ABSTRACT
The study examined the effect of succession management on corporate survival and goal attainment in the Nigerian oil gas industry. Some selected companies within the industry were assessed to ascertain the extent to which succession management could function as a strategy for growth and profitability in the Nigerian oil and gas industry. The study verified whether succession management encourages healthy competition and advance continuity of corporate objective in Nigerian oil industry. The study found out whether gaps in leadership pipeline, difficulty in filling key employee’s positions, inadequate career path and ineffective line management were the key challenges succession management is designed to address in Nigerian oil industry and its (succession management) role in curbing these challenges. It also ascertained the extent to which the supply of talented, experienced, motivated and high morale staff ensured prospects in Nigerian oil industry. The study verified the degree to which succession management engendered significantly labour retention among employees in Nigerian oil and gas industry. The instruments for data collection used were structured questionnaire and oral interview. The questionnaire was structured in line with likert-five point scale and validated using the face-to-face approach. The instruments were checked for reliability using the pilot survey method. The data collected from the responses to questions in the questionnaire and structured oral interview were analyzed using quantitative and qualitative methods. The test of hypotheses was performed using chi-square distribution, Analysis of Variance (ANOVA) one-way test and Pearson Product Moment Correlation Coefficient(r=0.84). It was discovered that succession management functioned as a strategy for growth and profitability of the Nigerian oil and Gas industry (Fcal=6952.68>Ftab=3.00,p<0.05). It was revealed that succession management significantly engendered healthy competition and advanced achievement of corporate mission in the Nigerian oil and Gas industry(Fcal=6930.50>Ftab=3.00,p<0.05). The study revealed that gaps in leadership pipeline, difficulty in filling key employee’s position, inadequate career paths and ineffective line management were the major challenges facing the Nigerian oil and gas industry (Fcal=1882.01>Ftab=3.00,p<0.05). It was discovered that the internal supply of trained, experienced and motivated talents who could create the necessary competitive edge and sustain the companies through turbulent and uncertain business environment were the key prospects of succession management(Fcal=2094.23>Ftab=3.00,p<0.05). The study revealed that succession management engendered significantly labour retention among employees in Nigerian oil and gas industry(Fcal=7403.66>Ftab=3.00,p<0.05). Scholars have extensively discussed the effect of succession management on the survival of organizations. They have also discussed the principles and operational procedures of succession management. However, there are dearth of relevant information on the implementation of succession management in Nigerian oil industry and its effect on the survival of the industry. The study found that there was a gap between the perceived and actual position of succession management in the oil industry which serves as a wake up call for the industry. It was recommended that the industry should evolve strategies aimed at identification of where and when leadership pipeline is running dry, planning and development of management so as not to lack the capability to compete in the future, and creating changes to refocus the firms position in the market place. All organisations need strong leaders in order to maintain continuity and remain relevant in the ever turbulent environment. Therefore succession management ensures the corporate survival and goal attainment in Nigerian oil and gas industry.
TABLE OF CONTENTS
Declaration ii
Approval iii
Dedication iv
Acknowledgements v
Abstract vii
List of Tables xi
Abbreviations xii
List of Figures xiii
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 9
1.3 Objectives of the Study 11
1.4 Research Questions 11 1.5 Research Hypotheses 11
1.6 Significance of the Study 13
1.7 Scope of the Study 13
1.8 Limitations of the Study 14
1.9 Profile of Selected Organizations 15
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Introduction 21
2.2 Conceptual Framework 21
2.2.1 The Concept of Succession Management 21
2.2.2 The Concept of Goal 21
2.2.3 The Concept of Oil Industry 23
2.2.4 The Concept of Corporate Governance 23
2.2.5 The Concept of Corporate Social Responsibility 24
2.3 Theoretical Framework 25
2.4 Empirical Review 34
2.4.1 Empirical Review Related to Objective One 34
2.4.2 Empirical Review Related to Objective Two 35
2.4.3 Empirical Review Related to Objective Three 39
2.4.4 Empirical Review Related to Objective Four 41
2.4.5 Empirical Review Related to Objective Five 45
2.5 Summary of Review of Related Literature 46
CHAPTER THREE: METHODOLOGY
3.1 Introduction 59
3.2 Research Design 59
3.3 Type of Data and the Source 59
3.4 Population of the Study 60
3.5 Sampling and Sampling Procedure 60
3.6 Method of Data Collection 61
3.7 Method of Data Presentation and Analysis 61
3.8 Validity of Research Instrument 62
3.9 Reliability of Research Instrument 63
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction 66
4.2 Data Presentation and Analysis 66
4.3 Test of Hypotheses 77
4.4 Discussion of Findings 82
4.4.1 Discussion of Findings Related to Objective One 82
4.4.2 Discussion of Findings Related to Objective Two 87
4.4.3 Discussion of Findings Related to Objective Three 89
4.4.4 Discussion of Findings Related to Objective Four 94
4.4.5 Discussion of Findings Related to Objective Five 97
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction 105
5.2 Summary of Findings 105
5.3 Conclusion 106
5.4 Recommendations 106
5.5 Contribution to Knowledge 107
5.6 Areas for Further Research 109
Bibliography 110
Appendixes 121
LIST OF TABLES
Table 3.1 Population of the Study 60
Table 4.1 Age of Respondents 67
Table 4.2 Length of Service of Respondents 67
Table 4.3 Educational Qualification of Respondents 68
