Succession planning is crucial to success

PUBLISHED : Saturday, 22 March, 2008, 12:00am
UPDATED : Saturday, 22 March, 2008, 12:00am

Jardine Matheson embraces a broad portfolio of companies ranging from the Mandarin Oriental Hotel Group and Dairy Farm to property giant Hongkong Land, Pizza Hut, Gammon and Jardine Motors, along with airport and shipping interests.

About 16 top managers of each entity are colour-coded, providing chairman Henry Keswick, director Simon Keswick and group managing director Anthony Nightingale an instant indication of talent availability for the future.

The evaluation clearly indicates which key players are more critical to the organisation than others - from high-fliers destined for the top, to laggards in danger of the chop. About three-quarters of them are somewhere in between. The group judges managers according to two benchmarks - performance and potential.

People are complex and changeable; some blooming early, some late. The fact that some are earmarked as special can also breed resentment, with successions degenerating into backstabbing bloodbaths. But this is the tool Jardine has adopted to cope with the modern process of developing businesses through succession planning.

Recognising that people are ultimately key to business success, and some jobs are the lifeblood of an enterprise, succession planning is all about thinking ahead with a 'Plan B' to replace key players. It starts with identifying those most suited for grooming, and continues by preparing them for future roles, through such mechanisms as mentoring, training and job rotation.

Ritchie Bent, group head of human resources for the conglomerate that has a workforce of 245,000 in 46 countries, said that succession planning was not foolproof.

'It does not stop us making costly succession planning mistakes, but it does help avoid them,' he said.

More important to consider, he said, was where a company stood without a plan? Without naming the company, he recounted the lesson Jardine Matheson learned when a key executive resigned, leaving the business over a large slice of Asia leaderless.

'There was no succession plan in place and the post went unfilled for a year,' he said. The case in point involved a business in the mainland. 'The business did not develop and grow because there was no one to do it,' he said.

'The loss was immeasurable. How can you measure how much potential growth was lost in 12 months in China, with a business basically back at the starting block? It doesn't bear thinking about. Poor succession planning can be a recipe for disaster. One thing is certain, the cost of implementing succession planning is significantly less than the cost of no succession planning.'

It can take a lot of time to replace senior people. An executive search can easily take three months. Then candidates may have to give six months notice before they can leave their present job. Or they may want to wait for a bonus, unless the company compensates them for it.

Mr Bent's succession chart involved him in 49 meetings last year. Human resources directors at all the individual group companies are similarly involved at the 'grassroots' level.

Grooming managers involves constantly upgrading expertise - from the moment management trainees are recruited through Jardine's executive training programme, through their career up to senior executive and director level.

'This is also key to retaining talent. People need to see their careers progress or they go somewhere else,' he said.

Mr Bent takes groups of high-fliers once a year on foreign jaunts for management advice from some of the world's most prominent chief executives. But it is a telling reminder of the importance Jardine attaches to the issue that Henry Keswick and his board review the succession chart every three months.

'The chairman is deeply involved. It's a very serious issue as far as he is concerned,' Mr Bent said. 'He recognises that we are essentially a people business.'

The bottom line speaks for itself. Jardine has announced its highest profits in the group's 175-year history, including notably massive expansion by Mannings and 7-Eleven in China.

Grooming talent

Jardine Matheson constantly grades senior managers and prepares them for succession planning.

The group identifies high-fliers destined for the top and laggards in danger of the chop.

Managers are judged according to performance and potential.

The company develops businesses without potentially costly interruption and retains talent.

Group head of human resources Ritchie Bent said: 'Poor succession planning can be a recipe for disaster.'