Succession Planning and Financial Performance: A Resource-Based View Analysis.

International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue I, January 2022 | ISSN 2454–6186

Succession Planning and Financial Performance: A Resource-Based View Analysis.

Isaac Onyeyirichukwu Chukwuma¹, Emmanuel Chibueze Ohakim², Emmanuel Kalu Agbaeze³, Fidelis Odinakachukwu Alaefule⁴, Uche Mary Rose Iwobi⁵, Gertrude Chinelo Ugwuja⁶, Jacob Ojonugwa^7
1University of Port Harcourt, Nigeria
^2,3,4,5,6University of Nigeria, Nigeria
⁷Kogi State University, Nigeria

Abstract
Succession planning (SP) connotes the empowerment of employees with valuable, rare, inimitable, and non-substitutable capabilities that ensure the sustainability and optimisation of organisational performance. This study expands relevant knowledge on the empirical relationship between succession planning and financial performance, and creates a niche within the context of the resource-based view theory. This study is qualitative and explores the resource-based view perspective in understanding the relationship between succession planning and financial performance. This study, via the reviewed empirical literature, observed a heightened positive relationship between SP and the financial performance of organisations. The study concludes by postulating, that the ultimate goals of every organisation are growth, relevance, and sustainability; SP is indispensable to the optimization of these goals as it influences critical performance factors that facilitate the positive continuity and achievement of these goals, hence, succession planning is inevitable for any organisation that is interested in a viable posterity, especially with regards to its financial performance.

Keywords: financial performance, succession planning, resource-based view

I. INTRODUCTION
In a world that is constantly evolving and radically becoming unpredictable, organisations are continuously striving to remain competitively relevant and spontaneously meet the evolving needs of their clients; this necessity for relevance connotes that potential successors (i.e. employees) are constantly untrained, trained, and re-trained, hence, making succession planning (SP) a key feature for an organisation’s viable posterity and sustainability.

SP connotes any strategy designed to guarantee the continued optimal performance of an organisation structure via executing strategies for the development, replacement, and strategic utilisation of competent employees over time (Rothwell, 2005). Couch (2013) further asserts that SP is the purposeful and systematic application of strategies geared at identifying leadership requirements, identifying pools of high-potential employees at all levels, accelerating the development of mission-critical leadership competencies in the employees via deliberate development, selecting leaders from the employee pools for strategic roles, and recurrently measuring progress.

SP is no longer seen as a competitive advantage, but a competitive necessity. Once perceived as an operational cost, the practice of SP is now a significant device of organisational strategy and is now executed as an investment that can increase sustainable advantage (Fink, 2011). SP is a significant tool utilised by top management to plan and exploit future opportunities and threats in the environment and to guarantee employees’ competence is optimised and prepared to assume leadership roles (Beheshtifar & Vazir-Panah, 2012; Calareso, 2013). SP is an essential strategy targeted at transforming an organisation’s direction and proactively directs an organisation’s vision, mission, and performance (LeCounte, Prieto, & Phipps, 2017).

The association between SP and financial performance (FP) is articulated in literature (Rotich, 2014; Patidar, Gupta, Azbik & Weech-Maldonado, 2016; Mihaylov & Zurbruegg, 2020), notwithstanding this evidences, the relationship has a paucity of empirical review within the purview of the resource-based view (RBV) theory, as SP is a holistic (i.e. planning, execution, and monitoring) organisations’ resource, hence, RBV aids to analyse and develop it (Barney, 1991).

This study aimed to investigate the relationship between SP and FP, with a keen focus on interpreting this relationship within the RBV perspective. The remaining sections of this investigation are addressed under the following headings; SP, financial performance, a RBV perspective, empirical review, discussion, and conclusion.

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