613995

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CHAPTER 18

An Epilogue to Succession Planning: Understanding the Value of Your Enterprise

Paul Wendee, Fiona Sussan, and Ravi Chinta

Business successions are complex. When business successions are badly planned and managed, significant loss of enterprise/shareholder value happens. Examples are plentiful: the Porsche and Piëch families in Germany (Stern, 2009), Nina Wang’s Chinachem in Hong Kong (Lau, 2008), Senator Kilonzo in Kenya (Kwamboka & Muthoni, 2017), among others. The complexity is global and universal. As every business founder or leader in an organization exits the business at one point, either by design or by death, it is necessary to plan business succession. Researchers found drastic value destruction when business successions were not carried out smoothly (Lau, 2008). Despite the awareness of the possibility of value destruction in business succession, conventional wisdom evaluates a company in a static mode and lacks a holistic understanding of how value is created in a business to begin with. The purpose of this chapter is to introduce a value

P. Wendee (*) Value Driver Institute, Dana Point, CA, USA

University of Phoenix, Tempe, AZ, USA

F. Sussan University of Phoenix, Tempe, AZ, USA

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driver theory approach to understanding the enterprise/shareholder value creation process, including the development of succession management. Using a Value Creation Process Chart, we show and discuss how value is measured and determined in enterprises. We further highlight the func-tion of advisors in value creation as being value drivers themselves, as guides for the value creation process, and as trainers in value creation.

SucceSSion Planning and the creation of enterPriSe/Shareholder Value

Choosing effective leaders has always been a problem in organizations, and this problem is exacerbated in particular by a lack of succession planning that ensures the next generation leaders will be suitable to manage the next round of impending challenges thrust upon the firm (Higginbottom, 2013). Though leaders realize the need to be focused on value creation potential and longevity of the firm (i.e. continued survival into eternity which requires divestments from past businesses), senior leadership still largely ignores or underemphasizes the link between value creation and suc-cession planning (Guess & Service, 2015). There are various definitions of succession planning, and scholars tend to converge on defining it as a proac-tive approach used to identify potential candidates to backfill leadership positions, clarify leadership job roles, establish assessment criteria, and moti-vate employees to develop in the workplace (Sharma, Chrisman, & Chau, 2003). It is generally believed that a planned business succession will increase the probability of a successful succession (Sharma et al., 2003). Organizations can use succession planning to increase the adaptive capacity of the firm to meet with future challenges imposed by newer and imminent environmen-tal changes (Connolly & Groysberg, 2013; Pasmore, 2014). Succession planning is a way to break down persistent institutional barriers (Connolly & Groysberg, 2013). When succession planning is successful, it allows orga-nizations to continue to learn and adapt, and provides employee satisfaction (Gray, Jaworski, & Shlomo, 2015). Though not yet widespread across the globe, there is a growing interest in succession planning (Rothwell, 2010; Schuler & Tarique, 2012).

Our basic thesis in the chapter is that the value creation capability of firms is inextricably linked to their succession planning. The extent to which this linkage is understood determines the survival and advancement of the organizational entity. The rationale for this linkage is self-evident in

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that value creation capability is a dynamic construct that is constantly changing (as we describe in value drivers theory); the very definition of “value” as a metric varies from for-profit and not-for-profit organizations, and is largely specified by the mission, vision and values which are crafted and influenced by the leaders of the organization; and the next generation of leaders must be appropriately chosen through succession planning to ensure seamless and continuous upward growth trajectory of the firm’s adaptive capacity to survive and grow. We first present value driver theory to map the underlying value drivers that contribute to value creation capa-bility of a firm, and then discuss succession planning as it relates to value drivers.

theoretical Background

J. B. Williams is generally recognized as the first scholar explicitly linking present value concepts to investment in The Theory of Investment Value. His main intention in writing this was “codifying the Theory of Investment Value and making it into a department of Economics as a whole” (Williams, 1938, p. vii). Williams’s thesis popularized the dividend valuation model (Rutterford, 2004), which is one of the many discounted cash flow approaches to business valuation. Williams’s work was the first to link the present value concept to dividends (Damodaran, 2006). Specifically, investment value is defined as follows:

