Management Succession Planning: A catalyst to the growth of Rural and Community Banks (RCBs) in Ghana
Management succession planning is a deliberate decision by an organization to foster and promote the continual development of their employees. This is to ensure there are always the personnel to maintain key positions thus enabling the business to maintain its continuity. Succession planning management strategically identifies and develops internal people with the potential to fill key business leadership positions in the organization. Through succession planning process, management recruit superior employees, develop their knowledge, skills, and abilities, and prepare them for advancement or promotion into more challenging roles. Actively pursuing succession planning ensures that employees are constantly developed to fill each needed role. As organizations grow, they lose key employees, succession planning then guarantees the business has qualified employees on hand to take over when the old guards retire or exit.
Source: FMI corporation, 2013
Preparing for succession
Developing a good management succession plan and implementing them can take some years so it’s important that directors and management put in place the necessary structures and policies to make it successful. To establish an effective succession plan, clear objectives are critical. These objectives must include identifying potential candidates with the requisite skills sets who can assume leadership roles in the future and tying them down with both immediate and deferred incentives. The potential candidates must also be provided with critical development experiences to prepare them to move into their roles. A database of all the potential candidates for various identified positions must be built in order that they provide a critical pool of experienced and staff making it easier for the organization to make better staffing decisions.
Over the years, organizations have changed their approach to succession planning. What used to be a rigid, confidential process of hand-picking executives to be company successors is now becoming a more fluid, transparent practice that identifies high-potential leaders and incorporates development programs in their operations to prepare them for top positions.
Rural Banks must consider succession planning a part of their strategic planning on human capital. This is known as talent management. It is the activities and processes throughout the employee life cycle: recruiting and hiring, onboarding, training, professional development, performance management, workforce planning, leadership development, career development, cross-functional work assignments, succession planning, and the employee exit process. When managing internal talents, Rural and Community Banks must ensure the right people are moving at the right pace into the right positions at the right time. An effective succession planning strategy, coupled with solid career development programs, will help paint a more promising future for employees and help them focus more on realizing the objectives of the banks. Rural and Community Banks must actively guide potential successors in their career development. In this way they are assured of continuous loyalty of their employees who would do everything possible to ensure the growth and development of the banks.
Process and practices of succession planning
Progressive companies establish a well-designed plan that embodies every detail of their succession and development practices. And these processes and plans may include:
Identifying key roles for succession or replacement planning, defining the competencies required, assessing people against these criteria – with a future orientation, identifying pools of talents that could potentially fill and perform highly in key roles.
Stages in succession planning
Management experts emphasize four stages in the management succession planning process. These are the initiation, selection, education and transition stages. At the initiation stage the CEOs speak openly about the future prospects of the bank in a positive but realistic manner setting out the bank’s future prospects and how it intends to grow or expand and future direction. The aim of this is to enable possible successors learn about the strategic paths the bank has taken and how their skills sets fit in. If the possible successors want to remain with the bank but finds they are lacking in some aspects, they then would seek to acquire or learn such skills to enable them fit in properly or become eligible for the positions when they become available.
The next stage is the selection stage. This stage involves actually choosing or designating a successor from the various candidates eligible for the position. This is a very important stage that must be properly managed to assuage bruised egos from rival or other possible successors who were all interested in the position. To manage this stage well the board of directors must or a consultant could be employed to develop specific objectives and benchmarks for qualifications into the various positions including the CEO position. This must also include a detailed job descriptions and functions or role for the successors to any of the management positioned. This is very critical stage as everything must be done in open and fair manner in order for all to see that they were not done to favor any particular candidates. Many CEOs sometimes skews qualifications and skills sets for vacant positions such that every bystander would know that it was done to cut of some very good and qualified materials contender in order to pave the way for a favorite. A story is told of a rural bank in the which set a qualification for a management position as 10 years post bachelor Degree experience. Now all who applied for the position even with 8-year-old Bachelor degree and a Master’s Degree were disqualified since their Bachelor’s Degree were not 10 years. Only one person had a 10-year post Bachelor’s degree experience and so was appointed. This was clearly designed to exclude all to pave the way for this person to be appointed as even people without Bachelor’s degree have previously been appointed into management positions and were still holding such positions.
