A SURVEY ON THE STABILITY OF SMES THROUGH LEADERSHIP SUCCESSION PLANNING IN GHANA

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Succession planning has garnered attention not only as a human resource management concern but also as a vital strategic component for institutional performance and growth globally. However, it has been utilized to groom new leaders for governing nations and enterprises, ensuring a well-prepared cadre of leaders ready to step in when needed (Cole and Harbour, 2018). The depth and effectiveness of modern succession planning not only shape a company's future performance but also pave the way for generational enterprise. However, in small-scale businesses, succession planning often revolves around transferring ownership and management to the next generation (Akpan and Ukpai, 2017), a process often hindered by inadequate talent management, reward structures, career development, and training for potential successors. Given the dynamic, complex, and uncertain business environment, organizations must adopt proper approaches to retain their employees to adapt to changes effectively. Furthermore, SMEs can leverage talent management to build high-performing teams comprised of skilled individuals who can address business challenges and weaknesses due to their competence and experience. However, without robust talent management practices in place, attracting, retaining, and nurturing talented employees in SMEs becomes a significant challenge. According to Rothwell (2018), succession planning consists of five fundamental elements: identifying critical organizational roles, evaluating the competencies needed for these roles, developing staff capabilities to meet future organizational needs, and assessing the overall effectiveness of the plan. Similarly, according to research, an effective succession plan provides clear instructions for identifying potential leaders and guarantees their retention in the organization for the required amount of time, which significantly contributes to SMEs growth and stability. However,for succession planning to be successful and sustained effectively, the contribution of employees should be optimized to the goals of the organization and this can best be achieved through training and development of the employees. Despite the recognized contributions of small businesses to the growth of various economies, including Ghana's, the majority of SMEs face challenges in ensuring business continuity. Rothwell emphasized that "the continued survival of the organization depends on having the right people in the right places at the right time" (Rothwell, 2018). The high rate of business failures in the sector, attributable to the challenge of business continuity, has led to a lack of generational enterprise. Onuoha (2019) argued that without effective succession planning, the concept of generational enterprise cannot be realized. Succession planning poses a serious threat to the performance and survival of most SMEs.  However, those with robust succession planning processes are able to identify and address the developmental needs of their employees and select effective leaders who can ensure the company's stability. Therefore, a survey will be conducted on the stability of SMEs through leadership succession planning in Ghana .

1.2 Statement of the Problem

Recognizing the importance of long-term SMEs stability, succession planning aims to nurture future leaders capable of steering the organization towards enduring success. However, resistance often arises from stakeholders and individuals accustomed to the current leadership system when implementing succession planning (Akinwande, 2019). Overcoming this resistance requires successful change management techniques, transparent communication, and a focus on the benefits of succession planning. Moreover, integrating leadership development programs and skill assessment procedures into the succession planning process may require substantial resource investment. However, organizations facing challenges such as understaffing or underfunding may find establishing effective succession planning strategies particularly challenging. According to research by Pritesh (2023), effective succession planning reduces leadership gaps, enhances organizational continuity, increases employee engagement, attracts top candidates, and fosters innovation. Yet, implementation hurdles like resistance to change, resource constraints, and talent identification issues persist. Furthermore, there is lack of employees’ training in SMEs sector which deprive them the opportunity to acquire current knowledge that will positively impact on the performance of the SMEs, increases the chances of a proper succession planning and enhance their capacity for growth and stability.

Nevertheless, organizations can address these challenges by empowering senior leadership, establishing a talent management, promoting a culture of learning and development, utilizing technology for skills assessment, and evaluating the effectiveness of succession planning activities (Park & Gursoy, 2018). These techniques can help organizations navigate the complexities of succession planning and pave the way for sustainable leadership transitions and organizational growth. Hence, it is in the light of these that the study seeks to survey on the stability of SMEs through leadership succession planning in Ghana.

1.3 Objectives of the Study

The main purpose of this study is to survey on the stability of SMEs through leadership succession planning in Ghana. Specifically, the study will;

Determine the extent to which leadership succession planning practices are implemented in selected small-scale businesses in Ghana.

Identify the leadership succession planning practices adopted by small-scale businesses in Ghana.

Assess the impact of leadership succession planning on stability of small-scale businesses in Ghana.

Investigate the challenges hindering the effective implementation of leadership succession planning in small-scale businesses in Ghana.

1.4 Research Questions

The following questions have been prepared for the study:

To what extent are leadership succession planning practices implemented in selected small-scale businesses in Ghana?

What are leadership succession planning practices are commonly adopted by small-scale businesses in Ghana?

How does leadership succession planning impact the stability of small-scale businesses in Ghana?

What are the challenges that impede the effective implementation of leadership succession planning in small-scale businesses in Ghana?

1.5 Research Hypotheses

Ho: Leadership succession planning has no significant on SMEs stability.

Ha: Leadership succession planning has no significant on SMEs stability.

1.6 Significance of the Study

The significance of succession planning extends beyond mere administrative duty; it stands as a critical operational necessity for firms. By actively managing talent, nurturing the next generation of leaders, and ensuring a seamless transfer of leadership, organizations can achieve operational balance, stimulate creativity, and fortify their position in an increasingly competitive business landscape. The findings of this study provide valuable insights and actionable guidance for companies seeking to develop and implement effective succession planning strategies. It is imperative for organizations to acknowledge the fundamental importance of succession planning and allocate the requisite resources, leadership support, and ongoing commitment to its execution in order to thrive. By integrating continuity planning into their organizational ethos, companies can adeptly navigate leadership transitions, foster continual talent growth, and position themselves for sustained long-term success. Furthermore, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to survey on the stability of SMEs through leadership succession planning in Ghana.

1.7 Scope of the study

The scope of this study is boarded on the stability of SMEs through leadership succession planning in Ghana. Empirically, this study will determine the extent to which leadership succession planning practices are implemented in selected small-scale businesses in Ghana, identify the leadership succession planning practices adopted by small-scale businesses in Ghana, assess the impact of leadership succession planning on stability of small-scale businesses in Ghana and investigate the challenges hindering the effective implementation of leadership succession planning in small-scale businesses in Ghana.

Geographically, the study will be delimited to SMEs owners in Accra, Ghana.

1.8 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. 

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

1.9 Definition of Terms

Leadership styles: the diverse approaches and methods that leaders or managers use to guide and influence their teams or organizations.

Employee: is an individual who works for an organization or company in exchange for compensation, such as a salary or wages.

Succession Planning: is a strategic process designed to identify and develop future leaders within an organization to ensure continuity and smooth transitions in key positions. It involves assessing current talent, identifying potential successors, and implementing strategies to prepare them for future roles.

Talent Management: is a systematic strategic effort planned by the company to use a set of human resource management practices that include employee acquisition and evaluation, learning and development, performance management, and compensation to attract, retain, develop and motivate employees.