To appraise the investment value, then, it is necessary to estimate the future payments. The annuity of payments, adjusted for changes in the value of money itself, may then be discounted at the pure interest rate demanded by the investor. (Williams, 1938, p. 55)

a Brief hiStory of PreSent Value and diScounted caSh flow (dcf) Valuation

Valuation methods that use present value concepts and DCF have existed for several hundred years but have changed and evolved considerably over time. According to Parker (as cited in Damodaran, 2006), the first interest rate tables date back to 1340. Simon Stevin, a Flemish mathematician, published in 1582 one of the first textbooks on financial mathematics that established an early foundation for present value (Damodaran, 2006). In the late nineteenth and early twentieth centuries, A. M. Wellington, a civil

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engineer, and Walter O. Pennell, an engineer at Southwestern Bell, devel-oped and used present value concepts in their work in the railway and telephone industries (Damodaran, 2006).

In the UK, in the late nineteenth century, Armstrong, a mining engi-neer, used DCF to value mine leases (Rutterford, 2004). An even earlier use of DCF analysis arose in 1801 in the Tyneside coal industry (UK) for valuing coal mining interests (Brackenborough, McLean, & Oldroyd, 2001). In the USA, in 1932, G. Preinreich argued for using DCF tech-niques for valuing growth firms (Rutterford, 2004). Many other individu-als contributed on both sides of the Atlantic to the development of concepts in present value, DCF, and valuation using these methodolo-gies, but Irving Fisher (1906, 1907, 1930) and J. B. Williams (1938) are generally credited with formalizing the concepts of present value and DCF analysis and codifying them in economic terms and in economic theory (Damodaran, 2006; Rutterford, 2004; Stone, 2008). More spe-cifically, Williams codified the use of present value and the DCF approach to determine the value of an enterprise. Rappaport (1986), in Creating Shareholder Value, popularized present value and the DCF approach as an appropriate methodology for determining the value of an enterprise, and suggested managers of business enterprises should focus on the impor-tance of value creation. In the intervening years since the original publica-tion of Creating Shareholder Value in 1986 and the revised edition in 1998 (Rappaport, 1998), many managers have lost focus on the impor-tance of creating long-term shareholder value (Koller, Dobbs, & Huyett, 2011; Rappaport, 2006).

the ProPoSitionS of the theory of Value driVerS

While Williams (1938) and Rappaport (1998) used the present value con-cept to value investments, they did not investigate fully the factors or ante-cedents that create the dividends or other cash flows upon which value is based. To fill this gap in knowledge, Wendee (2011) proposed a unified theory of value drivers. Those factors are known as value drivers, and the identification, analysis, and understanding of value drivers become the Theory of Value Drivers. The Theory of Value Drivers consists of multiple components and 28 propositions (discussed in detail in Wendee, 2011), which present a holistic approach to value and show how value driver theory evolved from the Theory of Investment Value to include these holistic components. These components include business valuation

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research, business brokerage research, private capital markets theory, secu-rities markets research, decision theory research, and evaluation of DCF approaches. For brevity, please refer to Wendee (2011) for the details of each component.

Value creation ProceSS chart

Figure 18.1 presents the value creation process in the Theory of Value Drivers in Wendee (2011). The theory was developed based on works of Brigham and Ehrhardt (2011), Damodaran (2002), Kazlauskiene and Christauskas (2008), and Rappaport (1998).

What is a value driver?A value driver is any variable that influences the value of an enterprise (Kazlauskiene & Christauskas, 2008). Variables can be categorized as pri-mary and secondary, endogenous and exogenous value drivers.

How is value measured?Value drivers exert their influence on the value of an enterprise by operat-ing, directly or indirectly, through the DCF model. For a discussion of this, see Brigham and Ehrhardt (2011), Damodaran (2002, 2006), and Rappaport (1998). The DCF model derives the value of an enterprise’s operations, and with some modifications derives the total value of the enterprise (Brigham & Ehrhardt, 2011).

All value drivers that affect a particular enterprise are at all times operat-ing on the value of the enterprise through the DCF model. If the manag-ers of an enterprise are explicitly considering the effects of a particular value driver on the enterprise’s value, that value driver is operating in the foreground. If the managers of an enterprise do not recognize a particular value driver or are not currently considering the effect of a particular value driver on value, that value driver is operating in the background but is still affecting the value of the enterprise, whether recognized or not.

