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Financial Express Article, 30/08/2010, Ganesh Natarajan
 
 
The Succession planning, particularly in business groups in the country have always had an air of inevitability about the outcome as history has shown that the young scion of a business empire inevitably succeeds the founder in this country. However the announcements of Ratan Tata and more recently Narayana Murthy about their willingness to widen and deepen the search for a successor and look within their organisations as well as outside company and country borders has lent a new credibility to the process—corporate India awaits the outcome of the succession exercise in the Tata group and Infosys with bated breath!
Some interesting statistics are worth considering here which reveal why the process has lacked credibility so far. A survey reveals that over 75% of the company boards in India do not even discuss the issue of CEO succession planning. In comparison, the boards of more than 60% top-ranked companies in the US discuss their CEO succession at least one in a year, while 80% of those companies have already put in place an emergency succession plan. A Financial Times report says, “In a country where corporate leaders and politicians enjoy extraordinary professional longevity, lack of succession planning is a key failure of boards at many family-owned businesses in India, leaving them highly vulnerable after the retirement or death of their leaders.”
In the IT industry in India, the issue of succession planning could become one of extreme importance since the lack of a well thought through plan will put Indian majors at a disadvantage in comparison to their multinational competitors. Every corporation from Infosys and HCL and Wipro to smaller firms like Infotech and Hexaware will need to face this issue as their incumbent leaders prepare next generation leadership to take over the reins when required.
In that sense, the issue of succession plan is inextricably linked to the overall leadership development processes in the firm and the more focused a firm is on building layers of talent the less likely that it will be found wanting in succession planning.
The RPG Group in India which has always done a very dignified job of all changes whether it is succession planning or the recent changes in equity ownership of firms within the group can serve as a role model through its formal Organisation Management and Review processes. The OMR is a formal activity where the Chairman participates at group and company leadership level and every company CEO conducts the same exercise with considerable focus for the next level leadership through the organisation. Best in class practices like Groupwide Assessment and Development Centres, Career Dialogues and strategic use of Balance Business Scorecards and award winning company practices like Zensar’s Vision Community which has been the subject of a recent case study written by Professor David Garvin of the Harvard Business School and Rachna Tahiliyani of the Harvard Research Centre in India have helped the group to establish an excellent track record of leadership commitment and succession planning.
The real key in leadership development is to create a match between the organisation’s future needs and the aspirations of individuals. Many successful organisations in the IT sector are doing this as a “hire to retire” continuum that starts even before the entry of the associate into the organisation. Creation of centres of excellence’ in academic institutions which enables students even as they enter their final year gives the aspirant a chance to understand the specific domains and business processes of the company. During the first three years as the transition occurs from individual contribution to team leadership, inputs for development tend to be a combination of technical and behavioural and as the associate moves through the echelons of management, the bias towards soft skills and leadership capabilities is naturally more in evidence.
The IT industry has also dispelled the myth that the only route to the top is through general management and forsaking the skills that made a person an outstanding technical resource. Today there is a recognition in the planning for leadership and for succession that technical people who have the ability to demonstrate their competence in client engagements have as much potential to lead organisations as sales or finance or human resource professionals and it is the quality of development effort that truly enables the potential in managers to be converted into performance at the highest levels of the organisation.
Succession planning will always remain a tough art and science. Preparing the organisation to accept a former colleague as the new leader, ensuring that there are growth opportunities within the firm for candidates who may lose out in the end game and ensuring that the successful leader has an enabling environment through positive messaging and support eco-systems to successfully don the mantle of leadership and take the organisation to new levels of success through a judicious mix of continuity and change—not every Board or selection team gets it right but success in this area on a sustained basis will differentiate those institutions that remain beacons of excellence through generations!
   
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