Unit 41: Succession Planning
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1 Unit 41: Succession Planning Extract from Managing Governance in Nonprofit Organisations in Australia (Jean Roberts, 2004) Text book and CD ROM Note: The term Board includes Board of Directors and Committee or Board of Management Definition Succession planning is the process of planning appropriate action in the case that a person acknowledged as a key person or who currently occupies a key position in the organisation is no longer available to the organisation. Events that cause or contribute to such a person no longer being available may be sudden and unexpected, or scheduled and expected and wise succession planning will cater for both situations. Succession planning is a responsible management function and demonstrates real concern for the future of the organisation on the part of the current internal decision-makers. It must be emphasised that key persons and key positions apply to the governance, management and operational levels of an organisation. Succession planning lays out a careful and considered plan of action to ensure the least possible disruption to the person s responsibilities and therefore the organisation s effectiveness. Examples include such a person: a) suddenly and unexpectedly being unable or unwilling to continue their role within the organisation b) issuing an unexpected or sudden expression of discontent c) accepting an approach from another organisation or external opportunity which will terminate or lessen their value to this organisation d) indicating an early or reaching the anticipated - conclusion of a contract or time-limited project, or e) moving to another position and set of responsibilities within this organisation. A succession plan clearly sets out the factors to be taken into account and the process to be followed in relation to: a) retaining the person, or b) replacing the person.. 1 NOT Part of NEALS. This material is excluded from the NEALS Agreement
2 Note that: succession planning is not another term for employing staff or attracting volunteer effort. in a small nonprofit organisation, every position and every person - may be seen as critical to the success of the organisation, which means that selection of people for the few positions within the organisation is a critical function of itself: strategies associated with succession planning should be considered for inclusion in the normal employment processes. Cost and inconvenience as well as a sense of loss Sudden loss of a key person in a key position has the potential to place the organisation at risk. The effect of the key person s withdrawal from the organisation for whatever reason can cause confusion for the person s colleagues in personal as well as work-related ways. The immediate effect can be detrimental to the organisation, and it can be a great challenge for those that remain to re-group in order to reclaim the momentum. Momentum is a very interesting concept it consists of 3 components of equal value and importance: - the size of an object - the speed with which the object is travelling, and - the direction in which the object is moving. In applying these 3 components to a key person in a key position: - the key person s experience, knowledge and understanding of the organisation s affairs and activities, amount of intellectual capital they hold within their head and heart, extent of commitment to the organisation s purpose, importance of their professional input to the quality and range of service design and development or administrative or corporate functions, etc. - the ease with which they undertook their responsibilities, confidence with which they were able to make wise decisions and sound judgements on behalf of clients or co-workers, effectiveness of their skill and contacts in attracting sponsorship or community backing. - the importance of their personal, professional and practical contribution to the organisation s growth, achievements and future plans. 2
3 When momentum is interrupted, it can be due to any one of the 3 components but it will inevitably affect the other two. - a newly appointed or promoted replacement will take time to become familiar with and confident in the position s responsibilities and accountabilities. - s/he may bring a very different personal contribution to their position that will need to be demonstrated, rated and appraised by co-workers, clients and colleagues before it becomes a given factor within their sphere of influence. - s/he faces the challenge of making her way into the dynamics and nuances of internal and external networks associated with the position, which takes time, energy, insight, patience and determination. The process of replacement of itself can impose an unexpected financial burden on the organisation, as indeed can promotion of a person already on staff whose own position has then to be filled. The cost of advertising, interviewing, induction, orientation and familiarisation with the demands of the role is real in terms of dollars, and can be substantial in terms of opportunity costs while the new person is gathering confidence and knowledge in order to achieve the level of effectiveness of their predecessor. Where a key position is directly related to a specific project, the issue of succession planning is particularly relevant in the event that the person is unable to complete the project. A change in person in this case may have a high probability of compromising the project. While it is not possible to totally avoid turnover of key persons or key positions, every effort should be made to ensure that such an event is handled with the utmost care and sensitivity in the interests of both the person involved, their immediate colleagues and the organisation itself. Key positions In any organisational structure, there will be key positions which, if not functioning effectively or not receiving adequate and appropriate support, may place the organisation at disadvantage or risk. Such positions are usually a pivotal position, which means that the effectiveness of other positions or mandatory requirements - is dependent upon effectiveness in the key position. 3
4 Key persons Many organisations will have identified one or more key persons among their personnel (paid or unpaid, including the Board). The contribution of key person to the affairs or activities of the organisation is recognised to be of major or even critical importance or value to: a) the performance, integrity or reputation of the organisation as a whole, and b) the level of job satisfaction among their colleagues. Examples of key person characteristics include: a) their personality, demeanour, confidence or style has a substantial and positive influence or effect on the morale and spirit of their co-workers and wider afield b) they take a genuine interest in their work, colleagues and work-place c) they display a high level of commitment and loyalty to the organisation s purpose and clientele d) they have or have access to valuable and important information or knowledge that is not available anywhere else in the organisation, and e) the organisation has invested substantial resources in their professional or personal development in the interests of the organisation s future. Such persons will usually but not necessarily - occupy a key position. Indeed, where such person is identified within an organisation, the nature and extent of their responsibilities should be appropriate to their value to the organisation. Key people in key positions need to know that they are valued. Flowchart to guide succession planning in a nonprofit organisation Flowcharts are a valuable tool in designing a skeleton around which flesh and muscles can be added to create a working model. The flowchart presented in this manual presents the skeleton and the pages following the flowchart offer flesh and muscle in the form of checklists and tools to assist participants in developing and introducing an appropriate succession plan that can then be refined and improved with time and experience. Returning to the concept of momentum, an appropriate and practical succession plan is affected by: - the size of your organisation - the speed with which it is travelling, and - the direction it is moving. 4
5 It is relevant to refer briefly to the life-cycle of voluntarily managed organisations (as featured in The Committee Member s Handbook, Jean Roberts, 1990) Voluntarily managed organisations ideally should follow the continuing Life-cycle in their growth and development: Stage 1: INNOVATION a clear focus on an agreed opportunity, need or problem and end-user with, initially, a co-operative and informal structure key ingredients are enthusiasm and ownership. Stage 2: ESTABLISHMENT a clear focus on facility and service provision with the bottom line of end-user benefits, with a structure taking form and shape key ingredients are purpose and resources. Stage 3: MAINTENANCE a clear focus on continuity and refinement of a quality service and end-user benefits, with (perhaps) a measured expansion of facilities and acceptance of services key ingredients are continuity and consistency. Stage 4: EVALUATION clear focus on 'what is and why it is so' what did we set out to do and why what was the context back then how has the context changed how has the original opportunity, need or problem changed how has the original end-user changed what do we need to do and be in order to recapture our focus on the opportunity, need, problem and end-user as they are now key ingredients are commitment and change The life-cycle in action ensures progress along a desired and agreed path of growth and development and a maturity of commitment to the agreed opportunity, need or problem... and end-user. 5
6 Some of the imminent changes that voluntarily managed organisations need to consider today include: a) increasing demands for an increasing scope and quality of human services... with competitive access to decreasing resources b) the 'whirlwind' expansion in technology and systems c) innovation and change in industrial relations and structures d) an increasing dependence on highly skilled, readily available and professional volunteers e) an increasing cynicism about social justice as a concept and as an outcome... social justice initiatives have been branded as 'looters after bushfires' f) changes and movement in personal, community, human service and corporate values g) an increasing demand for accreditation, standards and accountability in the human services h) an increasing requirement for voluntarily managed organisations to market themselves and their services: * as a responsible, credible, viable and influential service provider * as a legally responsible and ethically managed organisation that is open to inspection, consultation and co-operation in order to achieve specific and agreed benefits for the end-user * as an entrepreneurial, efficient and effective organisation, and * as a ready and willing contributor to the common good of the local and specific community and of society generally. 6
7 How to use the continuing life-cycle Existing voluntarily managed organisations have the need to fast-forward to Stage 4 of Evaluation in order to consider and commence a courageous 'mind-shift' to ensure their organisation is willing, able and equipped to move further into the 21st Century. Initiatives to create a voluntarily managed organisation need to recognize the four Stages of the Life-cycle and be prepared to work through each one in turn: a) to re-visit their Stage 1 of Innovation to make sure that people most closely associated with the agreed opportunity, problem or need were involved in definitions, analysis and design of the immediate and longer-term action plans b) to re-visit their Stage 2 of Establishment to compare what it is that they have established, and how it relates today with what it was they created in their Stage 1 of Innovation c) to re-visit their Stage 3 of Maintenance to identify the nature and standard of quality and maturity they have incorporated into their management, operation and end-user relationship, and d) to fast-forward to Stage 4 of Evaluation in order to consider and commence a courageous 'mind-shift' to ensure their organisation is equipped to move toward and into the short-term and longer-term future. 7
8 RMC Succession Planning Flowchart Constitution and all relevant legislation Current strategic Current and Current and known and business anticipated funding contractual + plans + and service + obligations + agreements Current commitments Identify the current organisational structure - the formal structure shows how things are expected to happen, and the informal structure shows how things actually do happen - the formal structure displays delegation of authority, reporting, decision-making and information exchange Identify key positions in the Governing body Identify key positions in Management Identify key positions within the structure - which, if not functioning effectively or not receiving adequate and appropriate support, may place the organisation at disadvantage or risk Identify key positions in Operational and Support functions 8