The DCF model is one of the fundamental theoretical approaches to valuing assets (Brigham & Ehrhardt, 2011; Damodaran, 2002, 2006; Rappaport, 1998). For a value driver to create value, it must ultimately produce cash flows that are incorporated into the DCF model on a DCF

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basis. In other words, if a value driver does not directly or indirectly pro-duce cash flows, there is no value created.

The effect on the value of an enterprise by any value driver, whether exogenous or endogenous, or a primary or secondary value driver, can be estimated using the DCF model. Because the Theory of Value Drivers treats the assessment and undertaking of any value driver the same as the assessment and undertaking of any investment project for an enterprise, any value driver can be treated as a project for the enterprise. This approach is similar to the approaches suggested for the assessment of projects and business strategies suggested by Brigham and Ehrhardt (2011) and Rappaport (1998). The cash flows for any value driver can be estimated as one would estimate the cash flows for any other investment project for the enterprise. The cash flows for an individual value driver can then be evalu-ated for their effect on the overall cash flows of the firm.

Alternatively, individual value drivers can be evaluated using the net present value (NPV) method of financial analysis. In such cases, the corpo-rate finance rules of accepting the value driver project that has the highest positive NPV for mutually exclusive projects and accepting all positive NPV projects if independent projects are involved would apply, as the value drivers are adding value to the firm (Brigham & Ehrhardt, 2011).

The value of the firm’s operations is derived from the DCF model (Brigham & Ehrhardt, 2011). In Fig. 18.1, the primary and secondary value drivers combine to produce free cash flows (FCFs) leading to the value of the firm’s operations. The value of the firm’s operation is a com-ponent of total firm value.

Total firm value consists of both the value of the firm’s operation and its non-operating assets. Non-operating assets include short-term invest-ments in marketable securities. Adding non-operating assets to the value of the firm’s operations gives the total value of the firm (Brigham & Ehrhardt, 2011).

Subtracting debt and preferred stock from total firm value gives share-holder value (Brigham & Ehrhardt, 2011). This is shown in Fig. 18.1. Shareholder returns come from dividends and capital gains (Rappaport, 1998), which are influenced by shareholder value.

The terms value creation, a major subject in this chapter, and wealth creation are often used interchangeably, but a subtle difference exists between the two. According to Scarlett (2001), “The value perspective is based on measuring value directly from accounting-based information with some adjustments, while the wealth perspective relies mainly on stock

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market information” (p. 7). Wealth creation is applicable to publicly traded firms where changes in shareholder wealth come mainly from changes in stock prices, dividends paid, and equity capital raises. For publicly traded firms, where management provides all pertinent information to the capital

THE VALUE CREATION PROCESS

PRIMARY VALUE DRIVERS

minus equals leads to

equals

plusequals The expected growth rate and the high growth

period dura�on, which are an integral part of the DCF Model, are value drivers.

input input

equals equals

minusplus plus

�mes1 - tax rate

equalsimpacts

impacts impacts

impacts impacts

impacts

equals

minus

Total Firm Value

Non-Operating Assets

Value of Firm's Operations

Shareholder (Equity)Value

Debt+ Preferred Stock

Value Creation Engine

(DCF Model)

Free Cash Flow (FCF)

Weighted Average Cost of

Capital (WACC)

Net Investment in Operating Capital

Net Operating Profit After Taxes (NOPAT)

Earnings Before Interest & Taxes(EBIT)

Operating Expenses

Sales

Weighted Cost of Debt

Weighted Cost of

Preferred Stock

Weighted Cost of Equity

Company Specific Factors

Sectorand Industry Factors

Macroeconomic Factors

Shareholder Returns (Dividends)

+ (CapitalGains)

CombinedImpact

SECONDARY VALUE DRIVERS

MANAGEMENT TOOLS

plus plus

Leads toValue Creation

Management Tools Provide the Link for the Exploration ofValue Drivers, the Use of Value Drivers in Strategy Development,and the Solving of Specific Problems Using Value Drivers.