Once the eligible person has been appointed or selected the bank must now enter the training stage. This involves given specific responsibilities to the successor and as they settle into their routine their levels of responsibilities are then gradually increased. The CEOs or the substantive officers can then be given planned leaves of absence to give the successor the chance to actually run the bank for a limited time to enable them start having a hang of things without someone looking over their shoulders. This is the stage that seems very difficult for some CEOs to accomplish. Even when they are on leave they want to continue to give daily instructions to the deputies. Some would attend every board meeting even when they are on leave. These situations leave their deputies in unprepared situation to take fully over when they finally retire. Due to this many RCBs are unable to fill the position internally but had to go out to employ someone from another bank to take over. This is the stage that also affords the board of directors the opportunity to evaluate the successor’s decision making processes, leadership skills and abilities, and performance under pressure. This is also the phase where the new successor is introduced to the necessary networks needed for success in the position. These networks include the Association of Rural Banks and their respective regional chapters, managers of other financial institutions in the area and other stakeholders.
The final stage is when the new CEO or officer finally takes full responsibility for the position on the retirement or final exit of the incumbent. At this stage the board of directors must ensure that they give the new manager the maximum support they require to succeed. If it’s any other management position the CEO must ensure that the person gets every support necessary.
The importance of management succession planning to the growth of RCBs
According to the American Banker there were less than 50% of American banks that had any succession plans in 2013. Therefore, federal regulators viewed this as a major risk to the sustenance of the banking system and encouraged every bank to formally put in place a verified system of management succession planning to mitigate the risk. This situation is not peculiar to only the American banks. According to the CEO Succession Planning Survey Banking Edition of 2011, 41% of successions happened when neither the board nor management had identified a viable internal candidate. As a result, many of the banks were forced to look outside for a replacement for the exiting management.
Of the 10 CEOs and other management staff of RCBs I spoke to when preparing this article only 3 have a formal succession planning strategy incorporated into their strategic plan. Five others said they have often talked about it but have not written them down as a formal document and only one said he does not know if any such policy existed. This might be widespread in many RCBs in Ghana. It is imperative to underscore the importance of management succession planning in the growth and continuity of RCB in Ghana.
Management succession planning is important to the growth and development and continuity of Rural and Community Banks since it involves the evaluation of the skills set of staff and identification of those that have the potential to ascend to top management positions. Succession planning in this way encourages actively developing staff which send a clear message to the rest of the staff that the organizing is serious about developing the capacity of its human capital. This then may persuade talents within the organization to seek to remain rather than seeking for employment in other companies due to the availability of growth prospects in the new companies.
Succession planning increases the availability of experienced and capable employees that are prepared to assume these positions as they become available. It is also the process of preparing an organization for a transition from one leadership to another. It is helpful to forestall an abrupt exit of a key executive through death or change of employment.
Why some RCBs dither
It is established that if succession planning is not undertaken properly potential candidates who do not get the job might leave the bank. This would then exacerbate the succession issue and so most boards and management would dither holding on till the very end. In view of this some RCBs do succession planning on as when needed basis. This in a way keeps their good staff at post but rarely give the younger employees the needed time to be properly groomed to assume such managerial positions in the future.
Conclusion
Management succession planning is critical to ensuring the growth and continuity of every bank and most especially Rural and Community Banks that experience high staff turnover. Many bank CEOs are reluctant to plan for their succession usual because they fear for the security of their tenure as most RCBs suffer high CEO employment termination rates in Ghana. Management succession plans must be integral to any RCBs strategic plan to prepare managers at all levels for career advancement to top management levels.
Author: Francis Enimil Ashun (B.Com MA) has over 16 years’ banking experience in Credit Administration and Branch Operations. He is a researcher in current trends in Human Resources Management and Development.
Email: enimilashun@gmail.com, Cell: +233 050 636 3388
