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 of RMH's Succession Plan Approach:**
- **Thorough Evaluation:** RMH's approach involves regular evaluations of executives, allowing the board to understand their strengths and weaknesses. This can contribute to better-informed succession decisions.
- **Preparedness:** The proactive identification of potential successors helps in maintaining organizational stability, especially in the face of unexpected events, such as the illness of the Managing Director.

**Demerits of RMH's Succession Plan Approach:**
- **Confidentiality Issues:** Keeping potential successors' names confidential might lead to a lack of transparency, potentially causing uncertainty and speculation among the staff.
- **Limited Pool:** Focusing on only 10 out of 38 executives may result in overlooking other qualified candidates who could contribute effectively to top management roles.

(2) **Suggestions for Improvement:**
- **Enhanced Transparency:** RMH could consider a more transparent communication strategy regarding succession plans, ensuring that employees are aware of the process. This can foster a sense of trust and reduce uncertainty.
- **Broader Evaluation:** Expand the scope of evaluations to include a larger pool of executives. This ensures a more comprehensive understanding of potential successors, considering a broader range of skills and experiences.
- **Continuous Development:** Instead of only identifying successors when needed, RMH could adopt a continuous development approach. This involves consistently investing in the professional growth of executives, creating a pipeline of skilled leaders ready for advancement.
- **Succession Training:** Implementing training programs for potential successors can better prepare them for leadership roles, aligning their skills with the organization's future needs.

These improvements aim to address the demerits by promoting transparency, inclusivity, and ongoing leadership development within the organization.