Random Error (Luck)

Macroeconomic Factors

An Infinite Number of Other Value

Drivers Secondary Value Drivers in conjunction with Management Tools & Primary Value Drivers

Fig. 18.1 The Theory of Value Drivers possibilities frontier and value driver chain

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markets and where the markets believe in and have confidence in manage-ment, value creation and wealth creation should be identical (Scarlett, 2001).

the claSSification of Value driVerS

Many classification schemes are possible (Kazlauskiene & Christauskas, 2008), but the major categories used in the theory of value drivers to cat-egorize all value drivers are (a) value drivers are endogenous (originating internally) and are primary or secondary or (b) value drivers are exogenous (originating externally) and are primary or secondary. The primary value drivers consist of two parts and flow directly from the DCF model (for a discussion off the DCF model, see Brigham & Ehrhardt, 2011; Damodaran, 2002, 2006; Rappaport, 1998). The first part of the primary value drivers is shown as the disaggregated value drivers that flow into the free cash flow (FCF) component of Fig. 18.1. The second part of the primary value driv-ers is the disaggregated value drivers that flow into the weighted average cost of capital (WACC) component of Fig. 18.1. The primary value drivers are directly traceable to value creation for the firm, given their direct rela-tionship to the DCF model and the fact that they are part of the decom-positions. While there may be a few individual differences, for the most part the primary value drivers are the same for all business enterprises.

The secondary value drivers are all other value drivers that are not as directly traceable to value creation for the firm because they do not have the direct relationship that the primary value drivers have to value cre-ation. They may impact value creation directly or through the primary value drivers, but they operate through the DCF model like all value driv-ers. Theoretically, while an infinite number of secondary value drivers exist, 72 important value drivers were identified in Wendee (2011).

attriButeS of Value driVerS

The impact of value driver varies. They can have a positive or negative effect on value. Sometimes they can have both (Kazlauskiene & Christauskas, 2008). Some value drivers can have no effect on value, as discussed below.

Some actions that business managers take may have no effect on value at all. Actions that have no effect are considered value neutral. Actions that do not affect cash flows, the expected growth rate, the length of the high

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growth period, or the cost of capital do not affect value (Damodaran, 2002). An example is a stock split that does not affect the value of the firm although it might affect the price of the stock.

A few actions might be technically value neutral. Most actions, if not all of the actions taken by a manager, will probably have some effect on value, either directly or indirectly, because of the effect on the stock price and other possible indirect effects of any action that a manager might take. Damodaran (2002) acknowledged such notion.

Figure 18.1 depicts a construct of the theory of value drivers called the possibilities frontier. This consists of the primary and secondary, exoge-nous and endogenous, value drivers. Business managers can add value to their enterprises with the possibilities frontier.

Each separate value driver represents an entry point for potentially value adding actions. Managers and analysts considering strategies for cre-ating value in the enterprise should study each of the entry points con-tained in Fig. 18.1 for possible value creation. Each of the primary and secondary, endogenous and exogenous, value drivers is an entry point where value can be created.

The value driver chain is depicted in Fig. 18.1 as the sequence of pri-mary and secondary value drivers that create value in the enterprise. The value driver chain starts at the top of the chain (which is shown starting at the bottom of the figure) with the secondary value drivers. Next in the chain are the two branches of the primary value drivers—the FCF branch and the WACC branch. The chain continues through the DCF model to the creation of the firm’s value of operations. The chain ends at the cre-ation of shareholder value. Managers of business enterprises and analysts should work through the value driver chain to see where value is being created or destroyed in the enterprise.

Value drivers are interrelated in a myriad of ways. They rarely, or never, stand alone. In other words, value drivers do have influence on other value drivers.

other imPortant Value driVer characteriSticS

Luck is a value driver in Fig. 18.1. This plays an important role in everyday affairs and business matters (Mlodinow, 2008; Taleb, 2001). Luck might not be quantifiable or controllable in all cases, but in nearly all situations it has some influence on the determination of the value of a firm and should at least be considered in analyses. Luck is a secondary value driver.

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In many situations, luck is quantifiable and controllable. The fields of inferential statistics, stochastic modeling, and techniques such as Monte Carlo Simulation, are designed to quantify and control for luck (also vari-ously defined as uncertainty, randomness, and risk). In the Theory of Value Drivers, luck was generally defined as randomness, based on Taleb’s (2001) suggestion which stated, “This book is about luck disguised and perceived as non-luck (that is skills) and, more generally, randomness dis-guised and perceived as non-randomness (that is, determinism)” (p. 1). Another way to view luck is to think about it as characterized by uncer-tainty in decision theory and management science. Computer-based simu-lations, mathematical models, and statistical methods are often used by managers to make decisions under uncertainty (Monahan, 2000).

