Companies

Succession planning: the Board must speak

Rashmi Pratap Mumbai | Updated on January 15, 2018 Published on November 20, 2016

ITC Chairman YC Deveshwar   -  Bloomberg, PTI, Bijoy Ghosh

L&T Executive Chairman AM Naik

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Far too many honchos have their way in choosing their successor



He was in his seventies and the time had come to choose a successor to head the business conglomerate. There was a committee set up to find the right person.

And yet, he would have solo meetings with HR consultants on the matter, even disclose to them the salary he wanted his successor to draw, and none of the board members would be consulted. Over the decades, he had become a god-like figure at the company, and the board’s approval for his choice was a foregone conclusion.

The story is not exclusive to this Indian MNC. As board members across companies act as puppets in the hands of the top boss, succession planning is bound to suffer in India Inc.

It’s not just Ratan Tata’s return as chief at Tata Sons that should have India Inc pondering about succession planning; both tobacco-to-hospitality giant ITC, and engineering major Larsen and Toubro will welcome the next generation of top leaders some months from now. ITC Chairman YC Deveshwar will be 70 in February, while L&T group Executive Chairman AM Naik turns 75 in June.

Like Tata, these two executives have also assumed larger-than-life personas and are synonymous with their companies. Their successors are definitely not going to find it easy.

“The weakest link in succession planning in India is the board. If they are not strong enough to voice their opinions, it will remain a one-man show,” says Pankaj Dutta, Managing Partner of Alexander Hughes’ India operations.

Idea of the deviant

B Sivaramakrishnan, Client Partner, Korn Ferry Hay Group, says Indian boards have a big role to play in the succession agenda. “Some are acting proactively and are involved in identifying talent. But many a times it doesn’t happen.”

“Many a times, the incumbent starts defining what responsibilities are, and how a job should be done. And they also succeed. So over time, it becomes the only way of doing things. And when people don’t work that way, things don’t move or even collapse. That’s why you see top bosses coming back to their organisations,” he adds.

Catching them early

According to the Hay Group, both in India and emerging economies, the typical age group for moving into C-suite is 40 to 45. “So if you are planning succession, you should start grooming potential candidates from the time they are in their 30s,” Sivaramakrishnan says. Typically, there are seven layers of growth for a CEO, where he moves from an individual contributor to an enterprise head.

“If you want a successor from within, you need to have a 10- to 15-year window to groom at least 10 or 20 people (to pass through the seven levels). The real challenge is that in most Indian companies, leadership teams have no idea who are these bright 30-year-olds who can be groomed,” he adds.

Morgen Witzel, business theorist and author of ‘Tata – The Evolution of a Corporate Brand’ says, “I don’t think succession planning in India is any harder than anywhere else in the world.” He points out that in the past thirty years, there have been some really massive failures in the West too.

“This is particularly problematic when the previous leader is a high-profile, widely admired figure; any successor has a lot to live up to, and people will compare him or her to the predecessor, often unfavourably,” he says.

Global practice

And it is this hero worship that often leads to the failure of a successor. Sivaramakrishnan says that at one level, leadership is all about being hands-on and at another level, it is about being dispassionate and making it a system. “Some strike this balance very well and some don’t,” he says.

Globally, there is a trend of moving away from super hero to a senior leadership team that advises and works closely with the CEO. In General Electric, Shell and Philips, the operations are closely guided by a team of three to four senior leaders. It is time the big level shift comes to India Inc too. Because as long as hero worship continues, successors will be found to be lacking.

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Published on November 20, 2016
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