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Continuity and sustained development of business entities largely dependent on how they manage the change

By SHABBIR H. KAZMI
June 10 - 16, 2002

With the passage of time organizations become institutions which need sustained leadership achievable only by following a pragmatic succession plan. It is a very critical issue which deals with human being, the most unpredictable element. The Management Association of Pakistan recently held a seminar to dwell upon the important topic of 'Succession Planning in Corporate Sector.' The speakers included Zia Shafi Khan, Zaffar A. Khan and Omer Shamim Safari.

In his opening remarks, Zia Khan said, "It is a complicated process and a successful plan is based on management structure, regular review through evaluations and integrated management development system. Only one tenth of the expertise of professional managers consist of formal education and training and the result is attained through on the job development. Management structure has to be clearly understood by all and regularly reviewed for future planning. One of the reasons for the gradual and slow eradication of business groups of yesterday is that they failed in managing the change. The plan does not mean identification of an individual to replace his/her predecessor. It means identifying a group of individuals to be trained and groomed for the position of CEO."

Engro Chemical Pakistan (formally Exxon Chemical Pakistan) is often said to be the best managed corporation of Pakistan. It was established by one of the leading conglomerates in sixties. However, when the parent decided to divest from fertilizer business, its share were bought by the employees. It (Engro) also has the distinction of being the only fertilizer plant in the world owned by the employees. Engro has not only inherited the policies of the conglomerate but also improved its management standards since the takeover including human resource development, a often overlooked area.

President of Engro, Zaffar A. Khan, explained in detail the plan being followed by the company. His basic contention was that with the passage of time business organization should become institutions requiring sustained leadership. This can be achieved only through succession planning. This requires formal appraisal and at least five-year future positions plan. The full career plan for 'high potential' (hipo) employees.

In Engro retirement means respect and the company assigns priority to employees' development over job needs. The company offer employee development opportunities through: on the job learning, superior coaching and counseling, formal training programmes and job orientation for hipos. All these facilities not only help in employees development but also help in preparing the incumbents expected to occupy key positions.

Omer Shamim Khan, a consultant and commonly known as 'head hunter' emphasized the need for succession planning in the corporate sector. He said, "The companies have to decide today for tomorrow through a complex appraisal system for the human development, which is most uncertain." Business environment is getting increasingly dynamic, corporate growth, rate and size is crucial, values are changing which offer good business opportunities for head hunters.

To achieve the objective the process begins from recruitment, needs periodic appraisal and a flexible plan. Promotions are common and job rotation is a must to expose the incumbents to a variety of experience, i.e. sales, finance and even manufacturing. The basic criteria remains performance but potential also play a very important role.

To undertake such a complex process it is necessary to understand the challenge well in advance and act with commitment. Focus should be on performance as well as potential keeping in view the controllable challenges. The companies must differentiate between expenditure on personnel and investment in employees development. It is a fact that some of the corporates look after their senior executive very well but hardly invest in budding leaders.

One of the factor which has been a major impediment in succession planning is hardly any separation of management from ownership. Some of the leading groups vanished because they failed to read the change and to induct professional managers. People often assume that a manager by profession and a professional manager is one and the same. To face the emerging challenges corporates need more versatile managers.