The expected growth rate is a value driver. According to Damodaran (2002), “The most critical input in valuation, especially for high-growth firms, is the growth rate to use to forecast future revenues and earnings” (p. 268). The expected growth rate is shown in Fig. 18.1.

The high growth period duration is a value driver. The high growth rate period duration, or what Rappaport (1998) called the value growth duration, is “management’s best estimate of the number of years that investments can be expected to yield rates of return greater than the cost of capital” (p. 56). The high growth period duration is shown in Fig. 18.1.

Value creation and SucceSSion management

Value creation should be a focus and goal of every manager in the enterprise. This is as important for succession managers as it is for any manager. Accordingly, succession managers should be chosen with great care to ensure that the chosen succession managers understand the importance of enter-prise value creation and that they have the requisite commitment to its attain-ment. While existing research has established the benefits of talent acquisition and talent retention, the use of succession planning tools in annual strategic planning exercises has been sporadic and minimal (Adeniji, Falola, Ibidunni, Osibanjo, & Salau, 2016; Hummel, 2016; Imran, Pavithra, & Rachel, 2016). Organizations diminish succession planning when it comes to formal strate-gic planning processes, and succession planning often becomes discontinu-ous and episodic (McClure, Prewitt, & Weil, 2011; Miles, 2009).

As with any manager, succession managers are themselves value driv-ers—both in a positive and negative sense. If succession managers focus on value creation, there is a greater likelihood that value will be created in the

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enterprise. If succession managers lack a value creation focus and/or they do not understand the value creation process, enterprise value may stag-nate or decline. For organizations to take their management to the next level in a positive manner, the organization must create a proactive envi-ronment using succession planning to improve the overall innovation of the organization (Joullie, 2016). For example, American Express uses intentional succession planning through leadership development in its NGen Fellows program (American Express NGen Fellows, 2011). Similar programs exist in other organizational settings (Jenkins, 2015; Koay, 2015; Kowalewski, McGee, & Moretti, 2011).

Non-profit executive succession planning and organizational sustain-ability have been empirically shown to be linked in a comparative study in five nations—Australia, Brazil, Israel, Italy, Russia (Bassi, Bozer, Esposito, Santora, & Sarros, 2015). Research in other settings support this link as well (Bourke & Dongrie, 2015) calling it a succession dividend. It is therefore incumbent on succession managers to lead and guide the value creation process. Accordingly, succession managers should be trained, along with other enterprise managers, in the enterprise/shareholder value creation process. The following section discusses the importance of under-standing value in terms of sustaining the longevity of organizations.

SucceSSion Planning and theory of Value driVerS for longeVity of organizationS

We posit that succession planning and the Theory of Value Drivers work in concert to ensure the longevity of organizations. One without the other will cause organizational failure and demise. The Theory of Value Drivers motivates business executives, succession planning managers, entrepre-neurs, business analysts, securities analysts, and others to focus on value drivers as the source of value creation, and more generally to enable them to understand how value is created. Chan, Kassim, Shamsuddin, and Wahab (2012) posit that succession planning should be an integral part of a firm’s quest for value drivers. Succession planning increases the learning agility of the next generation of leaders and thus enables the firm to respond to new challenges, and a failure to respond to new challenges will adversely impact the positive value drivers of the firm (Dai & De Meuse, 2013; Day, 2016).

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To put success back into succession planning, there should be an emphatic intentionality and belief that succession planning is beneficial for the firm (Leonard, 2010; Naton, 2015). As Rothwell (2002) describes, many managers view succession planning as filling a vacancy either from within the organization or from outside the organization. In fact, the con-cept of succession planning is a much larger one than that. Each time a vacancy occurs, managers need to consider what alternatives are available to them and truly view the replacement needed not merely in terms of current job description but also in terms of the impending changes in the internal and external environment of the organization (Rothwell, 2001). The use of succession planning leads to a higher probability of internal succession and a lower probability of forced succession. However, it must be noted that in times of extreme crises it is necessary to recruit leaders from outside who can turn around poorly performing organizations (Berns & Klaner, 2017). Given the importance of chief executive officer (CEO) successions to a company’s strategy and success, boards of direc-tors play a key role in CEO succession. Boards of directors need to identify the most effective candidates and ensure a smooth leadership transition (Biggs, 2004).