9 Key positions in the structure Are there appropriate policies, procedures and practices for job analysis, job design, position descriptions, performance appraisal, performance indicators, measures, improvement and enhancement? Person in a key position Are there appropriate policies, procedures and practices for recruitment, selection, orientation, training, promotion, and replacement? Work environment Are there appropriate practices for care and nurturing, motivation, incentive, recognition, reward, OH&S, privacy, health and well-being? Identify criteria for filling key positions Identify criteria for retaining incumbents in key positions Identify and cost options for attracting and/or retaining key people in key positions Develop a careful and considered plan of action to ensure the least possible disruption to the responsibilities or influence associated with each key position, and therefore the organisation s effectiveness - take account of key persons in this preparation, although concept of key persons may be more associated with the informal structure than the formal structure 9
10
11 Checklist for developing policy and procedure for succession planning The starting point is for the Board (as the governing body) to commence the process of developing a policy and procedure on succession planning that will be appropriate and relevant for the whole organisation. 1. Schedule an agenda item for a near-future Board meeting to allow free discussion on the benefits of succession planning for key positions in the organisation, presenting strategies (with rationale) drafted following this workshop as a starting point. During the open discussion, consider and document the strengths of a succession planning process against the weaknesses of not having a succession planning process. 2. Following discussion, the Board to establish a Succession Planning Working Party to develop a draft succession planning policy and procedure: Purpose of the Succession Planning Working Party: To draft a policy and procedure that should enable the organisation to experience the least possible detrimental effect as a direct result of the unexpected departure or unavailability of a person occupying a designated key position in the organisation s formal structure. Causes for unexpected departure or unavailability can range from unexpected but positive occasions (eg winning the lottery) to occasions that result in trauma or damage to the person or within the workplace Composition: The Succession Planning Working Party may consist of: Chairperson one person with skill and experience in the area of succession planning who may be a person from outside the organisation one experienced Board member who is familiar with the organisation one staff member who is familiar with the organisation, and the CEO or senior staff person. 11
12 Structure: The Succession Planning Working Party will: be chaired by the Chairperson follow normal sub-committee procedures, and report to the Board within 3 months with validated and costed recommendations. Task: a) define and describe designated key positions in the formal organisational structure, and document the rationale for allocating this designation b) identify the impact on this and related positions, and on the organisation, if such key positions were to become suddenly vacant or if the incumbent were suddenly unavailable to continue c) consider the nature of support seen to be essential to ensure ongoing effectiveness of such a position in the event of the incumbent being unable to continue and of related positions d) draft a procedure by which the organisation could best address a sudden vacancy as result of a positive or negative event with consultation with the incumbent where that person is willing and available - the issue of job design is relevant here e) draft a recognition and reward system that is appropriate to the organisation, affordable within the resources available to the organisation, and has options that will prove meaningful (rather than demeaning) to a person in a key position in order to ensure ongoing effectiveness of the position f) draft an implementation plan, which sets out how the total policy and procedure on succession planning should be activated for an anticipated event as well as in the case of a sudden event or emergency, and g) give an indication of the nature and extent of resources (including financial) that may be required to ensure satisfactory implementation of this policy and procedure. 3. At the agreed time, the Succession Planning Working Party will report to the Board on a general policy and procedure which, following discussion and eventual endorsement, will become a formal task within the overall management of the organisation. 12
13 Great care must be taken during the process to ensure that things are not said or done that may cause concern or unrest among people working within the organisation in paid and unpaid positions. Succession planning strategies can range from multi-skilling or cross-skilling among peers through to identifying another member of staff with the potential to rise to a key position, and actively initiating training and development to cover such an absence. Risks abound for nonprofit organisations in designing a succession planning strategy, as they do not have access to unlimited resources to attract or retain staff. Where appropriate (ie untagged) resources are available, it may be in the best interests of the organisation to offer incentives to retain a key person in a key paid position. However, such an offer would need to ensure and protect the interests of the organisation and its services, as well as the interests of the person. The offer would also need to be able to be justified and defended to a public audience should an accusation be made of unwise use of resources, or preferred or inappropriate treatment of one person above others employed by the organisation. The issue of setting a precedent should also be discussed as a potential risk factor. The bottom-line in succession planning is that the quality and standard of service planning, delivery and provision should not be compromised due to the temporary or permanent unavailability of a key person in the organisation. 13
14 Action Plan What to do following discussion of this Unit 1. What Why How By whom By when At what cost
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