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Why corporates must prioritise succession planning

Amrita Nair-Ghaswalla Mumbai | Updated on August 24, 2018 Published on August 24, 2018

HDFC Bank’s Deputy Managing Director Paresh Sukthankar’s exit, Indra Nooyi’s Pepsi exit and Infosys CFO MD Ranganath’s surprise exit have laid bare the urgent need to have a leadership pipeline across corporates.

As senior executives depart, leaving behind a gaping void, it raises the bogey of succession planing.

“CEO succession planning needs to be the No 1 agenda for the board, and has therefore become an increasingly important conversation across the globe as well as in India,” says Monica Agrawal, Senior Client Partner, Global Financial Services, Korn Ferry India, a consulting firm looking at strategy and talent.

Changing realities

She adds succession planning for senior-level exits “is a process and not a project, and needs to be an ongoing agenda for the board. It is not just triggered by an event.”

R Sridhar, Executive Vice-Chairman and CEO of IndoStar Capital Finance Limited says: “Succession planning should be mandatory to ensure future success of an organisation. The two- pronged approach one can adopt is to identify someone within the organisation, you believe, can lead and then empower them with the necessary skill sets.”

Another reason to focus on succession planning is the changing realities of workplaces.

The impending retirement of senior executives could have a major impact on workforce capacity.

As vacancies in key positions occur in numerous organisations simultaneously, demographics indicate there are statistically fewer senior people available to fill them.

Pallavi Jha, Chairperson and Managing Director, Dale Carnegie Training India, tells BusinessLine that her succession plan includes recruiting high-potential employees, developing their leadership skills, knowledge and abilities, and preparing them for advancement into more challenging roles.

Experts say a strong line-up process should focus on developing a pool of individuals with critical, adaptable skills ready to lead when called upon.

Leadership crisis

Anuranjita Kumar, MD, HR, International Hubs, Royal Bank of Scotland, says, “Creating a succession pipeline is extremely important for every role and function, to not only ensure business continuity, but to also ensure opportunities for individuals at every level.”

Recent instances of companies facing challenges around succession planning at senior levels have only served to highlight this issue. The resignation of Infosys’s financial chief Ranganath, is a case in point, underscoring the persisting leadership crisis at the company.

Though Infosys has said the board will immediately start the search for his successor, Ranganath’s departure is the fourth major executive exit at Infosys this year.

A properly designed and executed succession plan should be at the centre of any successful transition, say experts. Several banks and wealth managers offer guidance to family-owned businesses and prep young adults on how to manage their family wealth and philanthropic interests, and also offer plenty of guidance on effective corporate governance and on the need to put together a succession plan in place.

Published on August 24, 2018
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