Table 4.4.An Analysis of Response on Succession Management
as a Strategy for Growth and Profitability 69
Table 4.5 An Analysis of Response on Succession Management’s
Efficiency in terms of Competition among firms 71
Table 4.6 An Analysis of Response on Succession Management Challenges and influence on survival of oil industry 73
Table 4.7An Analysis of Prospects Associated with the Adoption of Succession Management 74
Table 4.8 Analysis of whether non Practice of Succession Management
could Account for Failure of Nigerian Oil Industry 7
Table 4.9 An Analysis of whether Succession Management Engenders Retention- impact and Discourages Labour Turnover among Employees in Nigerian Oil Industry 76
Table 4.10 Computational Details of Hypothesis one 77
Table 4.11 Computational Details of Hypothesis two 78
Table 4.12 Computational Details of Hypothesis three 79
Table 4.13 Computational Details of Hypothesis four 80
Table 4.14 Computational Details of Hypothesis five 81
ABBREVIATIONS
CEO – Chief Executive Officer
HR – Human Resources
SP&M – Succession Planning and Management
NNPC – Nigerian National Petroleum Corporation
SPDC – Shell Petroleum Development Company
O & O – Ocean and Oil
GE – General Electric
IBM – International Business Machines
LIST OF FIGURES
Figure 2.1 Seven-Pointed Star Model for Systematic Succession Planning and
Management 26
CHAPTER ONE
INTRODUCTION
Background of the Study
The earliest author to support and accept the benefits of succession planning was Henry Fayol. As the managing director of a large coal mine in France, Fayol became fascinated by the practice of management, and mapped out the principles for effective organizations through his fourteen principles of management in 1916.He believed that deliberate leadership replacement planning was a requirement of managers and that it was the only way to avoid organizational missteps by putting persons in positions for which they were not ready. Stability of tenure of personnel as one of his principles, explains the need for employees to be given time to settle with their jobs, absence of which may lead to unnecessary turnover and bad management. This indicates that failure to prepare the workforce of tomorrow would lead to filing leadership vacancies improperly. Fayol was also passionate in his belief that all employees should have a chance to prosper and that talented employees could climb from the lowest to the highest levels of the hierarchy. (Rothwell 2005, Weihrich, Cannice, and Koontz 2008)
It was research into the impact of leadership changes in baseball team performance that perhaps triggered interest in succession as an important organizational activity (Azure, 2008). Gamson and Scotch (1964) put forth a ritual scapegoating theory of succession that was demonstrated through the work of their study of professional baseball. The team owners and general managers generally have a more significant role in obtaining talent and conducting the operations of the team, but when the performance of the baseball team falters, the on-field manager (or coach) is the one that is publicly fired, ultimately displacing the blame, and creating a succession approach. (The Leadership Quarterly 2005)
Succession management as a formal mechanism probably made its biggest advances with the rise of the “corporation” in the 1950s and 1960s. Growing complexity of size and organizational scope demanded a more systematic way to capture information about individuals, their performance, potential to progress and readiness to take a greater responsibility(Azure, 2008).. Directors and shareholders of multinational companies such as Pepsico began to worry about the future success and direction of their organizations. They realized that by planning who would take over senior positions, they could help ensure company growth and stability. By following the ideas of Fayol and example of pepsico and others, major companies began to adopt succession strategies. Toyota, International Business Machines (IBM), General Electric (GE) and Microsoft are now among the globally – recognized names that use succession planning (Continuum Briefing, 2013)
Grusky (1960) who puts forth the vicious-circle theory states that succession is a universal organization process and its absence leads to organization instability. The incidence of turmoil through changes in policies and practices put forth by the new leader is a part of the vicious circle. Grusky developed research methods to test hypotheses within succession and pave the way for other researchers to follow. His basic reasons for the study of succession were hinged on the following: that administrative succession always leads to organizational instability and that succession planning is a phenomenon that all organization must cope with.
Kesner and Sebora (1994) observed that it was Walter Mahler (1980) that first recognised the advantages of succession planning to companies’ performance and encouragement to preplan for transition by focusing on impacts of succession such as company size, type, industry, methodologies, internal versus external candidates, psychological characteristics with succession, and more in his research.
In the traditional and replacement method, when a business leader retired or died, the organization would appoint a successor, without proactive reasoning but on impulse with the belief on candidate’s abilities, or someone trained for the post would simply step into the role, or in the absence of an obvious candidate, rivals would compete against each other for the right to become leader. Allen (2005) agreed that this was the replacement method and was the traditional method used to fill vacancies in leadership and that it consisted of pre-selecting substitutes for key position. A brief training period may have been implemented to provide the future replacement with information pertaining to the job they might need to fill. Emphasis was placed only on replacement as an answer to vacancies created by a tragedy, such as death or a decision to leave for another position.
Allen (2005) points out that the replacement method has been utilized for decades with relative degree of success because:
