Case 2 Axis Bank

7/29/2019 Case 2 Axis Bank

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Significance of Succession Planning and leadership development

Succession planning is a process for identifying and developinginternal peoplewith

the potential to fill key business leadership positions in the company. Succession

planning increases the availability of experienced and capable employees that are

prepared to assume these roles as they become available. Taken narrowly,"replacement planning" for key roles is the heart of succession planning. Effective

succession or talent-pool management concerns itself with building a series of feeder

groups up and down the entire leadership pipeline or progression (Charan, Drotter,

Noel, 2001). In contrast, replacement planning is focused narrowly on identifying

specific back-up candidates for given senior management positions. For the most part

position-driven replacement planning (often referred to as the "truck scenario") is a

forecast, which research indicates does not have substantial impact on outcomes.

Fundamental to the succession-management process is an underlying philosophy that

argues that top talent in the corporation must be managed for the greater good of the

enterprise. Merck and other companies argue that a "talent mindset" must be part of theleadership culture for these practices to be effective.

Research indicates many succession-planning initiatives fall short of their intent

(Corporate Leadership Council, 1998). "Bench strength," as it is commonly called,

remains a stubborn problem in many if not most companies. Studies indicate that

companies that report the greatest gains from succession planning feature high

ownership by the CEO and high degrees of engagement among the larger leadership

team[1]

Companies that are well known for their succession planning and executive talent

development practicesinclude:GE,Honeywell,IBM,Marriott,Microsoft,PepsiandProcter & Gamble.

Research indicates that clear objectives are critical to establishing effective succession

planning.[2]

These objectives tend to be core to many or most companies that have well-

established practices:

Identify those with the potential to assume greater responsibility in the organization

Provide critical development experiences to those that can move into key roles

Engage the leadership in supporting the development of high-potential leaders

Build a data base that can be used to make better staffing decisions for key jobs

In other companies these additional objectives may be embedded in the succession

process:

Improve employee commitment and retention

Meet the career development expectations of existing employees

Counter the increasing difficulty and costs of recruiting employees externally
http://en.wikipedia.org/wiki/Employeehttp://en.wikipedia.org/wiki/Employeehttp://en.wikipedia.org/wiki/Employeehttp://en.wikipedia.org/wiki/Succession_planning#cite_note-0http://en.wikipedia.org/wiki/Succession_planning#cite_note-0http://en.wikipedia.org/wiki/Succession_planning#cite_note-0http://en.wikipedia.org/wiki/GEhttp://en.wikipedia.org/wiki/GEhttp://en.wikipedia.org/wiki/GEhttp://en.wikipedia.org/wiki/Honeywellhttp://en.wikipedia.org/wiki/Honeywellhttp://en.wikipedia.org/wiki/Honeywellhttp://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/Marriotthttp://en.wikipedia.org/wiki/Marriotthttp://en.wikipedia.org/wiki/Microsofthttp://en.wikipedia.org/wiki/Microsofthttp://en.wikipedia.org/wiki/Microsofthttp://en.wikipedia.org/wiki/Pepsihttp://en.wikipedia.org/wiki/Pepsihttp://en.wikipedia.org/wiki/Pepsihttp://en.wikipedia.org/wiki/Procter_%26_Gamblehttp://en.wikipedia.org/wiki/Procter_%26_Gamblehttp://en.wikipedia.org/wiki/Procter_%26_Gamblehttp://en.wikipedia.org/wiki/Succession_planning#cite_note-1http://en.wikipedia.org/wiki/Succession_planning#cite_note-1http://en.wikipedia.org/wiki/Succession_planning#cite_note-1http://en.wikipedia.org/wiki/Succession_planning#cite_note-1http://en.wikipedia.org/wiki/Procter_%26_Gamblehttp://en.wikipedia.org/wiki/Pepsihttp://en.wikipedia.org/wiki/Microsofthttp://en.wikipedia.org/wiki/Marriotthttp://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/Honeywellhttp://en.wikipedia.org/wiki/GEhttp://en.wikipedia.org/wiki/Succession_planning#cite_note-0http://en.wikipedia.org/wiki/Employee


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Leadership development refers to any activity that enhances the quality of leadership

within an individual or organization. These activities have ranged from MBA style

programs offered at university business schools to action learning, high-ropes courses

and executive retreats.

The development of "high potentials" to effectively take over the current leadershipwhen their time comes to exit their positions is known as succession planning. This type

of leadership development usually requires the extensive transfer of an individual

between departments. In many multinationals, it usually requires international transfer

and experience to build a future leader. Succession planning requires a sharp focus on

organization's future and vision, in order to align leadership development with the future

the firm aspires to create. Thus successive leadership development is based not only

on knowledge and history but also on a dream. For such a plan to be successful, a

screening of future leadership should be based not only on "what we know and have"

but also on "what we aspire to become". Persons involved in succession planning

should be current leadership representing the vision and HR executives having to

translate it all into a program. According to Meir Jacob and Amit Cohen (1995) three

critical dimensions should be considered: 1. Skills and knowledge 2. Role perception

and degree of acceptance of leading role 3. Self-efficacy .Albert Bandura. These three

dimensions should be a basis of any leadership succession programme.

Understand the role of a CEO in performance of a company

Your role as a CEO should focus on four things in nearly equal parts every day:

The Role of the CEO

1. People. Your employees, partners and service providers should be carefully chosen

based on their fit to your culture and strategy. Getting the right people aligned to

manage, serve and promote the business is your biggest challenge. Spend time here

and choose wisely.

2. Strategy.If you cant articulate where you want your business to be in 1 year, 3

years, or 5 years youre missing a valuable leadership tool. People will follow a

leader and company that knows where its headed, and why it will win. Refine your

focus.

3. Execution. Nothing kills companies faster than thrashing at decision making aroundthe basics of how to deliver a product, sell it or service a customer. These three

foundations need to be systematized for you to succeed. Flawless execution is your

friend.

4. Financing. Living hand to mouth is one of the most de-motivating experiences for

leaders and employees alike. Plan ahead and dont allow your company to get in that
http://en.wikipedia.org/wiki/Self-efficacyhttp://en.wikipedia.org/wiki/Albert_Bandurahttp://en.wikipedia.org/wiki/Albert_Bandurahttp://en.wikipedia.org/wiki/Self-efficacy


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position. Aligning the business to have enough reserves to support the execution of

your plan fully is not a luxury, its a necessity.

Summary

Every leader has a blind spot and areas of their performance that hold them back. Dontlet yours be the actual definition of the role itself. You need a balanced perspective on

how you develop your business that ensures a healthy foundation is in place. The four

focal points we recommend will allow you to always be focused on the things that mattermost. We call it your Pyramid of Success. The foundation is the CEO and the clarity of

his (or her) role.

a CEO performs several duties that are very important to the successful functioning ofany management team.

The CEO puts the strategy in place to achieve the companys vision and mission.In this capacity, the CEO works with team members to develop a strategy andplan. Then a process is put in place that will be used to execute the strategy.

The CEO gets the company organized to implement the process and guides allthe project activities using the process. All the schedules are established, layingout the tasks that have to be performed to deliver the companys product andservices and assigning the necessary resources to the people on the team.

The CEO establishes priorities for projects and tasks and makes decisionsrequired when they have to change.

The CEO makes sure that the right people are placed in the right jobassignments, and that people get further training to do their jobs.

The CEO facilitates problem solving, as needed, by directing the process ofproblem solving with team members, lending expertise to the process.

The CEO has an important duty to delegate responsibility and accountability. Indoing this, the CEO gives people a clear role and a set of responsibilities,empowers them to act, and holds them accountable for results. This is the art ofmanagement. In getting the best out of people, a CEO gives people theresponsibility they deserve, and then coaches them in their work in order to makethem the best they can be, and finally holds them accountable for producing the

results that are expected. The CEO takes care ofpeoples needs. The CEO is an enabler for and ensures

that people get what they need in order to do their jobs. This includes equipment,training, assistance, coordination, and time.

The CEO has the very important role of communicator. The CEO not onlycommunicates important information needed for people to do their jobs, but alsoinformation that is necessary for people to understand the context of their jobs.


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People generally want to know what the company vision and strategy is. Theywant to know about markets, customers and competitors. They want to knowabout key company initiatives and how it affects them. The CEOs job is to makesure that people know what is going on and how they are affected.

The CEO represents the company and its policies. To the people in the

company, their CEO is the company. CEOs are familiar with company policy,communicate policy to employees, and represent the policies of the company.

The CEO builds relationships. The CEOs job is to establish positive andeffective working relationships both inside and outside the company. One of thevalue-added aspects of a CEO's role is that the CEO knows people and can callupon their assistance to help the company achieve its goals.

The CEO establishes and supports working relationship principles by creating anenvironment where people can count on each other. It is important to know whatone can expect from another. The CEOs job is to coach people to help themunderstand how the team operates and to give them the understanding of each

others role on the team. The CEO establishes goals and objectives for people as a key part of being a

coach. As part of the performance management process, the CEO establishesperformance goals and objectives for people. This is a very formal part of theCEOs job. Establishing the objectives for people and then letting them know howthey are performing in meeting the objectives is managements bread and butter.To get their best performance, people have to understand how they areperforming and be given the coaching necessary to improve. Ultimately, CEOshave to formally appraise the performance of their people. This formal reviewbecomes the determining factor for additional coaching, compensation andpromotions.

The CEO makes sure that people are recognized for their contributions andextraordinary efforts on the job. The recognition should be timely. Recognitioncan take the form of anything from a sincere thank you to a substantial monetaryaward. The important thing is that people feel that they are appreciated for theirextra effort.

The CEO is a mentor. In this capacity, the CEO advises people on their careergoals and helps them get the job assignments needed to move their careersforward. Although people are responsible for their own careers, the CEO can bea valued advisor in career planning.

Finally, a CEO manages upward. That is, the CEO keeps board members andshareholders informed of the companys progress.

This is not an exhaustive list of CEO duties, but represents some of the most importantones. These are the kinds of things that one should regularly expect from their CEO asthey play out their three roles of leader, project manager and coach.


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Understanding the challenges in Bringing in a new CEO

The transition from one CEO to anotheris a critical moment in a companys history. Asmooth transition is essential to maintain the confidence of investors, business partners,customer and employees, and provides the incoming CEO with a solid platform from

which to move the company forward. A properly designed and executed successionplan is at the center of any successful transition.

CEO vacancies can be planned or unplanned; in either scenario, by the time asuccession plan is needed it is far too late to start building one. Because of this, it is theresponsibility of the board to make succession planning a priority, even in the face ofmore immediate and tangible issues. In addition to being necessary for risk mitigation,succession planning brings with it several beneficial byproducts:

It provides a framework that drives senior executive development, aligningleadership at the top of the enterprise with the strategic needs of the firm.

It gives the CEO, through an ongoing analysis of the job requirements, theopportunity to adjust his or her role in light of changing business conditionsand strategic imperatives.

It strengthens the relationship and information flow between the board and thesenior management team through the regular contact that is part of theboards review of candidates.

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Case 2 Axis Bank