The Hindu Business Line : Succession challenges: Are crown princes in shortage?

With effect from March 15, 2007, the IITs in India have raised the retirement age of professors and scientific officers to 65. There is talk of increasing it further to 70 very soon!

A similar trend is visible in many of India’s large and respected older organisations – typically in the manufacturing sector. The retirement age here is also a cause for concern with leaders seeing a lack of depth in the leadership pipeli ne in the next few years. Many of them have taken recourse to hiring retired experts as consultants. Some of these companies are also headed by CEOs in their 70s and 80s!

The trend does not seem limited to CEOs and senior executives – there also appear to be skilled operators who are being hired back as retainers post-retirement.

Ironical isn’t it? Given that..

India is today the youngest country in the world with an average age of 26 years with a population growth rate of 1.36 per cent.

If we look at technical resources, there are approximately 3.5 lakh engineers graduating in India every year.

India is growing younger, there are more and more technical resources passing out and yet some of our mainstream industries seem to be having to depend on older employees. Will this have a serious impact on our pipeline of talent for the future, let alone social implications?

And more importantly, if we are already facing a shortage of talent today, what does the future hold?

The situation seems set to only magnify in the coming years with increasing demand for skilled technical resources across sectors. Consider this..

Investments in the manufacturing industry are at an all-time high. Captive R&D units have been set up in India by various MNCs – Bosch, Caterpillar, among others, besides Tata Motors and Mahindra and Mahindra.

There is a shortage of engineers in manufacturing with the IT Sector offering one million jobs – what happens when this grows to 10 million?

The Ministry of Commerce and Industry claims that in February 2007, manufacturing growth crossed a record 12 per cent and FDI equity flows registered a 450 per cent increase from February of 2006! Even higher growth is predicted!

Given all of this, expanding the immediate talent pool by employing the 60-plus’ seems to be a great solution. However, are there significant latent implications to an over-dependence on an older talent pool to meet our immediate needs for talent?

Before we jump to conclusions, let’s look at possible reasons why re-drawing retirement ages seems an attractive solution.

The reasons

First, many of these “older” senior executives / CEOs exhibit enviable levels of commitment and zest for what they do.

They are often respected for their domain knowledge and are listened to.

Many of them also provide a note of realism and common sense in today’s impetuous and tumultuous world.

But apart from these, are we overlooking something here? Are today’s solutions long-sighted enough? Are we unwittingly hurtling towards a situation where we will not have adequate successors to take on the mantle – a possible future wisdom void?

Is there more beyond this seemingly innocuous trend?

The implications

Besides the obvious implications of the sustainability of today’s solutions and the inequilibrium that may result in the future, there are also cultural implications.

Some “senior” leaders continue to live in the successes of the past and struggle to come to terms with the changes required to work in the new era of a buoyant labour market. Some others are spent forces and are in their jobs only because the organisation fondly hopes to cash in on their technical expertise. However, they soon become liabilities with little or no contribution, politicking and hanging on to their assignments. There is also a reluctance to groom successors given the carrot of the possibility of a further extension of service.

What are some of the factors that could have possibly reached us here?

Perhaps the largest contributor is the lack of foresight that led organisations that were dormant in the ’90s to hire in very small numbers over the last many years. Be it the IITs or India’s technology-dependent older corporates, this single action has led to an imbalance in the age profile of employees. (A large manufacturing organisation we studied recently had just woken up to the realisation that approximately 65 per cent of its senior leadership would retire in the next two years!)

Secondly, while everyone continued to hire freshers in small numbers over the years, there was little effort in either developing or retaining this talent. Attrition among graduate engineers continued to gallop until today the life expectancy of a graduate engineer in any organisation is realistically less than three years!

There has also been a reluctance as well as an inability to hire laterally, with the effect that newcomers are rarely assimilated well in organisations and attrition in the 0-6 months tenure is high.

What has certainly not helped is the disposition of the employees concerned. With the opening up of opportunities in the ’90s, most have resorted to job hopping in a bid to increase their earnings, very often at the cost of eroding market value by not building on core strengths. This has meant that there are fewer veterans who by sheer stint of tenure and soaking, have qualified to be called “experts”.

And finally, we must also blame the deteriorating quality of technical education in the country with emphasis on short-term ‘semester se semester tak’ knowledge rather than building an engineering mindset and aptitude. D id our senior citizens have a better quality of education than today’s mass production model? Looking at the older generation, I would say that yes, they perhaps had a far better grounding in the basics.

To my mind, all of this poses a larger concern — How are we as a nation preparing for the future?

The Role of Education

First, we need to take a hard look at our technical education programmes. Are we preparing our young engineers to take up challenging jobs in engineering or are we preparing engineers who will move on to humdrum jobs that have nothing to do with what they studied?

(I was pleasantly surprised to hear from a college in Coimbatore that the number of graduate engineers who had taken up jobs in manufacturing and areas related to their technical expertise was on the increase this year!)

It actually also has to do with the entrance process for engineering admission. Over the last few years, success in gaining admission is dictated more by which preparatory course you attend than on individual aptitude.

In fact, some States seem to have cracked the code for success in the entrance exams judging by the vast numbers that gain admission from some geographical areas.

The Role of Organisations

From an organisation and HR point of view, an important solution is succession planning. How many of our organisations and institutions have a well-thought out succession plan for each key job?

We also cannot get away from the need to pay differently for niche or key skills. The main reason for the erosion of talent from the teaching professions, say, the IITs or even from technical skills reliant positions in organisations (eg R&D), is the reluctance of those concerned to differentiate and pay a premium if required, for some of these key areas.

I understand that the starting salary index for someone entering teaching (even teaching at a premier institute) and someone entering an IT job is 1:3. Where then is the question of attracting good talent into areas where the difference matters?

The Role of Younger Employees

Lastly, while our education systems and organisations have much to do in covering the lapse, it is up to our young employees to sit up and took notice.

It is important for employees to take a long-term view and ensure that shorter tenures and generalisation does not erode market value.

They simply cannot afford to take a problem-free philosophy and say Hakuna Matata. Like the young Lion King, they must one day take charge and towards that — start preparing early enough.

Let’s get future smart!

(The writer is a Principal Consultant at Totus Consulting, a strategic HR consulting firm that designs and implements HR systems and processes for organisations across diverse industries.)

More Stories on : Insight | Management | Human Resources

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Succession challenges: Are crown princes in shortage?

The marketing plan

Mentoring, a timeless concept

Let’s take this private

Energise your team, sell them your vision

A secret among sculpture