Retirements of Key Managerial Personnel
Figure 4-4 Job openings by major occupational group, projected 2012–2022, in thousands of openings Source: Occupational Outlook Quarterly (Winter 2013–14): Page 9. Accessed February 23, 2014, at http://www.bls.gov/ooq.
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per-employee basis, as two 20-hour-a-week part timers may have comparably pro-rated, scaled back benefits. Other companies may reduce the workweek from five days to four thereby having a 20 percent reduction in wages. Some companies may offer an unpaid holiday option where instead of taking two weeks off, employees are being asked to take five, with three being unpaid.
The classic case of a firm that believes a no-layoff policy is best for continuous well-being of the firm is Cleveland’s Lincoln Electric, a manufacturer of arc welding equipment. Lincoln Electric offers its Guaranteed Continuous Employment Plan, which provides covered employees with security against layoffs because of lack of work.11 Since the 1930s, this $3 billion com- pany has kept its promise to its U.S. employees to never lay them off for economic reasons. For decades, wages were 20 to 30 percent above industry averages. The firm believes that a stable workforce provides a long-term competitive advantage. In difficult times, hours are reduced, people are reassigned, and white-collar salaries are cut. As long as workers meet the firm’s performance standards, no one is laid off.
The recession that began in 2007 created uncertainty, and job losses were prevalent in much of the media industry. Gawker Media founder Nick Denton faced difficult staffing choices because of the recession. Ultimately, they chose to hire new talent in growth areas of their business, but laid off employees assigned to underperforming areas of the business. The following Watch It video describes Gawker Media’s efforts to make staffing decisions to the benefit of the company’s long-term success.
Watch It 3 If your instructor has assigned this, go to Managemental to watch a video titled Gawker Media: Personnel Planning and Recruiting and to respond to questions.
succession planning: A Component of strategic planning succession planning is the process of ensuring that qualified persons are available to assume key managerial positions once the positions are vacant.
Nothing could be as important to the strategic well-being of a company as ensuring that a qualified person is in place to lead the company both now and in the future. This succession planning definition includes untimely deaths, resignations, terminations, or the orderly retirements of key managerial personnel. The goal is to help ensure a smooth transition and operational efficiency, but the transition is often difficult. The Institute for Corporate Productivity (i4cp) paper “Succession Planning Highlight Report” found that succession planning will be among the top five challenges executives face in the future.12 However, in another survey, more than half of U.S. and Canadian companies surveyed could not immediately name a successor to their organization’s chief executive officer.
General Electric (GE) provides an example of a company with an excellent succession plan. At GE the goal is same-day succession. When senior vice president Larry Johnston quit to become the CEO at Albertsons, the position was filled the same day. Bill Conaty, former senior vice president of HR at General Electric said, “We had candidates with two or three backups for all key positions—including the C-suite and all business units. And the board already knew who was lined up thanks to six-month reviews.”13 This process is in sharp contrast to the difficulty that Hewlett-Packard has experienced in the selection of a new CEO. HP has its third CEO in slightly more than a year14 and its eighth CEO since 1999. 15None of the former CEOs at HP had implemented a succession plan that would have at least identified internal candidates who were qualified to take over should the need arise.16 This form of disruption can be a serious drain on both morale and the financial well-being of the firm.
Because of the tremendous changes that will confront management this century, succession planning is taking on more importance than ever before. Deaths are not the only challenges that have created an increased focus on succession planning. For example, the premature firing of CEOs is no longer a rare event. CEOs are being terminated more quickly than in the past.
Describe strategic succession planning in today’s environment.
succession planning Process of ensuring that qualified persons are available to assume key managerial positions once the positions are vacant.
ChaPter 4 • StrategiC Planning, human reSourCe Planning, and Job analySiS 91
In recent years, succession planning is going much deeper into the workforce. A firm might have a good succession plan for top-level positions but few plans for the levels where all the work is performed. There is a movement away from traditional succession planning, which was focused only on top executives of the company. Succession management is now involving middle managers, where they are developed to help ensure that key roles below the C-suite have ready replacements.17 The succession plan needs to consider both external and internal candidates.
