According to the Disaster Recovery Journal (DRJ), Business Continuity Management is “A holistic management process that identifies possible impacts on an organization and provides a framework that allows for a response that protects its reputation, brand, and value-creating activities, as well as the interests of key stakeholders.” Management of continuity or recovery in the event of a catastrophe. The management of the overall plan through rehearsals, reviews, training, and review to ensure that it is always current. (n.d.). BCM also includes succession planning. DRJ defines succession planning as “A predetermined plan to ensure continuity of authority and decision-making in the event that key executives become incapacitated unexpectedly.” (n.d.)
Planning is important
These planning elements are critical for governments and businesses. It is crucial to plan to be able to conduct essential functions during and following a crisis. Without a plan, the prognosis is for business death.
Businesses without a disaster recovery strategy:
In just over one year, > 80% of the population will go bankrupt.
43% won’t even reopen.
According to the U.S. Bureau of Labor, > 93 per cent of businesses that suffer a significant data loss go out of business within five year. (Hatter, 2004)
The evidence clearly supports the necessity for businesses to be prepared for natural disasters. Now, the question is: “What is a catastrophe?” DRI International provides the following definition of disaster: “A catastrophe is an unplanned, sudden calamitous event that causes an organization to fail to perform critical business functions for a predetermined time period and results in significant damage or loss.” (2006)
The DRI definition includes the loss that is at an unacceptable level. The loss could not be considered unacceptable if a sudden, unplanned incident occurred, preventing the business from performing its critical business functions. However, the company has insurance that covers one hundred million dollars. Although the loss was mitigated by the insurance, the company could be facing a public relations problem due to the law suit. Harvard Business Review points out that companies sometimes misclassify problems by focusing only on technical aspects while ignoring perceptions. (Augustine, 2000)
This definition of disaster allows planning to be expanded beyond the traditional natural, manmade and technological disasters. The definition of disaster now allows for additional considerations such as product recall, class action and individual lawsuits; executive resignation, termination, arrest, contract ending or death. These items can cause “an inability of an organization to provide critical business functions…which can result in great damage and loss.”
Denial is another problem in crisis management. The definition of disaster helps to mitigate it. Augustine explains that this stage of crisis management can be the most difficult: Recognizing that there is actually a crisis. (Augustine 2000). Having a threshold that is quantifiable for unacceptable loss allows executives to recognize that a crisis situation exists and require a response. Only when the crisis is recognized, can the inevitable consequences be minimized.
Planning for Succession
Wikipedia defines succession planning as “the process of identifying, training, and preparing suitable employees to replace key personnel such as the chief executive officers (CEOs) within an organisation as their terms end.” Brent Filson explains it in this statement. “It is a common occurrence that a CEO leads an organization to record earnings and then retires, and those once high-flying earnings drop like shot ducks.” The new leadership team is being blamed by observers. But it’s most likely that observers are wrong. The problem is not only with the new leaders. It was likely the former CEO. It is most likely the former CEO. (Filson n.d.). A characteristic of great military leadership is for the leader to encourage the people below him to rise in the positions he occupies, so that the leader can move up the ranks or so that the subordinates can handle battlefield situations if the leader becomes incapacitated. A military unit shouldn’t have the ability to survive like a snake. Cutting off the tail is fine, but the head (leader) can cause the death of the entire unit.
The development of the next generation is an important task. It is instructive to remember that Noah built the Ark before it started to rain. (Augustine 2000) Planning prevents poor performance. The wrong methodology is not used to prepare for personnel turnover or unavailability. A corporation can go into panic hiring and lose the ability to implement its strategic plans.
Notifications that are short-term must be considered in planning. What happens to the company if two of its executive vice presidents are killed in an airplane crash? Who is being “acted” as a temporary replacement until the executive search uncovers the best candidate or has the ability to ramp up for permanent replacement? If a senior executive leaves and moves to a rival company, has the company established a program to make sure that everyone knows that the company’s strategic plans, customer accounts and other critical business information are their exclusive property? Have these key people signed non-disclosure agreements to protect the company’s proprietary information? Are they ready to make sure that the new key employees are required to sign non-disclosure agreements if they have not done so before they hire the defecting manager?
The Mid-Range Needs
People will retire. This text shows the planning process of a GM. Companies that fail to prepare a similar plan for testing and grooming potential top executives must seriously think about how well they are prepared to run their business. Failure to plan is planning to fail.
Long lead times for retirements allow companies to give people time to test them out, be mentored more closely, or be given substantially more responsibility in order to assess their ability to deal with the circumstances that will arise.
The United States is now entering an era when the balance of the worker pool will be affected by the baby-boomer generation. The demographic balance shifts in 2010. By 2015, the 65-and over age group will grow faster than the 20-to 64 age group. (Allier J.J. and Kolosh Keneth 2005).
“Organizations who understand the importance of the baby boom exit will be in the best place to achieve unmatched success. (Allier J.J. and Kolosh Keneth 2005) These authors suggest questions that businesses should ask to be prepared for the demographic shift. These are some of the questions:
What is your company’s demographics? (age, gender and position, number of years in the same position, anniversary date, etc.)
What is your company’s retirement policy? Are early retirement options encouraged or discouraged?
What programs and mechanisms must be in place to ensure that key skills and knowledge are retained by employees who are retiring?
Does your company need to increase its dependence on immigrants?
What is the age breakdown for your overseas partners if your company is offshoring?
Could your offshoring partners be affected by a shortage of labor that could impact their ability provide services?
(Allier J.J. and Kolosh Keneth 2005).
Kolosh and Allier also stress that businesses must be able to meet the demands of an aging population. The aging population may require unique skills and competencies. These issues are tied back to business continuity planning. Businesses must be prepared for the changing average age to remain competitive.
Executives are not the only ones who need it
It is important to not limit the scope of succession planning to only the top executives of the corporation. Steve Nelson, MSPB’s policy Director, stated that succession planning often focuses on top Third Eye Capital Ninepoint, when it is necessary to consider critical skills at all levels. (Welles 2006) Marta Brito Perez at OPM is the associate director of human resource leadership and merit system accountability. She stated that succession planning does not have anything to do with age. Planning for succession is not about identifying high-risk occupations and how to fill them. (Welles, 2006)
Planning for succession involves determining which positions are essential to create a succession plan. After assessing the positions, the skills of those who could fill them are evaluated, taking into account the time it would take to train them for the job. To ensure that these people are closer to an immediate insertion rate, if a position is not filled, a training program must be put in place. This will allow for a smoother transfer of the individual in waiting and give a sense of stability to the company during difficult times.
Succession planning is an integral part of business continuity planning. This is an important piece of the overall business continuity planning process that should not be overlooked. If succession planning is not done properly, the company will be without well-trained managers and key personnel to replace those who have left the company for any reason.