DDBA 8581 Week 4 Succession Risk Ranking Example

Ranking Ten Roles by Exposure When Departures Are Hard to Predict: A Succession Risk Assessment That States Its Formula, Compresses the Weight Given to Departure Probability Because Many Exits Follow Sudden Shocks, and Shows What the Choice Changes

Student Name

Walden University

DDBA 8581: Succession Planning: A Survival Tool of the Fittest

Instructor Name

Month Day, Year

Ranking Ten Roles by Exposure When Departures Are Hard to Predict: A Succession Risk Assessment That States Its Formula, Compresses the Weight Given to Departure Probability Because Many Exits Follow Sudden Shocks, and Shows What the Choice Changes

The Formula

This assessment ranks ten roles at the composite chemicals manufacturer by exposure, the risk that a role's sudden vacancy would harm operations. Each role is scored on three components. Probability is the estimated chance that the holder leaves within two years, from age, tenure, known plans and manager judgment. Consequence, scored 1 to 5, is the harm of the seat being empty, judged by what stops or degrades. Replacement time, scored 1 to 5, is how long a successor would need to perform at standard, drawn from the decision log and capability inventory for profiled roles and from hiring history for others.

The composite score multiplies consequence and replacement time by an adjusted probability: 0.6 plus 0.4 times the estimated probability. The adjustment compresses probability into a range from 0.6 to 1.0, so that a role with a low estimated chance of departure still carries most of its exposure.

Why Compress Probability

Griffeth et al. (2000) conducted a meta-analysis of predictors of voluntary turnover and found that even the best-supported predictors, among them attitudes toward the job and the organization and active job hunting, accounted for limited portions of actual exits. Lee and Mitchell (1994) proposed the unfolding model of turnover, in which many departures begin with a shock, an event such as an unsolicited job offer, a spouse's relocation, a merger or a health crisis, rather than with a slow buildup of dissatisfaction. Lee et al. (1999) tested the model and found that a large share of leavers described a shock as the trigger for their departure. If many exits follow shocks that no manager can see coming, then estimated probabilities, however carefully made, are weak guides to who will leave. Giving them full weight would rank roles mainly by a number the organization cannot estimate well.

The Ranking

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Table 1

Exposure Ranking of Ten Roles

What the Choice Changes

With unadjusted probability, the scheduler would rank second with a score of 8.0, the chemist third with 6.4, and the sales director would fall to fourth with 6.0, while the plant manager would drop from fifth to sixth. The adjustment raises the sales director, whose departure is judged unlikely but who holds every major distributor relationship and would take a year or more to replace. The unadjusted ranking would tell the company to worry about the scheduler first because the scheduler is more likely to leave. The adjusted ranking says the sales director's seat is more dangerous to leave uncovered, because a shock could empty it at any time and the damage would be large. That conclusion seems right: the company cannot plan for the sales director's departure by watching for signs of dissatisfaction, because the departure, if it comes, may come without them.

Component Definitions and Their Limits

Consequence and replacement time are themselves judgments, but they rest on observable facts: what stops when the seat empties and how long past hires took to reach standard. They are more stable than probability. The 0.6 floor is a judgment as well; a floor of 0.5 leaves the top four roles in the same order.

Implications

The top two roles warrant succession work now regardless of their holders' plans. The company should not wait for the controls engineer's retirement date or for signs that the sales director is looking elsewhere.

Using the Ranking

The ranking is a tool for allocating limited succession effort, not a forecast of who will leave. It should be revisited each year as roles and people change.

A Note on Honesty

Presenting probability as compressed is a choice the board should see, since it shifts attention toward roles whose holders seem settled.

Limits

Ten roles drawn from managers' nominations may omit exposed roles no one thought to name.

References

Griffeth, R. W., Hom, P. W., & Gaertner, S. (2000). A meta-analysis of antecedents and correlates of employee turnover: Update, moderator tests, and research implications for the next millennium. Journal of Management, 26(3), 463-488. https://doi.org/10.1177/014920630002600305

Lee, T. W., & Mitchell, T. R. (1994). An alternative approach: The unfolding model of voluntary employee turnover. Academy of Management Review, 19(1), 51-89. https://doi.org/10.5465/amr.1994.9410122008

Lee, T. W., Mitchell, T. R., Holtom, B. C., McDaniel, L. S., & Hill, J. W. (1999). The unfolding model of voluntary turnover: A replication and extension. Academy of Management Journal, 42(4), 450-462. https://doi.org/10.2307/257015