EXECUTIVE SUCCESSION AND ORGANIZATIONAL PERFORMANCE IN SELECTED TRANSNATIONAL COMPANIES IN SOUTHERN NIGERIA

CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

Change is endemic in all organizations. One area of organizational change is executive succession.All organizations,including business organizations, that have historical pasts, experience executive changes at one time or the otherbecause while individuals come and go, the organizations in which they have found themselves, in whatever capacity, remain. Unlike the start-up companies that have only experienced initial selection of top management staff and have no history of succession and succession planning, all companies that are going concerns do the selection of their top management staff within the context of choosing a successor. However, one of the things that should actually be of interest to one with a discerning mindas these changes take place is to examine the mode of entry of new and exit of old top management staff; the reason being that some of such successions have been done in smooth seamless transition, while others have been quite schismic, cataclysmic and catastrophic. Besides, as the business organizations are going concerns that are expected to make profits and satisfy their stakeholders, it has become an area of research interest to assess how organizational performance is affected whenever such executive changes take place in them. Also, in view of the fact that the top management is charged with strategic thinking, and it is at that level that organizations are given strategic directions, the interest in the performance effect of executive successions in these companies is not out of place(Colley, Doyle, Logan and Stettinus, 2003:91-98).

To be specific, thefocus of this work is to assess how executive successionin the transnational companies operating in Southern Nigeriaaffects organizational performance. However, our approach to the issue of executive succession and organizational performance in this study is not whether executive succession in the transnational companieshas an effect on organizational performance in Southern Nigeria per se. Rather our position is to establish the extent to which these executive changes occurring in the transnational companies affect the stakeholders in the Region (Boyne, James and Petrovsky, 2009:1). Hitherto, executive succession in those companies was an internal affair; but nowadays, other stakeholders, who are not necessarily shareholders in these organizations, are becoming interested in how executive changes in these organizations are carried out, and how they affect them. Simply put, apart from the shareholders and employees who are closer to the organizations, the customers, the suppliers of raw materials, the funds suppliers, environmentalists, non-governmental organizations, governments and their agencies, and the society at large, have developed interest in the executive changes in these organizations around them. Interestingly, each of these stakeholders assesses the success or failure of these organizations from how these changes have met his or her personal interests. This is noticeable in the increasing incidence of youth restiveness, resulting in high profile kidnappingsin the Region, which include foreigners, due to the high rate of youth unemployment (Hambrick, 1989:5-6; Broeker, 1992: 400-402; Grube, 1995:42-43; Plitch, 2003: B-3F).

Over time managing the process and consequences of top management turnover and succession has become a challenge to organizations; for whether the exit is voluntary or forced, or whether the succession is done internally or externally, there is usually a reaction, negative or positive, from the stakeholders. Recent literature on strategic management succession, has tried to focus attention on these challenges which organizations face in the event of top management turnover or succession (Kesner and Sabora, 1994:327-329; Khurana, 2001: 91-95; Khurana, 2002 cited in Cao, Maruping and Takeuchi, 2006:563-566; Huson, Malatesta and Parino, 2004:237-239; Cao, Maruping and Takeuchi, 2006:563-566). As organizational managers, the top management teams (TMTs) of organizations have become so influential and powerful that they cannot be ignored in the process of examining the performance or non-performance of such organizations (Hambrick, 1981:263-265; Boeker, 1992:400-402; Pettigrew, 1992:163-168).

To properly focus this study in a historical perspective, it is imperative that we trace the growth of management theory from early influences to the era of the industrial revolution, the Scientific Management Movement, to the modern era typified by the Japanese and American management thoughts.

1.1.1 The Evolution of Management Theory

Management takes place in organizations. In the pre-industrial era,there were businesses; and in those businesses there was some form of management.The businesses were small, the production processes were small-scale, and the processes of organizing workers were also fairly easy. In the simplest groups engaged in hunting, farming, and fishing,there were decision makers who saw to the welfare of their members. There were also those who were involved in weaving, pottery, and shoemakingbusinessesthat employed men and apprentices. Furthermore, there werethe more complex well-known African kingdoms of Oyo, Ghana, Mali, Songhai, Edo, etc, who engaged in lucrative business and commerce, and they had established administrative structures through which the affairs of the kingdoms were managed. The magnitude and complexity of the Egyptian pyramids,which were undertaken long before modern times, provide evidence of a sound management because it involved the employment of tens of thousands of people. Also, the Church, notably the Catholic Church, had a well organized system of managing its adherents through which it was able to influence the spread of education (Yalokwu, 2006:35-36).