Succession planning is often neglected in small businesses because it is generally thought of in terms of replacing CEOs and key executives within larger businesses. But, succession planning is just as, or more, important for small businesses. A problem, however, is that only 31 percent of small business owners say their businesses are extremely or very prepared for such an event.18 Without proper succession planning, the company could face economic and tax disasters. Often the small business owner’s argument against succession planning may be “we’re too small,” “we’re too new,” “we have good people in place,” or “I’m not going anywhere soon.”19 Many of today’s small businesses will not survive to the next generation of same family ownership. In fact, it is estimated that only 30 percent of businesses make it to the second generation, and just 10 percent survive to the third generation.20 Peter Handal, president, CEO, and chairman of Dale Carnegie Training, said, “The failure to establish a comprehensive succession plan is a leading cause of this phenomenon.”21
job analysis: a basic human resource Management tool job analysis is the systematic process of determining the skills, duties, and knowledge required for performing jobs in an organization. With job analysis, the tasks needed to perform the job are identified. Traditionally, it is an essential and pervasive HR technique and the starting point for other HR activities. In today’s rapidly changing work environment, the need for a sound job analysis system is critical. New jobs are being created, and old jobs are being redesigned or eliminated. A job analysis that was conducted only a few years ago may now be obsolete and must be redone. Some have even suggested that changes are occurring too fast to maintain an effective job analysis system.
A job consists of a group of tasks that must be performed for an organization to achieve its goals. A job may require the services of one person, such as that of the president, or the services of 75, as might be the case with machine operators in a large manufacturing firm. A position is the collection of tasks and responsibilities performed by one person; there is a position for every individual in an organization.
In a work group consisting of a supervisor, two senior analysts, and four analysts, there are three jobs and seven positions. A small company might have 25 jobs for its 75 employees, whereas in a large company 2,000 jobs may exist for 50,000 employees. In some firms, as few as 10 jobs may make up 90 percent of the workforce.
The purpose of job analysis is to obtain answers to six important questions:
- What physical and mental tasks does the worker accomplish? 2. When is the job to be completed? 3. Where is the job to be accomplished? 4. How does the worker do the job? 5. Why is the job done? 6. What qualifications are needed to perform the job?
Job analysis provides a summary of a job’s duties and responsibilities, its relationship to other jobs, the knowledge and skills required, and working conditions under which it is per- formed. Job facts are gathered, analyzed, and recorded, as the job exists, not as the job should exist.22 Determining how the job should exist is most often assigned to industrial engineers, methods analysts, or others. Job analysis is conducted after the job has been designed, the worker has been trained, and the job is being performed.
Job analysis is performed on three occasions: (1) when the organization is founded and a job analysis program is initiated for the first time; (2) when new jobs are created; and (3) when jobs
Describe the types of information required for job analysis and the reasons for conducting it.
job analysis Systematic process of determining the skills, duties, and knowledge required for performing jobs in an organization.
job Group of tasks that must be performed for an organization to achieve its goals.
position Collection of tasks and responsibilities performed by one person.
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are changed significantly as a result of new technologies, methods, procedures, or systems. Jobs also change when there is increased emphasis on teamwork in organizations, empowerment of employees, or other managerial interventions such as quality management systems. Job analysis is most often performed because of changes in the nature of jobs. From job analysis information, both job descriptions and job specifications can be prepared.
The job description is a document that provides information regarding the essential tasks, duties, and responsibilities of the job. The minimum acceptable qualifications a person should possess to perform a particular job are contained in the job specification.23 Both types of documents will be discussed in greater detail later in this chapter.
Reasons for Conducting Job Analysis As Figure 4-5 shows, data derived from job analysis in the form of the job description/specifi- cation can have an impact on virtually every aspect of HR management.24 In practice, both the job description and job specification are combined into one document with the job specification presented after the job description.
Staffing All areas of staffing would be haphazard if the organization did not know the qualifications needed to perform the various jobs. A major use of job analysis data is found in HR planning (discussed later in this chapter). Merely knowing that the firm will need l000 new employees to produce goods or services to satisfy sales demand is insufficient. Each job requires different knowledge, skills, and ability levels. Obviously, effective HR planning must take these job requirements into consideration. Also, lacking up-to-date job descriptions and specifications, a firm would have to recruit and select employees for jobs without having clear guidelines, a practice that could have disastrous consequences.
Training and Development Job description information often proves beneficial in identifying training and development needs. If it suggests that the job requires a particular knowledge, skill, or ability, and the person filling the position does not possess all the qualifications required, training or development are probably in order. Training should be directed at assisting workers in performing duties specified in their present job descriptions or at developing skills for broader responsibilities.
Performance Appraisal Most workers want to know what they are supposed to accomplish and good job descriptions provide that. Then, employees should be evaluated in terms of how well they accomplish the duties specified in their job descriptions and any other specific goals that may have been estab- lished. A manager who evaluates an employee on factors not clearly predetermined is left open to allegations of discrimination.
job description Document that provides information regarding the essential tasks, duties, and responsibilities of a job.
job specification A document that outlines the minimum acceptable qualifications a person should possess to perform a particular job.