Question

Top Management Succession Plan at Raska Macha Hotel

In March 2000, Raska Macha Hotel (RMH) Managing Director James Kitaluka had a cancer of the jaw and one month later underwent an operation. Rai the weekly paper reported that there was not going to be an apparent successor to James and actually asked, “What happens when the best boss leaves?” Quite clearly, RMH had a serious succession problem and was working hard to find a new leader.

Rai’s story was surprising because RMH had always been described as Tanzania’s pioneer of top management skills. The reality was that not a single Director in RMH had been identified as the successor of James Kitaluka’s job. However, in the minutes of the 150th Board meeting there were two names of Directors who the board and James himself had identified as capable likely successors of the top job. Rahma Sabuni, the Company Secretary had kept the names strictly confidential to RMH’s staff.

RMH had a peculiar succession system that differed from those of other companies. Its board members had established a tradition of examining the curriculum vitae and HR records of 10 out of the company’s 38 executives twice per year, i.e., a total of 20 annually and deciding who would be the best candidate to take over the top jobs in the company in case of need. The 10 executives would be subjected to interviews by a panel comprising board members and 2 external HR consultants. Through this method the directors got a feel for the top executives’ strengths and weaknesses and were able to devise strategies for their development for future assignments. When the day came for filling a top management job, the board just convened a short emergency meeting and appointed a successor rather than wasting time waiting or making a rushed decision.

Questions:
(1) Briefly discuss the merits and demerits of RMH’s succession plan approach for top executives.
(2) Suggest improvements if any in RMH’s succession plan approach, providing reasons for your suggestions.

Answer 1

(1) Merits and Demerits of RMH's Succession Plan Approach for Top Executives:

Merits:

- Systematic Approach: RMH's succession plan approach is systematic as it involves regular examination of executives' curriculum vitae and HR records, interviews by a panel, and strategy development for their future assignments. This ensures a comprehensive understanding of executives' capabilities and suitability for top positions.

- Internal Talent Development: The emphasis on internal talent through the identification of potential successors among the existing directors promotes employee development and fosters loyalty within the organization.

- Swift Decision-Making: By already having identified potential successors in advance, RMH can make quick and efficient decisions when it comes to filling top management positions, minimizing disruptions and transitional challenges.

Demerits:

- Lack of Transparency: The strict confidentiality surrounding the names of potential successors creates uncertainty and a lack of buy-in from employees. It can lead to a sense of unfairness and insecurity among those unaware of the identified successors.

- Limited Pool of Candidates: By only considering a pool of 10 executives twice a year, RMH may overlook potential talent outside this selected group. This may limit diversity in leadership styles and perspectives.

- Neglecting Leadership Development: While the plan focuses on identifying potential successors, it does not explicitly mention the development of leadership skills or training programs to groom executives for future leadership roles. This may hinder the readiness of potential successors for top positions.

(2) Suggestions for Improvements in RMH's Succession Plan Approach:

- Increased Transparency: RMH should consider increasing transparency by informing employees about the existence and purpose of the succession plan. Communicating the plan's goals and providing opportunities for feedback and engagement can help build trust and reduce uncertainty.

- Broaden the Candidate Pool: Instead of limiting the selection to just 10 executives, RMH should consider expanding the pool of candidates. This enables a more comprehensive evaluation of talent and provides opportunities for diverse perspectives and skills to contribute to the leadership pipeline.

- Implement Leadership Development Programs: To ensure the readiness of potential successors, RMH should invest in leadership development programs aimed at enhancing the skills and competencies required for top management roles. This could include mentoring, training, and exposure to different parts of the organization.

- Succession Bench Strength: RMH should continuously assess the performance and potential of a wider group of executives within the organization, not just those targeted during the twice-yearly review. This broader assessment will help create a deeper bench strength and be more prepared for unexpected leadership vacancies.

By implementing these suggestions, RMH can strengthen its succession plan, promote transparency and employee engagement, and develop a robust pipeline of effective future leaders.