concluSion

Succession planning has received much attention in strategic manage-ment, corporate governance, strategic leadership, and organizational behavior research. Despite the important insights gained during the past decades, we still know very little about the considerations given to the links between value drivers of the firm and succession planning. We sum-marized the state of the art of value drivers of the firm and described suc-cession planning and its impact on value drivers. In our view, this serves as a solid basis to stimulate urgently required research on understanding value drivers and succession planning working in concert for the survival and advancement of organizations. In 2015, the world’s 2500 largest companies had a 16.6% CEO turnover rate, the highest rate in the past 16 years (PwC, 2016). Because CEOs influence company outcomes, boards face strong shareholder scrutiny concerning CEO replacement. Only with an understanding of the links between value drivers and succession plan-ning can the right choices in leader selections be made. We conclude that the importance of making the right leadership choices applies not only at CEO level but at all levels within the organizational hierarchy.

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Index

NUMBERS AND SYMBOLS2012–2013 PWC Family Business

Survey Armani, Berkshire Hathaway, 76, 81

AAppraisal, 47, 143

BBest practices, vii, ix, x, 12, 16,

19, 20, 24, 57, 58, 60, 138, 199–209

Bro-culture, 2, 8Business technology, 126

CCanada, 76, 80–84Certification, 51, 55, 56China, 75, 76, 80–84Clinicians, 53, 156, 158, 159Coaching, 13, 46, 56, 130, 145,

179, 182, 191, 196, 205, 208

Competencies, viii, 3, 28, 33, 34, 46, 53, 54, 57, 58, 114, 137, 142, 167, 171, 183, 190, 196, 214

Competitive advantage, 18, 27, 28, 42, 79, 130, 139, 143

Complexity perspective on leadership development, 4

Core competencies, 15, 137, 149Corporate social responsibility (CSR),

1, 25, 36, 43Creative leadership, 5

DDistributed project teams, 196Diverse candidates, 14

EEmployee retention, viii, 42, 46, 125,

142–144Employment, ix, 30, 42, 46, 52, 67,

90, 91, 128, 195, 200, 208Enterprise Risk Management (ERM)

Policies, 147

240 INDEX

Executives succession, 156, 233EXOR, 76External candidate, viii, 44, 45, 64,

65, 67–70

FFamily affair, 63, 66Family dynamics, viii, 64, 68–70Family owned, xxiii, 11, 63, 65–67,

71, 75–85, 166, 169Family relationships, 71Federal, viii, 89–102, 105, 107, 110,

146, 158, 160Feedback, 5, 6, 46, 146, 170, 171Forecasting, viii, 13, 29, 42, 45, 47,

89, 127, 177, 194, 232

GGlobal Family Index, 75Gross domestic product (GDP),

75, 83, 85Group Assessment of Risk Capital

and Prospective Solvency Assessment, 147

Guanxi, 82

HHome Depot, 76Human resource management

(HRM), 29, 43, 51, 54, 142, 143

Human resources, 14, 20, 45, 68, 80, 97, 100, 112, 116, 133, 159, 199, 205

IIdentifying the leaders, 15, 20, 70, 129IKEA, 76Implementation, 19, 29, 30, 51, 56,

