Management Problem Of Corporate Leadership And Succession Planning Business Essay

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Introduction

This report will aim to analyse and discuss the primary management issue with the organisation, Virgin Group, and critically assess several proposed solutions and recommendations in order to determine which would best resolve the management issue. Although the organisation along with its founder, Sir Richard Branson, is one of the most distinguished brands in the world and annually receives revenue of approximately $22 billion dollars (Robbins, et al, 2009), a lack of corporate leadership and succession planning has been identified for the Virgin Group and this needs addressing due to the potential of an unplanned replacement of its leader with a talentless successor.

Integrating leadership development and succession planning best practices is important for businesses similar to Virgin Group, as it can have significant benefits that include "providing leadership continuity, reducing turnover, increasing retention of key personnel, and directly or indirectly improving business and financial results" (Barnett & Davis, 2008, pp. 723). This report will argue that, in order to prepare for a future leadership transition, Virgin Group must use a high impact succession planning process along with best practice leadership development methods to ensure the brand is an independent body and has an existence beyond its association with the current leader.

Problem Identification

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In this report, leadership development and succession planning are terms that are often used interchangeably with a collection of other terms. However, for the purpose of this report, they will be collectively defined as "a structured process involving the identification and preparation of a potential successor to assume a new role". (Garman & Glawe, 2004, pp. 120).

It is evident that many businesses today are failing to integrate leadership development and succession planning best practices into their organisation and "too often, the lack of clarity about the process and its results stands in the way of effective assessment, development planning, and execution" (Beeson, 1998, pp. 63). An example of this failure is shown in the case of the Miles Timber Company where the founder, George Miles had no reason to doubt the future success of his business due to extreme financial achievement. However, unexpectedly, he fell ill and passed away, leaving the company to his unable and unqualified family members. Certainly, this business disaster could have been avoided if George Miles had received assistance in creating a succession plan to suit his organisational structure (Private Capital Corp. n.d.).

The lack of clarity is partly caused by many out-dated traditional succession planning practices being overtaken by new, innovative practices. This transition is due to several organisational changes over the last few years; such as "downsizing, reengineering, reduced organisational levels, and broadened spans of managerial control" (Beeson, 1998, pp. 61). Although these changes have caused large detriment on several businesses, many organisations have taken the chance to turn it into an opportunity to become more radical and innovative in their approaches to management and leadership. This is shown in the case study where the Virgin Group has minimal management layers, no bureaucracy, and no massive global headquarters" (Robbins, et al, 2009, pp. 360). Although this approach allows managers to use their own initiative in decision making, a lack of supervision and minimal evaluation of these managerial decisions may eventually lead to brand dilution and confusion over what the organisations goals and objectives are. Therefore, although innovation is a key aspect in assisting the future of an organisation, it is one element of the business framework which can be very risky and hard to hand down to future leaders (Agin & Gibson, 2010).

Another large problem is that, although Sir Richard Branson is a strategic and charismatic leader rather than a hands-on manager, he cannot be the head of the Virgin Group forever, and not many executives can adapt to his individualist style of management. In other words, his unique persona makes it difficult for future employees to reiterate his style of leadership (Groves, 2007). Therefore, there has to be a centralised and systematic way of managing the future of the Virgin Group and this arrangement has to be able to be easily adopted by the potential successors.

Nonetheless, though there seems to be a large potential organisational problem within the Virgin Group, its lack of corporate leadership and succession planning has not yet been a major disadvantage to its success in the business world. However, an understanding of succession planning and how a number of widely documented best practices could link to the organisation's strategy and objectives would definitely be beneficial. Therefore, this report solely recommends introducing several proposed solutions in order to discover a single resolution to the problem, while still sustaining the Virgin Group's radical and innovative approach to management.

Critical Analysis and Discussion

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There are two suggested methods that can be used by line managers to increase the chances of corporate survival and sustainability within the Virgin Group. The first suggested method is to incorporate a high impact, five-step succession planning process that is simple, flexible, and amenable to continuous improvement (Conger & Fulmer, 2003). This method will allow the Virgin Group to use a second suggested method which is to review and follow best practice leadership development methods discussed and outlined in the planning process. It is these two methods along with effective, efficient and willing employees and managers that will inevitably lead the Virgin Group and similar business to further success.

3.1 High Impact Succession Planning Process

The Virgin Group could achieve successful corporate replacement through utilising a high impact succession planning process that is systematic and repeatable, and intelligently positioned in the organisation's annual cycle of business processes (Dowell, 2002). According to Barnett & Davis (2008), the most comprehensive succession planning systems accomplish two things, firstly being they provide the processes and structure for identifying and understanding the leadership talent in the organisation and secondly being they emphasise and facilitate ongoing learning and development for the organisation's most talented leaders. They also suggest that integrated and effective succession planning systems can be implemented in a cyclical five step process to ensure the system is regularly refined or adjusted as it is repeated (Barnett & Davis, 2008). Briefly, these steps include preliminary planning, which focuses on the key aspects of the design and process; preparing for succession planning and talent review, which involves reviewing nominated probable successors; providing feedback and facilitating development action planning; which allows communication and initiation of development planning between nominated successors and reviewers; and measuring effectiveness, which comprises the evaluation of satisfaction and any modifications to the process (Barnett & Davis, 2008). This practical approach to succession planning would certainly benefit the Virgin Group due to its recent growth and diversification in the business world along with the possible risk of future leadership disintegration.