85, 105, 129, 138, 141, 142, 217

Improvements, 8, 20, 51, 53, 54, 56, 58, 60, 115, 171, 177, 189, 194, 195, 218

India, 76, 80–84Information technology (IT),

viii, 125–134Innovation, 17, 20, 78, 81, 116,

139–141, 148–150, 157, 161, 233

Internal candidate, 44, 45, 47, 65, 68–71

IT, see Information technology

LLeader effectiveness, 1, 2Leadership, 1–8, 12, 27, 52, 55,

56, 129, 130, 138, 140, 141, 176, 180, 187, 189–194, 204, 213–220

Leadership abilities, 180Leadership behaviors,

3, 5, 204, 215Leadership commitment, 17, 18Leadership competency,

190, 194Leadership development,

3–6, 8, 11, 12, 70, 77, 114, 115, 130, 141, 159, 166, 191, 233

Leadership development and training, viii, 4, 20, 60, 70, 167, 168, 196

Leadership knowledge, 195Leadership skills, 15, 35, 46, 53–55,

70, 71, 144, 155, 201Leadership theory, 4, 5Legacy systems, 126, 131

MManagerial training process

improvement, 58Michelin, 76

241 INDEX

Micro small and medium family owned business enterprises (MSM- FOBE), 78

Missing middle, 78MSM-FOBE, see Micro small

and medium family owned business enterprises

NThe North American Free Trade

Agreement (NAFTA), 83

OOrganizational culture, 6, 17–19, 111,

130, 142, 143, 169, 204Organizational strategy, 16, 17, 29,

44, 47, 77, 128, 129, 132, 133Organizational sustainability, ix, 1,

28, 35, 112, 175–179, 184, 233

Ownership lifecycle, 78

PPrincipal mentoring, 193–195Process versus strategy, 15Public sector, viii, 105–117PWC Global Family Business Survey

2016, 76

RRecruiting, viii, 27, 29, 30, 42, 43,

46, 47, 56, 84, 114, 133, 149, 159, 179–181, 183, 187, 189, 191, 194–196, 207

Relational leadership theory, 4Replacement hiring, 13, 15Resource-based theory, 76, 79

Retention, 28, 44, 49, 56, 81, 94, 139, 140, 149, 159, 168, 170, 194, 232

Retirement, viii, 2, 6, 13, 18, 23, 29, 30, 59, 66, 69, 89, 90, 94, 95, 97–102, 109, 110, 113, 114, 126–128, 140, 161, 165, 167, 189, 190, 196

SSelf-Leadership, 138, 214Siblings, 63, 66, 67Small business, viii, xxiii, 33, 36,

63–71, 165–167, 172Small medium enterprises (SMEs),

80, 83SMEs, see Small medium enterprisesSocial capital, 78, 79, 82, 83, 85Staff training, 3, 4, 8, 129Strategic planning, 43–45, 48, 51, 56,

60, 78, 83, 116, 126, 127, 129, 132, 138, 145, 156, 232

Strategy, vii–x, 1, 6, 8, 11–20, 24, 25, 27, 28, 30, 32–35, 43–46, 49, 51, 55, 57, 77, 108, 111–117, 128, 130, 134, 137–150, 156, 166, 170–172, 177, 179, 181–184, 191, 192, 194, 195, 200, 206–208, 216, 220, 228, 231, 234

Succession management, viii, x, 41–48, 127, 204, 207–209, 224, 232, 233

Succession planning, vii–ix, 1–8, 11–20, 23–36, 41–60, 63–71, 75–85, 89–102, 125–134, 137–150, 155–161, 165–173, 175–184, 196, 199–209, 223–234

definition, 12, 176, 177, 224

242 INDEX

Successor, viii, 13–17, 19, 24, 25, 27, 35, 36, 41, 63–71, 77–85, 130, 146, 148, 149, 157, 165–173, 179, 203, 213–220

Successor characteristics, 96, 157, 191–194

Successor experiences, 65, 68Sustainability, 1, 3, 34, 105–117,

138, 175, 176, 180, 181, 183, 205, 209

Sustainable leadership, vii, 1–8

TTactical Strategies for Success

Planning, 144–147Tactics, vii, x, 8, 11–20, 144–147, 214Talent management, viii, 16, 27, 28,

41, 50, 57, 179, 199, 200, 207Teacher turnover, 188Theoretical foundation, viiTraining, xxv, 4, 5, 13, 24, 28, 29,

35, 42, 45–48, 53, 54, 56–59, 64, 66, 68–70, 82, 94, 110, 115, 126, 128, 129, 132–134, 146, 149, 155, 156, 158, 160,

165, 167–169, 171, 172, 179, 182, 183, 191, 192, 194, 195, 206, 214

Transferring ownership, 65, 67Transparency, 19, 20, 146Turnover, 27, 28, 42, 44, 53, 57, 59,

91, 93, 94, 99, 106, 127–129, 131, 134, 142, 144, 150, 156, 166, 172, 187–189, 192, 193, 195, 196, 204, 207, 209, 234

UUnited States (US), 11, 27, 50, 55,

56, 58, 65, 75, 83, 90, 94, 126, 127, 158, 165, 180, 189, 204, 207, 226

VVolkswagen, 76

WWal-Mart, 18, 63, 76Web technology, 99