For the high impact succession planning process to be successful, all employees, including line managers and human resource professionals would need to participate and give support throughout each step. Barnett & Davis (2008) believe that human resources should be responsible for coordination activities, framing issues and choices, collecting and organising data, and supporting line managers through the process. If this is not accomplished, Sir Richard Branson would be left as the key decision maker, doing much of the organisation's work instead of leading (Hollington, 2007).

3.2 Best Practice Leadership Development Methods

From when the Virgin Group first started, Sir Richard Branson has avoided systematically structuring the organisation due to his risk of losing full control of several important operations including managerial control, specific marketing and promotion techniques, and the creation of new projects. This approach to leadership has caused a lack in management hierarchy and following the review and implementation of best practice leadership development methods, an adaptation of best practice leadership development methods is highly recommended. If left unchanged, the Virgin Group could potentially be left with a pool of talentless successors who could eventually harm the survival of the organisation.

According to Bersin & Associates (2009), effective succession management enables companies to react quickly to change and endure difficult times. Therefore, if best practices are utilised, employees and managers under the Virgin Charter will be able to freely express their potential talent under supervised circumstances without having to fear any rapid changes occurring within the organisation. As stated in the case study, Richard Branson has already tried to create the 'idea of not being afraid to try out new ideas in new areas…his team is expected to keep up with any changes and trends that impact on the business" (Robbins, et al, 2009, pp. 360). Therefore, if an event occurred that caused Sir Richard Branson to leave the organisation, a solid succession plan would ensure a smooth role transition between leaders. In other words, "by investing in a credible forecast about what the future holds it then becomes possible to more precisely diagnose the skills and capabilities that a CEO will need in order to succeed" (Miles, 2007, pp. 3)

The Virgin Group can successfully marry leadership development and succession planning processes through the use of several best practice leadership development methods known as 360 degree feedback, executive coaching, mentoring, developing networks, job assignments, and action learning (Groves, 2007). Basically, the goal of the succession planning process and best practices is to "ensure that the quantity and quality of executive leaders the organisation needs are identified, full capable, and ready to contribute to the effective performance of a business over time" (Barnett & Davis, 2008, pp. 721).

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The lack of corporate leadership and implementing succession planning best practices needs to be addressed because, although it has not yet been a disadvantage to the organisation, "the failure to link succession planning to an organisation's strategy and its likely future business scenarios dooms it to mediocrity at best" (Barnett & Davis, 2008, pp. 733). After critically examining the research above, it is clear that the Virgin Group needs to incorporate a revised leadership and organisational structure and adapt a number of succession planning best practices.

4.1 High Impact Succession Planning Process Solution

The Virgin Group should establish a more systematic approach to the leadership with the intention that the organisation's dependence on Sir Richard Branson will reduce. This in turn will allow the potential successors to ensure the business will continue when the current management structure is no longer present. For the high impact succession planning process to remain stable, the Virgin Group also need to adopt some form of organisational structure where employees, line managers, human resource professionals and the current leader support each other with decisions made in the interest of the organisation. In other words, assistance is required to help with designing and implementing a flexible, future-orientated succession plan, ensuring that current skill and future potential are well defined and measured, and creating an atmosphere where current and potential future leaders can become better communicators and mentors (Barnett & Davis, 2008). Although Sir Richard Branson's radical and innovative approach to leadership and management caused the lack of corporate leadership and succession planning initially, his confident and charismatic persona will be what pushes his organisation forward.

4.2 Best Practice Leadership Development Methods Solution

Next, the Virgin Group needs to implement best practice leadership development methods following the creation of the succession planning process mentioned above. These methods should create an open and active communication channel between successors and the current leader so that development and growth can be nurtured; and minimise the risk of promoting a potential successor that will fail in the leadership role (Barnett & Davis, 2008). For the high best practices to be implemented properly, the execution of the high impact succession planning process needs to be successful and each step clearly defined and evaluated. Without the implementation of this process and best practices, organisations "are unable to prepare successors for future leadership positions, the bench strength of an organisation becomes weak and leadership pipelines are truncated" (Bersin & Associates, 2009, pp. 11). As well as this, line managers of each company in the organisation should thoroughly know their job roles as they are critical for motivating and implementing constructive succession best practices; "but the most critical differentiator between the "best" and the "rest" is the level of commitment and engagement displayed by top executives and next-level senior executives" " (Bersin & Associates, 2009, pp. 12).

Conclusion

The prevalence of formalised succession planning practices in organisations appears to be increasing, and over the years, many organisations have clearly developed the need to address this management issue but have been left unchanged. The case study of the Virgin Group is an example of such business. As evident in the Virgin Group, its current radical and innovative approach to management has failed to highlight the need for a distinct succession plan, which if left unchanged, could ultimately leave the Virgin brand and culture too closely linked to the persona and active participation of its leader, Sir Richard Branson. After reviewing the literature, the best way for Virgin Group to solve the issue of corporate leadership and succession planning is by firstly, developing and implementing a systematic organisational structure and secondly, creating and utilising best practices of succession planning through the use of a high impact succession planning process. Although there is no one model for succession planning and every organisation is different in terms of leadership and management, it is irrefutable that all organisations need leaders with a range of talent and experience that will ensure their future success and survival in the business world.